Olmstead v. Soc.

• Citation: 37 Kan. 93,14 P. 449
• Parties: W. J. OLMSTEAD, et al., v. THE MASONIC MUTUAL BENEFIT SOCIETY OF KANSAS, et al
• Decision Date: 09 July 1887
• Court: United States State Supreme Court of Kansas

14 P. 449

37 Kan. 93

W. J. OLMSTEAD, et al., v. THE MASONIC MUTUAL BENEFIT SOCIETY OF KANSAS, et al

Supreme Court of Kansas

July 9, 1887

Error from Reno District Court.

ACTION by Oscar W. Olmstead, executor of the estate of David D Olmstead, deceased, against The Masonic Mutual Benefit Society of Kansas, upon a policy issued by said society on the life of D. D. Olmstead. Trial at the September Term 1885, and judgment for the plaintiff. W. J. Olmstead and the other legal representatives and heirs of Jennett Olmstead have brought the case to this court. The opinion contains a sufficient statement of the facts.

Judgment reversed, and cause remanded.

Vandeveer & Martin, for plaintiffs in error.

Whiteside & Hutchinson, for defendants in error.

JOHNSTON J. All the Justices concurring.

OPINION

JOHNSTON, J.:

This is a controversy among several claimants to money due upon a certificate of membership issued by the Masonic Mutual Benefit Society of Kansas, a cooperative insurance company organized for charitable and benevolent purposes. It was organized under the laws of Kansas, and its declared purpose is "to give financial aid and benefit to the widows, orphans and dependents of deceased members thereof." David D. Olmstead became a member of the society, and as such there was issued to him on February 4, 1874, a certificate of membership, by which it was agreed that his beneficiary or beneficiaries would be entitled to a sum not exceeding two thousand dollars upon his death, if certain rules and requirements were complied with. It was expressly agreed and stated in the certificate that the benefit should be paid to Jennett Olmstead, his wife, or the legal representatives of the said Jennett Olmstead. On the 5th day of August, 1878, Jennett Olmstead died, and left surviving her the husband, D. D. Olmstead, and several children, the fruits of the marriage relation with D. D. Olmstead. On the 25th day of August, 1884, D. D. Olmstead died, leaving no other heirs than those heretofore named as the heirs of Jennett Olmstead. Shortly before his death he executed a will in which he named his son, Oscar W. Olmstead, as executor, and by which he undertook to bequeath the benefit to be derived from his membership in the insurance company. He gave in unequal amounts about one-half of the benefit to seven of his children, and to the one appointed executor he gave the residue, and directed him to pay therefrom certain doctor bills, his funeral expenses, and also for his tombstone. The certificate of membership remained in the possession of D. D. Olmstead during his lifetime, and all fees charged and assessments made thereon were paid. No change was made in the beneficiary, either before or since the death of Jennett Olmstead, and the Masonic Mutual Benefit Society never received from the assured, nor from anyone else, an affidavit setting forth the facts with reference to the decease of Jennett Olmstead; and there was never issued any other certificate or policy in lieu of the one originally issued. The Masonic Mutual Benefit Society admits its liability upon the certificate, and is willing to pay the same to whomsoever is entitled to receive it. Oscar W. Olmstead claims the money as executor of the last will and testament of D. D. Olmstead, and has brought the present action against the society to recover the same. The society brought the money into court and asked that the legal representatives and heirs of Jennett Olmstead be made parties defendant, and a determination made as to whom the money belonged. At the trial it was determined that D. D. Olmstead could dispose of the benefit by his will, and the claim of the executor was sustained. The plaintiffs in error complain of this judgment.

We are to decide whether the beneficiary named in the certificate could be changed and the fund disposed of by the will, as was attempted to be done. The general rule applicable to policies of ordinary life insurance companies is, that the rights of the beneficiary are vested when the policy is taken out, and the assured cannot, by will, deed or otherwise, change the beneficiary or transfer the interest vested without the consent of the beneficiary named in the contract. (Bliss on Life Ins., § 318.) It is insisted that the certificates issued by cooperative insurance companies, like the Masonic Mutual Benefit Society of Kansas, are not governed by the rule mentioned, and that in such cases the rights of the beneficiary are not fixed upon the issuance or by the terms of the certificate, but do depend upon the standing of the assured in the society and his rights under the constitution and by-laws of the society; and therefore the member may exercise the power of changing the beneficiary. Among the authorities cited which appear to support this...