Scott v. World
| Decision Date | 12 May 1906 |
| Docket Number | 14,516 |
| Parties | W. T. SCOTT v. THE BANKERS' UNION OF THE WORLD et al |
| Court | Kansas Supreme Court |
[Copyrighted Material Omitted]
Decided January, 1906.
Error from Shawnee district court; Z. T. HAZEN, judge.
STATEMENT.
IN 1901 the Bankers' Union of the World was a fraternal beneficiary association, organized under the laws of the state of Nebraska. Its principal officers were E. C. Spinney president, and C. M. Chittenden, secretary. At that time the National Aid Association was also a fraternal beneficiary association located in Topeka, Kan.; and its principal officers were L. R. Lewis, president, S.D. Cooley, secretary, and M. Ware, medical director.
The National Aid Association was very much reduced financially, having about $ 100 in its mortuary fund and about $ 2400 in its expense fund. It owed its officers nearly $ 5000 for past-due salaries, and there were claims due against its mortuary fund aggregating $ 34,330. The officers of these associations held a conference in October, 1901, for the purpose of effecting a consolidation of the organizations. Arrangements were considered, and written agreements signed, which were satisfactory to the officers. Efforts were then made by them to obtain the consent of the associations to the plans which had been agreed upon.
The board of directors of the Bankers' Union of the World, which had all the power legally conferred upon the association, authorized its president, E. C. Spinney, on October 23, 1901, to make such arrangements as "he deems necessary and proper to effect such consolidation." In pursuance of this authority E. C. Spinney confirmed the former arrangements made with the officers of the National Aid Association, whereby it had been agreed between them that Lewis, Cooley and Ware should use their influence in securing a transfer of the management of the National Aid Association to the management of the Bankers' Union of the World; that they should surrender all claims, for back salary and otherwise, held by them against the National Aid Association, and assist as far as possible in obtaining the final amalgamation of the two orders; in consideration whereof the Bankers' Union of the World agreed to assume the liabilities of the other association, not exceeding the sum of $ 34,330, and pay to said Lewis, Cooley and Ware the sum of $ 10,000 in thirty equal monthly instalments, beginning November 1, 1901, if the consolidation was completed at that time, and if not, then on the first day of the next month after it was completed. These instalments were each evidenced by a promissory note executed by the Bankers' Union of the World, by its president, E. C. Spinney, and by him personally. Ten of these promissory notes were made payable to the order of Ware, and the same number to each of the other obligees--Lewis and Cooley. The notes were in all respects negotiable in form.
In furtherance of this arrangement Lewis and Cooley called a meeting of the directors of the National Aid Association, resigned from their positions as president and secretary of the order, and to fill the vacancies made by such resignations the directors elected Spinney and Chittenden, who at once assumed the management and control of that association. Afterward a meeting of delegates sent from the subordinate lodges of the National Aid Association throughout the country met at Topeka, Kan., and after full discussion thereof ratified and confirmed the acts which had been done in the direction of a consolidation of the associations, and ordered that proper steps be taken to complete such arrangements.
Spinney and Chittenden managed the National Aid Association as a separate organization until December 15, 1901, when they resigned, and the management devolved upon Elsie Buckman, acting secretary, who conducted the affairs of the order until January 8, 1902, when it passed into the hands of a receiver.
The promissory notes held by Lewis, Cooley and Ware which fell due November 1, 1901, were paid by Spinney, with checks drawn upon the funds of the National Aid Association. The notes which matured December 1, 1901, were not paid when due, and suit was brought thereon, but Spinney afterward settled the suit and paid the notes.
As a result of the attempted consolidation, the Bankers' Union of the World received nothing; its officers, E. C. Spinney and C. M. Chittenden, received nothing. The National Aid Association received nothing; its officers, Lewis, Cooley, and Ware, received the notes as above stated. In the transaction, however, they had resigned their offices, and faithfully worked to accomplish the purpose in view, as agreed by them.
M. Ware, the payee and holder of eight of the notes above mentioned, exchanged them for the home farm and the live stock thereon of the plaintiff herein. This farm is located in Hodgeman county, Kansas. The plaintiff gave to Ware a bond for a deed to the real estate, a bill of sale for the stock, and agreed to retain possession thereof and care for the same one year. On January 2, 1902, suit was brought on the note which became due January 1, 1902, and afterward by stipulation the other notes were added, so that this suit embraces the eight notes of $ 333.33 each. The plaintiff still retains possession of all the property deeded to Ware. The plaintiff took the notes in good faith, for full value, and without notice of the circumstances under which they were executed.
The Bankers' Union of the World was organized under the provisions of chapter 47 of the Laws of Nebraska of 1897. The title of the act contains the following: "An act defining fraternal beneficiary societies, orders or associations, and regulating the same, and to repeal," etc. The act in part provided:
Section 4 defines who may be beneficiaries.
Section 6 defines where such associations may be served. Section 7 exempts the proceeds of a beneficiary certificate for debts of holder. Sections 8 and 9 provide the steps to be taken to obtain a permit to do business under this act. Section 10 provides reports to be made to the auditor of public accounts. Section 11 requires foreign associations doing business under this act to appoint a person upon whom service may be made. Section 12 provides terms upon which such orders may do business in the state. Section 13 limits the right to solicit membership. Section 14 concerns contracts between a beneficiary and a member whereby the former is to pay the latter's dues. Section 15 permits transaction of business outside the state. Sections 16, 17 and 18 recite causes which forfeit the right to do business and provide penalties for violations of the statute. Section 19 requires examination of members by physician. Section 20 provides for the organization of new corporations under the act.
Section 22 requires a copy of the constitution and by-laws to be filed with auditor. The constitution of the Bankers' Union of the World contains, inter alia, the following provisions:
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