Supreme Council of the Royal Arcanum v. Samuel Green
| Decision Date | 01 June 1915 |
| Docket Number | No. 106,No. 419,419,106 |
| Parties | SUPREME COUNCIL OF THE ROYAL ARCANUM and Val M. Schmitz, Regent of De Witt Clinton Council,, of the Royal Arcanum, Plffs. in Err., v. SAMUEL GREEN |
| Court | U.S. Supreme Court |
Messrs. Howard C. Wiggins, Curtis H. Waterman, John Haskell Butler, W. Holt Apgar, and Joseph A. Langfitt for plaintiffs in error.
[Argument of Counsel from page 532 intentionally omitted] Mr. F. J. Moissen for defendant in error.
Conformably to the authority conferred by the General Laws of Massachusetts to organize fraternal beneficiary corporations, in 1877 there was issued to designated persons a certificate of incorporation under the name of the Supreme Council of the Royal Arcanum. By the constitution and by-laws, referred to in the certificate, the corporation became what is known as a fraternal association under the lodge system. Its principal objects as stated were:
'1st. To unite fraternally all white men of sound bodily health and good moral character, who are socially acceptable and between twenty-one and fifty-five years of age.
'2d. To give all moral and material aid in its power to its members and those dependent upon them.
'3d. To educate its members socially, morally, and intellectually; also to assist the widows and orphans of deceased members.
'4th. To establish a fund for the relief of sick and distressed members.
There was power conferred by the constitution and by-laws to subsequently amend such constitution and by-laws in the manner therein provided. The general governing power of the order was vested in the Supreme Ouncil, and the administration of its affairs under the supervision of such council was intrusted to the officers named in the constitution. Authority was given to the Supreme Council to sanction the organization of local lodges or councils, upon whom were conferred certain powers not in any way conflicting with the constitution and by-laws of the order, and the members of such local lodges or councils were required to be members of the order, and were subject to the duties and responsibilities which resulted from that relation, and enjoyed also the resulting benefits.
Pursuant to the constitution, under due authority, there was organized in the state of New York a local lodge or council known as the De Witt Clinton Council No. 419 of the Royal Arcanum. In May, 1883, Samuel Green, the defendant in error, made application to become, and was admitted as, a member of this council. In his application it was directed that in case of his death,
Upon the admission of the applicant a certificate was issued to him as a member of the De Witt Clinton Council No. 419, of the Royal Arcanum, upon the condition, among others, 'that the said member complies, in the future, with the laws, rules, and regulations now governing the said council and fund, or that may hereafter be enacted by the Supreme Council to govern said council and fund.' The certificate then stated that upon compliance with these conditions, 'The Supreme Council of the Royal Arcanum hereby promises and binds itself to pay out of its widows' and orphans' benefit fund, to Louisa Green (wife) a sum not exceeding $3,000, in accordance with and under the provisions of the laws governing said fund, upon satisfactory evidence of the death of said member. . . .'
At the time this certificate was issued, under the by- laws the amount of the assessment required to be paid to the corporation to enable it to meet claims coming due under the widows' and orphans' benefit fund was graded according to the age of the member, and the contribution required of Green for this purpose was stated in his certificate to be $1.80 per assessment, and he paid up to 1898 at that rate various assessments called for under the rules of the order. In 1898, by a three-fourths vote of the Supreme Council, the system theretofore prevailing, exacting the payment of assessments as called for, was changed and the duty was imposed to make payment monthly of a sum the amount of which, although still dependent upon the age of the member, was higher than had previously prevailed. Under these new rates the sum due from Green was $3.16 per month, and he met regularly the payments thus exacted until the year 1905. In that year by the action of the Supreme Council, taken in virtue of the requisite three-fourths vote, while the standard of age was continued, the sum to be paid was again increased so that the monthly assessment of Green became $6.87, and from October, 1905, when these new rates became effective, down to February, 1910, it is not disputed that Green paid the amount of the increased assessments monthly, although it was found by the trial court that he did so under protest because of a denial on his part of the right of the Supreme Council, even under the sanction of the requisite vote, and in compliance with the forms of the constitution and laws of the order, to increase the rates.
In the meanwhile, shortly after the going into effect of the increased rates, that is, in November, 1905, sixteen members of the order, holders of certificates under the widows' and orphans' benefit fund, filed a bill in the supreme judicial court of Massachusetts against the corporation in their own behalf and in behalf of all other certificate holders to vacate and set aside the by- laws by which the rates had been increased, on the ground that the increase was ultra vires of the corporation and violative of contract rights. The case was submitted by agreement of counsel to the whole court upon an agreed statement of facts, and was on May 17th, 1906, decided. The court, after a careful review of the general nature of the corporation, of the character of the fund, of the rights of its members as evidenced by the certificates, of the constitution and by-laws of the corporation, and the laws of the state applicable thereto, decided that the increase complained of was valid, impaired no contract right of the certificate holders, and was entitled to be enforced. Reynolds v. Supreme Council, R. A. 192 Mass. 150, 7 L.R.A.(N.S.) 1154, 78 N. E. 129, 7 Ann. Cas. 776.
Four years after this decision Green ceased to make the payments required by the by-laws of the corporation, and in virtue of his membership and ownership of the certificate issued to him commenced in a state court in New York this suit against the Supreme Council and the regent of De Witt Clinton Council No. 419, assailing the validity of the increase in the rate of assessment made in 1905 on the ground that it was void, as exceeding the powers of the corporation, and because conflicting with his contract rights as a member of the corporation and a certificate holder. The prayer of the bill was not that the corporation be restricted to the method and rate of assessment which prevailed in 1883, when the complainant became a member, but that the corporation be confined to the rate of assessment established by the amendment adopted in 1898, and that the complainant be decreed to have a contract right to pay only that sum monthly in discharge of his duty to pay assessments, and that the corporation and its officers be enjoined during his life from exacting any greater sum, or in any way suspending him for refusing to pay the amount fixed by the amendment of 1905.
The answer in twenty-seven distinct paragraphs asserted the validity of the assessment and the action of the corporation by which it was established. It asserted that the complainant, as a member in a mere beneflciary association, was bound thereby, and that no contract rights of his were affected. In many reiterated forms of statement it was asserted that the corporation was created under the laws of Massachusetts and was subject thereto, and that under those laws, by which the power to make the change was to be determined, the validity of the change was beyond question. It was then alleged that the Reynolds suit in the courts of Massachusetts was brought by certain members and certificate holders against the corporation not only in their own behalf, but as a class suit in favor of all others similarly situated, and that the facts in that case were substantially identical with those presented in this. The judgment of the supreme judicial court of Massachusetts maintaining the by-law, and holding that the assessment was valid and binding, and that no contract rights existing in favor of certificate holders were impaired by the increase of rate, was explicitly referred to, and in addition the 27th paragraph of the answer expressly counted on the judgment as follows:
'That the defendant Supreme Council says that the rights of the plaintiff in respect to his contract with the said defendant and his membership in the defendant order, and the changes adopted by it, were and are concluded and determined by the aforesaid judgment of the supreme judicial court of Massachusetts; that under the Constitution of the United States the same is entitled to full faith and credit in the state of New York, and that the complaint should be dismissed.'
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