Klein v. Supreme Council of the Loyal Ass'n

Lehman, J. The plaintiff has recovered a judgment upon a claim that she was the beneficiary of her husband entitled to .receive from the defendant insurance upon her husband’s life in the sum of $1,000. The defense to the plaintiff’s claim was (a) that the plaintiff’s husband committed suicide and that under the by-laws of the defendant association no benefit was to be paid upon the death of "a member who should die by suicide; (6) that the plaintiff’s husband was a barkeeper and fraudulently concealed the fact from [220] the defendant association; that the constitution and laws of the defendant association provide that applications for membership shall not be received from barkeepers. The plaintiff has succeeded in recovering a verdict in her favor upon two successive trials. The judgment upon the first trial was reversed by this court. See Klein v. Supreme Council of the Loyal Assn., 92 Misc. Rep. 216. Upon that 'appeal the evidence before the court showed that the decedent had misrepresented his occupation in his application for membership but that the true facts were known to the head of the local council which admitted him. The evidence further showed that the head of the local council, who, as a matter of law, was the agent of the defendant, directed the decedent to conceal the true facts in his application and was a party to the decedent’s fraud. This court held that the fraud of the decedent could not be waived by the acts of the defendant’s agent, who was a party to this fraud. Upon the second trial the trial justice submitted tp the jury the question of whether the decedent had committed suicide and whether after the decedent’s death the defendant had waived the original fraud in the inception of the insurance by demanding from the plaintiff and receiving the amount of a membership assessment. The jury found a verdict in favor of the plaintiff. Thereafter the trial justice set aside the verdict on the ground that the evidence did not justify a finding that the defendant had waived the fraud. The plaintiff now appeals from the order setting aside the verdict. While the appellant upon this appeal raises various questions of law, upon this record we can consider only the one question of whether the evidence sustains the finding of the jury. It is, of course, plain that even though the defendant demanded and received an assessment to which it would have been entitled if the [221] decedent had been a member of the association, such act" can constitute no waiver unless it had actual knowledge of the facts upon which the claim of fraud rests. It appears that this demand and receipt of the assessment was made through the subordinate lodge. It further appears that the subordinate lodge was the agent of the defendant for the purpose both of enrolling members and of receiving assessments and dues. It further appears, that the officers of the local council or subordinate lodge had knowledge of the decedent’s fraudulent representations. It further appears that the Supreme Lodge did not have notice of such fraud until some time thereafter and did not intend to waive the fraud unless the knowledge of its agent may be imputed to it. As a general rule the knowledge of an agent will be imputed to the principal and where an agent does an act with such knowledge, which would constitute a waiver if the agent were acting as principal, it constitutes a waiver by the principal. In the present case, however, the constitution of the defendant provides that “ no subordinate council or any of its officers shall have power or authority to waive any of the provisions of the constitution and by-laws of this association.” This provision of the constitution is valid and the limitation is binding upon the members and beneficiaries. Section 239 of the Insurance Law applicable to fraternal benefit societies expressly provides : ‘ ‘ The constitution and law's of the society may provide that no subordinate body, nor any of its subordinate officers or members, shall have the power or authority to waive any of the provisions thereof, and the same shall be binding upon the society and each and every member thereof and on all beneficiaries of members.” It is urged that these provisions of the constitution [222] enacted in accordance with the statutory law of the state have no application to the present case; that the subordinate lodge did not waive any of the provisions of the association’s constitution or by-laws but merely performed certain functions within its powers and that by operation of law these acts constitute a waiver. This contention seems to me unsound. The defendant has done nothing except through its agent which could constitute a waiver either.as a matter of law or as an inference of fact. It is the acts of the subordinate lodge acting as the defendant’s agent, upon which the claim of waiver must rest. The defendant never itself intended to waive the forfeiture nor did it do anything except through its agent by which it manifested any intent to waive. While the agent could bind the principal in receiving money, it could not bind the principal by assuming to waive any of the provisions of the by-laws. The agent’s power was expressly limited in this regard and the limitation is binding on the plaintiff., In the case of McClelland v. Mutual Life Ins. Co., 217 N. Y. 336, the court stated: “ The rule is laid down in Story on Agency (Section 140) ‘ Notice of facts to an agent is constructive notice thereof to the principal himself, where it arises from, or is at the time connected with, the subject-matter of his agency; for, upon general principles of public policy, it is presumed that the agent has communicated such facts to the principal; and if he has not, still the principal, having intrusted the agent with the particular business, the other party has a right to deem his acts and knowledge obligatory upon the principal. ’ ” Applying this- rule to the present case we find that the undisputed testimony shows that the agent did not communicate the facts to the principal until some time thereafter and the defendant did not intrust his agent [223] with any power to waive the forfeiture but on the.contrary limited the agent’s power and the limitation was binding upon the plaintiff. It follows that the order should be affirmed, with costs. Finch, J., concurs.