Supreme Council of Order of Chosen Friends v. Forsinger
| Citation | 25 N.E. 129,125 Ind. 52 |
| Parties | Supreme Council of Order of Chosen Friends v. Forsinger. |
| Decision Date | 16 September 1890 |
| Court | Supreme Court of Indiana |
OPINION TEXT STARTS HERE
Appeal from superior court, Marion county; N. B. Taylor, Judge.
Finch & Finch, for appellant. Carter & Binford, for appellee.
The appellee's complaint is founded upon a certificate of membership issued to him by the appellant. The bylaws of the corporation contain, among others, this provision: “Should a member become totally and permanently disabled from following his or her usual or other vocation, by reason of disease or accident, such member, upon the receipt and approval of satisfactory proofs, as hereinafter provided, shall be entitled to a benefit not exceeding one-half of the relief-fund certificate held by him or her.” The certificate issued to the appellee is a contract of insurance, and his right to recover upon it does not depend upon the action of the officers of the society, for if he has performed his part of the contract, and is totally disabled by disease or accident, he has a complete cause of action. A refusal by the officers of the society to allow the claim will not defeat a recovery. The appellee was of course bound to comply with the terms of his contract, and with the lawful by-laws of the society. The valid provisions of the by-laws do indeed form part of his contract, and are of controlling force. Supreme Lodge v. Knight, 117 Ind. 489-496, 20 N. E. Rep. 479; Pfister v. Gerwig, 122 Ind. 567, 23 N. E. Rep. 1041. But while it was necessary for the appellee to comply with the requirements of the valid by-laws of the association, it was not in the power of the officers to defeat his claim by arbitrarily rejecting his proofs as unsatisfactory, or by wrongfully declaring that he had not done what his contract and the by-laws of the association required of him. It was not necessary, therefore, for the appellee to do more than appropriately show, by his complaint, the contract with the corporation, performance of the conditions on his part, that he was totally disabled, and that he had made proper proof of his disability. He was not bound to go further and allege that his proofs were such as satisfied the corporate officers. It was enough for him to show that they were such as his contract and the laws of the land require. He was not bound to anticipate and avoid defenses. It was sufficient for him to make a prima facie case.
The appellant, by way of answer in abatement, sets forth the following bylaw: The answer sets out other provisions concerning appeals, and regulating the mode of procedure. Both the complaint and the answer show that the claim was presented to the officers named in the by-laws, that action upon it was postponed, as the by-laws provide, and that it was finally rejected. The trial court held the answer bad, and that ruling is questioned by the assignment of errors.
Our decisions declare that it is not competent for parties, in advance of any dispute, to oust the jurisdiction of the courts by providing that the decision of persons named in the contract shall be final and conclusive. Railroad Co. v. Donnegan, 111 Ind. 179, 12 N. E. Rep. 153; Supreme Council, etc., v. Garrigus, 104 Ind. 133, 3 N. E. Rep. 818; Bauer v. Samson Lodge, 102 Ind 262, 1 N. E. Rep. 571; Kistler v. Railroad Co., 88 Ind. 460. There is some diversity of opinion upon this question, but the weight of authority sustains the doctrine declared by our own decisions. An author who has given the question full consideration says: “It is a settled principle of law that parties cannot, by contract, oust the courts of their jurisdiction, and agreements to refer to future arbitration will not be enforced in equity, and will not be sustained as a bar to an action at law or a suit in equity.” Bac. Ben. Soc. § 450. This principle is asserted by the supreme court of the United States, by the English courts, and by other tribunals. Insurance Co. v. Morse, 20 Wall. 445; Scott v. Avery, 5 H. L. Cas. 811; Thompson v. Charnock, 8 Term R. 139; Reed v. Insurance Co., 138 Mass. 575; Stephenson v. Insurance Co., 54 Me. 70. The logical conclusion from this long-settled doctrine is that parties cannot, by contract, provide for the conclusive settlement of questions before such questions arise by designating persons to adjudicate upon them; and this conclusion has often been given effect in cases such as this by other courts as well as by our own. Mentz v. Insurance Co., 79 Pa. St. 478; Lauman v. Young, 31 Pa. St. 310; Gray v. Wilson, 4 Watts, 41; Wood v. Humphrey, 114 Mass. 185; Rowe v. Williams, 97 Mass. 163; Braunstein v. Insurance Co., 1 Best. & S. 782.
It is obvious that there is a distinction between cases where the agreement that the decision of designated persons shall be conclusive is made after a dispute has actually arisen and cases where it is made prior to the existence of any controversy. One reason for this distinction is that parties may revoke an agreement to submit to arbitration, and appeal to the courts for redress; and this right is one which cannot be abridged by an agreement made before either party can know what the nature of the controversy...
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