Tice v. Supreme Lodge Knights of Pythias

• Decision Date: 05 July 1904
• Parties: TICE v. SUPREME LODGE KNIGHTS OF PYTHIAS.
• Court: Missouri Court of Appeals

100 S.W. 519

123 Mo. App. 85

TICE v. SUPREME LODGE KNIGHTS OF PYTHIAS.

St. Louis Court of Appeals. Missouri.

July 5, 1904.

1. INSURANCE — MUTUAL BENEFIT SOCIETIES — KNIGHTS OF PYTHIAS — STATUTES — SUICIDE.

Rev. St. 1899, § 1408 (Ann. St. 1906, p. 1111), defines a fraternal beneficiary association as one organized for the sole benefit of its members and their beneficiaries, and not for profit, operating on a lodge system with a ritualistic form of work and a representative form of government, making provision for the payment of benefits in case of death, sickness, temporary or permanent physical disability, etc. The section also declares that the fund for the payment of benefits and expenses shall be derived from assessments and dues collected from its members, and that payment of death benefits shall be to the families, heirs, blood relations, affianced husband or wife of, or to the persons dependent on the member, and that such association shall be exempt from the insurance laws of the state, etc., but may create, maintain, and disburse a reserve or emergency fund in accordance with its constitution and by-laws. Held, that a uniformed rank of the Knights of Pythias, which issued insurance only to members of its various lodges, had a representative form of government, worked according to ritual, and paid death benefits, etc., from a fund accumulated from assessments, dues, and a reserve fund, was a fraternal beneficiary association within such section, and not an old line life insurance company, and was therefore not subject to Rev. St. 1889, § 5855, making the defense of suicide unavailable to regular life companies.

2. SAME — STATUTES.

Rev. St. 1899, § 1423 [Ann. St. 1906, p. 1118], providing that Laws 1897, p. 132, relating to fraternal beneficiary associations, shall not apply to or affect grand or subordinate lodges of Masons, Odd Fellows, or similar orders paying only sick, disability, or funeral benefits, or any association not working on a lodge system, etc., does not exclude from the operation of such act the uniformed rank of the Knights of Pythias, which is a "similar order" paying death benefits.

3. SAME — PROFITS.

The charter of an insurance organization provided that the corporation should not engage in any business for gain, but that its purpose should be fraternal and benevolent, that its property should not be "divided among the members, but descend to their successors for fraternal and benevolent purposes." Its constitution declared that the funds of its endowment rank should be used to defray expenses and legitimate death losses. Held, that such association was not a profit sharing institution within Rev. St. § 1408 [Ann. St. 1906, p. 1111], declaring that a fraternal beneficiary association shall be one not conducted for profit, etc., and this, though it derived from assessments and interest-bearing securities a fund which sometimes was in excess of the amount required for the payment of accrued benefits.

4. SAME — NATURE OF ASSOCIATION.

Where the charter of an insurance organization limited its right to hold property to an amount not exceeding $100,000, the fact that its assets were permitted largely to exceed such sum, was irrelevant to the question whether the society furnished fraternal or old line insurance.

Bland, P. J., dissenting.

Appeal from Circuit Court, St. Francois County; James D. Fox, Judge.

Action by Madison M. Tice against the Supreme Lodge Knights of Pythias. From a judgment in favor of defendant, plaintiff appeals. Affirmed, and certified to Supreme Court.

The suit is on a certificate of insurance issued to John P. Tice by the defendant corporation, in which certificate Madison M. Tice, the father of John Tice, is named as beneficiary. In his application for insurance, John Tice agreed that the general laws, rules, and regulations of the order should be made a part of the contract of insurance. The application contains the following clause: "It is agreed that if death shall result by suicide, whether sane or insane, voluntary or involuntary, * * * then there shall be paid only such sum in proportion to the whole amount of the certificate as the matured life expectancy at the time of such death is to the entire expectancy at the date of acceptance of application by the Board of Control; the expectation of life based upon the American Experience Table of Mortality, in force at the time of such death to govern." Section 1, article 6, of the laws of the order is as follows: "If the death of any member of the Endowment Rank heretofore admitted into the first, second, third, or fourth classes, or hereafter admitted, shall result from suicide, either voluntary or involuntary, whether such member shall be sane or insane at the time, * * * then the amount to be paid upon such member's certificate shall be a sum only in proportion to the whole amount as the matured life expectancy is to the entire expectancy at the date of admission to the Endowment Rank; the expectation of life based upon the American Experience Table of Mortality, in force at the time of such death, to govern." The answer alleged that John Tice committed suicide by shooting himself with a pistol. The issues were submitted to the court who, after hearing the evidence, found for the defendant. Plaintiff appealed.

To facilitate the trial a stipulation agreeing to the following facts was filed, to wit: "That John P. Tice departed this life on the 8th day of October, 1900; that he committed suicide by shooting himself with a pistol. That after the issuance of said certificate and up to the time of his death, he paid all monthly payments, dues, and assessments as required by said certificate and the laws of the order. And that after his death, to wit, on the 31st day of December, 1900, proofs of death were forwarded to the defendant at Chicago, Ill. That said certificate has not been paid. It is further stipulated that before this suit was brought, the defendant tendered to the plaintiff herein the sum of sixty-six dollars ($66) being the amount claimed by the defendant to be due under said policy or certificate, and since the institution of this suit has paid said amount into this court, with its answer. And that amount is the true amount due on said policy or certificate if the contention of defendant is sustained by the court. That the defendant at the time of the issuance of the certificate here sued on, and at the time of the death of the said John P. Tice, defendant, had complied with the provisions of the act of 1897, p. 132, required of foreign companies and was authorized by the superintendent of insurance of the state of Missouri, to do business in this state under the act of 1897, as a fraternal beneficiary association. It is further stipulated that the defendant made an extra assessment upon all the members of the Endowment Rank in May, 1892, under the laws of said order, and made an extra assessment upon all the members of said rank in May, 1901, under the laws of said order."

The defendant was incorporated under an act of Congress passed in 1870. A special act of Congress passed June 29, 1894, in respect to the defendant, contained the following sections:

"Sec. 2. That the said corporation shall have the power to take and hold real and personal estate, not exceeding in value one hundred thousand dollars, which shall not be divided among the members of the corporation, but shall descend to their successors for the promotion of the fraternal and benevolent purposes of said corporation.

"Sec. 3. That all claims, accounts, debts, things in action or other matters of business of whatever nature now existing for or against the present Supreme Lodge Knights of Pythias, mentioned in section 1 of this act, shall survive and succeed to and against the body corporate and politic hereby created; provided, that nothing contained herein shall be construed to extend the operation of any law which provides for the extinguishing of claims or contracts by limitations of time.

"Sec. 4. That said corporation shall have a constitution, and shall have power to amend the same at pleasure, provided, that such constitution or amendments thereof do not conflict with the laws of the United States or of any state.

"Sec. 5. That said corporation shall not engage in any business for gain; the purposes of said corporation being fraternal and benevolent."

28 Stat. 96, 97, c. 119.

The body incorporated, as shown by the certificate of incorporation, is the Supreme Lodge Knights of Pythias of the World. A board of trustees of the Supreme Lodge was created by the articles of incorporation, and it is provided that no contract for the disbursement of moneys of the said Supreme Lodge shall be valid and of any effect until ratified by the board of trustees or the financial committee. In March, 1872, the following section was added to the act of incorporation: "That the said Supreme Lodge shall have power to establish the Uniform Rank and the Endowment Rank upon such terms and conditions, and governed by such rules and regulations as to the said Supreme Lodge may seem proper." In 1892 defendant adopted a new constitution, and provided for the Endowment Rank. Subordinate to the Supreme Lodge, Grand Lodges (for each state) have been chartered with the following powers:

"Sec. 6. A Grand Lodge shall exercise within its domain all power and authority not reserved to the Supreme Government by the Supreme Constitution."

"Sec. 11. Each Grand Lodge shall have a constitution for its own government, and shall provide such legislation as shall secure conformity to the Supreme Law and to the decisions of the Supreme Tribunal from the subordinate lodges and members of the order within its domain; but a Grand Lodge shall not enact or enforce any law which shall abridge the rights or privileges secured to a member of the order by the Supreme Law."

"Sec. 13. Each Grand Lodge shall provide by law for the holding of one regular...