Supreme Lodge, Knights of Honor v. Nairn

Campbell, C. J. Complainant filed a bill of interpleader to settle the contending claims of the two defendants to a sum of $2,000, under a member’s benefit certificate issued to Harry Traver, now deceased, who was a member of one of the subordinate lodges of the association represented by complainant. It appears from the record that the order of which complainant is a corporate representative, or various associations connected with it, became, at different times, incorporated in different states. It also appears that there is a general association to which the smaller bodies are said to conform, having local lodges, incorporated and unincorporated. Just how far the special corporations in different states govern those elsewhere not incorporated, does not fully appear, and is not material in the'present case. We have no judicial knowledge beyond the record, and need not inquire. In the present case, Traver appears to have been a member of a lodge at Port Huron, in this State, and the complainant, which is the body issuing the benefit certificate, and bound to pay it, is a corporation organized under the laws of Missouri. It is therefore, in all its contract drelations, subject to the conditions imposed upon its corporate powers by those,laws, and no rules or conditions can be lawfully imposed, contrary'to those laws, upon its corporate action, by any private association. It can make no contracts forbidden by the laws of Missouri'to such corporations; and, while the action of the unincorporated supreme lodge may be of more or less service in construing ambiguous arrangements not forbidden, it cannot in any way supersede the statutes. The benefit certificate, which is dated July 16, 1881, after reciting membership of Traver, and some other similar matters, and some conditions, concludes as follows: — 51 — “ The said supreme lodge hereby agrees to pay out of the widows’ and orphans’ benefit fund, to his sister, Mrs. F. F. Richardson, the sum of two thousand dollars, in accordance with and under the laws governing this order, upon satisfactory evidence of the death of said member, and the surrender of this certificate: provided, that this certificate shall not have been surrendered by said member, or canceled at his request, and another certificate have been issued in accordance with the laws of this order.” On the back of this certificate was a printed form: “ I hereby surrender to the Supreme Lodge, Knights of Honor, the within benefit certificate, and direct that a new one be issued to me, payable to-. [Signed]-. Attest: -. [Lodge Seal.] -Reporter.” Upon the certificate in controversy this blank was dated March 25, 1884, signed by Harry Traver, made payable to “ George K. Nairn, in trust,” but not signed or attested by the lodge “ reporter,” or by any one. Defendant Nairn claims that, by virtue of this indorsement, the fund belongs to him. Defendant Mrs. Richardson claims that nothing has been legally done to divest her of the benefits promised to her by the certificate. Nairn claims that Traver was an army comrade and intimate friend, who had lived at his house several years, and became hopelessly ill from some injury, in the early part of 1884, which interfered with his doing any considerable share of business, and in October, 1884, he went to Ypsilanti for medieal treatment, where he was under, the care of an aunt and other near relatives and family connections, one of whom was a physician. He died at Ypsilanti in December, 1884. Nairn testifies that, while going to Ypsilanti, Traver told him he had plaeed a transfer of the certificate, with other-papers, in an envelope, which he had left in a bureau drawer in his room at Nairn’s, and wished him to do according to-the .instructions which he would find there. It does not .appear very clearly when Nairn first looked at this envelope, but it was sealed, and contained on the .outside, in black — 52 — ink, “H. Traver,” and in blue pencil mark, “For Geo. Nairn, in case of my death.” After Traver’s death, it was opened by Nairn, in presence of some of Traver’s relatives, and it then contained the certerficate indorsed, as before stated, as of March 25, 1884, and a letter of the same date, as follows: “ Port Huron, March 25,1884. “ Reporter of Integrity Lodge, Knights of Honor — Sir : I desire to have the beneficiary in my certificate of membership changed from Mrs. F. F. Richardson to George K. Nairn, in trust; and in the event of my death, two thousand dollars to be paid to him. “'Harrt Traver.” There was also a letter in blue pencil, dated June 24, 1884, directed to Nairn, and indorsed, “Geo. K. Nairn, in case of my death,” the purport of which was a request to have his affairs straightened, pay a list of debts enclosed of about $359, and funeral expenses, and apply balance as directed in memoranda. The remainder of the letter explained his business matters and some other things. There was also a life insurance policy for $500 on the life of Mrs. Richardson, which he requested to have kept for her son. Also a letter, dated October 15, 18S4, (which was the date of his going to Ypsilanti), addressed jointly to his sister and aunt, requesting them, in case of his death, to confer and consult with Nairn,' and rely on him implicitly, saying: “ He has been to me through twenty years or more as a brother, and is as dear to. me as one.” There was no memorandum in regard to what were the terms of Nairn’s trust in the fund, but Nairn says that on the way to Ypsilanti, Traver told him to take what was reasonably due him, and keep the rest in trust for his little girl. He also says that from the spring of 1884 he paid Traver’s lodge dues and assessments at his desire, but never knew that the certificate had been assigned for his benefit till October, as before mentioned. It is not claimed on either side that this, certificate belonged to Traver as a part of his estate. It is admitted — 53 — on both sides that he had a power of appointment to change the beneficiary. It is also clear that the beneficiary named in the certificate must take the fund, unless there has been a valid appointment in favor of Nairn. It is claimed, however, that there are two objections to Nairn’s claim: First, that he is not such a person as could receive a benefit under the rules of the corporation. Second, that no appointment ever became operative. The circuit court for the county of St. Clair ordered the money to be paid to Nairn. Mrs. Richardson appeals on her own behalf. The complainant appeals, claiming that certain provisions of the decree are injurious, as changing the conditions on which complainant can be bound. The constitution of the order, as last adopted in May, 1881, is very explicit that benefits are to be paid, on behalf of a member, “ to such member or members of his family, or person or persons dependent on him, as he may direct and designate by name,” etc. The change of beneficiaries was to' be made by a member, “ while in good standing,” surrendering his certificate, and receiving a new one payable as he shall have directed; “ said surrender and direction to be made on the back of the benefit certificate surrendered, signed by the member, and attested by the reporter under seal of the lodge.” Const. art. 9, § 5. It appears that under a Kentucky charter, and under the constitution as it stood previous to 1881, the benefits could be made payable to his family, or as the member should direct. This, apparently, would have made Nairn a competent beneficiary, if we can regard these constitutions as controlling the contract. But this benefit is payable by a corporation of the State of Missouri, and the laws of that state very clearly and expressly forbid corporations of this sort from paying benefits to any but the member’s family or dependents. Rev. St. Mo., p. 179, § 972. This prohibition is strengthened by some further provisions, making it unlawful to issue policies of life insurance, or for the benefit of the members themselves in any, shape. Section 973. — 54 — The restrictions imposed by the laws of Missouri cannot be abrogated or changed by the corporation, and it cannot subject itself to any outside control which will override the laws of its organization as a corporate body. The intent of the prohibition is clearly to shut out all persons who áre not actual relatives, or standing in place of relatives in some permanent way, or in some actual dependence on the member. While the relations between Traver and Nairn were very intimate, they do not fairly come within the designation of family relations. If there was any dependence, Traver, and not Naim, was the dependent person. But, taking Nairn’s own answer and testimony together, it is shown that he expected, under the alleged arrangement with Traver, to apply this fund, not only to the payment of other debts, but also to payment to himself as a creditor, leaving such .surplus as he chose to leave to one of his own children. The purpose of Traver thus indicated .was not to provide a benefaction to a member of his family, or person dependent, but to use the fund to pay debts — a purpose which is honest, but which is entirely foreign to the benevolent objects of the association, which exclude the member from appropriating the fund to his individual purposes. The other objection, however, is one which cannot be surmounted. The written contract, so far as it goes, is the measure of the rights of all parties. By the express terms of that certificate, it is provided that Mrs. Richardson shall have the money unless the certificate is surrendered and canceled and a new one issued; and the form of surrender printed on the back conforms precisely to the clause also inserted in the constitution, requiring every surrender and new direction to be signed by the member, and attested by the reporter under the lodge seal, he being the officer into whose hands it must be- placed for transmission to the home office for reissue. Under this arrangement, the purpose is evident that the corporation shall always be in written contract relations with a member who is alive and in good standing, which — 55 — ■will show them the identity of the beneficiary to whom they are liable. It is possible — and we need not consider under what circumstances — that when a member has executed and delivered to the reporter his attested surrender, in favor of a competent beneficiary, his death, before a new certificate is rendered, may leave his power of designation so far executed as to enable a court of equity to relieve against the accident. But in the present case, the facts show conclusively that Traver did not mean to have any surrender made until after his death. Nairn was not authorized to open the envelope or handle any of the papers while Traver lived, and Traver retained complete control of them. No one was authorized, while he lived, to take any steps to complete a surrender. The attestation of the reporter was not a mere ceremony. In this very case, issue is made on the voluntary character and legal validity of Traver’s alleged execution of the various papers. We are not disposed to consider that view of the case. But it is plain that the formality of appealing personally before an officer of the corporation or its lodges, and having the execution seen and attested by such an officer, would be a valuable guard against fraud and forgery, which was not provided for without some intention. In our opinion, Traver never surrendered this certificate, and never attempted to surrender it, within either the letter or the spirit of its conditions, and the right of Mrs. Richardson remains as originally provided- for. We do not, in reversing the decree, mean to impugn any one’s integrity. We dispose of the case purely on legal grounds, which leave us, in our opinion, no choice in the matter. The contract is one which the parties made on their own conditions, and every one is bound by them. We do not regard the complainant’s appeal as within the rules of interpleader, and, while we shall not disturb the allowance of $50 made below, we can grant no further costs to it on appeal. The learned argument of the distinguished counsel representing it was instructive, but bore entirely in favor of one of the two defendants. — 56 — Mrs. Richardson is entitled to costs of both courts against Nairn, and to a decree for the money in controversy. The decree below must be reversed, and a decree entered here in her favor. The other Justices concurred.