Modern Brotherhood of America v. Quady

• Decision Date: 09 November 1928
• Docket Number: No. 26773.,26773.
• Citation: 175 Minn. 462,221 N.W. 721
• Parties: MODERN BROTHERHOOD OF AMERICA v. QUADY et al.
• Court: Minnesota Supreme Court

221 N.W. 721

175 Minn. 462

MODERN BROTHERHOOD OF AMERICA v. QUADY et al.

No. 26773.

Supreme Court of Minnesota.

November 9, 1928.

Appeal from District Court, Hennepin County; E. A. Montgomery, Judge.

Interpleader by the Modern Brotherhood of America against

Laura M. Quady and George L. Hanson, administrator of the estate of Peter E. Quady, deceased. Judgment for defendant Quady, and defendant Hanson appeals. Reversed, with directions.

Donald G. Hughes and Marshall S. Snyder, both of Minneapolis, for appellant.

Sam Sparrow, of Kansas City, Mo., and W. B. Anderson, William Rochford, Clarence O. Holten, and Geo. A. Lewis, all of Minneapolis, for respondent.

HOLT, J.

The defendant George L. Hanson, as administrator of the estate of Peter E. Quady, deceased, appeals from the judgment awarding the defendant Laura M. Quady the amount of a beneficiary certificate paid into court by plaintiff, a fraternal beneficiary association, interpleading the two defendants, rival claimants of the amount. Each defendant moved for judgment on the pleadings. The motion of Laura M. Quady prevailed.

Plaintiff, organized under the laws of Iowa, is a fraternal beneficiary association, having a lodge system with ritualistic form of work, and as such, ever since 1908, has been engaged in conducting the business of such association in this state, being duly licensed so to do. One of the principal objects of the association is to make provision for the payment of benefits upon the death of a member to the person lawfully designated in his membership certificate. Peter E. Quady, then a resident of this state, was in 1908 received as a member of the association, and a membership certificate for $1,000 issued, payable to Laura M. Quady, his wife, upon his death. In 1912 this certificate was surrendered, and another issued for the same amount, also designating Laura M. Quady, his wife, as beneficiary. In 1919 Laura M. Quady obtained a decree of divorce in Hennepin county, this state, where the parties continued to reside. Peter E. Quady thereafter remained single until his death in 1926. He left surviving a brother, who claims through the administrator.

If the law of Iowa controls, the judgment in favor of Laura M. Quady must stand. The statutes of Iowa under which the association was organized, as well as its constitution and by-laws, are to the effect that a beneficiary, eligible when the certificate issues, continues so to be, even if not so eligible at the time of the member's death. The Iowa statutes and applicable provisions of plaintiff's by-laws were pleaded. As these are constructed by the courts of Iowa, the designation of Laura M. Quady being valid when the certificate issued, the subsequent divorce did not terminate her right to receive the stipulated benefits. White v. Brotherhood of Am. Yeomen, 124 Iowa, 293, 99 N. W. 1071, 66 L. R. A. 164, 104 Am. St. Rep. 323, 2 Ann. Cas. 350; Schmidt v. Hauer, 139 Iowa, 531, 111 N. W. 966. It may be said that these decisions were not pleaded; but were we to construe the Iowa statutes, and the laws and regulations of plaintiff relating to this subject, the result in all probability would be in accord with the decisions cited.

But we reach the conclusion that this beneficiary certificate, or insurance contract, is a Minnesota contract, and in so far as our statutes are at variance with those of Iowa on the question of who is the legal beneficiary they control. When the certificate was issued, it was delivered to Peter E. Quady in this state, where both he and his wife resided. Before plaintiff could lawfully do business in this state, organize lodges, and issue beneficiary certificates, it had to and did obtain license to do so. And in such business it must conform to our law. Chapter 345, Laws 1907, is "an act to provide for the organization, admission and regulation of fraternal beneficiary associations transacting the business of life and disability insurance." Plaintiff clearly comes within the provisions of that chapter. Section 6 thereof reads:

"The payment of death benefits shall be confined to the wife, husband, family, relatives by blood, marriage or legal adoption, affianced husband or affianced wife, or to a person or persons dependent on the member, subject to the limitation and control of the association as to the designation of beneficiaries within said classes."

There have been amendments to that section, but of no bearing here, except that "a member's estate" is now an eligible class; hence appellant is qualified to receive the payment. Section 3452, G. S. 1923. Next to the last sentence of section 30 of said chapter 345 (section 3487, G. S. 1923) reads:

"All provisions of each section of this act, except as otherwise provided, shall be taken and construed as applying to both domestic and foreign associations."

Courts called upon to construe articles of incorporation, by-laws, or statutes relating to the beneficiary entitled to collect upon a beneficiary certificate issued by a fraternal beneficiary association worded the same or similarly to section 6, above quoted, reach the conclusion that the named beneficiary, in order to be entitled to the fund, must sustain the relation to the member at the latter's death, which the articles, by-laws, or statutes authorize payment to. By-laws may limit, but not extend, the designated classes of beneficiaries authorized by the controlling statutes. Anderson v. Royal League, 130 Minn. 416, 153 N. W. 853, L. R. A. 1916B, 901, Ann. Cas. 1917C, 691; Johnson v. United Workmen, 91 Kan. 314, 137 P. 1190, 50 L. R. A. (N. S.) 461; Green v. Green, 147 Ky. 608, 144 S. W. 1073, 39 L. R. A. (N. S.) 370, Ann Cas. 1913D, 683; Tyler v. Relief Ass'n, 145 Mass. 134, 13 N. E. 360; Dahlin v. Modern Maccabees, 151 Mich. 644, 115 N. W. 975; Brotherhood of Railroad Trainmen v. Taylor, 29 Ohio C. Ct. R. 173. There can be no doubt that the divorce decree destroyed and severed the relation of Laura M. Quady to Peter E. Quady. She was not his wife when he died, and not entitled to payment under section 6 above quoted. Under certain conditions, as when a divorced wife has by the decree been awarded future installments of alimony for her support or the support of minor children left in her custody, she may be a dependent within the meaning of section 6. Rose v. Brotherhood of Locomotive F. & E., 80 Colo. 344, 251 P. 537, 52 A. L. R. 381. But respondent's pleading asserts no claim to the fund as a dependent.

It seems clear to us that our statute, above cited, became part of the contract of the benefit insurance effected when this certificate was delivered to Peter E. Quady in this state by an association authorized to do business therein and doing so in accordance with our statutes. A case squarely in point is Dworak v. Supreme Lodge of Western Bohemia Fraternal Ass'n, 101 Neb. 297, 163 N. W. 471, Ann. Cas. 1918D, 1153. See, also, Royal Arcanum v. McKnight, 238 Ill. 349, 87 N. E. 299; Coverdale v. Royal Arcanum, 193 Ill. 91, 61 N. E. 915; Supreme Court of ...