Case Name: DROBNEY v. LUKENS IRON & STEEL CO.
Court: United States Court of Appeals for the Second Circuit
Jurisdiction: United States
Decision Date: 1913-03-10
Citations: 204 F. 11
Docket Number: No. 129
Parties: DROBNEY v. LUKENS IRON & STEEL CO.
Judges: • Before LACOMBE, COXE, and WARD, Circuit Judges.
Reporter: Federal Reporter
Volume: 204
Pages: 11–17

Head Matter:
DROBNEY v. LUKENS IRON & STEEL CO.
(Circuit Court of Appeals, Second Circuit.
March 10, 1913.)
No. 129.
1. Release (§ 24 ) — Miskepeesentation—Feaud—Proof at Law.
Where plaintiff, an illiterate widow of one of defendant’s employes, was induced to execute a receipt for $1,000 and for $1, releasing defendant from all liability arising out of the death of her husband, on the misrepresentation that, the instrument was a mere receipt for insurance money and that the dollar was a present to her infant child, such misrepresentation wits a direct fraud in the execution of the document which could be proven at law.
LEd. Note. — For other cases, see Release, Cent.- Dig. §§ 41-46; Dec. Dig. § 24. ]
2. Release (§ 13 ) — Liability for Death — Mutual Benefit Society — Insurance.
Defendant company maintained and operated in connection with its business an employes’ mutual benefit society, taking 10 cents a month from the wages of each employe for the benefit of the society, and furnishing the necessary additional funds and clerical force to operate it. The constitution and by-laws provided that the acceptance of benefits for death or permanent disability of ail employe, resulting from accident in the company’s service, should operate as a full satisfaction of any and all claims against the company on the part of the servant or by all who might legally assert such claim, etc. Held, that, where the widow of an employs killed in defendant’s service received $1,000 benefit and executed a release to the society, by which, in consideration of that sum and the further sum of $1 paid by defendant, she released it from all liability on account of the death of her husband, the transaction created a situation which relieved defendant from all liability because of a valuable consideration moving from it to the beneficial association and to its members,-in the absence of fraud or mistake, and was a defense to an action for intestate’s death.
[Ed. Note. — ITor other cases, see Release, Cent. Dig. §§ 21-27, 29; Dec. Dig. § 13. ]
3. Release (§ 21 ) — Feaud—Return of Money — Tendee.
Defendant, maintained an employes’ benefit society, under the constitution and by-laws of which relatives of an employe were entitled to a specific benefit in case of a member’s death, the receipt of which should operate to relieve defendant from any liability by reason of such death. After decedent was killed in the course of his employment, his widow was paid $1,000 by the association and $1 by defendant. She executed a receipt for the two sums, releasing defendant from all liability by reason of decedent’s death. The widow subsequently, claiming that she was induced to sign the release by misrepresentation that it was for insurance money and that the dollar was a present for her child, tendered a return of the insurance money to defendant, and sued for damages. Beld, that the tender of the insurance money to defendant, instead of to the beneficial association, was not a valid tender, and that her failure to tender the sum to the association was a bar to recovery.
[Ed. Note. — For other cases, see Release, Cent. Dig. §§ 41-46; Dee. Dig. I ÜL ]
Coxe, Circuit Judge, dissenting.
In Error to the District Court of the United States for the Southern District of New York; Walter C. Noyes, Judge.
Action by Marie Drobney against the Lukens Iron & Steel Company. Judgment for defendant, and plaintiff brings error.
Affirmed.
Rufus M. Overlander, of New York City (H. C. Smyth, of New York City, of counsel, and M. F. Tompkins, of New York City, on the brief), for plaintiff in error.
Wingate & Cullen, of New York City (G. W. Wingate, of New York City, of counsel), for defendant in error.
• Before LACOMBE, COXE, and WARD, Circuit Judges.
For other eases see same topic & § numbkh in Dec. & Am. Digs. 1907 to üate, & Rep’r Indexes

Opinion:
WARD, Circuit Judge.
This is an action by the plaintiff as widow of Martin Drobney "to recover damages for his death, under the statute «of the state of Pennsylvania. He Was a member of the Wawasset Beneficial Society composed of defendant's employés. The form of application for membership is as follows:
"To tlie Wawasset Beneficial Society:
"I.residing in tlie borough township of.in.county, Penn-
(Cross out one)
Sylvania, aged, at last birthday . years and employed by or entering
(Gross out' one)
the employ of the Lukens Iron & Steel Co., as a .apply to be admitted as a member of the Wawasset Beneficial Society, hereby consenting to be bound by the1 constitution, by-laws and rules of said society, which I have read or had read to me, and by any amendments thereto which may hereafter be made by the board of managers of the society and agree that an admission fee of $1.00 and dues at the rate of . per month in advance shall be deducted by the pay department of the Lukens Iron & Steel Co., or its successors, while I am a member of the said society, from the wages that may be due me from my employment as aforesaid, and paid to the treasurer, or other proper officer, of the said beneficial society. I also agree that' in consideration of the amount paid or to be. paid by the said company into the treasury of the said beneficial society, namely, ten cents per month for each beneficial member of the society at work in their employ and the collection of members' dues and supplying office room and clerical service by the company without cost to the society, and the agreement and guarantee of the company, as set forth in Art. VII of the constitution, the payment by the society to me or to my representatives of the benefits due on account of my permanent disability or death resulting from accident occurring in the company's service, shall satisfy'all claims against the- said company for damages arising from or growing out of said permanent disability or death unless before payment of such benefits notice is given to the president of the society of intention to seek indemnity from the company or to bring suit at law and further, that no part of said benefit for death or permanent disability shall be due or payable unless and until good and sufficient releases shall be delivered to the president of the said beneficial society of all claims against the said society and to an executive officer of the said company as against said company arising from or growing out of my death or permanent disablement, said releases having been duly executed by me or in the event of my death or of my being disqualified by reason of physical impairment from acting on my own behalf, by all who might legally assert such élaims; and further, if any suit shall be brought against the said company for damages arising from or growing out of permanent disability or death occurring to me, the said benefits otherwise payable and all such obligations of said beneficial society and of said company created by my membership in the said society shall thereupon be forfeited without any declaration or other act by the said beneficial society or said company. "
Article 7, section 1, oí the constitution, provides:
"¡Section 1. Tlie provisions of the society and the schedule of benefits payable are based upon an agreement of the Lukens Iron & Steel Co. to supply office room and clerical service, and collect the members' dues by deduction therefor from wages payable, .act as treasurer of the society, also to make a contribution to the treasury of ten cents per month for each beneficial member at work in their employ; also to guarantee the payment of all benefits to the members of the society by advance or loan to the society from time to time of such sum or sums as may be needed, whiph shall be repaid from surplus income of the society from time to time as it may be able to do, in consideration of which every applicant for membership shall agree that acceptance of benefits for death or permanent disability resulting from accidents in the company's service shall operate as full satisfaction of any and all claims against the company on the part of himself or of any and all who might legally assert such claim on account of such permanent disability or death."
Article 7, section 6 (a), of the by-laws, provides:
"Sec. tifa): In consideration of the agreement and guarantee of the company as set forth in article 7 of the constitution, the acceptance by the member of benefits for permanent disability resulting from accident occurring in their service shall operate as satisfaction of ail claims against the company for damages arising from or growing out of such disability unless before payment of any such benefits notice is given to the president of the society of intention to seek indemnity from the company, and, further, in tlie event of the disability or death of a member resulting from accident occurring in the company's service, no part of the benefits for death or permanent disability shall be due or payable unless and until good and sufficient releases shall be delivered to the president of the society of all claims against the society and to an executive officer of the company as against the company, arising from or growing out of the death or permanent disability of the member, said releases 'having been duly executed by the member or by all who might legally assert such claims or by those legally competent to release for them, and. further, if any suit shall be brought against the company for damages arising from or growing out of permanent disability or death occurring to a member, or if tlie member or Ms legal representative shall elect to sue at law and refuse or fail to execute and deliver the releases as above specified tlie benefits otherwise payable and all obligations of the society and of the company, created by the membership of such member in the society, shall thereupon bo forfeited without any declaration or other act by the society or the company, but the president of the society may, in conjunction with an exec-stive officer of the company, at their discretion, waive such forfeiture upon condition that all pending suits shall first be dismissed and the specified releases executed and delivered."
The plaintiff, an illiterate woman unable to speak English or to read or write, executed the following document:
"Received of Wawasset Beneficial Society the sum of one thousand x/10() dollars in full of all benefits due under certificate of membership Jib. 7i'J on account of the accident and death to Mart Drobi No. 1176 and in consideration of said payment and tlie further sum of one dollar to me in hand paid by the Lukens Iron and Steel Company, I do hereby release tlie said company of and from all suits, demands and damages for or on account of tlie accident and death to Mart Drobi No. 1176 as aforesaid.
"Witness my hand and seal this 8th day of April, A. D. 1911.
her
"Mrs. M. X Drobi [L. S.]"
mark
Upon executing the above she received two checks which .she deposited in bank and has collected, one for the sum of $1 and the other for the sum of $1,000. The trial judge directed a verdict for the defendant. There was testimony that the plaintiff was told before signing the above that it was merely a receipt for insurance money, and that the $1 mentioned was a present to the baby. This we think presented a question of fact for the jury who, if they found the allegations to be true, might have treated the document so far as it was a release as never having had any legal existence because of fraudulent representations to the plaintiff as to its purport in this respect. It would not be a case of fraudulent collateral representations by which the plaintiff was induced to sign what she knew to be a release, which could only be corrected in equity, but direct fraud in the execution of the document by making her think that it was not a release, which could be proven at law. Hartshorn v. Day, 19 How. 211, 220, 15 L. Ed. 605.
However, this inquiry need not be further prosecuted because we think that, striking out all evidence of a release in the document, it remains a receipt for insurance money, as she was correctly told it was. This payment could have been made and accepted only in accordance with the explicit provisions of the constitution and by-laws of the beneficial association. They made it a full satisfaction of all claims by Martin Drobney or his representatives against the defendant. The plaintiff, though not a member, received the money through her husband's membership. It made no difference whether she could read or not, or whether she knew the conditions upon which the payment was made. The 'transaction created a situation which relieved the defendant of all liability because of a valuable consideration moving from it to the beneficial association and its members. Johnson v. Phila. & Reading R. R. Co., 163 Pa. 127, 29 Atl. 854; Ringle v. Penna. R. R., 164 Pa. 529, 30 Atl. 492, 44 Am. St. Rep. 628; Reese v. Penna. R. R. Co., 229 Pa. 340, 78 Atl. 851; Day v. Coast Line, 179 Fed. 26, 102 C. C. A. 654. Of this right, in the absence of fraud or mutual mistake, no court can deprive the defendant. .
If fraud had been proved in inducing thé plaintiff to accept the insurance money, she could not maintain this action without returning or offering to return the money to the beneficial association. The case is quite unlike those cited, where a release is signed upon the strength of an untrue statement that the mone)^ paid was something different from what the documents called for as, for instance, that it 'was wages or a gift, instead of a consideration for a release. Under such circumstances there need be no tender. For this reason the plaintiff might not be obliged to return the dollar if she received it upon the representation that it was a present to the baby. In accordance with the advice of her attorney to return the insurance money, the plaintiff drew it out of bank and tendered it to one Jackson, an agent of the defendant. This is denied by Jackson, but, if it were true, the tender would be unavailing because the defendant was under no circumstances entitled to the money, and a tender to it was not a tender to the beneficial association. She was acting under advice at this time, and should have made a proper tender. It would be quite inequitable to permit her to retain the money which the constitution and by-laws of the beneficial society provided should be forfeited if she brought suit against the defendant, or, if received, should be full satisfaction of all claims and at the same time permit her to maintain this fiction.
The judgment is affirmed.