Court Opinion

ID: 6474834
Source: CourtListenerOpinion
Date Created: 2022-06-26 22:34:06.707507+00
Date Added: 2024-06-11T15:53:56.125814
License: Public Domain

McALISTER, J.
(Dissenting). — I am unable to concur in the well-stated opinion of Judge BOLLINGER, speaking for himself and the Chief Justice, because in my judgment it nullifies and defeats one of the only two purposes for which the Employees’ Benefit Association of the Phelps Dodge Corporation, a voluntary association, was organized, namely, to pay to the families of its members certain definite' sums in case of death, the other one being to provide sick and accident benefits for the members themselves.
This is shown very clearly from “object 1” of the “benefit plan,” which is the association’s constitution or fundamental law, setting forth the purpose of the organization — the reason for its existence — and appearing verbatim in the majority opinion, along with rule 17 of the association, which gives members the right, with the approval of its superintendent, to designate a person other than the one originally *352named as the recipient of the death benefits under its certificates or policies of insurance. The holder of such a certificate is not prohibited from changing his beneficiary, but in so doing is, in my opinion, restricted to a choice of some other member of his family, for this right can be exercised only within the limitation expressed in “object 1,” since “a person not of the class for whose benefit a mutual benefit association is organized cannot be a beneficiary.” Warner v. Modern Woodmen of America, 67 Neb. 233, 108 Am. St. Rep. 634, 2 Ann. Cas. 660, 61 L. R. A. 603, 93 N. W. 397; Fisher v. Donovan, 57 Neb. 361, 44 L. R. A. 383, 77 N. W. 778; Wolf v. District Grand Lodge, 102 Mich. 23, 60 N. W. 445; Britton v. Supreme Council, 46 N. J. Eq. 102, 19 Am. St. Rep. 376, 18 Atl. 675; National Mutual Aid Assn. v. Gonser, 43 Ohio St. 1, 19 L. R. A. 187, 1 N. E. 11; Alexander v. Parker, 144 Ill. 355, 19 L. R. A. 187, 33 N. E. 183; Norwegian Old People’s Home Society v. Wilson, 176 Ill. 94, 52 N. E. 41; Supreme Lodge, N. E. O. of P., v. Sylvester, 116 Me. 1, L. R. A. 1917C, 925, 99 Atl. 655; American Legion of Honor v. Perry, 140 Mass. 580, 5 N. E. 634; Caudell v. Woodward, 96 Ky. 646, 29 S. W. 614.
The opinion of the majority seems to be based upon the theory that a certificate of insurance issued by the Employees’ Benefit Association of the Phelps Dodge Corporation is a contract between the holding member and the association in which no one else has any interest, and that consequently it, like any other contract, may be changed by the parties at will. This may be true, but it must be remembered that one of the parties to the contract is an association composed of a large number of individuals which can act only in the manner prescribed by its constitution and by-laws (here benefit plan), and that when it is sought to change the terms of one of its contracts it must be *353done in conformity therewith or it is ineffective. The superintendent of the association can act for it only as he is authorized to do so by its constitution and bylaws, and when he performs an act which clearly amounts to a change in its constitution such act is void because unauthorized, for the fundamental law of the organization is the chart by which he is guided, and its provisions are as binding upon him and the association as though they were prescribed by statute. Neither he nor the association can ignore them any more than they could a requirement of the statute or a regulation of an incorporated association. If they stand in the way of something the association wants to do, they must be changed in the proper way by the association, either before action or perhaps after-wards by way of ratification, or the doing of that thing will not be legal. It follows, then, that those decisions dealing with the requirements of statutes or the constitution and by-laws of incorporated benevolent associations on the question of the eligibility of beneficiaries in the policies issued to their members are entitled to great weight. Hence the authority conferred on the superintendent of this association by its constitution and by-laws to approve the designation of a beneficiary does not carry with it the authority to approve the designation of one not coming within the only class which such fundamental law permits to be a beneficiary, to wit, the family of the deceased member, for surely the power to amend its constitution and by-laws without some action by the board of trustees upon whom this duty devolves was not thus given to a single individual, though to hold valid the act of the superintendent in this instance would in effect say that it was. It being immaterial whether the enumeration of those who may take death benefits be by statute or by the organization itself, in order to be binding, it is clear that only those named *354by the latter, the statute being silent on the question, can be beneficiaries, and consequently the approval by the superintendent of the designation by William W. Gristy of Jessie May Hudgens, his friend, as his beneficiary, was void and left in force the designation of Alexina Gristy, his wife, as originally made. Di Messiah v. Gern, 10 Misc. Rep. 30, 30 N. Y. Supp. 824; Union Mutual Assn. v. Montgomery, 70 Mich. 587, 14 Am. St. Rep. 519, 38 N. W. 588.
The rule which permits a member to designate anyone he desires as his beneficiary has been changed in many states by statute and by the constitution and by-laws of most of the benevolent associations in such a way as to limit the right to certain classes, generally the wife and children, relatives and dependents, and—
“where the classes of persons to whom benefits may be paid are prescribed by statute, or by the society’s charter of incorporation, neither the society, nor a member, nor the two combined, can divert the fund from the classes prescribed; the society has no power to issue a certificate payable to a person not belonging' to one of those classes; and the designation of a person thus ineligible as beneficiary is nugatory. . . . Ordinarily the society has power to prescribe what classes or persons shall be eligible as beneficiaries, and in case it exercises that power the designation of a person not belonging to one of those classes is ordinarily ineffectual.” 29 Cyc. 108.
The Supreme Court of New Jersey, in Britton v. Supreme Council, supra, used this language:
“Where a corporation is organized under a statute authorizing the formation of corporations to accumulate a fund to be paid to the widows and children of deceased members, the corporation can only pay the fund to the widows and children of deceased members, and, if it should make a promise to pay any part of it to any other person, its promise would be void.”
*355The Policemen’s Benevolent Association of Chicago is an association organized- and incorporated under the laws of Illinois “to create a fund and provide means for the relief of the distressed, injured, sick, or disabled members of the association and their immediate families.” Elef Danielson, a member of the association, named his daughter as beneficiary, but later canceled and annulled that policy and procured another in which he designated the Norwegian Old People’s Home Society as beneficiary. In disposing of the claim of the latter to the proceeds of the policy, the Supreme Court of Illinois, in Norwegian Old People’s Home Society v. Wilson, supra, used this language:
“There can be no question that the Norwegian Old People’s Home Society was incompetent to take under the terms of the certificate of incorporation of the association. It could not in any way be held to be a member of the deceased’s immediate family, and only such persons were competent to take. It is no answer to say that the statute of the state under which the association was organized was broad enough, to permit such society to take. The incorporators of the association chose to restrict the objects of its benevolence to the immediate family of the member, and the courts must construe the contract as they find it.”
In discussing the requirement of a benevolent organization known as the Order of the Golden Cross that only the families or dependents of members could be beneficiaries, the Supreme Court of Kentucky in Coudell v. Woodward, supra, used the following language :
“In this respect the objects of the order are in accord with those of the numerous benevolent associations in our country, and which have the support and hearty countenance of the law. Any other construction would open the floodgates of speculative insur*356anee, and at once frustrate the humane and generous purposes of the order. The member may direct, but he must do so 'within the restrictions evidently contemplated by the organic law of the society, and confine his choice to some member or members of his family, or to some one or more of those dependent on him. We construe the organic law of the order, therefore, as limiting the choice or direction of the applicant as provided in the Constitution, and which requires him to name the member of his family, or some one dependent on him, as the beneficiary of the certificate. Moreover, if the law of the order is to be so construed as to allow the member to name a stranger, the certificate would be void as to the stranger, and, under the policy of our law, the appellant, the mere friend of Mrs. Woodward, could not take; for nothing is better settled in this state than that one obtaining a policy of insurance on the life of another must have an insurable interest in the life of that other. It is said, however, that the appellant did not, in fact, obtain the insurance; that the insured voluntarily did so for the other’s benefit. It may be that in this case all the dangerous features are, as a matter of fact, wanting; nevertheless, the dangerous principle remains. If the law denouncing speculative insurance may be avoided by simply having the insured voluntarily take out on his life a policy of insurance, payable to his friend, we may soon witness a similar state of .case in our criminal courts as is now being heralded by the daily press in states where the courts have been more liberal in construing the law of insurable interest. As has been well said, such a system of insurance ‘is an incitement to murder that is irresistible by persons of large greed and small conscientiousness.’ ”
The designation of Alexina Gristy as the beneficiary having never been lawfully superseded, her interest in the policy of her husband vested immediately upon his death. It was as though no one else had ever been named or an attempt of that kind made, and the rule of law announced in the majority opinion that no one but the association or the insurer can *357question the eligibility of the person designated has no application, the policy standing as originally issued. No act or omission of the association after the death of the insured can affect in the slightest degree the interest of a beneficiary which has vested, and certainly the fact that the association déposited the amount of the policy in court to be paid to the one to whom the court might say it rightfully belonged, thereby signifying its willingness to pay it to Mrs. Gristy, if hers, cannot prevent her from showing that the policy as originally issued was never canceled, but remained in full force and effect.up to the time of her husband’s death, since nothing other than an ineffective and void attempt to change the beneficiary was ever done, either by the insured or the insurer, which could prevent her expectancy from ripening into a certainty upon the former’s death. Elsey v. Odd Fellows’ Mutual Relief Assn. et al., 142 Mass. 224, 7 N. E. 844; Di Messiah v. Gern, supra.
Bule 17, upon which the opinion of Judge BOLLINGEB and the concurring opinion of Judge BOSS are based, does not say in specific terms who may be designated beneficiaries, and its wording is such that it conveys the impression that only members of the family may be so named, for it will be observed that immediately preceding the blank space left for inserting the name of the person to be designated appears the personal pronoun “my,” which, as there used, conveys the idea that someone to whom the insured bears a close relationship, as wife, husband, son, daughter, father, mother, brother or sister, etc., would be supplied. And, if it be suggested that the word “friend” may be just as appropriately inserted, the thought immediately occurs: If it were not intended to restrict the designation of beneficiaries to those closely related to the insured, would not the word “my” have been omitted, and the designating clause, *358reading “death, benefits shall be payable to -, my -, residing at -, if living,” have read “death benefits shall ,be payable to ——•, residing at-, if living,” in which case the impression would have been conveyed that anyone, without restriction, might be the beneficiary? It would hardly seem, then, that it was intended that rule 17 should he so broadly construed as to permit the naming of one’s friend as his beneficiary, especially when it is realized that to do so destroys both the literal meaning and the possibility of effecting the evident purpose of “object 1” of the “benefit plan,” which is the very cornerstone of the whole structure; while to interpret it as requiring an exercise of the right it confers in the light and within the limits of the expressed purpose of the organization accomplishes the aim of the latter by compelling the payment of its funds to those to whom it was intended by the members who furnished them-they should go. The seeming conflict in the two provisions is in the letter, not the spirit, and in construing them it should be remembered that “the letter killeth, but the spirit giveth life.”
In becoming a member of this organization an employee of the plaintiff company could have no purpose other than to -gain for himself and family the benefits to be derived from such membership as these are disclosed by an examination of its “benefit plan,” and, when a contract between the association and a person joining it is entered into in accordance therewith, the courts should construe both in such a way as to effectuate completely the beneficent purpose of the organization. Journeymen B. P. & B. Assn. v. Bristol, 17 Cal. App. 576, 120 Pac. 787; 3 Am. & Eng. Ency. of Law, 1067. Such a result does not follow, however, if one who is merely a friend and without any insurable interest whatever in the life of the insured is permitted to supplant those for whose benefit *359the very organization itself was brought into being, and who both legally and morally have every reason to be the recipient of the insured’s bounty. With such a construction of its rules and regulations the Employees’ Benefit Association of the Phelps Dodge Corporation has no excuse for existence other than to furnish sick and accident benefits to its members; the part the family is supposed to play in the scheme being thereby excluded.
This should not be, for clearly what the concurring opinion designates as nothing more than a “voluntary relief department” of the Phelps Dodge Corporation was not organized for the relief of its members’ friends, but for the benefit of those whom natural justice itself, to say nothing of the law, makes it their duty to support. And even though it be true that the certificate of insurance issued to William W. Gristy is a contract between him and the Phelps Dodge Corporation, yet it cannot be changed at the will of these two parties, except as the “benefit plan” of the association, in accordance with whose requirements it was entered into, confers this right; but, as I see it, construing rule 17 so as to permit friends to be beneficiaries, either when the policy is first issued or afterwards, has the effect of changing this plan in a most vital particular, when there has been no amendment of its constitution allowing it. The members of the Employees’ Benefit Association, in addition to the amount given by the Phelps Dodge Corporation, contribute two per cent of their wages — $24 a year for one drawing $100 per month — to procure its sick and accident benefits and to help their families in case of death, and surely this fund should be disbursed in such a way as to accomplish this purpose, and no member of tfie organization permitted to direct the payment of any portion of it to another cause.
*360Hence the appellant, Alexina Gristy, the wife of the insured, is in my opinion entitled to the proceeds of the policy, and the judgment should be in her favor.