Supreme Ruling of Fraternal Mystic Circle v. Ericson

• Decision Date: 22 June 1910
• Citation: 131 S.W. 92
• Parties: SUPREME RULING OF FRATERNAL MYSTIC CIRCLE v. ERICSON.<SMALL><SUP>†</SUP></SMALL>
• Court: Texas Court of Appeals

Page 92

131 S.W. 92

SUPREME RULING OF FRATERNAL MYSTIC CIRCLE v. ERICSON.^†

Court of Civil Appeals of Texas.

June 22, 1910.

On Rehearing, October 19, 1910.

Appeal from District Court, Travis County; Chas. A. Wilcox, Judge.

Action by B. E. Ericson against the Supreme Ruling of the Fraternal Mystic Circle. Judgment for plaintiff, and defendant appeals. Reversed and remanded. Rehearing denied.

Meador & Davis, for appellant. James H. Robertson and Geo. E. Shelley, for appellee.

JENKINS, J.

A fraternal beneficial society, known as the Fraternal Mystic Circle, was incorporated under the laws of Ohio in December, 1884. This organization established a lodge in Austin, Tex., of which appellee became a member on March 3, 1893; he being at that time 48 years old. His certificate was for $3,000, and, in addition to mortuary benefits, entitled him to sick, disability, and old age benefits. His wife was named as the beneficiary in said certificate. The plan of the society at this time was to make assessments on the death of a member to pay the mortuary benefits; the number of assessments depending on the number of deaths. The members were divided into "Circles," known as "Circle A, B, and C." Appellee was a member of Circle A. His assessments from the time he became a member of said order until after he was transferred, as hereinafter stated, were $3.30 each. In the early part of 1895 this order seems to have gotten into, or at least, anticipated some trouble with the Insurance Commissioner of Ohio. On April 27, 1895, a society was incorporated in Pennsylvania under the laws of that state, known as the "Supreme Ruling of the Mystic Circle." The supreme legislative body of the Ohio order was known by this name. On June 5, 1895, the "Fraternal Mystic Circle" of Ohio, through its supreme or ruling body, passed the following resolutions:

"Whereas, the Supreme Ruling of the Fraternal Mystic Circle has been issuing certificates to members of the Fraternal Mystic Circle, under which the payments of benefits are and have been provided for; and,

"Whereas, the said Supreme Ruling is an unincorporated body and voluntary association, [the association was incorporated, but its legislative body was not] and,

"Whereas, the Supreme Ruling of the Fraternal Mystic Circle is a corporation organized under the laws of the state of Pennsylvania; and,

"Whereas, it is deemed to be for the best interest of all such certificate holders, and of all other persons concerned, that the business of said association be carried on by an incorporated body:

"Therefore, be it resolved that all the memberships, assets and property of every kind and description belonging to it be and the same are hereby transferred, set over and assigned in perpetuity to the said the Supreme Ruling of the Fraternal Mystic Circle, a corporation as aforesaid, in consideration of which the corporation assumes and agrees to discharge all liabilities of whatever kind appertaining to this body.

"Resolved, further, that the trustees of this body be and they are hereby empowered and directed to make transfer of all their right to and control over the assets and securities of all kinds, held by them for the use and benefit of said certificate holders, to the said the Supreme Ruling of the Fraternal Mystic Circle, the corporation aforesaid.

"Resolved, further, that the Supreme Mystic Ruler and the Supreme Recorder are hereby authorized to execute in behalf of this body, such instruments of writing as may be necessary to carry into effect the purposes and intent of the premises, and to sign such instrument or instruments officially, and affix the seal of this body thereto.

"Resolved, further, that the transfers, assignments and assumption, hereinbefore mentioned, shall take effect and be in force upon concurrent evidence of acceptance thereof being given by resolution or otherwise by the said the Supreme Ruling of the Fraternal Mystic Circle, a corporation aforesaid."

Thereupon the Pennsylvania corporation passed the following resolutions:

"Whereas, the Supreme Ruling of the Fraternal Mystic Circle, a voluntary association, at its regular annual session, holden in the city of Columbus, Ohio, on the fifth day of June, A. D. 1895, adopted certain resolutions with preamble, of which the following is a copy:" Then follow resolutions as above set out, and concludes: "Now, therefore, be it resolved by this body, the Supreme Ruling of the Fraternal Mystic Circle, that in consideration of the transfer by said association of all its membership, property and assets, we hereby assume all the liabilities of every kind and description of said association in accordance with the resolutions hereinbefore set out, and we hereby agree to faithfully discharge all obligations due to persons holding certificates issued by said association, and their beneficiaries."

The appellee accepted the terms of said transfer, and thereupon became a member of the Pennsylvania corporation, the appellant herein. The appellee's certificate was changed February 23, 1907, by making his children the beneficiaries therein, instead of his wife, who had died. Among other conditions set forth, both in the original and in the new certificate, were that the said member should comply with the constitution, laws, rules, and regulations then in force or that might thereafter be enacted "to govern said ruling and fund." The fund referred to was the mortuary fund of said society, out of which said benefit certificate was payable. Beginning January 1, 1903, the plan was changed to monthly payments. As above stated, appellee's assessments from the date he joined to the date of his transfer were $3.30 each. From September, 1895, to December, 1902, they were $4.92 each. From January 1, 1903, to August, 1908, they were $7.35 per month. On September 1, 1908, they were raised to $23.16 per month. Appellee refused to pay this rate, and, electing to treat the same as a repudiation of the contract by appellant, he brought suit to recover back the amount of premiums paid by him, which amounted in the aggregate to $1,049.88.

The case was tried by the court without a jury, and judgment was rendered for appellee for that amount, together with the further sum of $399.07, interest. From this judgment the appellant has appealed to this court, and the case is submitted upon numerous assignments of error filed herein by appellant.

1. Appellant filed eight assignments of error on the findings of fact by the court. Appellee objects to the consideration of these assignments for the reason that appellant did not except to the court's findings of fact. Appellant excepted to the judgment of the court, and has brought up the statement of facts as a part of the record herein. In such case it is not necessary that exceptions shall be taken to the findings of fact in order to assign error thereon. Voight v. Mackle, 71 Tex. 81, 8 S. W. 623; Tudor v. Hodges, 71 Tex. 395, 9 S. W. 443; Connellee v. Roberts, 1 Tex. Civ. App. 367, 23 S. W. 189; Wilkins v. Burns, 25 S. W. 432.

2. The first assignment of error is to the effect that the court erred in finding that the Fraternal Mystic Circle, the Ohio corporation, and the Supreme Ruling of the Fraternal Mystic Circle, were one and the same. We sustain this exception. They were organized under the laws of different states. Six of the incorporators of the Pennsylvania incorporation were not members of the Ohio incorporation, and each was carrying on business at the same time, from April 27th to June 5th. Change in membership is one of the tests as to whether or not a new incorporation is created. Wilhite v. Convent of G. S., 117 Ky. 251, 78 S. W. 139. The purchase of the property and franchise of one corporation by another does not constitute a consolidation of such incorporations. Railway Co. v. Newell, 73 Tex. 334, 11 S. W. 342, 15 Am. St. Rep. 788. The intent of the parties is the test as to whether a charter merely amends the charter of the old corporation or creates a new one. 2 Clark & Marshall on Cor. pp. 974-976. It is probably true that but for the embarrassed condition of the Ohio order the Pennsylvania order would not have been organized, but this shows an intention to get rid of such embarrassments, which could not be done without organizing a new corporation. There is no question here of fraud on the rights of the members, nor evasion of any law of Ohio by resorting to the subterfuge of a new corporation. "When a corporation is embarrassed in its business, and a new corporation is formed by its members, or some of them, for the purpose of purchasing its assets and carrying on the business, it is clearly a new corporation." 2 Clark & Marshall on Cor. 972.

3. In view of the disposition which we make of this case, it is not necessary that we should pass on the second and thirteenth assignments of error.

4. As to the third assignment of error, the evidence shows that the appellee consented to a change from the assessment to the monthly payment plan by surrendering his old certificate and accepting a new one under the changed plan. We do not, however, hold that he, either personally or by payment of the premiums under previous changes of rates, accepted the rerating complained of in this suit. On the contrary, like Jerusha, he "kicked," though for a different reason, as he alleges. Whether or not, as a matter of law, he assented to the rate of which he herein complains, depends upon the authority of the association to make said rerating. Without here discussing the question of "vested rights" and "violation of contracts" hereinafter considered, we call attention to the fact, as having a material bearing upon the matters hereinafter discussed, that the position of a member of a beneficial fraternal association having a representative form of government is like to that of a citizen of the state under such form of government, wherein each is held to have been a party to the making of every law...