Sovereign Camp of the Woodmen of the World v. A. E. & F. W. Fraley , 51 L.R.A. 898 ( 1900 )

On the 1st day of January, 1891, under the general laws of the State of Nebraska, certain persons filed articles of incorporation for the purpose of creating what was to be known as the Sovereign Camp of the Woodmen of the World. Article first provided that the name of the corporation should be "Sovereign Camp of the Woodmen of the World, with powers to make its own constitution, laws, rituals, rules of order, and discipline and secret work, and for supervisory and legislative control over the general laws and regulations of the sovereign camp, and its jurisdiction and all its subordinate branches."

The purposes of the corporation were declared to be to organize and establish a social, fraternal, beneficiary and benevolent order, "combining and associating together white male persons of sound bodily health, exemplary habits," etc., with power in the sovereign executive council to change the ages, etc.; to create a fund out of which to pay a sum not exceeding $3000 to the beneficiary designated by the member upon proof being made of the death of the member as required by the by-laws.

The affairs of the corporation were to be conducted by an executive council, composed of not more than thirteen members, consisting of the elective officers of the sovereign camp. The plan was to organize local camps, called membership camps, and what was known as head camps, having supervisory control and authority over the membership camps, from which head camps delegates were to be selected, which composed the sovereign camp of the order. These delegates were required to meet on the second Tuesday of March every two years at such place as might be designated by the sovereign camp, the sovereign executive council, or the sovereign consul commander. It was provided that the first meeting should be held in 1895 at the city of Omaha, in the State of Nebraska, at which time the officers of the camp should be elected. The jurisdiction of the order extended throughout the United States and its territories and the Dominion of Canada.

It was provided in the articles of incorporation that those articles might be altered or amended at any time at any meeting of the executive council by a two-thirds vote of the members present or a special biennial meeting of the sovereign camp by a two-thirds vote of the legal delegates present.

A constitution of the order was adopted at the first meeting in 1895, which contained the following provision: "The following conditions shall be made a part of every beneficiary certificate and shall be binding on both member and order," among which conditions was the following: "If the member holding this certificate * * * should die by his own hand (except it be shown that he was at the time insane) * * * this certificate shall be null and void and of no effect." At a regular meeting of the delegates to the sovereign camp, held in St. Louis, Mo., March 9-20, 1897, the constitution was so changed as to read as follows: "The following conditions shall be made a part of every beneficiary certificate and shall be binding on both member and the order * * * if the member holding this certificate * * * shall die by his own hand or act, whether sane or insane, * * * this certificate shall be null and void and of no effect." The constitution contained a clause prohibiting any officer or employe or agent of the sovereign camp or head camp or any camp to waive any of the conditions upon which a beneficiary certificate issued or to change or vary or waive any of the provisions of the constitution and laws, providing expressly, "Each and every beneficiary certificate is issued only upon the conditions stated in and subject to this constitution and laws."

The change in that part of the constitution which prescribed the conditions of the certificate took effect on the 1st day of May, 1897. In August, 1897, W.B. Fraley, by regular application, became a member of the order and received a life beneficiary certificate payable, in the event of his death while the certificate was in force, to his mother, Mrs. M.E. Fraley, for the sum of $3000 and $100 for a monument. The certificate was issued subject to the constitution and by-laws of the order, which were declared to be a part thereof, and to certain conditions indorsed on the certificate, one of which was as follows: "If the member holding this certificate shall die by his own hand (except it be shown that he was at the time insane) then this certificate shall be null and void and of no effect." The application made by Fraley expressly stated that it was made subject to all the provisions of the constitution and the by-laws of the order. The reason given for not including in the certificate the condition expressed by the amendment to the constitution is that the new form of certificate had not been issued and the officer used the old form. The certificate was signed by the sovereign consul commander, and secretary of the Sovereign Camp of the Woodmen of the World.

On April 1, 1899, while a member of the order in good standing and his certificate in full force, W.B. Fraley committed suicide, he being then insane.

Mrs. M.E. Fraley died on May 15, 1899, leaving a will in which the defendants in error, A.E. and F.W. Fraley, were appointed executors. The will was duly probated and the officers of the Sovereign Camp of the Woodmen of the World having refused, upon proper proof of the death of Fraley, and his insanity, to pay the amount of the certificate, this suit was brought by the executors of Mrs. Fraley to recover the sum of $3000 expressed therein and $100 for a monument. The case was tried before the district judge without a jury and a judgment was entered for the plaintiffs below for the amount sued for, which judgment was by the Court of Civil Appeals affirmed.

The three controlling questions presented in this case are: (1) Did the Sovereign Camp of the Woodmen of the World, which assembled at St. Louis, have the power to enact laws for the government of the order; (2) if it had that power, was it authorized to do so at the meeting held at the city of St. Louis; (3) if those questions be held in the affirmative, can the sovereign camp defeat a recovery on this certificate because the insured, being insane, committed suicide?

The articles of incorporation adopted "The Sovereign Camp of the Woodmen of the World" as the name of the corporation, which was empowered to make its own constitution and to exercise general legislative authority. The executive powers of the corporation were confided to an executive council composed of the officers of the sovereign camp, and, under certain conditions and limitations, the council might exercise legislative authority. Authorized delegates from the head camps were required to meet every two years, and, when assembled, were denominated "The Sovereign Camp of the Woodmen of the World," and constituted the supreme legislative department of the order to which was committed the authority to make its laws. The amendment in question was adopted by the delegates assembled as "the sovereign camp" in the manner required by the by-laws. It was a proper exercise of power given to that body.

It is claimed that the corporation could not hold a meeting for the exercise of strictly corporate functions outside of the State of Nebraska, under whose laws it was organized. That is the rule with regard to ordinary corporations. Franco-Texas Land Co. v. Laigle, 59 Tex. 343. That rule, however, is based upon public policy which seeks to protect the stockholders from meetings which might be held at places remote from their homes or of which they had not been notified; but the reason is not applicable to this class of corporations because, in the first place, there are no stockholders in the sense in which that term is ordinarily used. Such associations are composed of members living in various States, — usually the greater number outside of the State in which the corporation was created. Their interests demand that the meetings of the supreme legislative department be held as near to the membership as possible, and, to accomplish this purpose, the place of meeting is usually changed at each convocation of the body. Sound public policy sustains such a proceeding as consistent with the rights of persons interested in the management of the corporation. In the second place, when a corporation like this is created with power to organize subordinate bodies over so large a scope of country as the United States and the Dominion of Canada, it is necessarily contemplated that the greater part of the business will be transacted beyond the territory of the State in which it has its origin, and the authority to hold the meetings at such place as may be best adapted to the purpose of its creation, arises by implication. Derry Council v. State Council, 47 Atl. Rep., 208.

As amended, the language of the constitution is: "The following conditions shall be made part of every beneficiary certificate and shall be binding on both member and order * * * if the member holding this certificate shall die by his own hand or act, whether sane or insane, * * * this certificate shall be void and of no effect." The provision is a command to the officers of the sovereign camp to embody the prescribed condition in each certificate thereafter issued which binds the member accepting it and the order issuing it. This is not a general provision of the constitution nor a general by-law of the order which declares all certificates void if the insured shall commit suicide, but in direct and specific terms declares void that certificate of which it shall be made a part. The rule of construction that the intention of the parties to a contract must be declared and enforced applies in this case, and demands that the certificate as issued shall be upheld as against the amended article.

If, however, we consider it in the light of a general by-law or resolution, and that it was intended, by inserting it in the certificate, to give notice to the member of its existence, then the officers of this order having failed to insert that condition, Fraley was misled and caused to enter into a contract of membership that he might not have accepted if the terms had been expressed as now claimed. Having assumed the duty of notifying the member of the existence of that provision, he was not chargeable with knowledge on the ground that it was a by-law of the order; the plaintiff in error is bound by the notice as it was actually given by its officers at its direction. Fitzgerald v. Life Assn., 3 N.Y. Supp., 214; Warnerbold v. Grand Lodge A.O.U.W., 83 Iowa 23; Davidson v. Benefit Soc., 39 Minn. 303.

The certificate of membership must govern in determining the rights of the parties, and the judgments of the District Court and Court of Civil Appeals are affirmed.

Affirmed.