Court Opinion

ID: 3322423
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:39:57.440213+00
Date Added: 2024-06-11T12:36:05.747549
License: Public Domain

The plaintiff's complaint is met by a demurrer sustained, which assigns nineteen grounds of demurrer. In the defendant's brief these grounds are consolidated into four, which are stated as follows: first, the Texas corporation had no authority or power in the premises; second, the defendant had no power or authority under the laws of Massachusetts to enter into said contract; third, there was no consideration for the contract; fourth, the plaintiff has no cause of action against the defendant by reason of any contract, or claimed contract, set forth in the complaint. *Page 201 
The last three of the objections thus urged to the complaint are based upon an entire misconception of it. They rest upon the assumption that the plaintiff is seeking relief for the violation of some contract obligation which the defendant has entered into. That is not the gist of the action, and in so far as the complaint suggests the existence of any express undertaking on the part of the defendant, it is only as one of the incidents in the story told — a fact which it is conceived fortifies and strengthens the plaintiff's right to have the relief sought. The plaintiff asks for equitable relief only. It is none the less equitable because it is sought in the form of a money payment. The complaint attempts to set up a state of facts which entitles the plaintiff, as representing its members who were formerly members of the defendant, to the relief prayed for. It does not rest upon any contract between the parties, but upon the existence of relations and a series of facts and events which it says justifies it in its claim to an equitable proportion of certain funds in the defendant's hands, and this whether or not the parties ever entered into direct contractual relations with each other. The second, third and fourth of the consolidated reasons of demurrer are therefore inadequate to meet the situation presented by the complaint.
The remaining reason assigned for the inadequacy of the complaint calls for the further explanation of its meaning, found in the demurrer itself, as follows: "5. It does not appear that the Supreme Lodge of the Ancient Order of United Workmen had any authority or right to carry on its business in the State of Massachusetts, or, under the laws of Massachusetts, had any control over the Grand Lodge of the State of Massachusetts, or that the defendant ever recognized, or submitted to, the authority of the Supreme Lodge of the Ancient Order of United Workmen. 6. It does not appear that the Grand Lodge of Massachusetts, or its members or its beneficiaries, agreed to the separation *Page 202 
of the Grand Lodge of Connecticut from the Grand Lodge of Massachusetts."
A sufficient answer to this claim is found in the fact that the Supreme Lodge has never undertaken, as far as appears, to carry on any business in the State of Massachusetts; that it does appear that it had control over the Grand Lodge of Massachusetts in respect to the matter in which control was attempted to be exercised; that it does appear that the defendant recognized and submitted to the authority of the Supreme Lodge in that wherein authority was assumed; and that it appears that it was wholly unnecessary that the members or beneficiaries, who were the members, of the Grand Lodge of Massachusetts, should agree to the division of its territory which was made when the plaintiff was organized, in order that such division and organization should be effectual as to all parties concerned.
If we examine the complaint we learn that both the plaintiff and the defendant are subordinate bodies of the Ancient Order of United Workmen; that this Order is a fraternal insurance organization with a membership extending throughout the greater part of the United States; that the Order has a constitution and body of general laws for the conduct and government of its affairs; that the supreme representative authority is vested in a body known as the Supreme Lodge; that by authority of the Supreme Lodge, subject to the constitution and laws of the Order, Grand Lodges are organized and exist in such States, territories and districts as the Supreme Lodge may determine; that subordinate in turn to Grand Lodges are local lodges, within which are grouped the members of the Order; and that the constitution and general laws of the Order provide that the territory comprising a Grand Lodge having jurisdiction over more than one State may be divided by the Supreme Lodge.
Here we have outlined the familiar scheme of organization usually resorted to where bodies of persons, widely *Page 203 
scattered or numerous, are associated for a common purpose. The ultimate source of authority is found in the individual members, who are gathered into the lowest organic groups and exercise their right of government by representative methods. There is a body of organic law which defines what the details of organization shall be and the powers committed to the governmental agencies thus created. To this body of organic law the whole organization, its agencies of government and members, are alike subject, and under it all the powers which are exercised within and in the name of the organization are exercised, and all its rights and privileges enjoyed. This law, which is the expression of the will of the membership, enters into all the relations created by the organization and operates to define and limit them and the rights and privileges which the organization bestows. By this organic law there is created as a part of the chosen system of government a representative body in which is reposed a supreme authority as respects organization, government, regulation and discipline, which is defined by the fundamental law. Between it and the individual units of membership are one or more intermediate bodies, subordinate to the supreme body, also existing by the fundamental law, and all exercising authority (and in the event of two or more, gradations of authority) which is conferred under and defined by that law. These various bodies, supreme or subordinate, are in no sense separate and independent. They are only interrelated parts of a single, comprehensive, unified system existing as the result of the will of the membership of the general body, under a common law which comes from that membership, subject to a common authority created by that membership, and seeking common ends which are the concern of every member.
In the situation before us the organic law of the Order is written in what is known as the constitution and general laws. The Supreme Lodge has been made the repository *Page 204 
of the supreme power defined by and subject to this law. The Grand Lodges are by the provisions of this law its subordinates in the scheme of government, and to a certain extent at least its creations. We have no means of knowledge afforded us in the complaint as to all the provisions of the constitution and general laws of this Order. But we are told that the Supreme Lodge has therein been given authority to divide the territory over which the defendant was given grand lodge jurisdiction prior to October 17th, 1901, and that suffices to inform us that the action of the Supreme Lodge which created the present situation was one in the execution of a power conferred by the will of the membership of the Order and in respect to a subordinate agency of the Order subjected by that will, which is the law of its being, to the exercise of that power. This, and not the laws of Massachusetts, is the source of the authority exercised.
The defendant seems to rely upon the fact that it has been incorporated under the laws of Massachusetts, as affording it an exemption from the operation of the laws of the Order, or at least that one with which we are now concerned. It is as difficult to see why this result would necessarily flow from the mere act of incorporation, regardless of its terms, as it is to discover how, if that was the result, it could retain its appointed place in the organization to which it belongs and serve its allotted purposes as an agency of that organization. It also relies upon certain statutes of that State regulating the operation of benefit insurance associations, as prohibitive of the exercise by the Supreme Lodge of the authority in question, with the results claimed for it. We have occasion later to notice that this reliance is not well placed.
The situation thus presented possesses striking analogies in many respects to that which frequently exists in general church organizations, where the individual church is the member of a larger body with gradations of authority *Page 205 
which finally rests in some central body or authority which has the general ultimate power of control, more or less complete, over the whole membership and its organized parts. Such an organization was under consideration in Watson v. Jones, 13 Wall. (U.S.) 679, and the principles there laid down as to the position and power of the central authority, and the conclusive effect which must be given to its action, have a distinct pertinence to the situation here presented.
This analysis of the conditions found in the organization of this Order has an important bearing upon several aspects of this case, but when considered in connection with the authority conferred upon the Supreme Lodge it establishes beyond question that when it took its action dividing the territory over which the jurisdiction of the defendant extended, and took from that territory the State of Connecticut and organized the Connecticut members of the Order into a newly-created Grand Lodge which should thenceforth have jurisdiction within the territory of the latter State and over the members of the Order who should be resident therein, and did no more, it was acting with respect to the internal affairs and concerns of the Order, and was in no sense carrying on business within the State of Massachusetts. Acting, as it did, pursuant to the organic law of the Order, its action was binding upon every subordinate body and individual member, and needed no assent on the part of the defendant to make it operative. If assent, however, were needed, it is to be found in the action of February 25th, 1902, recited in the complaint.
The complaint alleges that the Order is a fraternal insurance organization. The rights of its members are, accordingly, something more than that of social association. Rights of property are attached to membership. A foundation for the intervention of courts of equity is thus laid. Rigby v. Connol, L. R. 14 Ch. Div. 482. It also appears that the defendant has in its hands certain funds held for the *Page 206 
protection of its members in their pecuniary rights. These funds partake of the character of trust funds, and equity will therefore see that the trust is enforced. Fawcett v. Iron Hall, 64 Conn. 170, 184, 29 A. 614;Burke v. Roper, 79 Ala. 138; State Council v. Sharp, 38 N.J. Eq. 24, 27. The relation of the parties to each other as subordinate bodies of an Order of which the Supreme Lodge stands at the head, as already indicated, and with the powers and authority already indicated, is set up. It is alleged that the defendant, for more than twenty years prior to October 17th, 1901, had existed as an organized Grand Lodge forming a part of this system and having jurisdiction conferred upon it for grand lodge purposes by the authority which was over it and over the members of the Order resident in the New England States, and that among these were many residents of Connecticut; that on October 17th, 1901, while this situation continued, action was taken by the Supreme Lodge, to which attention has already been directed, dividing the territory embraced within the jurisdiction of the defendant and thereby separating from the defendant Grand Lodge the members thereof resident in Connecticut, many in number and gathered into local lodges, and organized such members and lodges into the plaintiff Grand Lodge thus newly created, and that this division and separation took effect November 1st, 1901. It is alleged that at this time the defendant had in its hands certain funds and property, enumerated in paragraph 32 of the complaint, which equitably belonged to the members of the Order within its jurisdiction as it was prior to the separation, and including, therefore, the Connecticut members; that it also held moneys which had been recently paid into what is known as the "Beneficiary Fund" by the members of the Order within the territory of the defendant, under a call issued by it pursuant to the rules of the Order, for the purpose of meeting anticipated death claims, and as the equitable payment of the individual members of their *Page 207 
equitable share of the liabilities of the defendant for beneficiary claims due at the date of separation; that a considerable sum was thus paid by the Connecticut members who were organized into the plaintiff, and that said sum so paid in and on hand was not needed for the payment of death claims or beneficiary liabilities maturing prior to said date, but enured to the benefit of the defendant thereafter. These facts, more fully set out in the complaint, are the essential ones of the plaintiff's claim for an equitable accounting. Other facts are alleged in aid of the case thus presented, but the substance of the plaintiff's claim, save in one respect hereafter noticed, is to be found in the situation which is thus outlined.
The plaintiff says that under its allegations it is entitled to represent the rights of its members who by the action of the Supreme Lodge became separated from the defendant Grand Lodge. We do not understand the defendant to deny this proposition save as it, as an incident to its assumption that the complaint is one upon a contract, urges that the plaintiff, being a corporation organized in January, 1902, is not identical with the voluntary organization made in October, 1901, and not the party to whom the contract ran, and that therefore, in the absence of an allegation of an assignment or transfer to it, it has no right, title or interest in or to any of the funds in question which will enable it to maintain the action. The allegations that the newly-created Grand Lodge of Connecticut immediately upon its creation became the representative of the Connecticut members of the Order, and that the Grand Lodge of Connecticut, which before January, 1902, had been unincorporated, was then incorporated and thereupon, under the laws of the Order, succeeded to all the rights of the pre-existing voluntary organization, when read in connection with the other allegations of the complaint, properly interpreted, dispose of this contention.
All the funds and property which the defendant, as a *Page 208 
benefit association, had gathered together prior to the separation and held at that time, were trust funds. They were held in trust for the purposes designated by the laws and rules of the Order, and every member had an interest therein of some kind. State Council v. Sharp,38 N.J. Eq. 24, 27. The complaint alleges that this interest, as respects the funds and property enumerated in paragraph 32, was that of an equitable ownership. It was entitled to establish this fact, which might well be true, and to establish it by showing that they were held for the protection of the members as insurance beneficiaries, or for the security or prompt payment of the claims of the members as such beneficiaries. In the case of the beneficiary fund the allegations as to its purpose and use and the sources from which the moneys in it at the date of separation were derived, establish most directly the equitable interest therein of every member. Fawcett v. Iron Hall, 64 Conn. 170, 184, 29 A. 614.
When the separation was accomplished by the Supreme authority of the Order pursuant to power vested in it by its organic law, which defined and limited the relations of all the members and subordinate bodies to each other and to the Order itself, and the Connecticut members were gathered into a newly-created Grand Lodge, whatever equitable ownership or interest in the funds or property of the Grand Lodge of Massachusetts the members so separated had, would not, upon the facts alleged and in the absence of other facts which might put a different aspect upon the situation, be lost to them, but would go with them into their new relations. It is well settled in consonance with reason, that when individuals, or a portion of a corporate body, secede from the main body, they leave behind them all its rights and funds and can successfully urge no claim thereto. Goodman v. Jedidjah Lodge, 67 Md. 117,126, 9 A. 13, 13 id. 627; Smith v. Smith, 3 Dessaus. Eq. (S. Car.) 557. But the situation presented by the allegations of the complaint is a radically different one. *Page 209 
The Connecticut members took no voluntary action. They were the subjects of the action of the Order to which they belonged and continued to belong. They were taken out of their former grand lodge associations and into others, by the power which was alike over them and over their former associations, and pursuant to the organic law of the Order, to which all concerned had become subject. The Grand Lodge of Massachusetts with which, by the commandment of the Order, they had been affiliated, had, in gathering its benefit funds, been simply a part of the machinery of the Order provided by its constitution and laws to carry out its purposes and the better secure its privileges to the members committed to its grand lodge jurisdiction. The trust which it was executing in respect to these funds was a trust being executed by it as an agency of the Order. To hold, under these circumstances, that the exercise by the Supreme Lodge of its authority to divide the territory over which a subordinate jurisdiction had been committed to the Massachusetts Grand Lodge, was attended with the result — in the absence, at least, of law or regulation of the Order to that effect or of other facts not appearing — of depriving the separated members of what had been in equity theirs and giving it to those who remained, would be the height of injustice and inequity — an injustice and inequity which the law will not sanction.Merrill Lodge v. Ellsworth, 78 Cal. 166, 20 P. 399, 400. Equity will see to it that such a result is not accomplished, and will accord to the separated members an accounting for the funds and property in the hands of the defendant at the time of the separation, in so far as they may be able to establish an equitable interest therein at that time.
The complaint sets out certain votes of the parties hereto, passed subsequent to the separation, by force of which it is said that they then, for the consideration of their mutual undertakings, agreed upon the basis upon which this accounting should be made, in so far as the moneys in the *Page 210 
beneficiary fund are concerned, and that upon this basis, in view of other facts alleged, the plaintiff is entitled to receive the amount of the payments of the Connecticut members made under call No. 265, to wit, $11,763. A question is presented as to the true interpretation of the language of the votes which express this claimed agreement. This question we have no occasion to consider, since it concerns only a portion of what the plaintiff claims to recover, and a reformation is prayed for in the event of an interpretation unfavorable to the plaintiff's contention.
It remains to notice certain of the reasons of demurrer, the consideration of which has not been directly involved in what has already been said, to discover if any of them, as addressed to the complaint rightly interpreted, contains a valid objection to the plaintiff's recovery.
One of them is to the effect that it does not appear that either the unincorporated Grand Lodge of Connecticut, or the plaintiff, has or ever had any authority to carry on its business in the State of Massachusetts, or that two thirds of the certificate-holders of the defendant ever consented to, voted to make, or ratified, the contract claimed to have been entered into between the Grand Lodge of Connecticut and the defendant. This statement involves an appeal to a statute of Massachusetts. 2 Massachusetts Revised Laws, Chap. 119, § 11. In so far as the doing of business is concerned, it is sufficient to observe that it does not appear that either the plaintiff or its unincorporated predecessor has ever undertaken to do business in Massachusetts, or that the doing of business within that State was or is involved in, or will result from, the division of the defendant's territory by the Supreme Lodge. In so far as the statute appealed to may be said to have, or have had, a wider application to the situation created by the division and to the rights of the Connecticut members, if it be assumed that the court might, upon demurrer, take judicial notice of the existence and provisions of foreign statutes not pleaded, *Page 211 
and thereupon determine what the law of such jurisdiction is, we are unable to discover in the statute to which we are referred anything which made the act of the Supreme Lodge, in dividing the territory over which jurisdiction for the purposes of the Order was for the time being confided to the defendant, a prohibited one, or which attempts to say that in such an event equity might not be done to all who were affected.
It is asserted that it does not appear that the defendant had any right, power or authority to pay over to the plaintiff any of the moneys collected from assessments, or to give to it any portion of the funds which the defendant held. It certainly does not appear that the defendant is absolved from the duty of rendering unto others that which belongs to them in right and equity, and that is enough.
The assertion of one of the reasons, that it does not appear that all the claims by reason of deaths occurring prior to November 1st, 1901, had been paid, possesses no significance. It does appear that, whether actually paid or not, the amount in which the plaintiff claimed a share represented a balance over and above the total amount of such claims. If the defendant has neglected to pay its matured obligations, that fact cannot stand in the way of the plaintiff's recovery.
As for the assertion of other reasons — that it does not appear that the funds and property belonging to the defendant were not held for the benefit of, and were not needed by the beneficiaries and certificate-holders of the defendant, were not held for the sole purpose of paying such beneficiaries and certificate-holders, and have not been expended and necessarily expended for the purposes of and under the contracts made by the defendant with its members — they do not go to the merits of the plaintiff's contention, since it does sufficiently appear that they were not, after the division, held for the benefit of its former Connecticut members, were not needed to meet any demands *Page 212 
in favor of such members thereafter accruing, or demands in favor of any members already accrued, and have not been expended in the satisfaction of such demands. It appears that in so far as they may have been held, needed, or used for the benefit or in the interest of its membership, that membership was exclusive of its former Connecticut members, and that whatever membership contracts were protected thereby or satisfied therefrom, those of the separated Connecticut members were not among them.
It is said that it does not appear that the defendant has ever refused to make arrangements with the plaintiff or its unincorporated predecessor for the disposal of the funds and property enumerated in paragraph 32 of the complaint, that it does not appear that the plaintiff or its predecessor ever attempted to make any arrangement with the defendant for the disposal of such funds and property or requested the defendant to make any such arrangement, and that it does not appear that the defendant has the power to make such arrangement. It is alleged, however, that the defendant, having paid one half of the amount claimed on account of these funds and this property, has refused to pay the claimed balance, and this is a sufficient averment of the defendant's delict. The matter of power has already been sufficiently noticed.
   There is error, the judgment is set aside and the cause remanded with direction that the demurrer to the complaint be overruled and the case proceeded with according to law.
In this opinion the other judges concurred.