Tebo v. Supreme Council of Royal Arcanum

• Decision Date: 13 February 1903
• Docket Number: 13,320 - (254)
• Parties: ELIZABETH TEBO v. SUPREME COUNCIL OF ROYAL ARCANUM
• Court: Minnesota Supreme Court

93 N.W. 513

89 Minn. 3

ELIZABETH TEBO v. SUPREME COUNCIL OF ROYAL ARCANUM

Nos. 13,320 - (254)

Supreme Court of Minnesota

February 13, 1903

Appeal by plaintiff from an order of the district court for Ramsey county, Jaggard, J., denying a motion for a new trial. Reversed.

SYLLABUS

Insurance -- Amendment of Rules -- Notice to Insured.

The plaintiff is the beneficiary named in a benefit certificate issued by the defendant to the insured, her son. When he became a member of the order he agreed, by his application and certificate, to be bound by its rules and regulations then existing and those thereafter to be enacted. When he accepted his certificate, he had the right to engage in the occupation of a freight brakeman. Thereafter the defendant amended its by-laws to the effect that, if any member should enter upon or be engaged in the occupation of a freight brakeman, he should thereby forfeit his membership and certificate. No provision was made for notice of the change to pre-existing members. The insured never had any notice thereof, and after it went into effect he became a freight brakeman, and was killed in the discharge of his duties as such. This is an action upon the certificate. Held, following Thibert v. Supreme Lodge, 78 Minn. 448, that the amendment was unreasonable and void as to the insured.

James E. Trask, for appellant.

Every statute which takes away or impairs vested rights acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability, in respect of transactions or considerations already past, must be presumed, out of respect to the legislature, to be intended not to have a retrospective operation. Endlich, Interp. St. § 273; Wist v. Grand Lodge, 22 Ore. 271; Sedgwick, Const. St. 160; Bartruff v. Remey, 15 Iowa 257; President v. Copeland, 7 Allen, 139; Sutherland, St. Const. § 206; Benton v Brotherhood, 146 Ill. 571; Northwestern v Wanner, 24 Ill.App. 357. Tebo not only had no notice or knowledge of the alleged amendment, but it was absolutely void as to him because it was passed, or attempted to be enacted, outside of the jurisdiction of the laws of Massachusetts and beyond the bounds of the sovereignty of the laws of the United States; and for the further reason that Tebo was not in attendance upon, or represented at, the meeting in Montreal where the alleged amendment is claimed to have been enacted. Miller v. Ewer, 27 Me. 509; Hilles v. Parrish, 14 N.J.Eq. 380; Franco-Texan v. Laigle, 59 Tex. 343; 1 Thompson, Corp. § 694.

It is well settled that provisions for forfeiture without notice are void. People v. Mechanics, 22 Mich. 86; Commonwealth v. German, 15 Pa. St. 251; People v. Fire Department, 31 Mich. 458; Thibert v. Supreme Lodge, 78 Minn. 456. If subsequent amendments declaring forfeitures cannot be upheld as general policy regulations equally applicable to all members, they must be held void as impairing vested rights and as unreasonable and oppressive. Smith v. Supreme Lodge, 83 Mo.App. 512. A by-law must be general in its character and apply to all members alike. If invalid as to one member it is invalid as to all. A member cannot be subject to any conditions which do not apply to all alike. If part of a by-law is void, and the whole forms an entirety so that the part which is void influences the whole, the entire by-law is void. Niblack, Ben. Soc. §§ 17, 23 and 26; Bacon, Ben. Soc. § 85; Ebert v. Mutual Reserve F. L. Assn., 81 Minn. 116. Except in those cases in which the subsequent amendments were applicable to all members as policy regulations in the interest of discipline and the general welfare of the associations, the courts have uniformly either held such amendments invalid or limited their application to future contracts. Wist v. Grand Lodge, supra; Smith v. Supreme Lodge, supra; Becker v. Farmers, 48 Mich. 610; Knights T. & M.L. Ind. Co. v. Jarman, 104 F. 638; Hale v. Equitable, 168 Pa. St. 377; Grand Lodge v. Sater, 44 Mo.App. 445; Starling v. Supreme Council, 108 Mich. 440. It is a universal and inflexible rule that forfeitures are looked upon with ill favor and that they will be enforced only when the strict letter of the contract requires it. Western C. T. Assn. v. Smith, 85 F. 401; Siebert v. Supreme Council, 23 Mo.App. 268; Ballou v. Gile, 50 Wis. 614; Supreme Lodge v. Schmidt, 98 Ind. 374; Bacon, Ben. Soc. § 247.

A denial of liability on the ground of forfeiture without returning premium paid is of no effect. German-American v. Evants, 25 Tex. Civ. App. 300, 61 S.W. 536. Although the collection of the premium without notice of the alleged breach would not constitute a waiver, the retention of the premiums with such notice did constitute a waiver. Schreiber v. German-American Hail Ins. Co., 43 Minn. 367; Johnson v. Southern, 79 Ky. 403; Wiberg v. Minnesota S. R. Assn., 73 Minn. 297; Mee v. Bankers, 69 Minn. 210; Gandy v. Orient, 52 So. C. 225; Chicago v. Warner, 80 Ill. 410; Erdmann v. Mutual, 44 Wis. 376; Joliffe v. Madison, 39 Wis. 111; Underwood v. Iowa, 66 Iowa 134; Shea v. Massachusetts, 160 Mass. 289; Home v. Riel, 1 Monaghan, 615; Fishbeck v. Phenix, 54 Cal. 422; Harris v. Equitable, 64 N.Y. 196; Flannigan v. Prudential, 20 Misc. 539. Assuming that the amendment was valid, still the relaxation of its unjust and oppressive provisions so as to give a member the full benefit of the insurance he had bought and paid for was intra vires under the constitution and laws of the order, and it was competent for the association to waive the conditions of the alleged amendment. Wiberg v. Minnesota S. R. Assn., supra; Davidson v. Old People's Mut. Ben. Soc., 39 Minn. 303; Morrison v. Wisconsin, 59 Wis. 162; Watts v. Equitable, 111 Iowa 90; Home v. Kuhlman, 58 Neb. 488. Admitting that defendant did not know that Tebo had become a freight brakeman when it received payment of his last assessments and dues, still the acceptance and retention of the dues and assessments would be evidence of a waiver; for, if defendant did not know when he paid the assessments that Tebo was a freight brakeman, it was by reason of its own mistake or fault, and not the mistake or fault of Tebo, whom, although he had no notice of the alleged amendment, had given the collector such information as would lead to a full knowledge of all the facts. Both Tebo and the plaintiff, by the conduct of the defendant, were induced to rely upon the validity of the insurance, and, as defendant ought to have known, or might have known, all the facts, so far as the insured and his beneficiary are concerned the acceptance of the assessments was a waiver. Union v. Provident, 79 Mo.App. 362; Life Ins. Clearing Co. v. Bullock, 91 F. 487; Northwestern v. Freeman, 19 Tex. Civ. App. 632; Supreme Tent v. Volkert, 25 Ind.App. 627; Steinbach v. Prudential, 62 A.D. 133; Supreme Court v. Sullivan, 26 Ind.App. 60; Modern Woodmen v. Coleman (Neb.) 89 N.W. 641; Tobin v. Western, 72 Iowa 261; Bailey v. Mutual, 71 Iowa 689; Scott v. Edes, 3 Minn. 271 (377); Bank v. Puget, 20 Wash. 636; Flannigan v. Prudential, supra; Supreme Lodge v. Turner, 19 Tex. Civ. App. 346; Gray v. National, 111 Ind. 531; Boulder v. Lower Boulder, 22 Colo. 115; Deering Harvester Co. v. Donovan, 82 Minn. 162.

Philip Gilbert and Harris Richardson, for respondent.

The laws of the state, the application for membership, the benefit certificate issued by the defendant, and the constitution, laws, rules and regulations of the order, as they may be amended and changed from time to time, constitute the contract between the members. Ebert v. Mutual Reserve F. L. Assn., 81 Minn. 116; Hughes v. Wisconsin, 98 Wis. 292; Langnecker v. Trustees, 111 Wis. 279; Goett v. Grand Lodge, 32 Misc. 528; Thibert v. Supreme Lodge, 78 Minn. 448; Loeffler v. Modern Woodmen, 100 Wis. 79; Schmidt v. Supreme Tent, 97 Wis. 528; Wuerfler v. Trustees (Wis.) 92 N.W. 433; Engelhardt v. Fifth Ward, 148 N.Y. 281; Moerschbaecher v. Supreme Council, 188 Ill. 9; Supreme Lodge v. Trebbe, 179 Ill. 348; Ellerbe v. Faust, 119 Mo. 653; Supreme Commandery v. Ainsworth, 71 Ala. 436; Daughtry v. Knights, 48 La. An. 1203; Bowie v. Grand Lodge, 99 Cal. 392; Stohr v. San Francisco, 82 Cal. 557; Bogards v. Farmers, 79 Mich. 440; Hobbs v. Iowa, 82 Iowa 107; Chambers v. Supreme Tent, 200 Pa. St. 244; Pain v. Societe, 172 Mass. 319; Messer v. Grand Lodge, 180 Mass. 321; Supreme Lodge v. Knight, 117 Ind. 489; Farmers v. Kinney (Neb.) 90 N.W. 926; Lloyd v. Supreme Lodge, 98 F. 66.

In addition to the cases heretofore cited, there are many other cases, both in the same jurisdictions and in other states, all sustaining the principle for which we contend, and indicating that the by-law now under consideration is a reasonable and just by-law and a proper restriction on the rights of the members. Among these cases are: Fugure v. Mutual Society, 46 Vt. 362; Duer v. Supreme Council, 21 Tex. Civ. App. 493; McCabe v. Father Matthew, 24 Hun, 149; Pease v. Supreme Assembly, 176 Mass. 506; Supreme Council v. Morrison, 16 R.I. 468; Supreme Council v. Adams, 68 N.H. 236. Tebo is, as a matter of law, conclusively presumed to have known of the amendments. Supreme Lodge v. Knight, supra; Goett v. Grand Lodge, supra.

In order that there may be a waiver, the party who is alleged to have made a waiver must have had, at the time of the waiver, full and complete knowledge of all the facts, and the party in whose favor it is alleged the waiver was made must have depended upon and acted in reliance on the waiver. Neither of these elements exist in the present case. Lyon v. Supreme Assembly, 153 Mass. 83; Thompson v. Travelers (N.D.) 91 N.W. 75.

OPINION

START, C.J.

Action to recover $1,000, the amount of a benefit certificate issued May 8, 1900, by the defendant to Earl Charles Tebo, hereafter designated as...