Supreme Conclave, Royal Adelphia, v. Cappella

• Decision Date: 20 January 1890
• Citation: 41 F. 1
• Parties: SUPREME CONCLAVE, ROYAL ADELPHIA, v. CAPPELLA et al.
• Court: U.S. District Court — Eastern District of Michigan

41 F. 1

SUPREME CONCLAVE, ROYAL ADELPHIA, v. CAPPELLA et al.

United States Circuit Court, E.D. Michigan.

January 20, 1890

Syllabus by the Court

In cases of policies of insurance or benefit certificates issued by mutual benefit societies, the beneficiary has no vested interest in the certificate until the death of the insured member. Up to this time the insured may change his designation of beneficiary at will, and against the consent of such beneficiary.

The general rule that the insured is bound to make such change of beneficiary in the manner pointed out by the policy and by-laws of the association is subject to three exceptions (1) If the society has waived a strict compliance with its own rules, and, in pursuance of a request of the insured to change his beneficiary, has issued a new certificate, the original beneficiary will not be heard to complain that the course indicated by the regulations was not pursued. (2) If it be beyond the power of the insured to comply literally with the regulations, a court of equity will treat the change as having been legally made. (3) If the insured has pursued the course pointed out by the laws of the association, and has done all in his power to change the beneficiary, but before the new certificate is actually issued, he dies, a court of equity will treat such certificate as having been issued.

Plaintiff had issued a certificate upon the life of K., in which his aunt was named as beneficiary. Five days before his death, he made a written request for a change in his certificate in favor of his father, in the form prescribed by the by-laws stating that the original certificate was in the hands of his aunt, and that he could not make an actual surrender of such certificate. This request for a change was delivered to the company in the usual manner, but, before the certificate was made out, the insured died. Plaintiff filed a bill of interpleader, and paid the money into court. Prior to the execution and delivery of this request, the insured had handed to his aunt, the beneficiary, another similar request for a change of designation in favor of his father to the extent of two-thirds of the certificate. She had agreed to see that this change was made, but subsequently refused to do so. Held, that she was estopped to claim that the change of beneficiary was invalid by reason of the non-surrender of the original certificate, and the failure to issue a new one, and that the father was entitled to two-thirds of the amount.

This was a bill of interpleader to settle the title to a certain benefit certificate issued by the plaintiff to Leo F Kratzsch, a member of Carpenter Conclave, No. 17,,royal Adelphia, located at Milwaukee, and payable on its face to defendant Cappella, the aunt of the insured. Her title to this certificate, however, was disputed by defendant Julius Kratzsch, father of the deceased member, upon the following state of facts:

The certificate in question, which was for the sum of $3,000, was originally issued October 17, 1885, to Leo F. Kratzsch, and made payable to his sister Emma, in accordance with the laws of the order, one of which provided as follows:

'A member may at any time, when in good standing, surrender his benefit certificate, and a new one shall be issued, payable to such beneficiary or beneficiaries as such member may direct, in compliance with the laws and usages of the order, and the payment of a fee of fifty cents. Said surrender and direction must be made in writing, signed by the member, and forwarded under the seal of the subordinate conclave, with the benefit certificate, to the supreme secretary,' who resided in Detroit.

In March, 1888, the insured member, being then afflicted with a pulmonary disease, went to Florida for the benefit of his health. He returned in June by way of St. Louis, and remained there for about three weeks, at the house of one Pesch, for whom his aunt, Miss Cappella, was housekeeper. His aunt took care of him during his stay, and loaned him $400; he saying to her that he would 'will her the policy,' and that 'he wanted her to have it. ' Soon after his arrival home, and on June 23d, he surrendered his certificate, and procured another to be issued in favor of the defendant Cappella. In the month of August, the insured, being then at the residence of his father, the defendant Julius Kratzsch, about 35 miles from Milwaukee, and in the last stages of consumption, sent for the defendant Cappella, who came from St. Louis, where she resided, to Kratzsch's house. There was some dispute as to what took place there, but it seems to have been agreed that the certificate then in force should be surrendered, and a new one issued, wherein Miss Cappella should be made a beneficiary to the extent of $1,000, and the defendant Julius Kratzsch to the extent of $2,000. For the purpose of carrying out such arrangement, Leo made a request in writing, directed to the collector of Carpenter Conclave, No. 17, requesting him to cause his benefit certificate to be changed in accordance with such agreement; which request was delivered to defendant Cappella upon her promise to hand it, together with the fee of 50 cents, to the collector of such conclave, to be forwarded to the supreme secretary at Detroit. Miss Cappella also agreed to call upon one Mueller, at Milwaukee, to whom Kratzsch had given the certificate then in force, and procure such certificate from said Mueller, and deliver the same to the collector, to be surrendered by him to the supreme secretary. Up to this time Miss Cappella had never been in actual possession of the certificate then in force. After leaving Kratzsch's house, Miss Cappella went to Milwaukee, obtained the certificate then in force from Mueller, but did not deliver the request for the change of the certificate to the collector of Carpenter Conclave, but retained possession of the one received of Mueller. Upon returning to St. Louis, and on the 26th of August, she addressed a letter to the insured, Leo, in which, speaking of the certificate, she said:

'I went to Mr. Eckstein, and he advised me not to have it changed. If anything would happen to you, dear Leo, while it is getting changed, they would not pay the money. And he said you could not write your name so plain any more as you used, and then they could make trouble through that. It takes four to five weeks to change that policy. I think it is best to leave it the way it is, and I won't cheat your father out of that money.'

This letter, though affectionate, was not entirely satisfactory, and, on the 14th of September, Leo, being then very near his end, signed and duly executed and acknowledged an instrument in writing, directed to the supreme secretary of the plaintiff, requesting plaintiff to change his certificate in accordance with his original agreement with Miss Cappella, and stating that he could not make an actual surrender of the certificate then in force, because the same was in possession of the defendant Cappella. This instrument was duly attested by the secretary of Carpenter Conclave, No. 17, sealed with the seal of the conclave, and on the 18th of September delivered to and received by the supreme secretary of the plaintiff, together with the fee of 50 cents required by the rules of the order. On the 19th of September the insured died at the residence of his father. Due proof having been made of his death, the plaintiff audited the claim upon which it became liable, by reason of his death, at the sum of $2,910, being the amount of the certificate, less the sum of $90 paid prior to his death. Suits having been begun by Miss Cappella in this court, and by the defendant Julius Kratzsch in the state court is Milwaukee, plaintiff filed this bill of interpleader to compel defendants to litigate their respective claims upon the fund, and paid into court the amount of the certificate as audited.

Julian G. Dickinson, for defendant Cappella.

J. H. Brewster, for defendant Kratzsch.

BROWN J.

This is one of a class of cases which have become quite common within the past 25 years, arising out of an inexpensive method of insurance, by which persons in moderate circumstances may, by the payment of a small monthly assessment, secure a provision for themselves or their families in case of sickness, accident, or death. Much of the law applicable to ordinary cases of life insurance is equally applicable here. In a few particulars, however, it seems to be somewhat less favorable to the person for whose benefit the policy is taken out. For instance, in case of an ordinary policy, the right of the person for whose benefit a policy is issued cannot be defeated by the separate or joint acts of the assured and the company, without the consent of the beneficiary, (Bliss, Ins. Sec. 318;) while it is entirely well settled that in cases of this description the beneficiary has no vested interest in the benefit certificate until the death of the insured member. Up to this time he may change his designation of beneficiary at will, against the consent of such beneficiary, even though the latter may have advanced the money to pay the assessments upon the certificate. Bac. Ben. Soc. Sec. 306; Lamont v. Association, 30 F. 817; Wendt v. Legion of,honor, 72 Iowa, 682, 34 N.W. 470; Association v. Montgomery, 38 N.W. 588; Fisk v. Union, 11 Atl.Rep. 84; Hellenberg v. District No. 1, 94 N.Y. 580; Society v. Burkhart, 110 Ind. 192, 10 N.E.REP. 79, and 11 N.E. 449; Holland v. Taylor, 111 Ind. 121 12 N.E. 116; Lamont v. Grand Lodge, 31 F. 177; Schillinger v. Boes, 3 S.W.Rep. 427; Knights of Honor v. Watson, 15 Atl.Rep. 125; Beatty's Appeal, Id. 861; Byrne v. Casey, 70 Tex. 247, 8 S.W.Rep. 38.

In making such change of beneficiary, however, the insured is bound to do it in the...