Dworak v. Supreme Lodge

Letton, J. Joseph Dworak, a resident of Nebraska, became a member of the defendant, which is a fraternal beneficiary association, organized in the state of Iowa. The certificate provided that upon his death the sum of $1,000 would be paid to his wife, Marie Dworak, and his stepchildren, Milton Dworak and Stanley Dworak. He died and left surviving him William Dworak, Joseph Dworak, Carrie Dworak, now Carrie Johndeit, and Arthur Dworak, his children by a former marriage. He had no children by the second marriage. He became divorced from his wife and ceased to reside with her and her children, so that thereafter none of the beneficiaries were members of his family or household. Shortly before his death he designated the plaintiff, Anton Dworak, his brother, as beneficiary, instead of his former wife and her children, but the former beneficiaries allege that this was not done in accordance with the by-laws of the association and is therefore of no effect. This action was brought by An ton Dworak to recover the proceeds of the certificate. The defendant association admitted the indebtedness, alleged that there were several claimants of the fund, and paid the money into court for the benefit of the persons whom the court might find entitled to it. The divorced wife, Marie Dworak, and her children claimed as beneficiaries under the certificate. The children of the insured in their answer plead the invalidity of the assignment to plaintiff, set forth the facts as to the divorce of Marie Dworak, alleged that neither she nor the other beneficiaries were members of the family of Joseph Dworak at the time of his death, or for a long time prior thereto, and were not blood relatives or dependent upon him,- that they are the children and the only heirs of the insured, and that under the constitution and by-laws of the association and the laws of the state of Nebraska they were entitled to the amount due upon the certificate. At the oral argument it was stated by counsel for Anton Dworak that his client was willing that the fund be paid [299] to the children and next of kin as was adjudged by the district court. This relieves the court of the necessity of considering the validity of the attempted change of beneficiaries. The only question necessary to determine is whether the statutes of Iowa and by-laws of the association govern the' disposition of the fund, or whether this is controlled by the laws of the state of Nebraska. If the former apply, the beneficiaries named, the divorced wife and her children, are entitled to the money; if the latter, the children of Dworak are entitled to it. The case was tried upon an agreed statement of facts. In addition to the facts hereinbefore stated, it appéars that the application for membership was made in Omaha and forwarded by the officers of the local lodge to Cedar Rapids, Iowa, where the certificate was made out and signed by the supreme officers. It was then forwarded to the subordinate lodge in Omaha, was signed by the officers of the local lodge in Omaha, and delivered there to the insured. The application provided that the certificate would not be effective until the applicant was initiated in the local lodge and the certificate delivered to and signed by' the applicant. After April, 1910, neither Marie Dworak nor her children lived with the insured, and none of them was a blood relative of or dependent upon the insured, nor an heir.' The divorce was granted Marie Dworak in February, 1911. The Iowa statutes provide: “No fraternal association created or organized under the provisions of this chapter shall issue any certificate of membership to any person under the age of fifteen years, nor over the age of sixty-five years, nor unless the beneficiary under said certificate shall be the husband, wife, relative, legal representative, heir or legatee of such member.” Iowa Code, sec. 1824. The supreme court of Iowa in White v. Brotherhood of American Yeomen, 99 N. W. 1071 (124 Ia. 293), construing section 1824 of the Iowa Code, where the facts were that a certificate was issued by a fraternal association “payable to a certain person by name, such person being the wife of the member when the certificate was is [300] sued; subsequently she was divorced, and the member remarried, but made no change of beneficiary” — held that on the death of the member the first wife was entitled to the proceeds of the certificate. The business is conducted in the Bohemian language. The articles of incorporation recite as one of the objects of the organization: “To provide for the creation of a fund of assessments, contributions or otherwise, for the purpose of paying benefits to widows and children of deceased members, in accordance with the constitution, by-laws, rules and regulations that are now in force or that may from time to time be adopted by this supreme lodge.”' The by-laws provide that the benefit certificates “among other contents must contain also the name of the person or persons designated as heirs by the insured member, who have to be members of the family or related to him by birth.” Another translation is: “This insurance, however, can be only in favor of the members of his family, or blood relatives, or mutually for husband or wife, or persons dependent on the member.” Section 94, ch. 43, Comp. St. 1911 (Rev. St. 1913, sec. 3298), which was in effect at the time the certificate of insurance was issued and at the time of the death of Dworak, provides: “Payment of death benefits shall only be made to families, heirs, blood relations, affianced husband, or affianced wife, or to persons dependent upon the member.” It will be noted that in Iowa whether a person may become a beneficiary is determined by his status at the time the contract is entered into, but in this state the law controls to whom payment shall be made upon the matured obligation. We have held under a like state of facts with reference to the application for insurance, the conditions for membership, and the delivery of the certificate, that such a contract was entered into in Nebraska. Pringle v. Modern Woodmen of America, 87 Neb. 548; Haas v. Mutual Life Ins. Co., 90 Neb. 808. A like view is taken in Illinois and Maryland: Coverdale v. Royal Arcanum, 193 Ill. 91; Expressman’s Mutual Benefit Ass’n v. Hurlock, 91 Md. 585. [301] When the defendant association entered this state to do business, it came subject to the laAvs of this state regulating fraternal insurance. The statutory provision limiting and defining the classes of the persons to Avhom death benefits should be paid became as much a part of the contract of insurance as if it had been Avritten therein, and it declared the policy of the state Avith respect to such contracts. Leumann v. Grand Lodge, A. O. U. W., 85 Neb. 803. Every person concerned with the same, whether insurer, insured, or beneficiary, is bound to take notice of the law. It is pointed out in 29 Cyc. 108, that “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.” It is also a settled rule that where a beneficiary becomes ineligible or disqualified, and therefore not entitled at the time 'of the death of the insured to receive the benefit, the fund goes to such other persons within the class as are eligible to take the benefits in the manner prescribed by statute. Giffin v. Grand Lodge, A. O. U. W., 99 Neb. 589; Johnson v. Grand Lodge, A. O. U. W., 91 Kan. 314, 50 L. R. A. n. s. 461; Knights of Columbus v. Rowe, 70 Conn. 545; Lister v. Lister, 73 Mo. App. 99; Supreme Lodge, K. & L. of H., v. Menkhausen, 209 Ill. 277. Appellants rely upon Supreme Council, Royal Arcanum, v. Green, 237 U. S. 531, L. R. A. 1916A, 771. The question in this case is so different that the opinion in that case does not control its decision. The question there involved the relation existing between the corporation and its members and between the members themselves with respect to uniformity of assessments in different states. Here we are not concerned with such questions, since such relations have all been terminated by the maturity of the contract. The corporation itself is practically out of this case. It has paid the money in dispute into court for the benefit of the proper beneficiary. The contract was made with respect to [302] tbe Nebraska statute, and it must control tbe payment of the obligation. Judgment affirmed. Rose and Sedgwick, JJ., not sitting.