Great Hive of the Ladies of the Maccabees v. Supreme Hive of the Ladies of the Maccabees of the World

Carpenter, J. This is a controversy between two organizations of the order of the Maccabees. It was once before in this court. See Great Hive L. O. T. M. for Michigan v. Supreme Hive L. O. T. M. of the World, 129 Mich. 324 (88 N. W. 882). Each of these organizations is incorporated under the laws of Michigan. The two corporations have many resemblances and few differences. Each corporation is a secret, fraternal, and benevolent organization. Each conducts its operations by organizing subordinate lodges or hives, to which the members are admitted by secret initiation. As indicated by their names, only ladies are eligible to membership. Connected with each organization is the feature of life insurance, the benefits of which are confined to eligible members. Each organization uses substantially the same ritual, secret work, regalia, and paraphernalia. The method of insurance of each organization is similar, namely, an assessment is collected from the members insured to* pay losses. The material difference between the methods of assessment in the two orders is this: In the defendant order, ten assessments are made each year. One of these assessments is placed in the emergency or reserve fund of the order. The other assessments are placed in a life-benefit fund. From the life-benefit fund losses accruing are paid, and at .the end of the year the balance is also placed in the emergency or reserve fund. Complainant order levies as many assessments each year as are required to pay losses. Five per cent, of the total amount of its assessments is placed in the emergency fund. It has never made more than six assessments per year, and its average is four. Prior to the commencement of this suit, complainant’s field of operations was the State of Michigan; defendant’s, — 395 — all the territory of the United States except the State of Michigan, though it is to be noted that it has not actually done work in all this field. In 1900 complainant determined to extend its operations outside this State, and into the territory then occupied by defendant. It filed this bill to obtain an injunction restraining defendant’s interference with this project. This court decided, upon a demurrer to said bill, that under its averments complainant was entitled to relief. See Great Hive L. O. T. M. for Michigan v. Supreme Hive L. O. T. M. of the World, 129 Mich. 324 (88 N. W. 882). After this determination, defendant order filed a cross-bill, praying an injunction restraining said complainant from invading its territory as proposed. The case was heard in the court below on pleadings and proofs, and a decree granted in favor of complainant. The important question involved is this: Did the two orders voluntarily enter into such a relation that we can and should declare that complainant is in equity estopped from becoming defendant’s competitor in the manner proposed ? The determination of this question involves an examination of the facts. In making this examination we are not called upon to pass upon the credibility of witnesses. There is no dispute in the testimony touching these facts. The sole question is, What inference shall be drawn from undisputed testimony ? Of these two organizations, complainant is the older. It began its life as a voluntary organization in 1890. It became incorporated in 1891. By the laws voluntarily adopted for its organization, its jurisdiction was limited to the State of Michigan. Defendant was organized and incorporated in 1892. At this time there were three organizations of Lady Maccabees: viz., one in the State of Ohio, one in the State of New York, and one (complainant) in the State of Michigan. There was, however, no uniformity in their plan of organization, their ritual, or their secret work. One of the purposes of the organization of defendant was to unify these differences. Those responsible for — 396 — defendant’s organization declared that it did not propose to do any work ‘ ‘ in those States where great camps are organized, and have established themselves separate hives of the Ladies of the Maccabees, except with the consent of the executive officers of such great camps. ” This would exclude the defendant organization from the State of Michigan, as the complainant organization had been organized under the authority of the Great Gamp of Michigan. (This was an organization for men, somewhat similar to complainant organization.) By the consent of the executive committee of complainant organization (a committee composed in part of officers of defendant), defendant adopted its ritual and secret work. Complainant did not object to defendant’s using its ritual and secret work, but, on the contrary, by action of its executive committee, in 1892, recognizing the necessity of uniformity, passed this resolution : ‘ ‘ Resolved, that the ritualistic and secret work used by the Great Hive of the Ladies of the Maccabees for Michigan be the same in all respects as that used under Supreme Hive jurisdiction;” and at the next general meeting, composed of delegates from each subordinate hive, held in 1894, by an express amendment to its laws, made itself subject to the “Supreme Hive laws of said order bearing upon ritualistic and social work.” In 1894 the two orders entered into the following written agreement: “In order to make uniform the social and ritualistic work, and to give to the members of the Great Hive for Michigan the privileges of the order in other States under Supreme Hive jurisdiction, all changes in the Supreme Hive ritual and secret work are to be granted to the Great Hive, and all changes in the Great Hive ritual and secret work are to be submitted to thé Supreme Hive for approval. ” An arrangement was made at the same time by which the Great Hive was entitled to representation in the Supreme Hive upon the payment of a per capita tax. In pursuance of this arrangement, until the year 1897 the Great Hive enjoyed a representation in the Supreme Hive — 397 — and paid its per capita tax. The statement in the opinion of the trial judge that “no action was taken by complainant providing for the fixing or payment of any per capita tax to defendant hive ” is misleading. It is true that complainant passed no formal resolution fixing the payment of that per capita tax, but it is equally true that, for more than two years after the arrangement above referred to, it actually paid to defendant a per capita,. tax of two cents, and enjoyed the benefit of said payment. That complainant received advantages from this arrangement is evidenced by the report of its chief executive officer, made in 1896, who, after referring to the arrangement with the Supreme Hive, stated: “The work as outlined in the hew ritual has proven very satisfactory an'd is greatly appreciated. It is gratifying to know that wherever we may go, in any State of the Union, or in any L. O. T. M. hive in the world, that our work is uniform, and that we may feel perfectly at home while visiting other hives.” In 1897 complainant became dissatisfied with its basis of representation, refused to continue the payment of its per capita tax, and was never thereafter represented in defendant hive. The two orders, however, continued to be on friendly relations until the year 1900. The ritual and secret work, used alike by both orders, had been changed by action of the Supreme Hive alone prior to the year 1895, and were twice subsequently — namely, once in 1895 and once in 1899 — revised by joint committees of the two orders. In 1895, by agreement of the two orders, the ritual was copyrighted in their joint names. Until 1900 the same password was promulgated to the hives of each order. Prior to 1899 this password was fixed by defendant’s chief executive; afterwards by the joint action of the chief executives of the two orders. The complainant confined its work to the territory of Michigan, and the defendant to the territory outside of Michigan; that is, it had no subordinate hives in Michigan, and it permitted none to become its members who were not members of — 398 — complainant organization. Until that time the complainant, by its articles of association and Jaws, was limited in its jurisdiction to Michigan; and, while defendant had never expressly agreed that it would not be complainant’s rival in Michigan, it could not become so without violating a declared purpose of its organization, as well as the understanding under which it was permitted to use complainant’s ritual and secret work. The relation of the two parties is clearly stated in a letter dated February 15, 1899, from complainant’s great record keeper, or secretary, to the secretary of defendant, from which we quote: “ I find Supreme Hive jurisdiction is given as the United States and Canada. You have not all the United States or Canada. I think you should put in your report you send this month and mention Michigan and New York as not being in Supreme Hive jurisdiction. It is true we use the same ritualistic work and passwords, but further than that we have nothing to do with each other; and I think right is right,' and the Supreme Hive has no more right to claim Michigan than we have to claim any other State. * * * It is true you have a certain jurisdiction in Michigan and New York, and yet a woman to join the Supreme Hive from either of these States must first be a member of the order in such State.” It is suggested that during their relations complainant did, on one occasion, indicate its understanding that it had a right to use such ritual outside this State. It seems proper that we should examine this incident. In 189? the Supreme Tent, Knights of the Maccabees of the World, an organization of men (to which, in some particulars, defendant organization is subordinate), requested both complainant and defendant to permit it to use their ritual in the Province of Ontario. In answer to this request, complainant’s executive committee declared said ritual “the joint property of the Supreme Hive L. O. T. M. of the World and Great Hive L. O. T. M. for Michigan,” and resolved that, “in view of the fact that the second biennial review [convention of delegates of subordinate hives] of the Great Hive for Michigan will be held in the city of Detroit in — 399 — June, 1898, it is the sense of this committee that action on this request be deferred until it can be placed before the members of the order at said Great Hive biennial review.” We do not think that this action indicated complainant’s understanding that it had a legal right to use the ritual ■outside of the State. It went no further than to indicate its understanding that no other organization than defendant could use the ritual without its consent. By using a common ritual, secret work, regalia, and paraphernalia, and respecting the other’s rights, each of these orders has had a successful career. Complainant has a membership of 63,400. Its emergency or reserve fund is $65,000. Defendant has attained a membership of 99,138. Its emergency fund is $298,837.50. It has ■extended its work into 42 States and Territories of the Union. To build up and extend its work, defendant has expended over $200,000. In 1900 complainant, as heretofore stated, determined to extend its field of operations beyond the territory of Michigan, and into that theretofore and then occupied by ■defendant. Until that time complainant, by its laws voluntarily adopted, was limited in its jurisdiction to the State of Michigan. Its articles of incorporation also limited its jurisdiction to Michigan. Changes were subsequently made, both in its 'articles of incorporation and laws, extending its jurisdiction to “other States and Provinces.” For the purpose of this opinion we will assume that these changes have been legally made, though their legality is challenged by defendant’s counsel. After the decision in the court below, but before the decree, complainant, by amendment to its articles of incorporation and voluntary laws, changed its name from “The Great Hive of the Ladies of the Maccabees for the State of Michigan” to the “Ladies of the Modern Maccabees,” and changed the symbolic letters from “L. O. T. M.” to “L. O. T. M. M.,”with a view of obviating some of the objections of defendant. While it is objected by defendant’s counsel that these amendments come too late to be of ser — 400 — vice to complainant in this case, it is unnecessary, in our judgment, to pass upon this objection, because, for reasons hereafter stated, they do not, in our judgment, answer other valid objections to complainant’s project. Complainant’s sole purpose in enlarging its field of operations was to promote its material prosperity. The project, to quote complainant’s chief executive, was “purely a matter of business.” This purpose more clearly appears from an address to the order, made by said chief executive, from which we quote: “It would seem that, if our assessments are to be kept at the low rate they have been in the past, our membership must certainly be kept moving, and the field should, be a broader one. * * * We have had five or six assessments per year, — never more than six, and the average has only been slightly over four, — -and we want to keep that. It has been our pride and our boast, — our low rate of assessment.” We scarcely need to be told that, if these two orders compete in the same field for insurance, the argument of cheaper insurance will be used to secure membership in complainant organization. When its chief executive officer was a witness, the following occurred on her cross-examination : “ Q. I ask whether it is not'a part of your purpose, that being based also upon your history, to say to people that the Supreme Hive has ten assessments in a year for about the same amount per age that you make, where your extreme number of assessments has been six. Is not that an argument which you intend to use in that competition, if you enter into it ? “A. It is not an argument that I intend to use. “Q. It will be made known, will it not ? “ A. I could not say as to that. I shall not be doing the work personally everywhere.” What will be the effect of the competition of these orders, if complainant becomes defendant’s rival in the territory in which defendant has been and is now doing business ? We have already said that both complainant and defend — 401 — ant are using the same ritual and secret work. In making this statement we do not overlook the finding in the opinion of the court below that, “since the beginning of this litigation, defendant Give, through certain of its executive officers, has prepared, or is now preparing and has practically completed, a ritualistic and ceremonial work which is distinct from that used by complainant and defendant, as seems to be indicated from the proofs adduced.” It is not meant by this to assert that the ritual above referred to is now in use by the defendant order, for it is distinctly said subsequently: “ The proofs show that the ritual is substantially the same as that used and owned by complainant before the existence of the defendant hive.” The record shows — and this I assume to be what the trial judge had in mind when he said that defendant was preparing a ritualistic and ceremonial work— that defendant has undertaken to make a ritual, “a harmonious and complete new work, possessing literary merit, and embodying the best and highest points of our order.” It does not appear that this ritual is completed, and it does appear that the old ritual is still in use. Defendant’s rights are to be determined by the ritual it uses, and which it has a right to use, and not the ritual which it proposes to make. Nor can we presume that the proposed ritual, “embodying the best and highest points of our order,” will differ essentially from that now in use. If these two orders compete in this field for membership, we shall have the remarkable spectacle of two rival orders using the same ritual and secret work. The basic principle underlying each of these orders, and the principle which is by each regarded as essential, is the" maintenance of secrecy. The only material difference between the two .is in the number of assessments made upon the insured members, complainant collecting in that way only 5 per cent, more each year than is needed to pay its losses, while defendant collects a larger amount in excess of what is needed to pay its losses. In other words, defendant collects larger annual assessments for the same insurance — 402 — than does complainant, and places this excess into an emergency or reserve fund. In behalf of complainant, it will be contended that it furnishes a cheaper insurance; in behalf of defendant, it will be claimed that it furnishes a safer insurance. Which of these methods is preferable is not a question for this court to determine. It is enough to say that this method of rivalry is very different from any competition which occurs between rival business, fraternal, or church organizations, and that it is almost certain to be ruinous in its effect Upon defendant, if not upon complainant, organization. In what respect are defendant’s initiatory exercises and unwritten work secret, if a rival order possesses and exercises the right to divulge them to a hostile membership ? Each of these orders is based upon the principle that the value of the confidential relations established by the secrecy of its work is of vital importance to its welfare. Neither of them could hope to succeed in competition with rival orders whose secrecy is protected and respected. Their conduct would' warrant the charge that they were competing in the sale of the same secrets. Each might expect to become ridiculous in the eyes of the impartial world. Is complainant under any obligation to refrain from doing this act which threatens to destroy defendant’s business ? This question cannot be answered in the negative simply because complainant and. defendant did not make what amounted to a formal agreement to partition the territory. The obligation to refrain from doing an act so hostile to defendant’s interests may be imposed by other circumstances than an express agreement. The facts I have stated prove that complainant not only permitted, but encouraged, defendant to make use of its original ritual, secret work, badges, and paraphernalia. Defendant “has expended over $200,000 in establishing its business on the foundation of the ritual and secret work under consideration. Did it make this expenditure believing that complainant, by asserting its rights as the owner of said ritual and secret work, could, whenever it chose, destroy or seri — 403 — ously damage said business ? It is impossible to believe that the expenditure was not made under the supposition that complainant would assert no right in said ritual and secret work which would destroy or seriously damage said business. Neither is it possible to believe that, complainant was not aware of the supposition under which defendant made this expenditure. Complainant, having encouraged defendant to make this expenditure on the supposition that it had no rights which would jeopardize the investment, is now, according to elementary principles of equity (see Walker v. Bottomley, 110 Mich. 127 [67 N. W. 1083]), estopped from asserting those rights. It is es-topped from asserting a title to the foundation of the structure which it has encouraged defendant to build. It is possible that a different question might be presented if defendant had ever violated its express or implied obligations to complainant, but it violated none of these obligations. Allusion has been made to the circumstance that, after this case was heard in the court below, complainant changed its corporate name from “ The Great Hive of the Ladies of the Maccabees for the State of Michigan” to that of “Ladies of the Modern Maccabees,” and instead of using the symbolic letters used also by defendant, “ L. O. T. M.” (Ladies of the Maccabees), uses the letters “L. O. T. M. M.” (Ladies of the Modern Maccabees). These changes might answer some of the objections urged by defendant against complainant’s project. Complainant, 'however, still persists in its determination to use the same ritual, secret work, badges, and paraphernalia used by defendant. Defendant has the same right to insist that the principles of equitable estoppel prevent complainant’s use of these in defendant’s territory that it once had to insist that complainant should not use there the name and symbolic letters which it formerly used and has now .abandoned.' This decision does not, in our judgment, result in giving •defendant a monopoly which would be condemned by the courts. No one would think of characterizing the right — 404 — which every secret organization has to the exclusive use of its ritual and secret work as an illegal monopoly, nor would any one deny that defendant has this right against all the world except complainant. If this exclusive right was not^an illegal monopoly, — and it surely was not, — we do not make it one by deciding, as we do, that, by virtue of the principle of estoppel, it is also exclusive as against complainant. In our opinion, the decree of the court below should be reversed, and a decree entered here enjoining complainant from competing with defendant in the field now'occupied by it, by using the same, or substantially the same, ritual, secret work, badges, and paraphernalia as those used by defendant. Defendant is entitled to costs of both courts. Moore, C. J., and Montgomery, J., concurred with Carpenter, J.