Seffens v. Carisch , 190 Wis. 144 ( 1926 )

Doerfler, J.

As answer to the third question of the special verdict the jury found that Carisch was acting as the agent of Mrs. McKenney in withholding-the certificate. The court- set aside the answer of the jury to this question upon the ground that there was no credible evidence to sustain such answer. We have carefully reviewed the evidence and are satisfied that the action of the court was fully warranted. Carisch was the husband of Mrs. McKenney’s daughter. No unpleasant relations existed between McKen-ney and Carisch. McKenney haid arrived at the age of seventy-seven years, and it is natural to presume- that business dealings had become somewhat distasteful to him. While he had been a member of the Woodmen since 1888 and had served in the capacity of a local clerk, he evidently did not discover that the document which he signed on Form No. 7Yz was not the proper form. Smith, the local clerk, testified that he read the document to him and that he understood it and signed it, and yet it appears on the face of the document itself that it is designed for a change of beneficiary and a reinstatement into the order in a case where the certificate had lapsed for either nonpayment of dues or for some other reason.

Mrs. McKenney had been an invalid for about one year, suffering from a distressing and fatal malady. She had sought relief in hospitals and by operations, in vain. She had taken an extensive trip to California in an effort to recuperate her health, but without avail. When she returned to Osseo, some time in the month of March, 1925, after her California trip, it was realized that her condition was hopeless. She could not remain in Osseo because her husband could not give her the necessary attention and assistance, and therefore she sought refuge in the home of her daughter, Mrs. Carisch, at River Falls.

It is claimed by the plaintiff that some time before Mrs. McKenney left Osseo the certificate and the note disappeared, and it is strongly intimated that Mrs. McKenney, or some one else for her, wrongfully abstracted these documents, had them taken to River Falls, and delivered to Mr. Carisch. Carisch himself testified that he received them for safe-keeping, and the evidence in the case is conclusive that his testimony upon this subject is m accordance with the truth. It is true that Mrs. McKenney knew that Carisch had these papers in his possession, but there is no evidence whatever that would j'ustify a conclusion, or even an inference, that he held them as her agent, or that she gave any directions whatsoever to him with respect thereto. Here it must be borne in mind that Mrs. McKenney at that time had suffered the ravages of a fatal disease for a period of about one year; that her condition gradually became worse, and that she was rapidly nearing her end. Under such circumstances it can readily be assumed that Mrs. Mc-Kenney, who had up to that time, so far as the record shows, borne a spotless reputation, was not engrossed upon the commission of an act which would have a tendency to create dissension between herself and her husband, with whom she had lived happily for many years.

There is evidence in the case that when Mrs. McKenney, together with Mrs. Carisch, stopped at the McKenney home in Osseo for the last time, for a day or two, which was some time in March, 1925, McKenney signed a document which manifested an intention to transfer the certificate to E. B. Carisch, with the understanding that Mrs. Carisch would take care of the old gentleman for the rest of his life if it became necessary. ' This was testified to by Mr. Anderson, and the document, which was identified by him and which bears his signature as a witness, was introduced in evidence and reads as follows:

"To Whom It May Concern:

“I, J. H. McKenney, wish to have my Modern Woodmen policy changed to Mr. E. B. Carisch, River Falls, Wisconsin, providing that he will advance me money for the care of my wife and myself when it is necessary.”

“(Signed) J. H. McKenney.

“Witnesses: C. B. Carisch, Peter Anderson.”

Carisch testified that the certificate and the note were handed to him at River Falls by his son. Carisch being in possession of this certificate and also the note, the presumption is that he came by them lawfully. A short time previous to his death McKenney visited his wife at River Falls, and during such visit the possession of the certificate and of the note by Carisch was not discussed, and no demand at that time was made for the surrender of these documents.

On April 15, 1925, Mr. McKenney wrote the following letter to Mr. Carisch:

“Osseo, Wisconsin, April 15, 1925.

“Dear Friend Emil: You may think that it is strange of me to make this request of you: That is, that you send my note and Woodmen policy to me. I am sure that if nothing happens to you — if something should happen I have nothing to show that there was coming to me. I see that you tried hard. to. keep Weltha [Mrs. Carisch] . quiet but she does not listen to you. I think she makes a big mistake by not doing as you tell her. Now I am going to insist that you send them to the Farmers’ Exchange Bank for me and I will report all indorsements. I will have them do it for me so it will be done right. I suppose it will bother you to read this as I cannot see what I am writing. If you think that I do not indorse or have it done as it should be, you cari te lime. I don’t want to do business — Weltha, so please send my papers — I am sure that.

“As ever, your J. H.”

In this letter Mr. McKenney seems to be somewhat troubled, principally because the note of $2,000 of Mr. Carisch was in his possession, and that if anything should happen to Carisch McKenney would have nothing to show for his indebtedness. This letter clearly shows that Mc-Kenney knew who had possession of his papers, and he also clearly indicates the purpose of this possession. The reason for delivering the note is apparent, for it speaks of indorsements to be made thereon, which clearly corroborates Mr. Carisch’s testimony that he held the note so that when he made payments for either Mr. or Mrs. McKenney- the indorsements could be properly made. He even suggests that when the note is returned, either he or the bank would be able to make the proper indorsements, or, if there were any difficulty, Carisch himself could see that they were properly made. The only suspicion of any trouble between any of the relatives is manifested by the writer’s reference to Carisch’s wife, but there is no indication that any serious trouble existed between even McKenney and Mrs. Carisch.

On the 17th of April, 1925, Carisch promptly replied to this letter, and stated that he would mail the papers as soon as he obtained the statements from Eau Claire (meaning the hospital, doctors’ and nurse’s charges). These bills had been paid and the moneys advanced by Carisch. He further stated that he would mail them just as soon as he obtained these statements, which would be Monday or Tuesday. The letter then proceeds:

“I think this is the best way to handle this since this trouble came up while you were here, as then I will mail you the bills from here and you can pay them and in that way keep track of it yourself, or you can have the bank do it for you. Will mail you this just as soon as I get the statements from Eau Claire.” (Italics ours.)

The Carisch letter recognizes that Mr. McKenney is entitled to his papers. It also affirms Carisch’s testimony wherein he testified that the papers were delivered to him for safe-keeping, and that the purpose of his possession of the note was to indorse thereon the moneys expended for Mrs. McKenney; and it further indicates strongly that Carisch’s possession was a lawful one.

The facts thus far referred to do not support a reasonable inference that Carisch either obtained possession of these documents wrongfully, or that he withheld them as the agent of Mrs. McKenney. The undisputed evidence in the case is to the effect that Mr. Carisch was not aware of the serious illness of Mr. McKenney until a few days prior to his death, when he received a letter from the nurse informing him of that fact.

On the 25th day of April, Mr. Jones, who acted as attorney for Mr. McKenney in drawing his will, at the request of the latter wrote Carisch the following letter:

“Mr. E. B. Carisch, River Falls, Wisconsin.

“Dear Sir: Mr. J. H. McKenney has asked me to write you concerning the papers which you hold for safe-keeping. He states that he has requested you to return them to him but you have evidently overlooked the matter. The papers, I think, consist of a deed, a note, and an insurance policy. Will you kindly send these papers by return mail and oblige,

“Yours very sincerely, J. Reese Jones.”

To this letter Mr. Carisch promptly replied on the 27th of April, 1925, as follows:

“Attorney J. Reese Jones, Osseo, Wisconsin.

“Dear Sir: Your letter of the 25th received in regard to Mr. McKenney’s papers that he left with me for safe-keeping. About the same time that I got your letter I received a telephone call that Mr. McKenney had passed away. For that reason I am not sending the papers at the present time, but will hold them and turn them over to the administrator.

“Yours truly, E. B. Carisch.”

The testimony also shows that at or about the time of McKenney’s death Mr. Carisch had received all of the bills incurred for Mrs. McKenney’s medical attendance and was ready to send the documents to McKenney, when he was informed of the latter’s death.

The foregoing comprises substantially all the evidence which has a bearing upon questions number 3, 4, and 5 of the special verdict, and upon which the answers to such questions must be sustained if the jury’s verdict is permitted to stand. From this testimony, and particularly the written communications above referred to and set forth, the conclusion is irresistible that Carisch did not act as Mrs. McKen-ney’s agent in withholding the certificate. Nor can it logically be inferred therefrom that the withholding of the certificate prevented the issuance of a new one before the death of Mr. McKenney. The .trial court, therefore, was fully justified in changing the answers of the jury in the respects above indicated.

In McGowan v. Supreme Court of Independent Order of Foresters, 104 Wis. 173, 180, 80 N. W. 603, the rule, which is in accordance with universal authority, is stated as follows:

“It is now well settled that one who is insured in a mutual benefit association, and who wishes to change the beneficiary, must make the change in the manner required by his policy and the rules of the association, and that any material deviation from this course will render the attempted change ineffective.”

The rule thus laid down is recognized by plaintiff’s counsel, but he argues that the insured in signing Form No. 7j4 has substantially complied with the provisions of the bylaws, and that in failing to issue a new certificate in accordance with the insured’s request the society failed to perform a mere ministerial duty, and that inasmuch as the insured had done everything in his power which he could have done, equity will consider that done which ought to be done, and that therefore a change in the beneficiary should have been decreed.

The rules and regulations of a mutual benefit society which designate the manner in which a change in beneficiary under a certificate shall be accomplished are for the benefit and protection of the society. The society has seen fit in the instant case not only to provide in its by-laws for provisions for a change of beneficiary, but has also specified and incorporated therein certain forms which are applicable and suitable to meet any situation which may arise. When the deceased became a member he agreed not only to abide by tKe by-laws then in force but by those which might be enacted at any time thereafter. The forms in question were adopted to promote a system in the organization. They were drafted by those experienced in fraternal insurance; were based upon experience; and were designed not only to further the administrative policy of the society but for its protection. Where an order like the Woodmen, which in the course of its operations has spread over the entire country, and which is primarily designed for the benefit and relief of the dependents or near relatives of the insured, provided by its by-laws for certain definite steps to be pursued in order to effectuate a change of beneficiary, such by-laws must be construed largely in accordance with the fundamental spirit which has created the order and which maintains it, and therefore we must assume that such rules and regulations are necessary and proper in order that the objects and purposes of the order may be attained and promoted.

An examination of the Reports pertaining to cases brought to recover on benefit certificates discloses that at an early date few, if any, by-laws were enacted prescribing how a change of beneficiary may be wrought. Many cases in our own Reports evidence this fact. However, in the course of time experience has taught that certain protective features were necessary, and therefore it has been the tendency of all societies of this kind to prescribe certain rules and regulations and to add to them as necessity required, and such changes invariably are based upon actual experience. The Woodmen, therefore, in its by-laws provided for three separate and distinct situations: (1) Where a change in beneficiary is desired and where the insured has in his possession the certificate, and in such case the only requisite consists of the surrender of the certificate with a proper indorsement thereon. (2) Where the insured is a member in good standing and has lost his certificate, or where it is not in his possession or control, and a change of beneficiary is desired, the use of Form No. 7 is prescribed. This form contains certain provisions to which the insured is required to subscribe, and which are designed for the protection of the society upon issuance of a new certificate. (.3) Where the certificate of a member has lapsed and where he has not the possession or control of the certificate, Form No. 7Jé was prescribed and adopted, and the application pursuant to such form provides not only for a reinstatement of the certificate, but also contains certain other provisions for the protection of the society. In the instant case Form No. 7 was the proper form. Instead of using this form, both the local clerk of the camp and the insured saw fit to use Form No. 7Jé. The form used contains a number of statements which were untrue. It did, however, contain a waiver of liability under the old certificate, and in this respect did not differ substantially from the waiver contained in Form No. 7.

In the form used, this material agreement, which is contained in Form No. 7, was entirely missing:

“In the event the Modern Woodmen of America should suffer loss by reason of any claim made under any benefit certificate heretofore issued to me, I agree that said Modern Woodmen of America may reserve and retain a sufficient sum from the amount due any beneficiary or beneficiaries, under any benefit certificate hereafter issued to me and in force.”

This provision clearly was not applicable to an application where Form No. 7Jé was used, for that form contemplated a lapsed certificate, where all liability of the association had come to an end. This feature, therefore, contained in Form No. 7 (which was the proper form) constituted a vital protective feature under which, by the agreement of the insured, the association could recoup itself for any damages sustained in the event that the lost certificate was transferred to a third party. Under these circumstances it cannot be said that the member has substantially complied with the by-laws of the association; and, regardless of all other improper statements contained in the form used, amply justified the head clerk in refusing to recognize the application. And it requires no argument to demonstrate that if the head clerk had done otherwise his act would be a clear violation not only of his duty to the association but of the by-laws.

The McGowan Case, supra, is not an authority in favor of the doctrine advanced by plaintiff’s counsel. In the McGowan Case it was held that:

“The insured had done every substantial act required of him by the terms of the policy and the rules of the society in order to make a complete change of beneficiaries. The last act was the surrender to the deputy chief ranger of the original certificate, at least one day before his death. He could do nothing further. On the part of the society there were simply formal acts to be performed. There was no discretion as to whether the society would allow the change. It is. true the rules say that the change shall be made and a new certificate issued if the application be approved by the supreme chief ranger, but this approval plainly relates to matters of form only. It was the right of the insured to make the change before his death if he took the required steps, and if the new beneficiary was competent to be such under the rules of the order.” Page 181.

Defendant’s counsel do not take issue with the doctrine of the McGowan Case as above quoted; in fact, expressly concede it. The distinction between the facts in the McGowan Case and the instant case is so plain and apparent as to require no further comment.

In the case of Waldum v. Homstad, 119 Wis. 312, 96 N. W. 806, cited in plaintiff’s brief, a situation similar to that in the McGowan Case existed, but in that case the grand secretary unreasonably delayed the issuance of a new certificate, and the holding of the court in that case on the subject now considered was almost in the identical language of the opinion in the McGowan Case.

In the case of Raschke v. Haderer, 138 Wis. 129, 119 N. W. 812, the insured had substantially complied with all the by-laws and rules of the association, and a new certificate was duly issued to him accordingly, and the fact that the original certificate had not been lost, as was represented in the application, but had been secreted by the wife, did not affect the rights of the beneficiaries named in the new certificate, there being no question that the insured desired the change.

In the case of Faubel v. Eckhart, 151 Wis. 155, 138 N. W. 615, as will appear by paragraph 5 of the syllabus, it is said:

“Although the insured may be equitably bound by a contract to exercise his power of appointment and change the beneficiaries, yet if he fails to execute that power equity cannot regard it as done, since to do so would nullify the rule that a change of beneficiary must be made conformably to the regulations of the association.”

Berg v. Damkoehler, 112 Wis. 587, 88 N. W. 606, was an action brought to recover under a life insurance policy, and the insured had the right to change the beneficiary by filing with the company a written request duly acknowledged, accompanied by the policy. In that case all of the requirements of the company were complied with, excepting only that the application was not acknowledged. A new application with instructions was thereupon sent to the insured, which was not executed, on account of the death of the insured. In that case the court held that the unacknowledged application was not a substantial compliance with the provisions of the policy. In the opinion in that case it is said:

“The unacknowledged request was not in compliance with the requirements of the policy. The company refused to recognize it. The proper authentication of the written request was of importance to all concerned.. It was material because made so by the contract. It was a protection to the company as against payment to persons who might fraudulently secure possession of the policy. It was a safeguard of the insured and his beneficiary for the same reason.” Citing Mellows v. Mellows, 61 N. H. 137; Rollins v. McHatton, 16 Colo. 203, 27 Pac. 254; Grand Lodge v. Fisk, 126 Mich. 356, 85 N. W. 875.

When the insured did not receive his certificate in time to surrender it, together with an indorsement thereon, he elected to pursue another course. Ample opportunity and time were available to him to have a change of beneficiary effected under the method pursued by him. That the new certificate was not issued was not the fault of the company, or of Mrs. McKenney, or of Mr. Carisch, but was due to the oversight and neglect of both the local clerk and the insured.

But it is further argued by counsel for the plaintiff that the association, upon suit being brought by the plaintiff, paid the money into court; that the association thereafter was no longer interested as to who of the two rival claimants was decreed to be the beneficiary; and that therefore, as between such claimants, the court, sitting as a court of equity, should have decided the issues in favor of the plaintiff for the reason that he held the superior equities. Prior to the death of the insured there were but two parties interested, viz. the insured and the association; and such interest sprang from the contract relations between them. The insured was authorized under the by-laws to effect a change of beneficiary by the power of appointment of a new beneficiary. Up to the time of the death of the insured the beneficiary named in the certificate had no interest therein unless it was an inchoate interest, which might ripen into a vested one upon the death of the insured. Therefore, regardless of the form of the request of the insured for a change of beneficiary, it was at all times within the power of the association to waive any of the rules and regulations and to issue a new certificate ; and had this been done, the original beneficiary would have no cause for complaint. So that, while the association in the instant case might have recognized the application made upon Form No. 7j4 and issued its new certificate, which would have precluded the original beneficiary, nevertheless it did not deem fit to do so; and in taking the course it did the association acted fully within its rights. ' Up to this stage the association waived nothing, and it is difficult to comprehend a form of logic which holds that .the association waived its rights, after the death of the insured, by paying the money into court and by praying .the court to determine who of the two claimants is rightfully entitled to the proceeds of this benefit certificate. Upon the death oí the insured the right of a beneficiary became vested. The inchoate right which existed during the lifetime of the insured became transformed into an absolute and vested right, which the association could not modify or change even if it so desired. As is said in the McGowan Case, there was either a change of beneficiary or there-was not. It is true that a court of equity will recognize certain equities existing between the parties, such as appeared in the McGowan and subsequent cases. In a case where the insured had done everything within his power to effect a change of beneficiary, under the equitable doctrine that a court of equity will consider that done which ought to be done, it will decree a change as wrought where the only requirement unperformed consists of the performance of a formal, ministerial act on the part of the association. This would likewise apply to a case where the association for an unreasonable length of time failed or neglected to properly respond to a formal application for a change of beneficiary; where the association or its officers act in collusion with one of the beneficiaries; and where the by-laws provide that a change of beneficiary can only be effected by a surrender of the original certificate with a proper indorsement thereon, and the original beneficiary wrongfully or fraudulently abstracts the certificate from the owner and withholds it from him. Such are the equitable grounds upon which a court of equity, in a proper case, will decree that done which ought to have been done, and such is the ruling of this court in the cases above cited.

In a learned and exhaustive opinion in the case of Modern Woodmen v. Headle, 88 Vt. 37, 90 Atl. 893, L. R. A. 1915 A, 580, it is said:

“It is also said that it waived the provisions of the by-laws by paying the fund into court and asking that the adverse claimants be required to interplead. By the great weight of authority the society cannot be regarded as having waived the requirement of the by-laws by bringing the bill of inter-pleader and paying the fund into court. By so doing the society admitted its liability under one or the other of the certificates, and asked the court of chancery to protect it by determining the conflicting rights of the claimants; but it cannot be held that the rights of either claimant are prejudiced thereby. The rights of the parties became fixed at the moment of the death of the insured member, and the society was powerless to do anything to affect vested rights. They are controlled by the contract as it was at that time.”

The ruling in the Headle Case is in conformity with the rule laid down by this court in the Berg, the McGowan, and the Faubel Cases, supra.

No useful purpose could be served by extending this opinion. The effect of the provision of the by-laws heretofore quoted and which reads as follows:. “No change of beneficiary shall be effective until a new certificate shall have been issued in the lifetime of the member, and until such time the provisions of the old certificate shall remain in force,” is not determined in this opinion. This provision is also contained in the certificate in the Headle Case and is exhaustively treated therein. This provision adopted by mutual benefit societies is a new one of recent origin, and the effect of the same has not been generally determined by the courts; and we therefore reserve a decision upon this provision for the future.

We therefore conclude that the beneficiary in the certificate was not changed, and that the judgment of the lower court must be affirmed.

By the Court. — Judgment affirmed.