OASES ARGUED AND DETERMINED INTO
_nittd·· JtnttS @;ircuit and SUPREME CONCLAVE, Ro;Z-AL ADELPHIA, t7. CAPPELLA
et ale
(O£rCW£t Oourt, E. D. Michigan. January 20,1890.)
1.
HtrrUALlIBliEl\'IT INStmANCE-RIGIITS Ol\' BENEFICIARY.
B.
In cases of policies of insuranoe or benefit certificates issued by mutual benefit societies,the beneficiary has no· vested interest in the certificate until the death of member. Up to this time the insured may change his designatioD.of. benefician' at will, and against the consent of such beneficiary. The general rule that the insured is bound to make such change of beneficiary in the manner pointed out by the policy and by-laws of the association is subject to three eXceptIOnS: (1) If the society has waived a strict compliance with its own rules, .and, in pursuance of a request of the insured to change, his beneficiary, has issued a,l).ew certificate, the original beneficiary will not be heard to complain that the course indicated by the regulations was not pursued. (2) If it be beyond the power of the insured to comply literally with the regulations, a .court of equity Will, treat the change as having been legally made. (3) If the insured has pursued the course pointed out by the laws of the association, and has done all in his power to change the beneficiary, but, before the new certificate is aatually issued, he dies, a COur,t of equity will treat such certificate as having been issued. . . .
S.ull!;-CIIANGE OF BIINEFICIARY,'
L SAME.
-Plaintiff had issued a oertificate upon the life of K., in which his aunt was named as beneficiary. Five days before his death, he made a ",ritten request for iii change in hisoertificate in favor of his father, in the form prescribed by the by-laws, stating that the original oertificate was in the hands of his aunt, and that he could not D;lake.an actual surrender of suchoertificate. This request for a change'ivasQelivered totb,e company in the usual manner, but, before the oertificate was made out, the insured died. Plaintiff ·filM a bill of interplellider, and paid the money into ,",ourt., . Prior to the execution and delivery of this request, the insured had handed to his &untl the. beneficiary, another similar request for a change of designation in fa.vor of h18father to the extent of two-.thirds of the certificate. She had agreed to see that thilil change was made, but subsequently refused to do so. Hetd. that she was estOpped to claim that the change of beneficiary was invalid by reason of the non-surrender of the original certificate, and the failure to issue a new one, and that the father wall entitled to two-thirds of the amount. (SyHabUS by the Ocrurt.) . .
In Equity. This was. a bill of interpleader to settle the title to a certain benefit certificate issued by the plaintiff to Leo F. Kratzsch, a member of Carpenv.41F.no.l-1
J'EDERAL REPOBTER,
vol. 41.
ter Conclave, No. 17, Royal Adelphia, located at Milwaukee, and payable on its face to defendant Cappella, the aunt of the insured. Her title by defendant Julius Kratzsch, to this certificate, however, w8:S father of the deceased member,upon the following state of facts: The certificate in question, which was for the sum of $3,000, was originally issued Oot6be'rl.lL7.; 18.85, and made payable to his sister Emma, in accordance with the laws of the order, one of which provided as follows.: , ".A member may at any time, when in good standing, surrender his benefit a new on,e.. be issued.. to or ben'AS I.lqch member !llay direct, in;comphance with the.Jaws usages the payment ora fee df fifty cents. ' Said 'llutrenderand direction must be made in writing, signed by the member, and forwarded under the seal of the subordinate conclave, with the benefit certificate, to the supreme secretary," who residedin·Detroit. ,
In March, 1888, the insured member, being then afflicted with a pula monarY,.disease, went totF.lorida {-OF, thebene,fit of his haalth., He returned in June by the way of St. Louis, and remained there for about three weeks, at the house of one ,Resch''lioBwhom his aunt, MissCappella, was housekeeper. His aunt took care of him during his stay, and loaned he/saying to her will her the policy, ". and tl:lat her to ha\\'e 'it.".',: Soon after his and on Jun&23d;hesurrenderedhis eElrtifi<late, and procured another to be issued in favor of the defena.antCappella. In themontq of August, t4e lit the:residenceof his 'father,thedefendant Julius 35 fuilEls fmIri Milw.aj.lkee,and in the of consumption, Sent for the ,defendant Cappella, who came from St. Louis, where she resjder}; to Kratzsch's.<house. There was sOllie dispute as to what took place there,but it seems to have been agreed thatthe certifiauda new one issued,wherein cate theri infor.ce'should be Miss Cappella should be made beneficiary to the extent of $1,000, and the defendant Julius Kratzsch'fc)' tbeextent of$2,000. For the purpose of,carryingQut auoh arraQgement,Leo made a ,request in writin.e;, diNo.17, requesting him to rected totqe,'¢()llecltor of in accordance with such agreecauseb,is benefit certificate ment; to defendant Cappella upon her promise to hanctlt,tOgether, with of,50 cents, to the collector of such conclave; to b,e'forwat:ded to ,the Il\lpreme secretary at Detroit. Miss CappeUaalso'agreed to call upoIl.(ineMlleller, at Milwaukee, to whom Kmtzsch' the then in and certificate, {rem;), slI.idMueller, and deliver the same to the collector,Jo, be ',Up to' this. time, Miss surrendered by him to thesU'Pt'eme' Cappella had never been in actual possession of the certificate then' in force. After leaving Kratzsch's house, Miss Cappella went to Milwau,the certificat.e then in force from Mueller, but did >not"dekee, liver the request for the change of'thecertificatet6 tlie'collector' of Car. penter' ConClave,' bUt retained possession of the one 'received of Mueller. Upon returning to St. Louis, and on the 26th of August, 'she addressed
a
SUPREME COljCLA.'VE; ;ROYAL ADELl'lIlA,tJ. CAPPELLA.
8
&' toth' :speaking"of' the certiti¢ate, she : I" said; "IWentit(fMr. Eckstein, and he advised ine not tohhve it changed;', If anything would happen, to you, dear Leo, while it is th.ey would not ,tllemonay. And he s!}id you ,could l10t write' your name so plainany-rfiore aS10,u used, and then make trouble through that,. five weeks to cbangethatpolicy. I think it is best to leave it the way it 1$, and I w()n't cheat your father out of that money." ,.This letter, affectionate, was not entirely. satisfactory, and" on of September,Leo, being,then very near his end, signetland the duly and, acknowledged an instrument in writing, direct,ed to secretary of the plaintiff. requ!3stingplaintiff to change1,lis certificate in accordance with his original agJ:e£:ment with Miss Cappella, and stating that he could not make ,an actual surrender of the certificate Capthen. in forc,e, because the same, was in possession of the pella.This .instrument was duly attested by the secretary of Carpenter Oonclave, No. t 7 the seal of the. condave, and on the 18th ;of.September delivered to and .received by the supreme secretary of the plaintiff, tpgether with, the fee of 50 cents required by the l'ules of the order. On the 19th of SepteInber the insure,d died at the residence Qf his father. Due proof having been made of his death, the plaintiff audited the cl&im, upqn. which .it became liable, by reason of his death" at the .sm;n of $2,91O,being the amount of the ,certificate, less tpe.sum of $90 paid prior t6 his death. Suits having been :begun by Miss Cappella intbis court, and by the J Kratzsch in the state court at¥ilwaukee, plaintiff filed this bill of interpleader to compel defendants.to IHigate their respective claims upon the fund, and paid into court the amount of the as audited. JulianG. DickinBOn, for defendant Cappella. J. H. Brw8ter, fordefendantKratzsch. ?
J· Thisj,sone of a class o.f cases which have become quite compast 25 years,arising out of an inexpensive method of inmon surance. Qy WhlCh personsin moderate circumstances may,by the payment of a SOl all xn(mthly ftSl)essment, secure a provision for themselves or their families in cal;le ofsickness, accident, or death. Much of the law applicable to cases oflife in$urance is equally applicable here. In a few parhowever, it seeml;lto be som.ewhat less favorllible the person for wllose benefit the. policy is tll-ken out, For instance. in case Of,an o.rdinary policy, the right of the personfor whose.benefit a policy is issued cannot-be <lefeated by the separate or}oint acts of the assured and the company. witlk out the consent of the beneficiary, (Bliss, Ius. § 31S;) while it is entirely well settled. that incases of thisdescriptionthe beneficiary has no vested interest in the bene&tcertHicate until the. death of the insured member. 'Up to this time he may change. his designation ,of beneficiary at will, against theconserit of such even though theJatter may have advanced the money to pay the assessments upon the certifica.te; .. Ben. Soc. v· .A88ociaticm., 80 WC/'I..dt'\1, Let-
FEDERAL REPORTER,
gilm ,Djl1o'nO'f, 72 Iowa, 682, 34 N. W.Rep. :470; .A.880ciation v. Montgomery, 38 N. W. Rep. 588; Fisk v. Union, 11 Atl. Rep. 84; Hellenbe:rg v. District No.1, 94N. Y. 580,; Society ,v. Burkhart, 110 Ind. 192, 10 N. E. Rep. 79, and 11 N. E. Rep. 449; Holland v. Taylor, 111 Ind. 121,12 N. E.Rep. 116; Lamont v. Grand Lodge, 31 Fed. Rep. 177; Schillinge:rv. EOe8, 3 W. Rep. 427; Knights of Honor v. Watson, !.", AU. Rep. 125; BeattY'8 Appeal, Id.861; Byrne v. CaseJ!j, 70 Tex. 247, 8 S. W. Rep. 38. ' ' In making such change of beneficiary, 1l0wever,the insured is bound to do it in the manner pointed out by the policy and the by-laws of the association, and any material deviation from this course will invalidate if the certificateprovid'eS that no assigmnent shall the be va;lid unless approved by the secretary, an assignment without such approval will be invalid. HariniLnv. Lewi8, 24 Fed.' Rep. 97,530. So, if it be provided that such change must, be made on a prescribed form or blank, the signature to which shall be attested before a notary, and the change entered upon the 'books, an assignment to a creditor as collateral security, not made upon the blank, and of which the . association had no notice until after the death of the member, was held to be fatally defective. AS80ciation v. Brown, 33 Fed. Rep. 11. So, where the certificate requited every surrender to be in writing, attested under the lodge seal, it was held that a conditional surby the render of the same by the holder, not to take effect until after his death, arid not made in the presence of or attested by such iodge reporter, was invalid. Swfreme Lodge v. Nairn, 60 Mich. 44, 26 N. W. Rep. 826. See, also, v. Legion of Honor, 72 Iowa, 682, 34 N. W. Rep. 470; Elliott v. ' Whedbee, 94N: 0.115; Mellow8v. Mellow8, 61 N. H.137; Highland v. Highland, 109 Ill. 366. So, if the by-laws fix definitely the manner of changing the beneficiary by his action during his life, an attempt to divert the benefit by will has usually been held to be abortive. Holland v. Taylor, 111 Ind. 121, 12 N. E. Rep. 116; Stephen80n v. Steplwnson, 64 lawai 534,21 N. W. Rep.1911mJuranoe Co.v. Miller, 13 Bush, 489; Vollman'if'Appeal, 92 Pa. St. 50;' Renk v. Herrman Lodge, 2 Dem. v. Pratt, 143 Mass. 216, '10 N. E. Rep. 166. Sur. 409; 'There are, however, three exceptions to this general rule, requiring &n:exact conformity with the regulations of the association: , (I) If the society has waived a strict compliance with its own rules, and,in pursuance of a request of the insured to change his beneficiary, has issued a new certificate to him, the original beneficiary will not be heard to "complain that the course indicated by the regulations was not pursued. This naturally follows from. the fact that, having no vested interest in the certificate during the life-time of the assured, he has no right to require, thai the rules of the association, which are framed alone foritsown protection and guidance, are not complied with. Martin v. 126 Ill. 387, 18 N. E. Rep. 657; Splawn v. Chew, 60 Tex. 532; Manningv.Ancient Orde:r,5 S. 385i Society v.liupold; 101 Fa. St. H1r,s1'OUm v, Mansus,5 Atl. Rep.. 768i Knight8 of Honorv. Wat8on, -1&Atl: Rep.' 126; Byrnev. (Jasey, 70 Tex. 247, 8S. W.Rep. 38;
SUPREME CONCLAVE, ROYAL ADELPHIA, t. CAPPELLA. '
I)
Pitsworfh, v. Titsworth, 20 Pac. Rep. 213. The case of Wendt v. Legion oj HO'1tor, 72 Iowa, 682, 34 N. W. Rep. 470, appears upon its face to lay down a different rule, but upon examination it will be seen that the change was attempted to be made by a paper which the insured called his last will, but which was no will in law; and the court held that, the interest of the beneficiary having become vested by the death of the insured, they had acquired rights which could not be cut off, except in the manner prescribed in the contract. This case, evidently, has no application to a chaJ;lge made prior to the death of the insured. (2) If it be beyond the power of the insured to comply literally with the regulations, a court of equity will treat the change as having been legally made. Thus, in the case of Grand Lodge v. Child, 38 N. W. Rep. 1, the insured made his betrothed the beneficiary, and subsequently lost his certificate. ,His beneficiary having married another, he made a statement of the loss, and applied for a reissue of the certificate, makIng his 80n the beneficiary. His application was refused. The rules of the organization required the change to be indorsed on the original certificate, but, by the advice of the officers, he attempted to make the change of beneficiary by giving a power of attorney to another to collect the amolint which should accrue under the certificate. It was held that such acts constituted an equitable change of beneficiary, and that the son was entitled to the fund. The court held that the insured had done all that he could, and all that he was required in equity to do, to change the donee of the certificate. "The rules of the order allowed him to do this, and it was not in the discretion of the order to prevent it. * * * The law never requires impossibilities; and the rules of the order, which requireq. the certificate to be surrendered when a change of the beneficiary was made, that it might be indorsed upon the certificate, could only be construed as requiring that to be done when the certificate was in existence. The existence of the right to share in the benefits of the order, and to direct who should receive the fund in case of the death of a.member, was a right vested in the member as soon as he became entitled thereto, and the certificate was only evidence of the existence of that right, and, when that evidence was lost, the right remained, and its existence could be established by any other competent evidence; and the same is true of the existence of the change'directed by the member of the beneficiary." (3) If the insured has pursued the course pointed out by the laws of the association, and has done all in his power to change the beneficiary, but, before the new certificate is actually issued, he dies, a court of equity will decree that to be done which ought to be done, and act 3S though the certificate had been issued. The case of Association v. Ki:t:gin, 28 :Mo. App. 80, is an illustration of this exception. In this case, the insured, having met with It fatal accident, called a friend, and requested him to take his certificate to the association and surrenderit, pay the fee of 50 cents, lind request them to issue a new one, payable to his wife. This was' done, and a minute of the transaction was made on the records of the association for that day. On the following day the insured died.,
.-r
:
.FJl;DERALUPORTER,
vol.
!
It that in doing this he'haddorieall tMt the laws of the order l'EJquired:tobe done on"bis part'i'n ol'der to have a, new certificate; that hi$' right to make the change was absolute, -and that the association had no,tight to refuse his .request; and,further, that the fact that the certificate.was:iasued after his 'death -was immaterial, since the certificate was not the, right itself, but merely, the evidence of the right. See, to the V ·. AS80cidtion,2'N. Y. Supp. 79; Supreme Lodge v. NairtJ" ,60 Mich. 44, '26 N·. W. Rep. 826; Kepler v. Supreme Lodge, 45 Hun, 274. The case of Ireland;v.']lfeland,42 Hun, 212,' is distinguishablerfrotnthese in the fact that the]nsured'll1ade rio'written request for a change, as required by theJroIes,.hutmerely delivered the certificate to a friend, telling him he wanted it changed. This was manifestly insufficient. We think, the, case under consideration falls within, these exceptions. Five days before the death of the insured, he signed and acknowledged before a notary a written applicaiionfor a changein his certificate in the form prescribed 'by the by-Iaws,stating that the original certificate to Anna Cappella was in her possession, and beyond his control. This application was delivered to the secretary of the Carpenter Conclave at Milwaukee, who ,affixed the seal of the conclave, and forwarded it to the supreme secretary., It is true, he did not surrenderthe original certificate, as required by the regulations; but he had done all in this connection which was within his power, or which he could reasonably be required to do. had requested defendant Cappella to obtain it of Mueller, and deliver it to the proper officer at Milwaukee, and had taken her word that she would do so. She probably went to Milwaukee with that intention, but upon calling upon Mr. Eckstein, the collector of the Carpenter ConClave, she 5ayshe advised her that it would take four to five weeks to make a change, and she had better not do it. This was before she had obtaiued the certificate ofMueller. It is but just to Mr. Eckstein to say that he gives an entirelydiffererit version of the transaction, and swears that she told him that she had been prevailed upon to make a change in the benefit certificate which was entirely satisfactory to' her, saying that $1,000 was all she cared for, seeing that that was the amount the insured was owing her. Says he: ,"Tasked her whether she had something written to that effect; that itshQuld be made in that manner, or indorsed on the certificate. She said that nothing had been indorsed,on the shewss perfectly willing to leave 'it asIt was, andtp give the father bonds; or some security for the $2,000." Upon arriving at St. Louis, she writes Leo that she thinks it 'best to leave it the way it is, and that she-will never cheat his father out of the money. .Herpurpose was illycollcealed by this letter. Upon the stand she this by saying -that -Leo was -being· annoyed by his fa ther fli'bollt the certiticate, and she wished to put his mind at rest, that he might die in pea.oe; and that his father might understand that he Was to bave the ,benetit of two-thirds of the certificate. In short, she leaves us to infer that she never really intended to make the change. 'Our im'" pression,however, .is that she did intend, at first,. to comply with Leo's
ne
SUPREME CONCLAVE, ROYAL ADELPHIA, t1. CAPPELLA.
7
request, but was overpersl1aded by some one to change her mind. With regard to the writing which she received from Leo, she first says that it was destroyed, and then that it was lost; but. whichever it was, it is clear that the certificate was as much lost to the insured as if it had been destroyed. While the supreme secretary may have been justified in refusing to issue a new certificate without a surrender of the old one, according to the requirements of the order, it certainly does not lie in the mouth of Miss Cappella to set up this failure in a .court of equity, when she herself is·a cause of it, and the company has admitted its liability by the payment of them6ney into court. No maxim of the law is founded upon more substantialjustice than that which declares that no one shall take advantage of his own wrong. Under the by-laws of the com· pany, the insured had a legal right to change his beneficiary whenever he pleased; and the consent of the company does not seem to berequired, mlich less that of the beneficiary. Were the non-surrender of the certificate set tip by the company in a common-law action brought by Kratzsch, it is possible the court might be compelled to hold that he had failed to establish his title; but when the company waives this defense, or at least disclaims any interest in tho result of the contro'\fersy, the objection comes with ill grace from one who is solely responsible for such non-surrender. A court of equity is seldom embarrassed by technicalities, and will make such. decree as the justice of the case manifestly The cases above cited, which establish the proposition that the failure to take the proper steps to change the designation can only be taken advantag;e of by the company itself, are equally pertinent to show' that it cannot be made available by one standing in the relation of Miss Cappella to this fund. The case ofHainerv. Legion of Honor, 43N. W. Rep. 185, is instructive in this connection. In this case the deceased had made his certificate payable to his mother. Upon the back was a printed blank designed for changing the designation. After the issuance the insured married, and subsequently died, leaving a of the will,in which he bequeathed one-half of the amount doe upon the certificate·to his daughter. The association appeared, and paid into court the amount of the certificate. It was held that the mother, having known of the provisions of the will, and having made no objections thereto, but, on the contrary, having expressed her acquiescence in 'the same, and taken possession of certain real property devised to her, and otherwise ,having availed herself of the benefits conferred upon her by the will, was estopped to claim the full amount of the certificate. ,The court held that, although a change of beneficiaries by will was not such a compliance with the regulations of the company as would entitle the person named in the will to recover; yet the company having'disclaimed any interest in the controversy by the payment of the money into court, the original beneficiary was estopped by her conduct in taking under the will to repudiate the provision by whichone.halfof the certificate was bequeathed to the daughter. The case of Marsh v. S'Ur pTimlIeOo¥ncil, 21 N. E. Rep. 1070, is still more direct authorit};to,the point that the original beneficiary callnot avail herself of her own mi,s,.
FEDERAL REPORTER, vol. 41.
conduct to allege that the insured did not comply with the requirements' . There must be a decree awarding one-third of the fund to defendant Cappellaiand the residue to the defendant Julius Kratzsch, with costs against Miss Cappella.
of the association.,
TRUST Co.
'II.
MISSOURI, K. & T. Ry. Co. et al,
(Circuit Court, D. Kansas. December 23,lSS9.) 1. RAn,ROAD COMPANIES-MoRTGAGE FORECLOSURE-RECEIVERS-ExTENSION OF PowERa.
Where a railroad is in the hands of receivers pending suits of 10reclosure and settlement of the priority of liens, it is proper, on the application of a lienholder priority, to,extend the receive1'8hip, as to such claim, over the portion of t.he road. on which the priority is claimed. A,motion to consolid.ate three foreclosure suits, where all are not ripe for decree, nothing can be for the purpose of a hearing, will be denied.
2. SAME-MoTION TO CONSOLIDATE SUITS.
3. SAME-LEAVE TO FILE CRoss-BILL.
Leave to file a cross-bill in 8 suit of foreclosure, where it appears that the purpose is to Iljeoure, between an alleged debtor and the mortgagor. an accounting not neeessaITto the determination of the suit, will be denied. Anlorder'may be maae on the receivers for the payment of expenses incurred by a in a suit of foreclosure. where the mortgage makes provision for such expenses. . The, JIl ,ortgaged property ,being insufficient to pay the mortgages, an order cannot be liiy.d,e for allowance of counsel fees of the mortgagor, to be paid out of money in thecharids of the receivers.
4. SAME-,-ALLOWANCE TO MORTGAGEE FOR EXPENSES.
5. SAME.:...A'l'TORNEY'S FEES OF MORTGAGOR·
6.
SA,M&-tLEASE OF ANOTItER: ROAD-NOTICE TO MORTGAGEES.
Tlje courthas power, on consulting the receivers, and without notice to the mortgagees; 'to oi-der the lease of another road which is found necessary to the profitable management of the mortgaged property. In Ii fdreclosure against a corporation, tbe legal title bein.e; in an appl1.catidn to bring in its grantor as a defendant will be denied. mortgagor, '
7. SAME"",pARTIEB.
Simon Sterne, Charles F.. Beach, Jr., aI).dL. B. Wheat, for the Missouri, Kansas & Texa.'l Railway Company. Wheeler H. Peckham and Rossington, Smith &: Dallas, for the Union Trust Company. Alexander &: Green, (William W. Green, of counsel,) for the Mercantile Trust Company. , Dillon &:Swayru, (A. L. Williams, of counsel,) for George J. Gould and Russell Sage,., trustees. Alexander ,G. Cochran, (Winslow S. Pierce, of counsel,) for the Missouri Pacific Railway Company. BREWER, C; J. In these foreclosure cases, during the last sb months, have accumulated several motions and applications, which, by consent
In Equity. Rep. 2210
On: bill for foreclosure.
:D'or former report, see 36 Fed.