Van de Water v. Order of United Commercial Travelers

• Decision Date: 06 May 1935
• Docket Number: No. 385.,385.
• Citation: 77 F.2d 331
• Parties: VAN DE WATER v. ORDER OF UNITED COMMERCIAL TRAVELERS OF AMERICA.
• Court: U.S. Court of Appeals — Second Circuit

77 F.2d 331 (1935)

VAN DE WATER v. ORDER OF UNITED COMMERCIAL TRAVELERS OF AMERICA.

No. 385.

Circuit Court of Appeals, Second Circuit.

May 6, 1935.

Daniel F. Fitzgerald, of Rochester, N. Y. (John Millener, of Rochester, N. Y., of counsel), for appellant.

Harris, Beach, Folger, Bacon & Keating, of Rochester, N. Y. (Charles S. Wilcox, of Rochester, N. Y., and E. W. Dillon, of Columbus, Ohio, of counsel), for appellee.

Before MANTON, SWAN, and CHASE, Circuit Judges.

MANTON, Circuit Judge.

October 27, 1923, appellant's husband applied for membership in the appellee, a fraternal organization. By the terms of his application, he agreed to comply with its articles of incorporation, constitution, laws, and rules and regulations, and he further agreed to accept a certificate of membership and insurance "subject to all the provisions, conditions and limitations of the constitution, laws, rules and regulations of said Order as they now exist or as they may hereafter be added to, revised or amended * * *." The certificate issued to him provided: "This Certificate, the Constitution, By-Laws and Articles of Incorporation of said Order, together with the application for insurance signed by said Insured Member, shall constitute the contract between said Order and said Insured Member and shall govern the payment of benefits, and any changes, additions or amendments to said Constitution, By-Laws or Articles of Incorporation, hereafter duly made, shall bind said Order and said Insured Member and his beneficiary or beneficiaries, and shall govern and control the contract in all respects."

The by-laws thus made a part of the contract provided for the payment of dues, and for the faithful observance of the constitution, by-laws, rules, and edicts which "now exist, or as they may hereafter be added to, revised or amended." Article XIV, § 2, p. 88, provided for the method of amendment of the constitution, by-laws, or articles of incorporation.

When Mr. Van De Water became a member, the contract exempted the Order from liability for injuries, fatal or otherwise, intentionally inflicted by others, except such injuries as were inflicted for the sole purpose of burglary or robbery. By this provision, the Order would have been liable on appellant's claim; Van De Water having been murdered during the course of a robbery of his store, which occurred May 18, 1933. But prior to his death, and effective September 1, 1932, the constitution and by-laws were amended so as to provide (article IV, § 9, p. 39, thereof): "Nor shall the Order be liable to any person for any benefit for death, disability, loss of time, or any of the losses specified in Items 3 to 10 of Sections 4 and 5 of this Article, resulting from * * * murder * * * injuries intentionally inflicted by others, resulting in death."

The question presented is whether this amendment, having been made after Mr. Van De Water joined the Order, could relieve the Order of liability because Van De Water's death occurred by murder committed for the purpose of burglary or robbery. The question contested below was whether the amendment was reasonable and binding upon the insured member and his beneficiary.

Like mutual insurance companies, beneficial associations, doing business without capital on the assessment plan, differ from companies dealing in insurance only. The point of distinction lies in their organization. They are formed, usually, not as insurance companies but as social or benevolent associations; the insurance being but an incident, and not their main purpose. The insurance feature is conducted not for the purpose of gain, but for the object of benevolence. Again there is a distinction in their mode of government which is usually representative in form, ordinarily governed by a lodge system, and they generally have an initiation and a ritualistic form of work. The benefits are usually confined to limited classes of persons, one not a member of the society being unable, as a rule, to obtain a certificate of insurance, and the member's right to nominate the person to whom death benefits shall be paid, is usually limited either by statute, article, or by-law. 7 C. J. p. 1051. Usually, the society and its members, by their elected representatives, are both the insurer and the insured, and the members have the right, through their representatives, to make or change their contract of membership and insurance. The insurance feature of such a fraternal society is exactly what its members, through their representative form of government, provide. Supreme Lodge, K. P., v. Mims, 241 U. S. 574, 36 S. Ct. 702, 60 L. Ed. 1179; Supreme Lodge, K. P., v. Smyth, 245 U. S. 594, 38 S. Ct. 210, 62 L. Ed. 492. It is within the power of the society to change its constitution and by-laws so as to provide a different rate of insurance, or membership fees, or to make other reasonable changes in its by-laws. Supreme Lodge, K. P., v. Mims, supra; Holt v. Supreme Lodge, K. P., 235 F. 885 (C. C. A.). Where members agreed to such changes, if the changes be reasonable, they are binding upon the members. Supreme Lodge of Fraternal Union of America v. Light, 195 F. 903 (C. C. A. 8); Order of United Commercial Travelers of America v. Smith, 192 F. 102 (C. C. A. 7). The agreement of membership, and the terms of the certificate which Mr. Van De Water accepted, contained his promise to abide by changes in the constitution and by-laws, and if the changes made were reasonable, they are binding upon him. Wright v. Minn. Life Ins. Co., 193 U. S. 657, 24 S. Ct. 549, 48 L. Ed. 832.

The appellee is an Ohio corporation, and the rights and obligations of the parties are to be determined by the laws of that state. Supreme...