Brotherhood of Locomotive Firemen & Enginemen v. Ginther

The plaintiff, defendant in error herein, brought an action against the Brotherhood of Locomotive Firemen and Enginemen to recover upon the beneficiary certificate hereinafter referred to and sometimes called the "policy." Judgment was for the plaintiff and the defendant brings the case here on error. The parties will be referred to herein as in the court below.

The plaintiff in his petition alleged that the policy was issued October 30, 1918, upon the life of Garrett F. Ginther, for $1000, payable, in case of the death of the insured, to William Ginther, his father; that said father predeceased the insured and that on June 24, 1922, said insured "designated on the back of said insurance policy a change of beneficiary, and therein named this plaintiff, Blaine F. Ginther, brother of said insured, beneficiary under said policy of insurance; that the said Garrett F. Ginther died on June 28, 1922." The defendant answered, admitting the issuance of the policy, but pleaded that the regulations of the defendant with respect to the change of beneficiary, had not been complied with. This was denied in a reply and plaintiff further pleaded that the said insured, immediately after the execution of the change of beneficiary by filling out the printed form on the back of the beneficiary certificate, was stricken with mortal illness, and incapacitated thereby from performing any other act in relation to the said policy of insurance, and while so incapacitated, died from his mortal illness four days thereafter. The policy provides that in the event of the death of said insured:

"William Ginther, father, related to him (insured), is hereby designated as his (insured's) beneficiary, and if the aforesaid member shall not have made a later designation of beneficiary, as may be provided in said constitution, the beneficiary named herein shall be entitled to receive, from the beneficiary fund of the said brotherhood, the sum of One Thousand Dollars, provided that the beneficiary designated herein shall not acquire any legal, equitable or fixed right or interest in and to the proceeds of this certificate which would prevent any change of beneficiary herein in the manner provided in said constitution * * *. This certificate is issued upon the express conditions that the constitution of the said brotherhood * * * is and shall be a part of this contract in the same manner and to the same extent as if said constitution * * * were written herein. Should the beneficiary named herein die before said member, or should there be a failure of a proper designation of beneficiary, then in all such cases the amount due upon the certificate shall be paid to the person or persons who may be entitled thereto in the order prescribed in the constitution of said brotherhood."

Printed on the back of the benefit certificate are the following instructions:

"To change beneficiary, write the name of the new beneficiary, and relationship of such beneficiary following the name, in the following blank form, designating same amount as on face of this certificate."

"Make acknowledgment of change of beneficiary before a notary public, or other officer authorized by law to take acknowledgments, and be sure that he impresses his official seal where indicated."

"Do not fill this blank form until change is desired."

Then follows the blank for use in making change of beneficiary. This was filled in, signed and acknowledged by the insured on June 24, 1922, and, omitting the acknowledgment, is as follows:

"Change of Beneficiary or Class of Certificate.

"I hereby certify that I am now a member of Lodge No. 86 of the Brotherhood of Locomotive Firemen and Enginemen, the same person to whom was issued the within beneficiary certificate. I hereby direct the cancellation of the certificate, and that assessments shall cease upon same, and that the proceeds arising therefrom shall no longer be payable as therein stated. I hereby direct that, in lieu of this certificate, a new certificate be issued to me for the sum of One Thousand Dollars, and in the event of my death while said new certificate is in force and effect, I hereby direct that the benefits arising therefrom be payable to Blaine F. Ginther, related to me as brother.

(signed) Garrett F. Ginther."

The following parts of the constitution of said brotherhood, relating to the designation and change of beneficiary, were introduced in evidence, namely:

"Article 8, Section 1 (c). A member may designate as his beneficiary or beneficiaries, one or more persons of the following class and no other. Viz.; wife, child or children, mother, father, sisters, brothers, blood relations, or persons depending upon him for support. And in the event that a member has no wife or child living, he may then designate as his beneficiary a charitable institution."

"Change of Beneficiary. "Section 10 (a). A member desiring to change his beneficiary, shall make such change in writing on the form printed on the back of the beneficiary certificate, and such change can be made without the consent of the beneficiary. Said certificate must be forwarded to the general secretary and treasurer.

"(b). Beneficiaries shall not have, nor shall they require, a legal, equitable or fixed interest in or to said certificate or the proceeds thereof, so as to prevent any member from changing his beneficiary.

"(c). The member's signature thereto shall be acknowledged before a notary public or other officer authorized by law to take acknowledgments * * *.

"(d). A change or transfer of beneficiary shall not be valid or have any binding effect until said certificate has been received by the general secretary and treasurer, and by him cancelled, and a new certificate issued wherein a new designation of beneficiary shall appear. * * *."

It appears from the evidence that the insured became sick with tuberculosis in the month of March, 1922, but was able to be up and around most of the time until June 24, 1922. On the last mentioned date he went before a notary public and signed and acknowledged the change of beneficiary on the back of the benefit certificate. The time of day when this was done does not appear. The notary testified that insured appeared sick at that time. Some time before midnight of the same day, the insured was taken violently ill, at the home of plaintiff with whom the insured was living. A physician was called and some morphine was given the insured at that time. He was removed to the hospital the next morning, where he remained until the date of his death, on June 28, 1922. The immediate cause of his death was cerebro meningitis. He was under the influence of morphine from the night of June 24 until his death. It does not appear what became of the benefit certificate from the time that he signed and acknowledged the change of beneficiary, as aforesaid. But it, together with proof of death, was sent in to the society by the plaintiff soon after insured's death. It was admitted that the original beneficiary in said benefit certificate predeceased the insured by a number of years; that the mother of the insured was dead, and that he was unmarried and had no children.

Our laws applicable to fraternal benefit societies provide that within certain restrictions, which do not affect the plaintiff in this case, "each member shall have the right to designate his beneficiary, and, from time to time, have the same changed in accordance with the laws, rules and regulations of the society, and no beneficiary shall have or obtain any vested interest in said benefit until the same has become due and payable upon the death of said member." Wyo. C.S. 1920, Sec. 5329. We understand that this provision is a part of a Uniform Fraternal Benefit Law that has been adopted in nearly forty states. Bacon on Life Acc. Ins. (4th ed.) Sec. 10, note 20 and Sec. 20, note 46. It is a part the laws of Ohio and Illinois, the only states where we have found decisions construing the pertinent provisions of the constitution of the defendant. Ohio Gen. Code, Sec. 9467; Ill. Rev. Stat. (1923) ch. 73, Sec. 488.

The quoted language of our statute may be accepted as a statement of the general policy of the defendant, as shown by its constitution, with reference to designation and change of beneficiary. We need not pause to inquire whether the statute would control if the constitution of the defendant were opposed to it. The policy is to permit the member to name the beneficiary, so long as he chooses a qualified person and follows the regulations as to the manner of making the designation or change. The society reserves no right of veto. The regulations are merely as to the manner of making the change, and to provide for notice thereof to the society so that the fact may be made a matter of record.

The plaintiff's petition was drawn on the theory that his designation as beneficiary constituted a "change of beneficiary," and the defense interposed by the society was that the change had not been made in the manner provided by the above-quoted provisions of its constitution. There may be some doubt whether the naming of a new beneficiary after the original beneficiary has died would be a "change of beneficiary" within the meaning of the regulations of defendant's constitution. That question will be discussed later. For the present we shall concede that to make the plaintiff the legal beneficiary the insured was required to follow the regulations in regard to a change of beneficiary.

The constitution of defendant (Sec. 10a, 10c) provides that the member desiring to change "his" beneficiary shall "make such change" on the form printed on the back of the certificate, acknowledging his signature before a notary public. This is the regulation as to the manner of making the change. It is conceded that the insured made the change in the manner prescribed. This was all that was required by the regulations to be doneby the insured or in his lifetime. By printed instructions on the back of the benefit certificate the insured was told how to make a change of beneficiary. He was told thereby that the change was made by filling in, signing and acknowledging the blank provided for that purpose. The instrument, when so executed, contained the direction to cancel the certificate and issue a new one. The insured was warned: "Do not fill this blank form until change is desired." The instructions contained nothing to indicate that the certificate, when the change of beneficiary was endorsed thereon, should be forwarded to the society by the insured or within any particular time. We do not say that these instructions on the back of the certificate could have the effect of changing a provision of the defendant's constitution. We do think, however, that they may be considered as an interpretation of the constitution by the officers of the company who prepared and approved the form of the certificate. They evidently thought that they were instructing the insured as to everything required to be done by him to change the beneficiary.

The other regulations are for the purpose of giving notice to the society in order that the change may be made a matter of record. In view of the general policy of permitting the insured to name his beneficiary without obtaining the approval of the society, the regulations for the purpose of providing notice of the change to the society, and for the cancellation of the old and issuance of the new certificate, should not, we think, be given a construction that would limit the member's right of appointment by any restrictions not clearly expressed. By the last sentence of Section 10 (a) it was required that the certificate be forwarded to the general secretary and treasurer. It was not required that this be done by the insured, or in his lifetime. It was further provided (Sec. 10d) that the change should not be valid or have any binding effect until the old certificate was received and cancelled and a new certificate issued wherein the new designation of beneficiary should appear. It was not required that these acts be done in the lifetime of the insured, and as they involved no consent or approval on the part of the officers of the society, they were purely ministerial. If the plaintiff was designated as beneficiary in accordance with the defendants constitution, his right to recover cannot be affected by the failure of defendant to perform the ministerial act of issuing the new certificate. Supreme Conclave v. Capella, 41 Fed. 1, 6; Arnold v. Newcomb,104 O. St. 578, 136 N.E. 206.

In the Ohio case just cited the court considered the very provisions of the constitution of the defendant that we have to consider in the case at bar. In that case the member, desiring to make a change of beneficiary, filled in and executed the blank on the back of the certificate, but the certificate was not sent to the society until after the death of the insured when, as in the case at bar, it accompanied the proofs of death. The insured in that case delivered the certicate to the newly designated beneficiary who retained possession of it until after the death of the insured. The delivery of the certificate to the beneficiary might be entitled to be considered on the question of the insured's intention, but it was in no respect a compliance with the regulations in regard to changing the beneficiary, and, in our opinion, does not serve to distinguish that case from ours so far as concerns the question of complying with the rules of the society. The Supreme Court of Ohio held that a change of beneficiary was effected. They emphasized the point that the regulations contained in defendant's constitution did not require that the certificate be sent in, cancelled and new certificate issued "during the lifetime" of the insured, and held that the insured, by doing everything required to be done in his lifetime had substantially complied with the regulations.

Arnold v. Newcomb, just discussed, and an Illinois case presently to be mentioned, are the only cases we have been able to find that have considered the meaning of the pertinent provisions of this defendant's constitution. It is desirable that the by-laws or constitution of a society like the defendant should receive a uniform interpretation so that the rights of members, beneficiaries and the society in different jurisdictions will be the same. Such uniformity of interpretation may sometimes be attained by looking to the laws and decisions of courts of the state where the society is incorporated. Royal Arcanum v. Green,237 U.S. 531, 542, 35 S. Ct. 724, 59 L. Ed. 1089, L.R.A. 1916 A, 771; Modern Woodmen v. Myers, 99 O. St. 87; 124 N.E. 48; Royal Arcanum v. Brashears,89 Md. 624, 631; 43 a. 866; Larkin v. Knights of Columbus, 188 Mass. 22, 73 N.E. 850. There is nothing in the record to show in what state the defendant is incorporated. There are facts to show that its home or general offices are in Cleveland, Ohio, where the policy was issued, and, in the absence of anything to show the contrary, we might be justified in assuming that the defendant is organized under the laws of that state. If that assumption be not warranted, we would still feel inclined to give great consideration to the opinion of the Ohio Supreme Court as to the meaning of the defendant's constitution, and, for the purpose of uniformity, to follow that opinion which does not seem to us to be unjust or erroneous.

It may be argued that Arnold v. Newcomb, supra, should be distinguished because in that case the money was brought into court and other claimants interpleaded, and the action thus became an equitable one, in which equitable principles could be applied, while the present action is one at law to be controlled by strict legal principles. This may be answered by quoting the words of Winslow, J., in McGowan v. Supreme Court, etc., 104 Wis. 173, 80 N.W. 603:

"The objection does not seem forcible. Either there was a change of beneficiaries or there was not. There is no middle course. Nor do we see how there could well be a change in equity and no change at law, or a change which should operate as to some parties and not to other parties to the transaction. Therefore we hold that the facts here shown prove a change of beneficiaries, even though the action be one at law."

The same conclusion was reached, and the point fully discussed, in Wintergerst v. Court of Honor, 185 Mo. App. 373, 170 S.W. 346.

Between the case of Arnold v. Newcomb, supra, and the case at bar there is another difference which, however, if material, does not help the defendant. In that case the original beneficiaries were living when the insured changed the beneficiary and when he died. In the case at bar, when the insured named the plaintiff as his beneficiary, the original beneficiary was dead, and the contract of insurance was without any designated beneficiary.

The sections of defendant's constitution that seem to control this situation are Sec. 1 (c) and 1 (d). Section 1 (c) already quoted, provides generally that a member may designate as his beneficiary one or more persons of the classes there mentioned. There is nothing provided as to the manner of making the designation. Section 1 (c) is followed by Sec. 1 (d) which provides that "should there be no legally designated beneficiary, then the fund shall be paid, subject to provisions of this constitution bearing thereon, as follows, in the order named: First: to the widow, Second: to the child or children, Third: to the mother, Fourth: to the father, Fifth: to the sisters and brothers equally." There is some doubt whether this was introduced in evidence at the trial, but for the purposes of our decision we shall grant, as defendant contends, that it was.

The original beneficiary had no vested right, but only a mere expectancy. When he died no one succeeded to any rights under him, and the contract was without a "legally designated beneficiary." Had this condition continued until the death of the insured, the persons mentioned in Sec. 1 (d) would have been entitled to the fund, not because they had been "designated," but because the original designation had become ineffective on the death of the beneficiary and there had been no other designation. The situation would have been the same if there had never been a designation of beneficiary, and in such a case it would seem clear under the authorities that a beneficiary could have been designated without following the manner prescribed for "changing a beneficiary." Hanson v. Minnesota etc. Ass'n., 59 Minn. 123; 60 N.W. 1091; Shryock v. Shryock, 50 Nebr. 886; 70 N.W. 515; St. Louis Police Relief Ass'n. v. Tierney, 116 Mo. App. 447, 91 S.W. 968.

In Cullen v. Knights of Maccabees, 77 Hun 6, 28 N.Y.S. 276, where the appointment of a beneficiary had been revoked, it was remarked that the certificate must be treated as if no designation had been made. We might say in our case that the original designation was revoked by the death of the beneficiary. If the contract should then be treated as if no designation had been made, the appointment of the plaintiff might well be considered a "designation," and not a "change" of beneficiary, and not controlled by the regulations relied upon by the defendant.

This view would seem contrary to many cases in which it has been held or assumed that in appointing a new beneficiary after the death of the former beneficiary, the regulations in regard to change of beneficiary must be followed. In many of those cases the point seems not to have been raised. Others may be distinguished on the ground that the by-laws or constitution in question showed clearly that any new designation should be made in the same manner as a change. Some of the cases cannot be distinguished on this point from the case at bar, and we might feel disposed to follow them if it were not for the case of Quest v. Brotherhood of Locomotive Firemen Enginemen, 230 Ill. App. 321, an action against this society, where, on consideration of these same regulations, the conclusion of the court is stated as follows:

"The provisions of the constitution and by-laws of appellant relied upon in this case have no application to the naming of a new beneficiary in place of one who has died during the lifetime of the insured, but only applies where the insured desires to change the name of a living beneficiary."

It is stated in the report of this case that the opinion has become final on denial of certiorari by the Supreme Court. So, in Illinois, the defendant's constitution permits the member, in a case like ours, to designate a new beneficiary without complying with the regulations in regard to change of beneficiary.

It is argued that to apply the rule of the Quest case would permit the plaintiff to recover on a theory different from that on which the case was brought and tried. It is true that the petition alleged that there was a change of beneficiary, but the facts were alleged, and we think if those facts warranted a finding that the appointment of plaintiff was a designation and not a change, the plaintiff might have been permitted to recover on that theory. The point was not overlooked by plaintiff at the trial, for, in objecting to the introduction of Section 10 of defendant's constitution, the plaintiff insisted that the provisions of that section did not limit the right of a member to appoint a new beneficiary after the other beneficiary had died.

Under the case of Arnold v. Newcomb, supra, the trial court was justified in holding that the plaintiff was the legally designated beneficiary, even granting that his designation was required to be made in conformity with the regulations in regard to a change of beneficiary. Under the case of Quest v. Brotherhood of Locomotive Firemen and Enginemen the trial court might have held that the designation of plaintiff as beneficiary was not a change of beneficiary within the meaning of the regulations relied upon by the defendant. These are the only cases construing these identical regulations and we are disposed to follow them. If cases to the contrary are to be found, they must have less influence, for we think we should, where it does not seem unjust or unreasonable, give to defendant's constitution the same meaning it has elsewhere.

The judgment of the district court will be affirmed.

Affirmed.

POTTER, Ch. J., concurs. BLUME, J., dissents.