Sovereign Camp v. Bolin

• Decision Date: 07 November 1938
• Docket Number: No. 31,31
• Citation: 305 U.S. 66,59 S.Ct. 35,119 A.L.R. 478,83 L.Ed. 45
• Parties: SOVEREIGN CAMP, W.O.W., v. BOLIN et al
• Court: U.S. Supreme Court

305 U.S. 66

59 S.Ct. 35

83 L.Ed. 45

SOVEREIGN CAMP, W.O.W.,

v BOLIN et al.

No. 31.

Argued Oct. 21, 1938.

Decided Nov. 7, 1938.

Rehearing Denied Dec. 5, 1938.

See 305 U.S. 673, 59 S.Ct. 241, 83 L.Ed. —-.

Mandate Conformed to May 8, 1939.

See 127 S.W.2d 718.

Messrs. John T. Harding and D. A. Murphy, both of Kansas City, Mo., for petitioner.

[Argument of Counsel from pages 67-68 intentionally omitted] Mr. Miles Elliott, of St. Joseph, Mo., for respondents.

[Argument of Counsel from Pages 69-71 intentionally omitted] Mr. Justice ROBERTS delivered the opinion of the Court.

We granted certiorari, 304 U.S. 557, 58 S.Ct. 1058, 82 L.Ed. 1525, because of the claim that the judgment of the court below failed to accord full faith and credit to the public acts, records, and judicial proceedings of the State of Nebraska as required by Article 4, Section 1 of the Constitution, U.S.C.A.Const. art. 4, § 1.

The petitioner is a fraternal beneficiary association organized under the laws of Nebraska, having a lodge system, a ritualistic form of work, and a representative form of government. It has no capital stock, and transacts its affairs without profit and solely for the mutual benefit of its members and their beneficiaries. It makes provision for the payment of death benefits by assessments upon its members and issues to members certificates assuring payment of such benefits.

In 1895 the petitioner adopted a by-law authorizing the issue of life membership certificates. Under this by-law a member entering the order at an age greater than 43 years was entitled to life membership without the payment of further dues and assessments when the certificate had been outstanding 20 years. In June 1896, while the by-law remained unrepealed, Pleasant Bolin, who was over 43 years of age, joined a Missouri lodge of the petitioner and received a certificate of membership which recited that while in good standing he would be entitled to participate in the beneficial fund to the amount of $1,000 payable to his beneficiaries and to the sum of $100 for placing a monument at his grave. The certificate recited that it was issued subject to all the conditions named in the constitution and laws of the fra ternity and was endorsed with the words 'Payments to cease after 20 years.'

After Bolin's death, the respondents, as beneficiaries, brought action to recover upon the certificate. The petitioner's answer set up that Bolin had ceased to pay the required dues and assessments in July 1916, and his certificate had therefore become void; that the by-law making the certificate fully paid after twenty years was ultra vires the association and had been so declared by the Supreme Court of Nebraska in a class suit brought by one Trapp, the holder of a certificate similar to that of Bolin; that, under Article 4, Section 1, of the Constitution, U.S.C.A.Const. art, 4, § 1, full faith and credit must be given by the courts of Missouri to this decision of the Supreme Court of Nebraska. The respondents replied that the contract was made and delivered in Missouri and was to be construed and enforced according to Missouri law; that, at the date of its consummation, the petitioner had no license or authority to transact business in Missouri as a corporation or otherwise, and the certificate was therefore to be considered as issued pursuant to, and governed by, the general insurance laws of Missouri; that Bolin having fully performed in accordance with the terms of the certificate, the petitioner was estopped to plead ultra vires; and that in truth the contract was not ultra vires the petitioner.

A jury was waived and the case was tried to the court. The respondents proved the issue of the certificate and Bolin's payments for twenty years thereafter. The petitioner proved the adoption of the by-law purporting to authorize the issue of 'payments to cease' certificates; and put in evidence an exemplified copy of the record in Trapp v. Sovereign Camp of the Woodmen of the World, 102 Neb. 562, 168 N.W. 191, wherein it was decided that petitioner never had power under the law of Nebraska to issue such a certificate. Judgment went for the re- spondents. The petitioner appealed to the Supreme Court of Missouri, which remanded the cause to the Kansas City Court of Appeals¹ on the ground that it involved no constitutional question. The latter affirmed the judgment² and adhered to its decision on rehearing.³

The court below based its decision on the following grounds:

'Under the law of Missouri the certificate was a Missouri contract because it was delivered to Bolin in Missouri and he made his payments there; all issues respecting rights arising out of the contract must, therefore, be adjudicated according to the decisions of the Missouri courts. The question then arises what system of local law is applicable,—that relating to fraternal beneficiary societies or that applicable to old line insurance companies. At the time the contract was made there was no local statute providing for the licensing of foreign fraternal beneficiary societies. Under the decisions of the Missouri courts the petitioner must, therefore, be denied the immunities extended by statute to domestic fraternal beneficiary associations and must be taken to have been doing business in Missouri under the State's general insurance laws, and the certificate must be regarded as a contract of general or old line insurance. This conclusion is not altered by the nature of the society granting the insurance because the character of the insurance, so far as Missouri is concerned, depends on the terms of the contract only. Whatever may be the character of the petitioner in the eye of the Nebraska law it need not have the same character in Missouri. Whether it is a fraternal beneficiary society when sued in Missouri is a question of local law. Even if the issue of the certificate be an ultra vires act under the law of Nebraska it does not follow that it is such under the law of Missouri. The contract is not ultra vires under the law of Missouri or, if so, the petitioner may not plead ultra vires because, in the light of Missouri law, the contract is an insurance contract with an old line insurance company and the petitioner, under Missouri decisions, cannot, in the circumstances disclosed, avail itself of the fact that the contract was in excess of its charter powers.'

The court refused to give force or effect to the decision of the Supreme Court of Nebraska in Trapp v. Woodmen, supra, saying that case did not hold the issue of such a certificate ultra vires in the sense that it was prohibited by positive statute; that the contract being a Missouri contract its ultra vires character must be adjudged by the local law irrespective of what the courts of the domicile had held; that the respondents in the present case relied on an estoppel of the petitioner to plead ultra vires, whereas no such issue was presented or decided in the Trapp Case.

We hold that the judgment denied full faith and credit to the public acts, records, and judicial proceedings of the State of Nebraska.

First. The beneficiary certificate was not a mere contract to be construed and enforced according to the laws of the state where it was delivered. Entry into membership of an incorporated beneficiary society is more than a contract; it is entering into a complex and abiding relation and the rights of membership are governed by the law of the state of incorporation. Another state, wherein the certificate of membership was issued, cannot attach to membership rights against the society which are refused by the law of the domicile.⁴

Second. The circumstance that at the time the certificate was issued domestic fraternal societies were exempted from the operation of the general insurance law of the state, and no similar exemption was extended to foreign societies, cannot enlarge the statutory and charter powers of such a foreign society. The fundamental error of the court below springs from a misapprehension of the effect to be given to the absence of provisions exempting foreign beneficiary associations from the statutes applicable generally to old line life insurance companies. Missouri has statutes affecting the validity and enforcibility of stipulations inserted in life insurance policies and other statutes dealing with procedure in actions upon such policies. In 1879 a statute was passed authorizing the incorporation of fraternal beneficiary societies and exempting them from the operation of the general laws of the State in respect of insurance companies.⁵ An act of 1881 exempted both domestic and foreign societies from the operation of the general insurance laws.⁶ This act did not require the registration of foreign associations but accorded them the same exemption as domestic associations. In 1889 the legislature adopted an act...