Modern Order of Pr&198torians v. Childs

The suit is upon a fraternal insurance certificate. The defense is lapse of the policy for nonpayment of monthly dues.

The constitution of the order, made part of the contract, requires monthly dues to be paid on or before the 20th of each month, as a condition to the continuance of the policy in force. Dues are payable to the "worthy recorder," and officer of the local "council." Section 3, art. 20, defining the duty of the member in making payment, and section 1, art. 37, limiting the authority of agents and officers, will be found in the statement of the case.

Plaintiff's evidence tended to show: In September, 1923, C. H. Gibson was "state manager" of the order, with jurisdiction over North Alabama, and "worthy recorder" of the local council at Birmingham; that he arranged with J. A. Stocks, a member of the order, having a real estate office near the Birmingham office of the order, to solicit members and take applications for membership and insurance, furnished Stocks with blank applications, and with blank receipts for dues under seal of the order and with the name of a former worthy recorder printed thereon, and authorized him to collect dues from time to time on policies he should obtain, issue receipts therefor, and make settlement with Gibson when he should call at Stocks' office for that purpose. Pursuant to this authority, Stocks solicited Wm. P. Childs, the insured, took his application, collected and receipted for the dues of October, November, and December, 1923. The application was accepted, the member admitted to the order, and the beneficiary insurance certificate issued payable to this plaintiff, as father of the insured.

Prior to January 20, 1924, the insured casually met Stocks and paid him the dues for January, February, and March, and after January 20th called at Stocks' office and obtained a receipt therefor. The insured came to his death as the result of an automobile accident on February 16, 1924. On learning of his death, Stocks informed Mr. Glover, the new worthy recorder, of having collected the dues, and offered to turn them in, which was refused on the ground that the policy had lapsed.

Defendant's evidence tended to show that on January 4, 1924, Mr. Gibson, preparing to remove to Florida, ceased to be manager and recorder, and was succeeded as manager by C. S. Chapman, and as recorder by C. A. Glover. There is evidence that neither Mr. Stocks nor Mr. Childs, the insured, had any notice of any change of Mr. Gibson's relations to the order at the time of the alleged payment of dues in January.

Defendant's request for the general affirmative charge is predicated upon the want of authority in Stocks to collect the dues from the insured. This is the vital question in the case.

A fraternal benefit society has power to prescribe the time for payment of dues, the officer to whom they shall be paid, and make compliance therewith a condition precedent to the continuance of the insurance in force. The constitution of the order may be incorporated in the contract by reference, and may therein provide that no subordinate body, nor any of its subordinate officers or members shall waive any of the provisions of the constitution. Code 1923, § 8477; Beiser v. Sovereign Camp, W. O. W., 74 So. 235, 199 Ala. 41; Sovereign Camp, W. O. W. v. Blanks, 94 So. 554, 208 Ala. 449; United Order of Golden Cross v. Hooser, 49 So. 354, 160 Ala. 334.

Do these rules, in the light of the constitution of the order, and under the facts disclosed by the record, avoid the action of the state manager in making Stocks an agent to collect dues of members insured through him? Nothing in the constitution, so far as appears in the record, defines the powers of a state manager, unless the general limitations of section 1, art. 37, be so construed.

There is evidence that the state manager, as such, has authority to collect dues. This, within itself, implies that the corporate body had so far made him its alter ego in the management of business within his jurisdiction, that he could waive the requirement for payment of dues only to the worthy recorder. That, in his capacity as manager, he employed an agent, provided him with blanks, arming him with the indicia of an ordinary insurance agency; that the agent, acting upon his appointment, did write the insurance and collect three months' dues from the insured, all of which was accepted and the policy issued — are circumstances tending to show that the state manager was empowered so to act for the company at least as to persons dealing with the order through such agency.

"* * * 'Unless his authority is especially restricted, the authority and power of a general or managing officer or agent are coextensive with the powers of the corporation itself, and he has authority to do any act on its behalf which is usual and necessary in the ordinary course of the company's business (Baird Lbr. Co. v. Devlin, 27 So. 425, 124 Ala. 245; Rhodes Fur. Co. v. Weeden, 19 So. 318, 108 Ala. 252), or which he is held out to the public as having authority to do, and may exercise all the powers which the board of directors could exercise or authorize under the same circumstances in the general management of the corporation business. * * * The fact that he occupies the position of general or managing agent implies, without further proof, his authority to do anything that the corporation itself may do, so long as the act done pertains to the ordinary business of the corporation.' " Sheip v. Baer, 97 So. 698, 700, 210 Ala. 231, 233; 14a C. J. p. 360, § 2221; 1 Mechem on Agency (2d Ed.) §§ 979, 980; Tenn. River Trans. Co. v. Kavanaugh, 13 So. 283, 101 Ala. 1; Montgomery Furniture Co. v. Hardaway, 16 So. 29, 104 Ala. 100.

It is of the nature of the insurance business to act largely through agencies. In the conduct of business in states remote from the head office, the presence of some one on the ground with authority to speak for the company in all matters pertaining to the ordinary conduct of the business makes for the advantage of the insurer as well as the public. When a fraternal insurance company, although operating under a constitution and by-laws designed to promote the fraternal and insurance features of the order, organizes its insurance business on the usual lines, placing at the head of its state organization a state manager, he will, in the absence of notice to the contrary, be treated as possessed with the implied authority going with the position.

However full the provisions of section 1, art. 37, limiting the power of officers and agents, this does not apply to action of the corporate body. So, if the governing body created the office of state manager, and empowered him, as such, to collect dues, this within itself is evidence of waiver of the requirement that dues should be paid solely to the worthy recorder of a local council. Members coming into the order through dealings with an agent named by the state manager, whose act in collecting dues had not been questioned, were, in the absence of notice of a change of status, authorized to deal with such agent, having possession of the official signed receipts of the order for dues. These facts were evidence of continuing agency to members who had been dealing with him as such.

"* * * 'When third parties have dealt with an agent clothed with general powers, the agency continues as to them, after revocation, until they have notice thereof. Also the principal may be liable for acts of the agent after revocation, to third persons, who never dealt with him previously, if they, in common with the public at large, are justified in believing that such agency existed, and have no notice of its revocation.' " Continental Fire Ins. Co. v. Brooks, 30 So. 876, 878, 131 Ala. 614, 620; Simpson Harper v. Harris Scrandrett, 56 So. 968, 174 Ala. 430; Sun Ins. Office of London v. Mitchell, 65 So. 143, 186 Ala. 420; 14 A.L.R. 846, note.

Appellant insists that Stocks was a subagent of Gibson, that the subagency terminates with the agency to which it is attached, and that no notice was required of the termination of the subagency of Stocks. The general rule is:

"The termination of the authority of an agent terminates also the authority of subagents who derive their authority from him, and this is true, even though he may have been expressly authorized to appoint them if they were appointed as his agents." 1 Mechem on Agency (2d Ed.) p. 446, § 622.

Conceding, without deciding, that Stocks was a subagent, the question comes, Did his authority cease as to persons theretofore dealing with him, without notice to Stocks of the termination of his authority? Where the authority of the subagent ends as the result of the termination of the authority of the agent, the rule as to notice to the subagent is thus stated:

"Where the subagent derives his authority solely from the agent, no notice is required to be given by the principal to the subagent of the revocation of the agent's authority; but, where the subagent was appointed by and with the authority of the principal, he is, as has been seen, the agent of the principal, and notice should be given to him of the revocation of his authority." 1 Mechem on Agency (2d Ed.) p. 448, §§ 627, 332, and 333.

The appointment of Stocks by the state manager of the company, with the authority above indicated, warrants an inference that Stocks had authority to act for and on behalf of the company, and, if a subagent, in the sense that he was subordinate to and under the control of the manager, he was entitled to notice of the termination of his agency. If he was entitled to notice, then the member dealing with him in good faith within the scope of his agency prior to such notice to either would be protected.

An instruction, therefore, declaring that the severance of the relation of manager by Gibson at once terminated the authority of Stocks, as subagent, ignoring the question of notice to Stocks, was properly refused. The plaintiff's evidence does not warrant the view that Stocks was merely agent of the insured to deliver the dues to the worthy recorder within the time required.

The rulings of the trial court were in harmony with these views.

Affirmed.

ANDERSON, C. J., and SOMERVILLE and THOMAS, JJ., concur.