Warner v. Modern Woodmen of Am.

• Decision Date: 21 January 1903
• Citation: 93 N.W. 397,67 Neb. 233
• Parties: WARNER v. MODERN WOODMEN OF AMERICA
• Court: Nebraska Supreme Court

67 Neb. 233

93 N.W. 397

WARNER

v.MODERN WOODMEN OF AMERICA^a1

Supreme Court of Nebraska.

Jan. 21, 1903.

Syllabus by the Court.

1. A member of fraternal beneficiary society has no such interest or property in the proceeds of a certificate therein as will impress such proceeds with a trust in favor of his estate or his creditors.

2. Where a certificate in such an association provides that payment thereof shall be made only to the family, widow, heirs, blood relatives, affianced wife, or persons dependent upon the member, and the by-laws of the association, as well as the statutes of the state under which it is organized, contain the same provisions, the death of such member, without the existence of any one who is entitled to be made a beneficiary under his certificate, creates no interest in his estate to the fund mentioned therein, and his administrator cannot recover against the association on such certificate.

3. Where, under such circumstances, the certificate is payable to the legal heirs of the member, and he dies, leaving no heirs, and without designating any other beneficiary, and it appears that there is no one in existence who could legally become such beneficiary, no equitable rights accrue to either the creditors or the estate of the deceased member, and the fund contemplated by the certificate will revert to the society.

Commissioners' opinion. Department No. 2. Error to district court, Lancaster county; Frost, Judge.

Action by M. W. Warner, administrator, against the Modern Woodmen of America. Judgment for defendant, and plaintiff brings error. Affirmed.Ricketts & Ricketts, for plaintiff in error.

J. G. Johnson and Talbot & Allen, for defendant in error.

BARNES, C.

On or before the 20th day of April, 1896, one Leoan Richardson became a member of the local camp of the Modern Woodmen of America situated at Maquon, Ill., and on that day made application to said camp for a benefit certificate therein for the sum of $1,000. Upon the payment of the required charges and fees, such certificate was issued and delivered to him; and the association thereby promised to pay said sum, on the death of the said Richardson, to his legal heirs, the beneficiaries named therein. Richardson during his lifetime complied with all of the rules, conditions, regulations, and by-laws of the association, and paid all dues and assessments made or demanded of him. On the 27th day of June, 1900, he departed this life in Seward county, in this state, leaving no last will and testament. He had never designated any change in the beneficiary under his said certificate, and after his death it was ascertained that he left no children, relatives, kindred, legal heirs, or others sustaining such relation to him as would entitle them to become beneficiaries under the terms of the certificate and the by-laws of the association. Thereupon the plaintiff herein was appointed administrator of his estate, and commenced this action in the district court of Lancaster county upon said certificate to recover the amount due thereon, as a part of said estate. It was alleged in the petition that the defendant is a corporation duly organized under the fraternal insurance laws of the state of Illinois; that it has a large number of lodges organized in the state of Illinois and other states; that the primary purpose and object of the principal organization is to issue benefit certificates to members of its several lodges, in the nature of life benefit certificates of life insurance, payable on the death of the member to the beneficiaries named in the certificate; that the persons who may become beneficiaries are defined in section 40 of the by-laws of said association as follows: “Sec. 40. Benefit certificates shall be made payable only to the family, widow, heirs, blood relatives, affianced wife or persons dependent upon the member, and to such others who the applicant shall designate in his application.” It was alleged that it was also provided in section 41 of the defendant's by-laws that the certificate holder may change the beneficiary designated in the original application, but it confines the beneficiaries to those named in section 40, above quoted; that the beneficiaries named in section 40 are in substantial accord with the beneficiaries named in the fraternal insurance laws of the state of Illinois, under which the defendant is organized; and that the certificate contained the following recital: “This certificate, issued by the ModernWoodmen of America, a corporation organized and doing business under the laws of the state of Illinois, witnesseth that Neighbor Leoan Richardson, a member of Maquon Camp, No. 3,618, located at Maquon, Illinois, is, while in good standing in this fraternity, entitled to participate in its benefit fund, to an amount not to exceed $1,000, which shall be paid at his death to his legal heirs, related to him as heirs, and subject to all the conditions of this certificate and by-laws of this order, and liable to forfeiture if said member shall not comply with said conditions, laws, and such by-laws and rules as are or may be adopted by the head camp of this order from time to time, or the local camp of which he is a member.” The death of Richardson was properly alleged in the petition, the appointment of the plaintiff herein as administrator was set forth therein, and all of the facts necessary to constitute a cause of action, if one could be maintained by the plaintiff, were pleaded. And it was further alleged “that by reason of the premises there is a resulting trust in favor of the plaintiff as administrator of the estate, and there is now due to this plaintiff, in his representative capacity, from the defendant, on said benefit certificate, the sum of $1,000, together with interest thereon at the rate of seven per cent. per annum from the 1st day of November, 1900,” for which the plaintiff prayed judgment. To this petition the defendant filed a demurrer based on the following grounds: First, the plaintiff has not legal capacity to sue; second, the petition does not state facts sufficient to constitute a cause of action in favor of the plaintiff and against the defendant. The trial court sustained the demurrer. The plaintiff elected to stand upon his petition, refused to further plead, and thereupon a judgment was rendered dismissing the plaintiff's action, and from that judgment the plaintiff prosecutes error to this court. This brings before us the single question as to whether or not the plaintiff, as administrator of the estate of the deceased, is entitled to maintain this action against the defendant herein to recover the sum alleged to be due upon the benefit certificate set forth in his petition.

Plaintiff in error bases his whole contention on the theory that, by reason of the facts hereinbefore stated, a trust fund was created, which he was entitled, in his representative capacity, to recover. His argument is, in substance, as follows: The defendant was the trustee of the fund which it is alleged was created by the benefit certificate. The deceased was the trustor, and his legal heirs were by such certificate made the beneficiaries or the cestuis que trustent; that, there being a failure of beneficiaries contemplated by the parties, he, as administrator of the estate of the trustor, would be entitled to recover the trust fund.

This contention cannot be sustained, for several reasons. The purposes and objects of this beneficiary organization are vastly different from those of ordinary life insurance companies. The so called old-line insurance companies immediately on the issuance of a policy confer on the beneficiary a valuable right, which cannot be devested without his consent. Such policies may be pledged or assigned by the beneficiary as security for the debts of the insured. These policies often by law have a marketable or cash surrender value, making them a form or kind of property. This is not the case with certificates in fraternal beneficiary societies. They are mere expectancies. The beneficiary has no vested rights in them, and the insured any time, at his option, may change the beneficiary, provided only he keeps within the limitation established by the rules of the society, and complies with its laws respecting such change. These certificates have no cash surrender value. The intestate had no property in the fund. The fund, in fact, was never his property. He had power of appointment, only, and such power did not create any property in him. The only interest he had in the association was his membership interest. Fisher v. Donovan, 57 Neb. 361, 77 N. W. 778, 44 L. R. A. 383. The purpose of these certificates excludes the claim that there was any property interest therein in the insured member. Fisher v. Donovan, supra; Association v. Jones, 154 Pa. 99, 26 Atl. 253;Rollins v. McHatton, 16 Colo. 203, 27 Pac. 254, 25 Am. St. Rep. 260;Hellenberg v. District No. 1, 94 N. Y. 580; Bacon, Ben. Soc. 237-241; Eastman v. Association, 62 N. H. 555;Keener v. Grand Lodge, 38 Mo. App. 543;Society v. Clendinen, 44 Md. 429, 22 Am. Rep. 52;Arthur v. Association, 29 Ohio St. 557.

It follows that, if Richardson had no property in the certificate in question, he had no right or interest therein upon which he could impress a trust; it became upon his death no part of his estate, and his administrator could have no right, title, or interest therein. The defendant was organized to issue certificates of indemnity, calling for the payment of a certain sum, known and...