Drum v. Benton

Mr. Chief Justice Alvey delivered the opinion of the • Court: The bill in this case was filed by the appellee, Mrs. Sarah H. Benton, widow of James W. Benton, deceased, against the appellants, the officers and representatives of the Army Mutual Aid Association, an unincorporated association having its place of business in the City of Washington, for the purpose of having reinstated to membership of the association her deceased husband at the time of his death, and of having decreed against the defendants, representing the association, the benefits alleged to be due her, as beneficiary appointed by her late husband, from the benefit fund of the the association, under the constitution and by-laws thereof. Upon this bill and the answer thereto, and the evidence produced by the parties, the learned court below decreed in favor of the plaintiff, and directed the reinstatement of James W. Benton to membership of the association, as of and at the time of his death, and that the association pay to his widow, the plaintiff, as beneficiary, the sum of $3,000. James W. Benton, the deceased husband* of the plaintiff, wras a lieutenant in the United States Army, stationed at Fort Robinson, in Nebraska, where he died on the 2d of September, 1896, leaving the plaintiff as his widow. The — 254 — •deceased made application to become a member of the association, by written communication, dated the 5th of January, 1895,.and in which application he nominated his wife, the plaintiff, the beneficiary to receive all the money that might be due by reason of his membership, upon his death, if at the time of his death he should have continued to be a member of the association. And in this application to become a member, he expressly, agreed to be bound •by and to conform to the constitution and by-laws of the ■association in these terms: “I agree to make punctual payment of all dues and assessments for which I may become liable, and to conform in all respects to the constitution, by-laws and regulations •of the above-named association, now in force or which may hereafter be adopted by the same or its executive committee, and to keep the secretary informed at all times of my proper postoffice address, or the address of any person I may appoint to pay assessments for me.” That application was accepted by the association, and a ■certificate of membership was issued on the 26th of February, 1895 ; and that, again reciting the contract and the full •compliance with all the initiatory conditions, declared that the applicant was thereby constituted a member of the association, agreeable to and upon the conditions set forth in the constitution and by-laws of the association.” We must, therefore, look to the constitution and to the by-laws of the association to ascertain and determine upon what terms and conditions the party became a member of the association, and upon which he was entitled to remain A member, with all the rights and benefits resulting therefrom; for it is well settled, by many decisions, that, in such case as the present, the constitution and by-laws, and cer_ tificate of membership, constitute the contract, and determine the rights of the members of the association, and that the rights thus defined and prescribed are to be enforced, according to the terms of the contract, and not otherwise. — 255 — Union Mutual Assn. v. Montgomery, 70 Mich. 587 ; Arthur v. Odd Fellows’ Assn., 29 Ohio St. 587; May on Insurance, Sec. 552. But a mutual benefit association is not a life insurance company, in the restricted sense in which that term is generally used; nor is a certificate of membership of a mutual benefit society a policy of life insurance, in the sense that life insurance is generally understood; yet, it is certainly true, thq.t a certificate of membership of a mutual benefit association is substantially in the nature of a mutual life insurance policy. Comm. v. Wetherbee, 105 Mass. 161; State v. Mer. Ex. Mut. Ben. Soc., 72 Mo. 146; Sup. Commandery Knights of Golden Rule v. Ainsworth, 71 Ala. 436; Sherman v. Comm., 82 Ky. 102; Illinois Masons’ Ben. Soc. v. Winthrop, 85 Ill. 539; Martin v. Stubbings, 126 Ill. 387; Comm. v. Eq. Benef. Assn., 137 Penn. St. 412; Northwestern Masonic Assn. v. Jones, 154 Penn. St. 99. The object of such association is not for gain or profit, as in? the case of the ordinary mutual life insurance company, but, as is declared in the constitution of the present association, “to aid the families of deceased members in a prompt, simple, and substantial manner.” As we have said, the association is not incorporated, but its organization is provided for in a series of articles, denominated the constitution, and certain by-laws have been adopted for the government of its members and of its affairs. They are made part of the contract of each member with the association; and the rights of the parties depend exclusively upon the contract for membership as defined in the constitution and by-laws of the association. By Section 12 of the by-laws it is provided that— “Any member who shall fail to pay any of his assessments, annual or extra, thirty (30) days after the same may be due shall be notified by mail (the evidence of which shall be the mailing of a registered letter to him at his address, as shown by the War Department records, or at the last address he may have furnished to the secretary), and if he shall be in arrears thirty (30) days longer he shall be dropped, unless the — 256 — executive committee shall be convinced that his failure to-pay is due to the interruption of mail communications or other causes without his fault, in which case they may retain him in membership for a reasonable period thereafter. If the member shall die in the meantime, any charges to which he is liable shall be deducted from the benefit due on such death.” It is manifest from the nature and declared objects of the association, and the provision of its constitution and bylaws, that promptitude and strict punctuality in making payments of the annual assessments by the members is of the first and most vital importance to the success and beneficial existence of the association. Time is of the essence of the contract; and while reasonable time is allowed for making the annual or semi-annual payments of assessments, indefinite or arbitrary indulgence beyond the time prescribed is not contemplated, and there is no power.delegated to grant such indulgence. Indeed, such a power would be in flagrant derogation of the whole scheme of the association. That scheme is founded upon the mutual pledge of duty and good faith of the members to each other, and each to the whole, and the only coercive remedy retained in the hands of the association to secure punctuality in making payments of assessments, is the power of forfeiture of membership. What was said by the Supreme Court in the Life Insurance Cases v. Statham et al., 93 U. S. 31, in respect to the necessit}7 of enforcing punctuality of payment of dues, is quite applicable to an association like the present. Indeed, the necessity for strict enforcement of the by-laws, and the rigid adherence to the remedy by forfeiture for non-payment of dues, is even more imperative in an association like the present than in the case of an ordinary life insurance company. In the case of Statham and others, just referred to, the court said: “There must be power to cut off unprofitable members, or the success of the whole scheme is endangered. The in — 257 — sured par-ties are associates in a great scheme. This associated relation exists whether the company be a mutual one or not. Each is interested in the engagements of all; for out of the co-existence of many risks arises the law of average, which underlies the whole business. An essential feature of this scheme is the mathematical calculation referred to, on which the premiums and amounts assured are based. And these calculations, again, are based on the assumption of average mortality, and of prompt payments and compound interest thereon. Delinquency can not be tolerated nor redeemed, except at the option of the company. This has always been the understanding and the practice in this department of business. Some companies, it is true, accord a grace of thirty days, or other fixed period, within which the premium in arrears may be paid, on certain conditions of continued good health, etc. But this is a matter of stipulation, or of discretion, on the part of the particular ■ company. When no stipulation exists, it is the general understanding that time is material, and that the forfeiture is absolute if the premium be not paid. The extraordinary and even desperate efforts sometimes made, when an insured person is in extremis, to meet a premuim coming due, demonstrates the common view of this matter. The case, therefore, is one in which time is material and of the essence of the contract. Non-payment at the day involves absolute forfeiture, if such be the terms of the contract, as is the case here. Courts can not with safety vary the stipulations of the parties by introducing equities for the relief of the insured against their own negligence.” The mutual beneficial aid associations of the character of the present are founded upon life tables, based upon exact calculations as to the average period of life of the members, and if punctuality in the payment of dues by the members is not strictly enforced, the benefit and security of the principle of mutuality is defeated. It is the right, therefore, of each and every member of the association to insist upon an — 258 — exact conformity to the requirement of the by-laws in respect to the payment of dues or assessments, as such assessments go to make up the benefit fund to enable the association to “aid the families of deceased members in a prompt, simple and substantial manner,” as contemplated by the constitution. The manner and time for making the annual assessments and the payments thereof are fixed by Sections 4 and 5 of the second article of the constitution ; and the time for the payment of the annual dues or assessments, in advance, was April 1, or when elected to be paid in semi-annual payments, the 1st of April, and the 1st of October of each year. Benton had'paid his assessments up to the 1st of April, 1896, in semi-annual payments, by checks drawn upon the Citizens’ National Bank of Washington City, D. G.; and his assessment for 1896 was due on and after the 1st of April, 1896. He did not, however, within the thirty days from the time the ássessment was. made, pay the same, either in whole or in part; and> as required by the twelfth by-law of the association, which has been cited, notice dated May 21,1896, was duly transmitted to him at Fort Robinson, which stated the amount of the assessment ($42.50) and the amount of expenses ($1.70) due from him, and informed him that if- he did not pay this amount ($44.20) within thirty days after the receipt of the notice, he would be dropped from the association; and enclosed with this notice was a copy of the twelfth by-law, just mentioned. This notice was received by Benton on the 25th of May, 1896, and, in response thereto, he drew and transmitted to Major Rittenhouse the following check: “ No. 260. Washington, D. C., May 30, 1896. “Citizens’ National Bank of Washington City. Pay to Treasurer, Army and Navy Mutual Aid Ass’t’n, or order, forty-four dollars. “ 44.20. . James W. Benton.” But before this check was received, and while it was in — 259 — ■course of transmission by mail, Major Rittenhouse, the secretary and treasurer of the Army Mutual Aid Association, received from Benton the following telegram: “Fort Robinson, Neb., June 1st, 1896. “Maj. B. F. Rittenhouse, War Dept., Washington, D. C. Please hold check sent on twenty-ninth until you hear from ■me. James W. Benton.” After the receipt of this telegram the check came to hand, ■and Maj. Rittenhouse, acting on the instruction of Benton, placed both check and telegram in an envelope, and endorsed it: “Benton’s check. Hold until Benton is heard from.” The envelope so endorsed was placed by Maj. Rittenhouse in the safe of the association, where it was constantly in view, to await further direction from Benton. But Benton was never heard from in regard to the check; and at a meeting of the executive committee of the association, held on the 6th of July, 1896, Rittenhouse, the secretary and treasurer of the association, reported the fact that Benton had failed to pay his dues or assessment; and at the same time he reported the fact of the receipt of the check and telegram, and that he was holding the check subject to the order or direction of Benton. Whereupon the committee directed that Benton be dropped from membership of the association, for non-payment of dues, and the entry was made accordingly; and immediately thereupon the check was enclosed to Benton, together with a notice that he had been dropped for non-payment of dues. It appears in evidence that the check and notice so directed to Benton were ■duly received by him, and after his death, the envelope enclosing the check and notice was found among his papers unopened. He died, as we have before stated, September 2, 1896. Subsequently, the check, as originally drawn, was tendered to the secretary and treasurer of the Army Mutual Aid Association, and a demand was thereupon made for the payment of $3,000 to the plaintiff as beneficiary of her de — 260 — ceased husband. That demand was refused, and hence this suit. The defendants, by their answer, controvert the right" of the plaintiff, and insist that her deceased husband was legally and rightfully dropped from membership of the association, in default of payment of dues legally assessed, and consequently, that there was nothing due her as beneficiary, under the constitution and by-laws of the association. Why the check was drawn payable to the treasurer of the Army and Navy Mutual Aid Association is not clearly explained. We may suppose that it was by mistake. There was no such association as the Army and Navy Mutual Aid Association, and, of course, no treasurer of such association. Whether the bank would have honored the check as it was drawn, if it had been promptly presented, is a question about which we can have no opinion. But the check never was presented for payment, and there was no authority given by the drawer to present it for payment. The drawer had complete power to control his check until it was received as and for payment of dues owing to the association, and he had a right to place it in the hands of Major Rittenhouse to be held, subject to his, the drawer’s, future order or direction. Major Rittenhouse was requested, which was -tantamount to a positive direction, to hold the check sent “until you hear from me.” Upon this notification and direction, Major Rittenhouse received the check, not as in payment of dues owing to the association, but as the agent of the drawer of the check, subject to the latter’s future order as to its disposition; and Major Rittenhouse swears positively that he did not receive the check as in payment of dues assessed by the association. No right or property in the check vested in the association, and its treasurer could not rightfully, under the circumstances, have disregarded the instructions of the drawer and presented the check to the bank for payment, and if payment had been refused, have had the check protested for non-payment. He was made simply the custodian — 261 — of the check, subject to the order of the drawer, and the latter never thought proper to give any order or direction in regard to the manner of disposing of the check. There can be no question that the drawer himself, in the face of his own express directiqwi to Major Rittenhouse, to hold the check until he was heard from, in the absence of any subsequent direction upon the subject, could never have insisted that the check had been received in payment of dues, and that it ought to have been presented for payment; and that being the position of the drawer, the plaintiff, claiming under the drawer, can occupy no better position or superior right to that of the drawer himself. And it can hardly be seriously contended that the subsequent tender of the check by the plaintiff, after the death of her husband and long after the expiration of the time limited for payment, can avail to restore the deceased member to the position he would have occupied if he had made payment of his dues in due time, and according to the requirement of the by-laws of the association. Nor can such tender of the check, even if forfeiture of membership had not been declared in the lifetime of the husband, aid her claim in any manner. It has been held in several cases, and laid down as a settled principle by text writers of authority, that the death, of a drawer of a check operates as a revocation of the authority of the bank or banker upon which it is drawn to pay it, though it is clear that if the check be presented and paid before notice of the death, the payment is good. Tate v. Hilbert, 2 Ves. Jr. 118; Byles on Bills (Sharswood’s Ed.), 24, 25; Chitty on Bills (13th Am. Ed.), 429; Morse on Banking, 278. The first branch of this general proposition may admit of some doubt, upon the more recent authorities; but there is no doubt of the general proposition, that if the drawer of a check, or other negotiable instrument, die before delivery of the instrument and acceptance by the payee, the check or other instrument becomes a nullity and can not be delivered by his representative. Bromage v. Lloyd, 1 Exch. 32; Clark v. — 262 — Boyd, 2 Ohio, 56; Clark v. Sigourney, 17 Conn. 517; 1 Danl. Neg. Inst. (2d Ed.), 58; 2 Danl. Neg. Inst. (2d Ed.), 569, 570. In this case, as we have seen, there was no real or valid delivery of the check to the association in payment of dues, and, of course, upon the death of the drawer, the check' became a nullity, if not before his death. The suspension of the check, made payable to a non-existent character,; though drawn and placed in the custody of Major Kitten-house, would seem to have been in accordance with a preexisting design to cease his connection with the association. His failure to give direction to Major Rittenhouse in regard' to the check, coupled with his declaration to the witness Cobb, would seem to indicate such purpose. According to the testimony of this witness, the deceased told him, the witness, “that he did belong to the defendant association, but he had lapsed, and he asked the witness if he could rejoin it. I told him, says the witness, that I did not know;; that General Stanton was there, and he had better speak to' the General about it.” This was at Port Robinson, about-August 10, 1896. General Stanton was at that time vice-president of the association, and was Paymaster-General of the Army of the United States, and was on an official tour, and the witness was his clerk. It is urged on behalf of the plaintiff that this witness ought not to be believed; that the circumstances related by him throw discredit upon his testimony. But there is nothing in the evidence to impeach his testimony, and it will not do simply to assert, as is done here, that his testimony “is improbable, ridiculous, and that it bears the stamp of untruth upon its face.” There is nothing in the facts related by him to warrant such an imputation. He held a confidential and creditable position as clerk to the Paymaster-General, and his character for veracity could only be impeached by evidence to show that his general character for truth and veracity among his neighbors was bad. This was not attempted. But it is insisted that though the déceased may have been — 263 — in default in the payment of his dues, yet he could not be dropped from membership of the association without having first been given special notice to appear and show cause against being dropped for the alleged default. ■ To this, however, we do not agree. There is no pretense of any surprise to the member that was dropped. He had received all the notice that was contemplated by the constitution and by-laws of the association, and he was fully aware that he was in default in the payment of his dues; that the time for payment had long since elapsed; arid, moreover, he was fully aware of the penalty prescribed for such default. Why, then, the necessity for any further notice? The law upon this subject, and in a case like the present, would seem to be too well settled to admit of a question. Notice in such case, other than that of the fact, of the time and amount of the assessment due, such as was given in this case, is not necessary or required, unless it be by the express terms of the contract, or by-laws of the association. Rood v. Pass., etc., Ben. Assn., 31 F. R. 62; Benevolent Society v. Baldwin, 86 Ill. 479; Madeira v. Merchants’ Ben. Society, 16 F. R. 149; Chamberlain v. Lincoln, 129 Mass. 70; Zeigler v. Mutual Aid & Ben. Life Ins. Co., 1 McGloin, 284; Yoe v. Mut. Ben. Assn., 63 Md. 86; Bacon, Benefit Societies & Life Ins., Secs. 352, 354, 385; Niblack, Mut. Ben. Societies, pp. 336, 337, Secs. 307, 385. The result of the cases is well stated in Yol. 16, p. 81, of the Am. & Eng. Encyc. of L„ where it is said: “In most societies, however, it is provided in the by-laws forining a part of every contract, that the mere non-payment of an assessment or due shall operate to suspend or forfeit the contract. The parties have a right so to stipulate, and having done so in clear and express terms, the courts will give the contract due force and effect.” Upon the whole case, we are clearly of opinion that the affirmative action taken by the executive committee of the association, in dropping the delinquent member, was strictly — 264 — in accordance with the provision of the twelfth by-law, and no other notice was required upon which to base that action than the notice that was actually given by the secretary and treasurer, and received by the delinquent member. The latter was legally dropped from membership of the association, and the plaintiff has no valid claim against said association; and therefore the decree appealed from.must be reversed, and the cause be remanded, that the bill may be dismissed by the court below; and is so ordered. Decree reversed and cause remanded.