Brown v. Grand Fountain of the United order of True Reformers

Mr. Justice Robb

delivered the opinion of the Court:

As stated by counsel, the issue in this case is the narrow one, whether or not the amendment of March 21, 1901, to the charter, restricting the beneficiaries of policy holders to the family, heirs, blood relatives, affianced husband or wife, or persons dependent upon said policy holder, was binding upon Milly Cook to the extent of modifying her contracts entered into prior to said amendment.

The original charter of the Grand Fountain, in force when each of these two certificates was issued, purports to be the charter of a joint-stock company. The first certificate or policy (as it is designated in the body thereof), dated May 5, 1886, certifies that the holder is “subject to the rules and regulations * * * which are contained in the constitution, the application and investigation blanTcs, which are the basis of this contract as if they were present in 'this certificateThe Grand Fountain then promised to pay to her heirs,or assigns or person named in the certificate, $125, at the time of death of the certificate holder; provided, only, that.the said certificate holder was a member in good standing at the time of death. This certificate contained no reservation of power to change or modify its provisions.

In the second certificate, issued June 5, 1897, it is stated “that the application signed hy the applicant, and this certificate, taken together, shall constitute the contract between the member above named and the Grand Fountain.” This contract was conditioned upon the payment by Millia Cook of annual or quarterly dues, in consideration of which the Grand Fountain promised to pay to her heirs, or assigns, the sum of $500. This certificate is also without any reservation of power to change or modify its provisions.

It is conceded that Milly Cook was a member in good standing at the time of her death.

Inasmuch as Milly Cook undoubtedly had the right at the time these certificates or policies were issued to her, and down to the time of the above amendment to the charter of the Grand Fountain, in 1901, to name anyone she chose as a beneficiary under such certificates or policies, it becomes necessary to carefully examine this amended charter to see whether it was intended to have a retrospective effect. Statutes will he given a prospective operation only, unless the language used clearly indicates that they were intended to be retrospective in their operation, — especially in a case where to give them a retrospective effect would be to impair the obligation of a contract. Prior to the enactment of the above act of March 3, 1898, there was no law in Virginia specifically authorizing beneficial associations, and it was probably for this reason that the Grand Fountain was incorporated as a joint-stock company. This act contains no language indicating that it was intended to be retrospective in its operation, and the reorganization of the Grand Fountain was effected, as set forth in its amended charter, “under the provision of the general laws of the land, being specially authorized and provided for in the acts of the regular session of 1897-98, of the general assembly of the State of Virginia,” which was the above act. There was a decided departure in the new charter from the scope and purpose of the old, both as regards the objects of the Grand Fountain and the government and control thereof. In the new charter there was a specific reservation of power “to make its own constitution, bylaws, rules, and regulations, as well as the general laws for Hie government of all its branches, and to alter and amend the same." In this amended charter the right is specifically-reserved “to alter and amend” the constitution and by-laws of the Grand Fountain. The fact that the original charter contained no such reservation, and that neither of the certificates or policies issued to Milly Ooolc contained such a reservation, that there was such a departure from the original scope and purpose of the Grand Fountain, and that no effort was made to take up outstanding certificates and issue new ones in their stead, — all indicate that it was not the intention, when this reorganization was made, that it would be retrospective in its effect, but that it was intended that the new Grand Fountain would take over the business of the old under the terms and conditions named in the contracts made by the old company.

The case of Voigt v. Kersten, 164 Ill. 314, 45 N. E. 543, is almost precisely like the instant case. That was a bill of inter-pleader filed by the High Court of the Independent Order of Foresters of the State of Illinois to determine who was entitled to the fund due on a certificate issued by the Order to one Fisher. This certificate was dated January 14, 1893, and in it the Order promised to pay Voight $1,090 on the death of Fisher. Fisher died on October 30, 1894, in good standing. The Order was organized under the statute in force July 1, 1887, which provided “that corporations, associations, or societies for the purpose of furnishing life indemnity or pecuniary benefits upon the death of a member, to the widows, heirs, relatives, legal representatives, or the designated beneficiaries of such deceased member” [3 Starr & 0. Anno. Stat. (Ill.) chap. 73, § 122], might be organized. At the time the certificate was issued one of the by-laws of the Order provided that “on the death of a member of this Order in good standing the endowment shall be paid, first, to such person or persons as he may designate in his last will and testament or endowment certificate ; second, to his widow; third, to his orphans; fourth, to his heirs.” On June 22, 1893, another statute applicable to such orders went into effect, whereby “payment of death benefits shall only be made to the families, heirs, blood relatives, affianced husband, or affianced wife of or to persons dependent upon the member, and such benefits shall not he willed or assigned or otherwise transferred to any other person.” In 1894, in accordance with the provisions of this later statute, the Order amended its by-laws, and adopted the words of the statute, omitting only the words “affianced husband^'’ On October 19, 1894, Fisher requested the Order to change the beneficiary from Voight to Mrs. Kersten, who was not a member of Fisher’s family, blood relative, affianced wife, or dependent upon said Fisher during his lifetime, as provided in the amended statute and by-laws, which change the Order refused to make. Fisher died on the 30th of October, leaving a will in which he designated Mrs. Kersten as the beneficiary of his certificate. The superior court awarded the fund to Voight, and on appeal to the appellate court the decree was reversed. The supreme court, in sustaining the decision of the appellate court, quoted its opinion from which we take the following: “At the time the contract was made between the deceased and the complainant order, the right to appoint the beneficiary or change the name existed, and, we think, was an important part of the contract entered into. It would seem that the construction of the act passed in June, 1893, giving .it the effect to destroy that right of appointing a beneficiary or naming another beneficiary, which existed in favor of the deceased under his contract prior to the passage of the act, would be to give the act a retrospective effect and destroy the obligation of the contract entered into between the deceased and the complainant. It is a recognized rule in the construction of statutes that they should be so construed as to give them a prospective operation only, and they should be allowed to operate retrospectively only where the legislative intention to give them such operation is clear and undoubted. * * *

We think that the right to make this change was one of the considerations entering into the contract at the time the deceased obtained his certificate from the complainant, and that it was a material right, and one that could not be taken away by the legislature, and we do not think that the legislature intended, by the act of June, 1893, to affect certificates of insurance issued prior thereto.” After quoting the opinion of the appellate court, the supreme court said: “We fully concur with the reasoning and conclusion of the appellate court in this ease, and the judgment of the appellate court is affirmed.”

We are in accord with the ruling in this case, and think the right of Milly Cook to name without limitation the person or persons who should be benefited under her contracts with the Grand Fountain was a material right; possibly, the very consideration that moved her to enter into these contracts; and a right which without her consent could not be taken away. In the case of Morton v. Supreme Council, R. L. 100 Mo. App. 76, 73 S. W. 259, the certificate bound the member insured to comply with all laws and usages of the council then in force or which might thereafter be adopted. At the time the certificate was issued one of the by-laws provided that, if a member committed suicide within two years after the policy was issued to him, the council would be liable for one half of the policy. Subsequently this by-law was amended so as to provide that, if any member committed suicide, his beneficiaries would receive only one half of the face value of the policy. The member committed suicide more than two years after the policy was issued to him, and it was held that the council was liable for the full amount of the policy. In its opinion, the court said: “Certificates in fraternal associations for indemnity in the event of death are contracts for insurance, subject to all the rules of law which control the interpretation of contracts generally, create and enforce their obligations, and prohibit their impairment or subsequent alteration without the consent of both the contracting parties.”

The case of Knights Templars’ & M. Life Indemnity Co. v. Jarman, 44 C. C. A. 93, 104 Fed. 638, is in line with the above State decisions. One of the questions in that case was whether the amendments to the constitution of the company, adopted after the policy was issued, and which limited to some extent the liability of the company, were binding upon the policy holder. The circuit court of appeals for the eighth circuit, through Thayer, Circuit Judge, said: “We have next to determine whether the amendments to the defendant’s constitution of date January 8, 1889, February 20, 1894, and January 14, 1896, whereby it expunged those provisions of its constitution which obligated it, on the death of a member, to refund ‘all money paid on the policy in assessments,’ have the effect of depriving the plaintiff of the right to recover the assessments paid on the policy in controversy, and of limiting her right of recovery to the principal sum therein mentioned. The argument in favor of giving the amendments such effect as is last described is based wholly on the concluding paragraph of Jarman’s application for the policy, which is as follows: ‘I further agree, if accepted, to abide by the constitution, rules, and regulations of the company as they now are, or may be constitutionally changed hereafter.’ Conceding, in accordance with the stipulation of the parties, that the amendments in question were adopted legally in the manner prescribed by the defendant’s constitution and by-laws, we observe in the first instance that there is nothing to indicate that the amendments were intended to have a retrospective operation, and reduce the amount payable on certificates or policies like the one at bar, which was then outstanding, and, in plain language, obligated the company to refund all assessments that might be paid thereon. The present record contains no evidence which shows affirmatively that the amendments were intended to operate retrospectively and extinguish the obligation to refund assessments that had been expressly assumed, while tbe fact that outstanding policies were not recalled, and tbe promise to refund assessments expunged or erased from tbe face of sucb policies, fairly indicates, we tbink, that tbe amendments were designed to operate prospectively on policies thereafter executed. * * * He [tbe policy bolder] was to occupy a dual relation to tbe company: Hirst, as one of its members; and, second, as any other individual having a contract with it. In the former relation be was willing to be bound by any lawful amendment to the company’s constitution and by-laws that tbe members collectively saw fit to adopt, which concerned the government of tbe corporation or tbe mode of transacting its business, and did not impair any of tbe essential provisions of bis contract. He probably foresaw that in the course of time the company might find it expedient to make some changes in its method of corporate government, or in the mode of transacting its business, or in its rules of discipline ; and he doubtless intended to assent to all amendments of the constitution and by-laws which were framed for that purpose, and would not deprive him of any substantial right or benefit secured by his policy. 'x' * * And, even if it did appear that he voted for the amendments and was aware of their adoption, the presumption would be that he did so in the belief that the amendments operated prospectively, and not retrospectively upon antecedent contracts.” See also- Smith v. Pinch, 80 Mich. 332, 45 N. W. 183; Bragaw v. Supreme Lodge, K. L. of H. 128 N. C. 354. 54 L. R. A. 602, 38 S. E. 905. ■ ‘ Claims for money due by virtue of an agreement are unlike mere matters of discipline, questions of doctrine, or of policy, and are not governed by the same rules. * * * One who asserts a claim to money due upon a contract occupies an essentially different position from one who presente a question of discipline, of policy, or of doctrine of the order or fraternity to which he belongs.” Bauer v. Samson Lodge, K. of P. 102 Ind. 262, 1 N. E. 571. In the cases relied on by appellee, either express authority was reserved to change the constitution and by-laws existing when the certificates were issued, or the member subsequently performed some act clearly indicating his acquiescence in the amendments. The case of Grand Lodge, A. O. U. W. v. McKinstry, 67 Mo.. App. 82, illustrates this point. After the certificate was issued in that case, the constitution of tho lodge was amended to conform to a statute subsequently enacted, which restricted the power of designation to classes of persons other than those mentioned in the certificate. The policy holder, however, “surrendered his old certificate and received a new one,” clearly indicating a waiver on his part of any rights he might have had under the original certificate.

But it is said that Milly Cook assented to and acquiesced in the amendment to the charter of the Grand Fountain restricting her right to appoint beneficiaries under her contracts. We do not think she did. The only allusion in the record upon which such a claim can be founded is the preamble to the resolutions authorizing the “Grand Worthy Master” and the “Grand Worthy Secretary” of the Grand Fountain to make application to the circuit court of the city of Bichmond to have its charter altered and amended. That preamble, as above stated, says: “The members (or stockholders)” of the Grand Fountain were all present in person or by proxy. There is nothing in the record to indicate that Milly Cook was either a stockholder or a member of the Grand Fountain. Assuming that Levy Fountain, a subordinate fountain, was entitled to a delegate and was. so represented when these resolutions were adopted, we cannot assume, in the absence of direct proof, that the delegate was authorized to consent to the impairment of the contracts of the-old fountain. Inasmuch as there was no reservation of power-to modify or change these contracts, either in the original charter- or in the contracts themselves, and inasmuch as the Grand Fountain after its charter was amended appears to have made no attempt to take up these certificates or contracts and issue new ones in conformity with the amended charter, we cannot assume .that because the policy holder continued payments under such contracts she thereby intended to assent to a material modification thereof. On the contrary, the natural inference to be adduced from the facts is that she expected to be bound by the new constitution as far as it provided for the government and discipline of the Grand Fountain and the subordinate-fountain to which she belonged, but that her contract rights would be preserved and protected.

The decree is reversed, with costs, and the cause remanded for a decree in conformity with this opinion. Reversed.