Court Opinion

ID: 6739245
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:44.236208+00
Date Added: 2024-06-11T16:01:54.362163
License: Public Domain

Christianson, Ch. J.
(dissenting). I am constrained to dissent from the foregoing opinion.
The plaintiff is a fraternal benefit society, having a lodge system with a ritualistic form of work and a representative form of government. It is incorporated under the laws of the state of Iowa, and its head office is in the city of Des Moines. It has a supreme governing or legislative body known as the Supreme Conclave, and subordinate lodges or branches. Each state constitutes a grand jurisdiction known as a State Conclave. The local lodges are called Homesteads. The State Conclave is made up of representatives from the different Homesteads. The State Conclave meets annually. At such meeting it is required to levy the necessary assessment upon the members in the state to maintain in force the benefit certificates issued to such members. The constitution provides that such “assessment shall be collected by the state correspondent through the Homesteads in that state.” It further provides: “A Homestead correspondent shall transmit the per capita tax provided for the maintenance of the State Conclave to the state correspondent, without a vote thereon. If any Homestead correspondent fails to transmit such funds to the state correspondent, said Homestead may be suspended by the grand foremen when receiving notice thereof from the state correspondent, and such Homestead shall remain suspended until the assessments are paid.”
A local lodge or Homestead had been established at Mandan. In July, 1918, and for sometime prior thereto, one August Hsselman was the correspondent of the Mandan Homestead. It is true, as stated in the majority opinion, that Hsselman, from time to time, borrowed money *538from the defendant bank upon promissory notes, to which he signed the name of the plaintiff by himself as secretary; bnt there is not a scintilla of evidence tending to show that he had any authority to do so. Nor is there any evidence — nor for that matter any contentions — that the plaintiff had any notice or knowledge that such loans were being made. The positive testimony is, also, that the local homestead never authorized TTsselman to make such loans. One of the officers of the local lodge testified that TTsselman was found to be short in his accounts, and the only reasonable inference to be drawn from the evidence is that he misappropriated the moneys collected from the local members, and that the money he borrowed from the defendant bank from time to time was used to make up his shortages.
The majority members hold that the plaintiff is liable on the ground that it received the benefits of the notes executed by TTsselman in its name. I do not believe that this principle is applicable here, nor am I aware of any principle upon which the plaintiff can be held liable on the notes executed by TTsselman. “It is fundamental in the law of agency that the power of every agent to bind his principal rests upon the authority conferred upon him by that principal, and this authority as to third persons consists of the powers intentionally conferred, those incidental to or implied from the main powers conferred, those which custom and usage have added to the main powers, and those which the principal has caused, as by a previous course of dealing, persons dealing with the agent to believe that the principal has conferred, as well as power, the exercise of which by the agent the principal is by his conduct estopped to deny, or which he has subsequently approved and ratified. Without this authority for which the principal himself, by acts or conduct, has become responsible, the agent can bind only himself.” 2 C. J. 560. See also Comp. Laws 1913, §§ 6325-6343, 6352; Martinson v. Kershner, 32 N. D. 46, 155 N. W. 37.
The defendant must have known that a fraternal benefit society, organized and doing business as the plaintiff, does not authorize officers of the local lodge to borrow money or execute promissory notes in its behalf. If the local officers had such authority it would indeed be difficult, if not impossible, for the society to make the reports which it is required to make to the insurance departments of the different states. In fact it is quite apparent that the defendant did not believe *539that the note was a valid obligation against the plaintiff. The cashier admitted that payment was never demanded from the plaintiff. He also stated that the defendant had caused the note to be presented as a claim against the estate of August ITsselman.
This is not a case where an agent has borrowed money and expended it in discharging obligations against his principal. In such case the principal receives the benefit, and his liabilities are not enlarged. In this ease the plaintiff had assumed certain liability as an insurer. The liability was evidenced by certain benefit certificates issued to members of the Mandan Homestead. Its liability as an insurer was conditioned upon payment to it, by those insured, of certain premiums or assessments. Nor the moneys which the plaintiff received from ITsselman it continued the benefit certificates in force, — i. e., it in fact assumed a liability equal to the amount of moneys received. Whatever -benefits were received were received by Usselman and by the persons whose benefit certificates were kept in force. The plaintiff received no benefit. Its total assets were not increased, because, although it received the money which ITsselman borrowed from the defendant bank, by virtue of such payments into its treasury, its liabilities were increased in a corresponding amount. Hence, if the plaintiff is required to pay the note in suit its liabilities will be increased in precisely the amount of the judgment, and for this liability it will receive no corresponding benefit. If similar liabilities have been incurred in other subordinate lodges, and plaintiff required to pay them, its assets — funds held in trust for the beneficiaries will be greatly impaired. In the circumstances shown to exist in this case, I do not believe that the principle invoked by the majority members has any application. See Calhoun v. McCrory Piano & Realty Co. 52 L.R.A.(N.S.) 571, and extended note thereto.