Meyer v. Supreme Lodge, Knights of Pythias

Dean, J.

On December 15, 1916, plaintiff sued in the district court for Otoe county to recover $2,000 as beneficiary of a fraternal insurance policy issued to his father by defendant. A jury ivas waived, and the case tried to the court. Defendant prevailed, and plaintiff appealed.

The policy sued on bears date May 11, 1910, and is a renewal of a policy issued to the insured January 1, 1885, when he was 51 years of age. Prom the latter date until the new and advanced rates became effective, which was about January 1, 1911, the insured paid all dues assessed under the old rates against members of “class four” to which he belonged. Subsequent payments at the old rates were tendered by or in behalf of the insured that plaintiff alleges were wrongfully refused. He argues that the money, so tendered, in effect kept the insured in good standing until his death April 11, 1916.

In August, 1910, the supreme lodge of the defendant society adopted a by-law that increased the rates in its insurance department above the rates formerly paid by members of “class four,” raising the dues on $2,000 policies from $5.70 a month to $26.30 a month. The insured refused to pay the increased rate on the ground, among others, that the defendant society did not have and was not working under a representative form of *507government when the rates were increased, and that the society was therefore without authority to increase its rates so as to affect Nebraska members whose policies were taken out in Nebraska under the former rate. Section 1, ch. 47, Laws 1897, was in force when the increased rates were adopted. The act provided: “A fraternal beneficiary association is hereby declared to be a corporation, society or voluntary association, formed or organized and carried on for the sole benefit of its members and their beneficiaries, and not for profit. Each such society shall have a lodge system, with ritualistic form of work and a representative form of government.”

It is pointed out in Holt v. Supreme Lodge, Knights of Pythias, 235 Fed. 885, that the present charter of defendant (Act June 29, 1894, 28 U. S. St. at Large, ch. 119, sec. 4, p. 97) authorizes amendments at will, profided they do not conflict with federal or state laws. Whether the defendant has the right in this state, under the act of 1897, to enforce the provisions of the amended by-law that was adopted in August, 1910, and that raised the rates in question, seems to be the decisive point in the case.

The laws of the order provide generally that the insurance department shall be governed by the supreme lodge. Defendant offered in evidence certain “ amendments to the supreme statutes” relating to and governing the insurance department, which were enacted and adopted at the convention of the supreme lodge held at Milwaukee in August, 1910. Among other amendments, section 479 was adopted, under which the increased rates were imposed that are complained of. The amendment follows: “The right to change, increase or adjust the schedule of rates in the fourth and fifth classes, respectively, or any of them, is expressly reserved to the supreme lodge, as is also the right to apply any such changed, increased or adjusted schedule of rates to all the members as of the date of their *508adoption without regard to the date of any member’s certificate. This right of readjustment includes the right to advance members without reference to the plan or class of which they are members to their attained age at any time and apply new rates applicable thereto when deemed necessary by the supreme lodge to carry out the purposes of the insurance department.”

The supreme constitution of the order provides: “The supreme lodge shall be composed of * * * all past supreme chancellors. * * * Its officers, as designated in this constitution. * * * The supreme representatives legally elected or appointed.” The officers of the supreme lodge are eight in number, and as designated in the constitution they are: ‘ ‘ The supreme chancellor, the supreme vice chancellor, the supreme prelate, the supreme keeper of records and seals, the supreme master of the exchequer, the supreme master of arms, the supreme inner guard and the supreme outer guard.”

It seems to us that, under section 1, ch. 47, Laws 1897, defendant cannot enforce section 479 of its “supreme statutes” in the present case, because that section expressly provides that the right to increase the schedule of rates in the fourth and fifth classes is reserved to the supreme lodge, a body that by the supreme constitution appears to be composed, not only of elected delegates, but in part of “all past supreme chancellors” and some members that are appointive and eight supreme lodge officers. How many past supreme chancellors may sit as voting members of the supreme lodge convention, nor how numerous they are, or whether they are participating members in supreme lodge conventions, does not clearly appear, nor does it appear whether the past supreme chancellors and supreme lodge officers and' the supreme lodge delegates are all elected by the members of the defendant society, or by the members of the “insurance department,” or by delegates elected from that department. It does not *509appear that a member of the supreme lodge or any of .its officers shall, to be eligible to membership in that body, be a member of the insurance department. The general secretary of the insurance department testified that membership in that department was not a necessary qualification for membership in the supreme lodge convention of 1910. It appears too, from his evidence that approximately only 10 per cent, of the members of the defendant order in 1910 were members of the insurance department. So that, under defendant’s constitution and laws, the insurance department could be governed bv members of the defendant order, part or even a majority of whom were not insurance policyholders, and consequently not members of nor vitally interested in the insurance department.

It seems to us that this lacks much of being a representative form of government as defined by the act and interpreted by our former decisions that will be presently noted.

The supreme statutes provide, also, that a “board of control” shall be appointed by the “supreme lodge,” and that this board, so appointed, shall “have full charge and complete control of the business and affairs of the insurance department, subject at all times and in all things to the direction of, and to account and report to, the supreme lodge.” It does not appear that any person to be eligible to membership on the “board of control” must be a member of the “insurance department. ’ ’

The detailed proceedings of the session of the supreme lodge convention that adopted the supreme statutes in question are not shown, as seems to be the usual practice in cases where like questions have been raised, so that in the present state of the record we are confined in our inquiry for the most part to a liberal display of exhibits. The rule is that the constitution or a by-law of an order that purports to be a beneficiary association will be strictlv construed against it where *510under its constitution or a by-law, there appears an attempt to work a forfeiture. Lange v. Royal Highlanders, 75 Neb. 196; Briggs v. Royal Highlanders, 84 Neb. 834.

Not only does the act of 1897, hereinbefore cited, provide that a fraternal beneficiary association shall have a representative form of government, but all succeeding legislation bearing on the subject has the same requirement. The question is not new in this jurisdiction, and does not now seem to require lengthy discussion, having been exhaustively reviewed in the following cases and in the citations therein noted: Briggs v. Royal Highlanders, supra, Briggs v. Royal Highlanders (on motion for rehearing) 85 Neb. 830. In the main Briggs case, in substance, we held that, to constitute a representative government within the meaning of the act, the delegates regularly elected by the members of a fraternal beneficiary association should absolutely control its government to the exclusion of appointive committee members who were not delegates. In the same case, wherein a rehearing was denied, it is pointed out that “Chapter 47, Laws 1897, did not by its own force amend the edicts of the Royal Highlanders so as to make its government representative inform.”

The dues tendered by the insured, and in his behalf during his last illness, appear to have kept the policy in force until his death, thus creating a valid and subsisting claim against defendant in the sum of $2,009. Including exhibits, the record consists of over 1,590 pages. Attached thereto are books of constitutions and by-laws of more than 1,000 pages, to which the learned counsel have referred and with which they are apparently familiar, but we suggest that more specific reference in the briefs to book and page of such, matter as they respectively rely on would greatly expedite the work of the .court. Sup. Ct. Rule 12 (94 Neb. XI).

From the evidence before’us it seems clear that the body assuming to change the schedule of rates did not *511constitute a representative form of government, when the rates in question were raised, within the meaning of the act as construed by our former decisions. Many other assignments .of alleged error are called to our attention that, in view of our conclusion, we do not find it necessary to discuss and do not decide.

Insurance: Benefit Association: Government. “Where, under the provisions of the constitution and by-laws of a fraternal beneficiary association, the delegates to the governing body thereof, regularly elected by the members of said association, cannot of themselves, and without the participation of members of committees appointed from members outside of such delegates, legally and of right adopt, alter, or amend the edicts and laws of such association and absolutely control the government of the same, such governing body is not a representative body, and an association so constituted and governed cannot be said to have a representative form of government.” Briggs v. Royal Highlanders, 84 Neb. 834.

The judgment is reversed and the cause remanded for further proceedings.

Beversed.

Morrissey, C. J., and Flansburg, J., not sitting.