Supreme Royal Circle of Friends of World v. Morrison

• Decision Date: 14 October 1912
• Citation: 150 S.W. 561,105 Ark. 140
• Parties: SUPREME ROYAL CIRCLE OF FRIENDS OF THE WORLD v. MORRISON
• Court: Arkansas Supreme Court

150 S.W. 561

105 Ark. 140

SUPREME ROYAL CIRCLE OF FRIENDS OF THE WORLD v. MORRISON

Supreme Court of Arkansas

October 14, 1912

Appeal from Howard Circuit Court; J. T. Cowling, Judge; reversed.

Judgment reversed, and case dismissed.

Jones & Price and W. C. Rodgers, for appellant.

1. The certificate of the society forms a part of the contract, and the court erred in holding that it was in conflict with the constitution and by-laws of the order, and in entering judgment in accordance with such holding. 73 Ark. 470; 75 Ark. 435; 76 Ark. 410; 79 Ark. 266; 96 Ark. 113; 80 Ark. 108; 88 Ark. 243; 19 Tex. Civ. App. 18; 83 U.S. 610; 74 Ark. 1, 8; 80 Ark. 419; 81 Ark. 512, 514; 94 Ark. 499, 502. Above authorities sustain the proposition that the constitution and laws of a fraternal order are a part of the contract of insurance. See also 97 Ark. 50; 53 Ark. 255; 74 Ark. 1; 67 Ark. 506; 98 Ark. 421.

2. The provision in the constitution and by-laws for an equitable gradation of dues and benefits is both just and necessary. It is shown that the assured had every opportunity to know the by-laws, and the presumption is that he knew the by-law in question. "Both sides are alike bound to comply with the constitution and by-laws." 35 N.Y.S. 124; 1 Marv. 187 40 A. 956; 14 Daly, 389; 118 Cal. 6.

3. The court having expressly found as a fact that the assured was over fifty-five years old, this special finding should have controlled, and the verdict should have been for the defendant. 40 Ark. 298, 327; 46 Ark. 17, 25; 50 Ark. 85, 97; 73 Ark. 428, 430; 74 Ark. 144, 147.

4. The laws of the order being a part of the contract sued upon assured, in accepting the certificate, accepted also those laws. 98 Ark. 421.

5. The act of March 29, 1905, does not apply to benefit societies and the court therefore had no jurisdiction to render judgment for penalty and attorney's fee. 97 Tex. 264; 83 Tex. 460; 81 Tex. 71.

W. P. Feazel, for appellee.

1. The policy, being an unconditional promise to pay the assured's beneficiary the sum of $ 300 upon his death, must prevail over any law of the order not made a part of the policy by the policy itself, which is in conflict with the terms of the policy. 52 Ark. 201; 55 Ark. 210; 97 Ark. 56; Niblack on Societies, 39; 98 Am. St. Rep. (La.) 469; 181 Mass. 111; 104 F. 638, 44 C. C. A. 93.

2. The court properly rendered judgment for penalty and attorney's fee. The statute makes no distinction between insurance companies, and applies to all alike. 92 Ark. 379; 86 Ark. 115.

OPINION

FRAUENTHAL, J.

This is an action instituted upon a certificate of insurance issued upon the life of Anderson Morrison, and in which appellee was duly designated as beneficiary. Appellant is a mutual benefit association organized under the laws of this State. It consists of a supreme body known as the "Supreme Royal Circle," which issues certificates of insurance upon the lives of its members and of numerous subordinate bodies or lodges, one of which was located in Howard County and known as "Beautiful Star, No. 268." Anderson Morrison became a member of the subordinate lodge, and made written application for the insurance. The certificate was issued by the supreme body on February 27, 1911, and the insured died within one year thereafter. It was alleged that the certificate provided that appellant would pay the beneficiary three hundred dollars upon the death of the insured; that only fifty dollars had been paid thereon; and recovery was sought for the remainder. Appellant resisted recovery on the ground that by virtue of the by-laws of said order it was provided that if a member was over the age of fifty-five years and not more than sixty years old, and died during the first year, his beneficiary should receive one-sixth of the amount of his policy; that said Anderson Morrison was, at the time he became a member of the order and obtained said certificate, over the age of fifty-five years, and died within one year thereafter; that it had paid to the beneficiary the sum of fifty dollars which it alleged was the full amount due on the insurance contract. The written application was taken by one R. B. Martin, who represented appellant as an organizer of lodges. In the application as it was sent to appellant it is stated that the age of the insured was forty-nine years. But there was testimony adduced tending to show that when it was signed the applicant stated an age greater than fifty years, and that later and without his knowledge said Martin changed in the application the age to forty-nine years. The certificate of insurance provided as follows:

"The Supreme Royal Circle, through its executive officer, the supreme president, hereby agrees, in case of the death of the member aforementioned, to pay to such beneficiary as he may designate in writing on the reverse of this instrument the sum of three hundred dollars * * *; provided, that the aforementioned member shall have fully and faithfully complied with the laws, rulings and regulations of the supreme, grand and subordinate circles of this order; otherwise this certificate is void and without force."

The by-laws of the order provide as follows: "Law No. 28. On the payment of one dollar per quarter in advance, each friend will be entitled to receive three hundred dollars as death benefit, * * * subject, however, to the modifications that may be made from time to time by the legislative department of the order."

"Law No. 44. Any member over fifty-five, and not more than sixty, his beneficiaries shall receive one-sixth of the amount of his policy if death occurs during the first year; * * *"

The case was submitted to the court sitting as a jury, who found that the applicant for the certificate sued on was more than fifty-five years of age at the time he made such application; and that appellant paid his beneficiary the sum of fifty dollars, which was not accepted in full of all claims under the certificate; and there was sufficient evidence to warrant these findings. The court further found that the by-laws of the order and the certificate of insurance were in conflict as to the amount for which the appellant was liable, and held that the terms of the certificate were controlling. It thereupon rendered judgment in favor of appellee for the sum of two hundred and fifty dollars. It also rendered judgment for the recovery of damages and attorney's fees under the provisions of the act of the General Assembly of 1905 (Acts 1905, p. 308).

The sole question involved in this case is: to what amount was the beneficiary entitled under the contract of insurance herein sued on? The contract was made by a fraternal order with one of its members. Under certain provisions of its by-laws, this order was impowered to insure the lives of its members. The general rule is that the assured becomes a member of a benefit society by virtue of his certificate, and he must take notice of the provisions of its constitution and by-laws, and this rule obtains although the provisions of the constitution and by-laws are not recited in or made a part of the certificate. Woodmen of the World v. Hall, 104 Ark. 538, 148 S.W. 526.

The constitution and by-laws of a fraternal order become a part of the contract insuring its members, and, if not inconsistent with the terms of the certificate, will be binding as a part of the contract. This principle has been approved in several opinions rendered by this court. Block v. Valley Mut. Ins. Assn., 52 Ark. 201, 12 S.W. 477; Johnson v. Hall, 55 Ark. 210, 17 S.W. 874; Woodmen of the World v. Jackson, 80 Ark. 419, 97 S.W. 673; Supreme Lodge K. & L. of H. v. Johnson, 81 Ark. 512, 99 S.W. 834; Woodman of the World v. Hall, supra.

In some of these cases it was expressly provided in the application or certificate of insurance issued that the laws and constitution of the order should...