Order of United Commercial Travelers of America v. McAdam

• Decision Date: 03 October 1903
• Docket Number: 1,833.
• Citation: 125 F. 358
• Parties: ORDER OF UNITED COMMERCIAL TRAVELERS OF AMERICA v. McADAM.
• Court: U.S. Court of Appeals — Eighth Circuit

125 F. 358

ORDER OF UNITED COMMERCIAL TRAVELERS OF AMERICA v. McADAM.

No. 1,833.

United States Court of Appeals, Eighth Circuit.

October 3, 1903

George A. Bangs (J. E. Sater, on the brief), for appellant.

Guy C H. Corliss (J. M. Cochrane, on the brief), for appellee.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

THAYER Circuit Judge.

At the conclusion of the trial of this case in the lower court counsel for the respective parties stipulated, in substance that it should be decided upon the pleadings and the evidence; that no point or objection should be urged by either party to the cause as against the other based upon the insufficiency of the pleadings to present the case of the plaintiff or the defense of the defendant; that the case should be decided in the same manner as though the matters of fact established by the evidence had a sufficient foundation in the pleadings; and that the evidence should be construed in the same manner as though the facts which the evidence proved or tended to prove were supported by proper allegations in the pleadings. In view of this stipulation it will be unnecessary to state the issues which were raised by the pleadings in detail. It will suffice to say generally concerning the nature of the controversy, that Isabelle D. McAdam, the appellee, exhibited a bill of complaint against the appellant, the Order of United Commercial Travelers of America (hereafter termed the 'Order'), for the purpose of setting aside a written release of all claims against said order which she had been induced to execute, and for the further purpose of compelling it to pay to her the sum of $6,300 and interest thereon, which she claimed to be entitled to under the constitution of the order by virtue of her husband's having been a member of the same at the date of his death on January 31, 1900. The release which she asked to have canceled was one executed by her on March 26, 1900, whereby she acknowledged the receipt of $1,000 in full settlement of all claims against the aforesaid order by reason of the death of her husband, who, at the time of his death, was the holder of a certificate of membership in the order. The lower court granted the plaintiff all the relief prayed for in her bill; that is to say, it canceled and annulled the aforesaid release, and further decreed that she have and recover from the defendant order the sum of $7,123.26. The present appeal was taken by the defendant order from that decree.

In the lower court it was contended in behalf of the defendant, and the contention is renewed on appeal, that Thomas J. McAdam, plaintiff's husband, was not one of its members in good standing at the time of his decease, and that his wife was not entitled to demand any indemnity from the order for that reason. This is the first question which deserves attention, and the facts pertaining to its determination are as follows: The appellant above named is an Ohio corporation, which transacts business in many states through the agency of what are termed 'subordinate' or 'local' councils. By its constitution it promises to pay a certain indemnity to its members in good standing who happen to sustain 'bodily injury effected through external, violent, and accidental means which alone shall occasion death immediately or within one year from the happening thereof. ' The fund to pay this indemnity is obtained by the supreme council of the order by assessing subordinate councils. The constitution of the order provides, in substance, that whenever the indemnity fund belonging to the supreme council becomes insufficient to pay four death losses, the supreme counselor of the order shall make an assessment upon each subordinate council to replenish its indemnity fund for a sum not exceeding $2 for each member in good standing of such subordinate councils, which assessment shall be payable within 15 days from its date; and that whenever the indemnity fund of a subordinate council is less than $2 for each of its members, the supreme counselor shall order an assessment not exceeding $2 upon each member of the subordinate council in good standing for the purpose of replenishing its indemnity fund, which assessment shall be payable within 30 days from its date. In case any subordinate council fails to pay an assessment levied upon it by the supreme council, power is given to the latter council to suspend the subordinate council or revoke its charter. Other provisions of the constitution require each subordinate council to keep the supreme council advised, by proper reports, of the number of its members and the condition of its indemnity fund. The subordinate council to which plaintiff's husband belonged was located at Grand Forks, N.D., and was known as 'Grand Forks Council No. 64.' He became a member of that council on February 17, 1896. On August 2, 1899, the supreme counselor of the order directed an assessment at the rate of $2 per each member in good standing to be made against each subordinate council, payable in 15 days, and at the same time directed an assessment of the members of each subordinate council at the rate of $2 per person, the latter assessment to be paid to the subordinate council. Further assessments in all respects like that of August 2, 1899, were ordered by the supreme counselor on September 30 and November 20, 1899. These assessments, known as assessments Nos. 46, 47, and 48, were not personally paid by the plaintiff's husband to the Grand Forks Council, of which he was a member, during his lifetime. At the time these assessments were respectively levied against individual members, the indemnity fund in the treasury of the local or subordinate council, to which McAdam belonged, was not less than $2 for each member of that council in good standing. Notwithstanding the fact that McAdam did not pay assessment No. 46 within the time limited, he was treated as a member in good standing and assessed as such when assessment No. 47 was levied. He was treated in the same manner when assessment No. 48 was levied, although he had not paid either of the prior assessments. In point of fact, the subordinate council dealt with McAdam as one of its members continuously until his death, which occurred as the result of an explosion of gas on January 31, 1900. In the meantime it reported him to the supreme council as one of its members, and advanced and paid on his account, out of its indemnity fund, to the supreme council, the several assessments aforesaid, which were made by the supreme council against the subordinate council. The payments so made on his account, as one of its members in good standing, the supreme council has never refunded or offered to refund to the subordinate council, but still retains. On February 3, 1900, after McAdam's death, the three assessments aforesaid, which he had failed to pay personally, amounting to $6.75, were paid to the subordinate council by an agent of the plaintiff, and out of moneys belonging to her, and the sum so paid was accepted by the subordinate council in satisfaction of its claim against the deceased for the money theretofore advanced in his behalf. Prior to the death of the deceased, and on January 13, 1900, at a regular monthly meeting of the subordinate council, a resolution was passed to the effect that the council carry T. J. McAdam and others, who were then delinquent, until the next meeting, and 'that the secretary make an effort to get them to pay up. ' The next regular meeting after the adoption of this resolution was not held, as it seems, until after McAdam's death.

The contention on the part of the appellant that McAdam was not one of its members at the time of his death, or not a member in good standing, and hence not entitled to indemnity, is based primarily on a provision of its constitution to the following effect:

'Any member who fails to pay his dues and assessments, or any of them when, and as the same become due and payable, shall immediately on the happening of such default, and by virtue thereof, forfeit his good standing in the order; and he, or any person or persons claiming under him and by virtue of his certificate of membership, shall likewise and at the time such default occurs, and by virtue thereof, forfeit all right to indemnity and benefits of whatsoever character.'

It is insisted, in substance, that this provision of the constitution operated proprio vigore to extinguish McAdam's right to indemnity when he failed to pay assessment No. 46 and the subsequent assessments, Nos. 47 and 48, to the subordinate council of which he was a member, notwithstanding the fact that the subordinate council in due time paid out of its own indemnity fund to the supreme council the amount of the assessments which McAdam should have paid to the local council, and reported him as a member in good standing, and elected to give him credit for the money so advanced, and to treat him in all respects as a member in good standing up to the moment of his death.

We have been forced to conclude that this contention on the part of the defendant company must be unsound. It is apparent that the supreme council has sustained no loss in consequence of the alleged default, because it received the three assessments from the local council in due season, and still retains the same. Its own indemnity fund, out of which all losses like the one in hand are paid, is precisely what it would have been, had McAdam paid the assessments punctually. Moreover, the local council has sustained no loss, because the money which it saw fit to advance has been refunded.

The provision of the constitution above quoted, which is invoked to work a forfeiture of the promised indemnity, is immediately preceded by another, which reads as follows:

'All members who fail to

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