McCleery v. Woodmen of the World

• Decision Date: 24 March 1931
• Citation: 297 P. 345,136 Or. 407
• Parties: MCCLEERY v. WOODMEN OF THE WORLD ET AL.
• Court: Oregon Supreme Court

297 P. 345

136 Or. 407

MCCLEERY v. WOODMEN OF THE WORLD ET AL.

Supreme Court of Oregon

March 24, 1931

Department 2.

Appeal from Circuit Court, Multnomah County; Walter H. Evans, Judge.

Suit in equity by D. W. McCleery against the Woodmen of the World and another to determine right to proceeds of benefit certificate in Woodmen of the World, a benevolent and fraternal corporation. A demurrer interposed to the complaint was sustained, and from the judgment plaintiff appeals.

Reversed and remanded.

Guy L. Wallace, of Portland (Roscoe P. Hurst, of Portland, on the brief), for appellant.

Robert R. Rankin, of Portland, for respondents.

BEAN C.J.

The complaint alleges, in substance, as follows: On March 13 1926, Charles E. Young, a member of the Woodmen of the World a benevolent and fraternal corporation, was the holder of a benefit certificate in the Woodmen of the World, in the amount of $3,000. At that time Young made an offer in writing to the plaintiff D. W. McCleery, a stepson of Young, that if McCleery would keep up the dues and assessments and would agree to pay the benevolent and fraternal corporation the sum of $5.50 every two months, so long as Young should live, he would cause the certificate, in so far as the beneficiary named therein was concerned, to be changed so that the payment of the $3,000, provided to be paid by the corporation on the certificate, upon the death of Young would be as follows: To Winifred A. Steele, the amount of $1,000, and to plaintiff D. W. McCleery, the sum of $2,000 and that Young would not make any other change of beneficiaries so long as he lived. Plaintiff McCleery, about April 2, 1926, accepted the offer of Charles E. Young, in writing, and immediately commenced the performance of the contract; thereafter, about May 25, 1926, pursuant to the written offer and acceptance, Charles E. Young caused the benefit certificate in the Woodmen of the World to be changed so that on his death the same was payable as follows: $1,000 to Winifred A. Steele and $2,000 to plaintiff McCleery, and the change in his benefit certificate was accepted by the defendant Woodmen of the World. About April 7, 1927, without the knowledge or consent of plaintiff, Young disregarded the terms of the agreement entered into and to be kept by him, and, for the purpose of defrauding plaintiff McCleery of the valuable rights he had acquired in the certificate, caused the benefit certificate to be changed so as to be payable on his death, as follows: $2,900 to defendant Winifred A. Steele and $100 to plaintiff McCleery. On March 16, 1928, Charles E. Young died in good standing in said benevolent and fraternal association. Thereupon plaintiff became the owner and entitled to the possession of the sum of $2,000 represented by the benefit certificate under the change thereof made by Charles E. Young and accepted by the benevolent and fraternal association, pursuant to the terms and conditions of the written agreement entered into between Young and McCleery. Plaintiff McCleery kept and performed all of the conditions of the agreement mentioned on his part to be kept and performed.

Subsequent to the institution of this suit, defendant Woodmen of the World paid into the hands of the clerk of the circuit court the sum of $3,000, and was discharged from all further liability by reason thereof.

Defendant Winifred A. Steele filed a demurrer to the complaint on the ground that it did not state facts sufficient to constitute a cause of action. The demurrer being sustained, plaintiff was given five days within which to further plead, which he failed to do, and the circuit court entered a judgment and decree in the suit in favor of defendant Steele for the sum of $2,900, and for the plaintiff McCleery for the sum of $100, and further provided that the defendants Woodmen of the World and Winifred A. Steele have judgment against plaintiff for costs and disbursements. Error is predicated on the court sustaining the demurrer of the defendant Winifred A. Steele.

Section 46-706, Oregon Code 1930, provides as follows:

"The payment of death benefits shall be confined to wife, husband, relative by blood to the fourth degree ascending or descending, father in law, mother in law, son in law, daughter in law, sister in law, brother in law, stepfather, stepmother, stepchildren, stepsister, stepbrother, children by legal adoption, adopting parents, or to a person or persons dependent upon the member, or to an incorporated charitable institution or association. Within the above restrictions, each member shall have the right to designate his beneficiary or beneficiaries and from time to time have the same changed in accordance with the laws, rules or regulations of the society, and no beneficiary shall have or obtain any vested interest in the said benefit until the same has become due and payable upon the death of the said member; provided, that any society may, by its law, limit the scope of beneficiaries within the above classes. * * *"

This section places no restriction upon the member contracting concerning his benefit certificate. It gives the assured the freest control over his certificate and the avails thereof, consistent with the existing law and the rules and by-laws of the Woodmen of the World, unless he has estopped himself by a contract.

The general rule in regard to such matters is stated in 45 C.J. 196, § 155. By the weight of authority, if there is nothing to the contrary in the statutes or the society's charter or laws or in the certificate of insurance, the beneficiary originally designated has no vested interest in the contract, even when he has possession of the certificate. Hence the member ordinarily may, at his pleasure, designate a new beneficiary and thus defeat the original beneficiary's contingent right to the benefits. In the same work, page 199, § 161, an exception to the general rule referred to is found, in substance, as follows: Apart from the limitations imposed by statute or the laws of the society, and even though such laws authorize a change of beneficiaries, equities may exist in favor of the original beneficiary which will preclude the member from substituting a new beneficiary, who has no equity superior to that of the person originally designated, as where his status is that of a mere volunteer and not that of a bona fide purchaser. An equity in favor of the original beneficiary precluding the substitution of another in his place may rest on a contract between him and the member (in the present case between Young and McCleery), based on a sufficient consideration, by which he is to receive the benefits, unless such contracts are prohibited by statute, or the rules of the society, and in accordance with this rule if a member designates a beneficiary, or having designated a beneficiary, delivers the certificate to him on an agreement that he shall receive the benefits in consideration of advances or in consideration of his promise to pay dues and assessments, which promise is fulfilled, the member cannot substitute a different person as beneficiary.

The plaintiff was eligible to be named a beneficiary under the statute quoted, being a stepson of the member, Charles E Young. There is nothing in the statute restricting Young from making the contract and naming McCleery as the beneficiary in the benefit certificate. The complaint alleges a contract between McCleery and Young, the member, based upon the consideration that McCleery should pay the dues and assessments so long as Young should live. There is nothing inequitable or unfair in regard to the contract. It is both for the protection of the interests of the member in the benefit certificate and also of the other beneficiary that the dues and assessments should be kept paid. In so far as it appears in the record, there is no prohibition against the member making such a contract or changing the beneficiary in his certificate. The statute providing that "no beneficiary shall have or obtain any vested interest in the said benefit until the same has become due and payable upon the death of the said member" does not preclude the...