Supreme Lodge U.B.A. v. Johnson

We copy the statement of the case made by the Court of Civil Appeals, as follows:

"Appellant is a duly incorporated fraternal insurance organization under the laws of Texas, with its chief place of business in Tarrant County. That its business is conducted for the sole benefit of its members and beneficiaries and not for profit; that it has a lodge system with ritualistic form of work and elective representative form of government, and that the fund from which it pays its beneficiaries is derived from a monthly assessment against its members, and that in all other respects it conforms to our laws relating to fraternal beneficiary associations as set forth in title 49a, Supplement Sayles' Texas Civil Statutes.

"It further appears that one W.F. Walker died on the 26th day of March, 1902, holding a certificate of the appellant association for the sum of $1000 payable to his wife, Mrs. W.F. Walker, by virtue of which appellant is now indebted in the sum of $500; that after the death of her husband Mrs. Walker became justly indebted to the appellee in this case, who sued her upon such indebtedness in the Justice Court, and at the same time duly sued out garnishee process which was served on the appellant association. Appellant pleaded that the fund due on the certificate mentioned was exempt from such process; and from the judgment of the Justice Court against this contention an appeal to the County Court was taken where a like judgment was rendered, and hence this appeal.

"The exemption claimed in the justice and county courts rests upon section 11 of the act relating to fraternal beneficiary associations, approved May 12, 1899 (title 49a, Supp. Sayles' Civ. Stats., Gen. Laws 1899, p. 199), which is as follows: `Sec. 11. The money or other benefits, charity, relief or aid to be paid, provided or rendered by any association authorized to do business under the provisions of this act, shall not be liable for the debts of the beneficiary or holder of any certificate, and shall not be subject to garnishment or other process at the suit of any creditor, nor shall it be taken, seized, appropriated or applied by any legal or equitable process or by operation of law to the debts of the certificate holder or any beneficiary named in such certificate or any person who may have any rights thereunder.'

"Appellee's contention, with which the trial courts agreed, is that said section conflicts with section 1 of the fourteenth amendment to the Constitution of the United States, providing that no State shall deny the equal protection of its laws to persons within its jurisdiction, and also with section 3, article 1, of the Constitution of Texas, providing that no man or set of men is entitled to exclusive, separate public emoluments or privileges but in consideration of public services."

By an act approved May 12, 1899, for the regulation of "fraternal beneficiary associations" (Laws 1899, p. 195), the Legislature of this State defined such associations in these terms: "Be it enacted by the Legislature of the State of Texas: 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 the beneficiaries, and not for profit, or that issues benefit certificates to such of its members only as may apply therefor, and that maintains a separate branch composed of the members who hold such certificates issued, and governed by or through a separate board of management, authorized and appointed by such corporation, society or association, for the sole purpose of managing and conducting such branch." * * * That act prescribes the form of government for such associations and in many particulars regulates their transactions with their members. It also prescribes certain requirements in the way of reports to be made to the Commissioner of Insurance of the State and places such associations under the control and supervision of that department. Section 16 of the act reads as follows: "The provisions of this act shall not apply to nor include the Order of Railway Conductors, Order of Locomotive Engineers, Order of Locomotive Firemen or Brotherhood of Railway Trainmen, or Order of Railway Telegraphers, which issue policies of insurance or benefit certificates only to members of their respective organizations, and said organizations shall be exempt from the provisions of this act." It is claimed that the exemption of the orders named in the foregoing section denies to them the "equal protection of the law" and renders the law unconstitutional because it is in conflict with the first section of the fourteenth amendment of the Constitution of the United States.

It is well settled by the decisions of this court, as well as by the decisions of the Supreme Court of the United States, that the Legislature may classify persons, organizations and corporations according to their business and may apply different rules to those which belong to different classes. Campbell v. Cook, 86 Tex. 630; Union Central Life Ins. Co. v. Chowning,86 Tex. 654; Marchant v. Pennsylvania Ry. Co., 153 U.S. 389.

There is nothing upon the face of the law to show that the orders named in section 16 of the act are embraced in the classes described in the first section as "fraternal benefit orders," and in favor of the constitutionality of the law the court will presume that the Legislature has properly classified the different orders and has applied proper rules for their government, so as to give to each that belongs to the class named due protection of the law. However, we are of opinion that upon the face of section 16 the orders named appear to belong to a different class from those named in the first section in this, that all of the orders exempted from the operation of the act embrace only railroad employes and each order embraces a particular class of the general class of laborers. Besides we know, as a matter of common knowledge, that those orders are labor organization that deal with their members in regard to their employments, acting through such organizations to secure what they conceive to be their rights as laborers. It would be an unnecessary burden to place upon such orders the supervision of the Insurance Department. Those orders are not surrounded by like conditions as the "fraternal beneficiary associations;" therefore the discrimination is proper. Marchant v. Railway Co., before cited.

We conclude, therefore, that the Legislature had the power to divide the different associations and orders into classes and to exempt those orders named in section 16 from the general operation of the law, and that the law is not thereby rendered unconstitutional.

It is ordered that the judgments of the County Court and of the Court of Civil Appeals be reversed and that this court proceed to enter such judgment as the County Court should have entered. It is further ordered that J.E. Johnson take nothing by reason of his garnishment and that the garnishee, the Supreme Lodge United Benevolent Association, go hence discharged and recover from said Johnson all costs of all of the courts.

Reversed and rendered.