Order of United Commercial Travelers of America v. Wolfe - 331 U.S. 586 (1947)


U.S. Supreme Court

Order of United Commercial Travelers of America v. Wolfe, 331 U.S. 586 (1947)

Order of United Commercial Travelers of America v. Wolfe

No. 32

Argued February 28, 1946

Reargued November 12, 1946

Decided June 9, 1947

331 U.S. 586

Syllabus

1. An Ohio citizen brought an action in a state court in South Dakota against a fraternal benefit society, incorporated in Ohio and licensed to do business in South Dakota, to recover benefits claimed to have arisen under the society's constitution as a result of the death of an insured member who had been a citizen of South Dakota throughout his membership. The society's constitution, which was valid in Ohio, prohibited the bringing of an action on such a claim more than six months after its disallowance by the society. The action was brought after expiration of this time, but before the expiration of the period prescribed by South Dakota law for commencing suits on contracts. A statute of South Dakota declared void every stipulation or condition in a contract which limits the time within which a party thereto may enforce his rights by usual legal proceedings in the ordinary tribunals.

Held: the federal Constitution requires South Dakota to give full faith and credit to the public acts of Ohio under which the society was incorporated, and the claimant was bound by the six-month limitation upon bringing such an action. Pp. 331 U. S. 588-589, 331 U. S. 624-625.

2. A claim based on membership rights under the constitution of an incorporated fraternal benefit society, the terms of which are subject to amendment through the processes of a representative form of government authorized by the law of the state of incorporation, differs from a claim for benefits under an ordinary contract of accident insurance, whether issued by a stock or a mutual insurance company. Pp. 331 U. S. 600, 331 U. S. 606.

3. It is of primary significance from the legal point of view in this case that the society is a voluntary fraternal association organized and carried on not for profit, but solely for the mutual benefit of its members and their beneficiaries, and has a representative form of government which shall make provision for the payment of benefits in accordance with certain statutory requirements. P. 331 U. S. 605.

4. Relationships between the members of fraternal benefit societies are contractual, in that they are undertaken voluntarily in consideration of the like obligations of others; but, interwoven with their

Page 331 U. S. 587

financial rights and obligations, they have other common interests incidental to their memberships which give them a status toward one another that involves more interdependence than arises from purely business and financial relationships. Pp. 331 U. S. 605-606.

5. Membership in a fraternal benefit society is governed by the law of the state of incorporation; control over its terms is vested in the elected representative government of the society as authorized and regulated by that law. P. 331 U. S. 606.

6. By virtue of the full faith and credit clause, the people of the United States have imposed upon the general rules governing conflicts of laws respecting statutes of limitations on claims arising out of ordinary contracts another limitation, giving effect to a limitation contained, as in the present case, in the constitution of a fraternal benefit society. P. 331 U. S. 607.

7. Fraternal benefit societies exist by virtue of the laws of the states of their incorporation, and the rights and obligations incident to membership in them are as much entitled to full faith and credit as the statutes upon which they depend. P. 331 U. S. 609.

8. To permit recovery in this case would fail to give full faith and credit to the terms of membership authorized by Ohio by placing an additional liability on the society beyond that authorized by Ohio or accepted by the society. P. 331 U. S. 610.

9. The weight of public policy behind the general statute of South Dakota, which seeks to avoid contractual limitations upon rights to sue on ordinary contracts, does not equal that which makes necessary the recognition of the same terms of membership for members of fraternal benefit societies wherever their beneficiaries may be, especially where the State, with full information as to those terms of membership, has permitted such societies to do business and secure members within its borders. P. 331 U. S. 624.

10. If a state gives some faith and credit to the laws of another state by permitting its own citizens to become members of, and benefit from, fraternal benefit societies organized by such other state, it must give full faith and credit to those laws, and must recognize the burdens and limitations which are inherent in such memberships. P. 331 U. S. 625.

70 S.D. 452, 18 N.W.2d 755, reversed.

In an action brought in a state court in South Dakota, an Ohio citizen obtained a judgment against a fraternal benefit society incorporated in Ohio for benefits claimed to have arisen under the society's constitution as a result

Page 331 U. S. 588

of the death of an insured member who was a citizen of South Dakota. The Supreme Court of South Dakota affirmed. 70 S.D. 452, 18 N.W.2d 755. This Court granted certiorari. 326 U.S. 712. Reversed, p. 331 U. S. 625.



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