In the absence of a special provision of law or rule of the
association to the contrary, the naming of a person as beneficiary
in the benefit certificate of a fraternal benefit association
confers an expectancy merely, which may be defeated by the act of
the insured member in taking out a substitute certificate changing
the beneficiary.
The fact that the first-named beneficiary had paid the
assessments before the change raises no legal claim upon the
insurance.
A benefit certificate expressed a promise to pay the beneficiary
therein named, upon the insured member's death, provided the
"certificate shall not have been surrendered by said member and
another certificate issued at his request," and bore a printed form
providing for "surrender and return" of the certificate by the
member in changing the beneficiary.
Held: That the
requirement of surrender did not necessarily imply a return of the
original paper.
A requirement that a certificate of a fraternal benefit
association shall be surrendered by the insured member before a new
one is issued is for the protection of the association, and, if
waived by it or complied with to its satisfaction during the
member's lifetime, it cannot be availed of by a former
beneficiary.
5 App.D.C. 260 reversed.
The case is stated in the opinion.
Page 247 U. S. 395
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
The Supreme Council of the Royal Arcanum is incorporated under
the laws of Massachusetts as a fraternal benefit society, and it is
licensed as a fraternal beneficial association in the District of
Columbia. [
Footnote 1] The
character and purposes of the organization and the relation to its
members are described in
Supreme Council of the Royal Arcanum
v. Green, 237 U. S. 531.
Samuel K. Behrend became a member of a local lodge of the order in
Washington, known as "Oriental Council, No. 312, Royal Arcanum." On
March 1, 1899, a $3,000 "benefit certificate" was issued to him
there, payable on his death to his wife, Sue, as beneficiary, and
there the first premium or assessment was paid. He delivered the
certificate to her, giving it as a wedding present. From that time
on, the certificate remained in her possession, and until August,
1913, most of the premiums and assessments were paid by her. On
August 8, 1913, Behrend, having ceased to live with his wife,
requested the order to change the beneficiary from his wife to his
son and his daughter. As the original certificate was still in the
wife's possession and she refused to surrender it, Behrend made
affidavit that the certificate was beyond his control and in
writing relinquished all interest therein. Thereupon a new
certificate was issued by the order payable to the children, as
requested, and the wife was notified that the certificate held by
her had been cancelled. On October 20, 1914, Behrend died. On
December 21, 1914, the order paid to his son and to his daughter
each $1,500 upon surrender of the new certificate. Thereafter the
widow brought, in the Supreme Court of the District of Columbia,
this action to recover $3,000 under the original certificate.
Page 247 U. S. 396
The order set up, by plea and affidavit of defense, the facts
showing the change of beneficiary and payment to the new
beneficiaries, which it alleged was in accordance with the contract
contained in the benefit certificate and the constitution and laws
of the organization. The case was heard by the Supreme Court on
motion for judgment against the defendant for failure to file a
good and sufficient affidavit of defense, and judgment was entered
for $3,000 with interest. The Court of Appeals of the District
reversed this judgment, but later granted a rehearing, the order
reciting:
"The question to be argued is this: had the beneficiary of the
certificate a vested interest in the same that could not be
divested by the issue of a substitute certificate without the
surrender of the original and without the consent of the
beneficiary named in the original certificate?"
Upon the rehearing, the judgment of the lower court was
affirmed. 45 App.D.C. 260. The case comes here on writ of
certiorari under § 251 of the Judicial Code.
The benefit certificate provided, among other things, that the
corporation will pay
"out of its Widows and Orphans' Benefit Fund to Sue B. Behrend
(wife) a sum not exceeding three thousand dollars in accordance
with and under the provisions of the laws governing said fund, upon
satisfactory evidence of the death of said member, and upon the
surrender of this certificate; provided that said member is in good
standing in this order at the time of his death, and provided also
that this certificate shall not have been surrendered by said
member and another certificate issued at his request, in accordance
with the laws of this order."
On the back of said certificate appears the following:
"
FORM FOR CHANGE OF BENEFICIARY"
"
____ Council No. ____, R.A."
"To _____, Sup. Sec., S.C.R.A.: I herewith surrender and return
to the Supreme Council
Page 247 U. S. 397
of the Royal Arcanum the within benefit certificate No. ___ and
direct that a new one be issued to me, payable to _____, residing
at _____, related to me as _____."
"________________"
"Member will write his name in full"
"Attest:"
"[Seal of Sub. Council] _________________
Secretary"
The general laws of the order, in force at latest when the new
certificate was issued, provide that a member in good standing may
at any time make
"a written surrender of his benefit certificate and direct that
a new certificate be issued to him, payable to such beneficiary or
beneficiaries as such member may designate,"
and that the issue of such new certificate shall cancel all
previous certificates. They also provide that, in case "a benefit
certificate is lost or beyond a member's control," he may, upon
making satisfactory proof of the fact by affidavit or otherwise and
paying the required fee of fifty cents,
"in writing, surrender all claim thereto, and direct that a new
certificate be issued to him, payable to the same or a new
beneficiary or beneficiaries."
These conditions were complied with before the new certificate
making the son and daughter beneficiaries was issued.
Act of Congress January 26, 1887, c. 46, § 6, 24 Stat. 367,
provided that each life insurance company doing business within the
district should attach to each policy a copy of the application "so
that the whole contract may appear in said application and policy."
Section 657 of the District of Columbia Code, as amended June 30,
1902, c. 1329, 32 Stat. 534, c. 1329, extended the provision to
benefit orders and associations and declared that, in case of
failure to furnish a copy of the application, "no defense shall be
allowed to such policy on account of anything contained in, or
omitted from, such application." The
Page 247 U. S. 398
Court of Appeals decided that Mrs. Behrend acquired a vested
interest in the benefit certificate which could not be divested by
the issue of a substitute certificate without the surrender of the
original and without her consent as beneficiary; that the rights of
the parties were governed by the laws of the District of Columbia;
that the benefit certificate was an insurance policy within the
meaning of both the above acts; that the order was an assessment
insurance company, and, as such, came within the scope of both
acts, so that the fact that the benefit certificate was issued
before the amendment of 1902 was immaterial; that it did not appear
that there had been attached to the certificate a copy of the
application therefor; that the failure to annex the application
precluded allowing as a defense any matter not appearing on the
face of the benefit certificate; that the change of beneficiary was
such a defense, and that, since matters found only in the
application and laws of the association could not be availed of,
the court must
"look solely to the terms of the contract, that is, to the terms
of this so-called benefit certificate, to determine the measure of
the insured's rights to change the beneficiary,"
and that, by its terms, there was no such right.
This Court held in
Washington Central Bank v. Hume,
128 U. S. 195,
128 U. S. 206,
that, under the ordinary policy of life insurance, when no right is
reserved to surrender the policy or to change beneficiaries, the
beneficiary named therein acquires at the moment it is issued, a
vested right which cannot be affected by any act of the insured
subsequent to the execution of the policy. The rule there declared
was deemed by the Court of Appeals to control the case at bar. But
it was not applicable, because the contract sued on was a benefit
certificate of a fraternal benefit association, not an ordinary
policy of life insurance, and also because the benefit certificate
on its face reserves the right to change beneficiaries.
Page 247 U. S. 399
First. The difference between ordinary life insurance
and that furnished by the fraternal benefit societies has been
universally recognized in legislation, and is a matter of common
knowledge. The differences in the legal incidents of these
different forms of protection have been illustrated by numerous
decisions. The difference in respect to the insured's right to
change the beneficiary has been frequently commented on, and is
firmly established. In the absence of a special provision of law or
of a rule of the association to the contrary, the naming of a
person as beneficiary in the benefit certificate of a fraternal
benefit association confers not a vested right, but an expectancy
merely which may be defeated at any time by act of the insured
member. [
Footnote 2] A
different case is presented where the insured has contracted with
the beneficiary that he shall remain such. A contract of that
nature may be enforced by appropriate proceeding if
Page 247 U. S. 400
consistent with the general law and with the laws of the
association. [
Footnote 3] But
the remedy to enforce rights arising out of such a contract would
obviously not be a suit, like that at bar, upon the certificate.
Nor is it contended that Behrend made any such contract concerning
the certificate with his wife. The mere fact that she paid some,
and possibly all, of the assessment prior to the change of
beneficiary, even if paid out of her separate estate, raises no
legal claim. [
Footnote 4]
Perhaps there was not even a moral claim, since, throughout the
period during which she paid assessments, she enjoyed the full
protection which the order agreed to furnish, and for this alone
payments were made. Under the form of insurance furnished by
fraternal beneficial associations, no reserve is accumulated.
Second. The certificate, on its face, expressed not an
unconditional promise to make payment to the wife therein named,
but a conditional promise to pay provided the "certificate shall
not have been surrendered by said member and another certificate
issued at his request, in accordance with the laws of this order."
The plaintiff alleged that the certificate had not been surrendered
and
Page 247 U. S. 401
that she had not been requested to surrender or deliver up the
same for change of beneficiary. The latter allegation is denied by
the affidavit of defense, and the statements therein contained must
be taken as true. But the fact is not material. As indicated by the
printed "Form for Change of Beneficiary" indorsed on the
certificate, which refers to both "surrender and return," the
requirement of a surrender does not necessarily imply a return to
the order of the original paper called the benefit certificate.
Furthermore, requirements of that character are made for the
protection of the society and, if complied with to its satisfaction
or if waived by it during the lifetime of the insured, cannot be
availed of to support the claim of a former beneficiary. [
Footnote 5] It is unnecessary,
therefore, to determine whether, under this form of certificate,
the burden rested upon the plaintiff to prove, as she alleged, that
she had remained the beneficiary. As the judgment of the Court of
Appeals must be reversed for the reasons stated above, we express
no opinion upon other questions argued by counsel and, in part,
passed upon below.
Reversed.
[
Footnote 1]
District Code, § 749 (Act of Congress March 3, 1897, c. 382, §
1, 29 Stat. 630).
[
Footnote 2]
Slaughter v. Grand Lodge, 192 Ala. 301;
Jory v.
Supreme Council A. L. H., 105 Cal. 20;
Masonic Mutual
Benefit Assn. v. Tolles, 70 Conn. 537, 544;
Smith v.
Locomotive Engineers Mutual Life & Accident Ins. Assn.,
138 Ga. 717;
Delaney v. Delaney, 175 Ill. 187;
Masonic
Mutual Benefit Society v. Burkhart, 110 Ind. 189, 194-195;
Carpenter v. Knapp, 101 Ia. 712;
Titsworth v.
Titsworth, 40 Kan. 571;
Marsh v. American Legion of
Honor, 149 Mass. 512;
Schoenau v. Grand Lodge A. O. U.
W., 85 Minn. 349;
Carson v. Vicksburg Bank, 75 Miss.
167;
Masonic Benevolent Association v. Bunch, 109 Mo. 560;
Knights of Maccabees v. Sackett, 34 Mont. 357, 363;
Ogden v. Sovereign Camp, W. O. W., 78 Neb. 804;
Barton
v. Provident Mutual Relief Association, 63 N.H. 535;
Spengler v. Spengler, 65 N.J.Eq. 176;
Lahey v.
Lahey, 174 N.Y. 146;
Pollock v. Household of Ruth,
150 N.C. 211;
Lentz v. Fritter, 92 Ohio St. 186;
Noble
v. Police Beneficiary Association, 224 Pa. 298;
Catholic
Knights of America v. Morrison, 16 R.I. 468;
Christenson
v. El Riad Temple, 37 S.D. 68, 71;
Alfsen v. Crouch,
115 Tenn. 352;
Byrne v. Casey, 70 Tex. 247;
Cade v.
Head Camp, W. O. W., 27 Wash. 218;
Supreme Conclave, Royal
Adelphia v. Cappella, 41 F. 1.
The right of a member of a fraternal benefit society to change
the beneficiary has been denied in a few cases which have failed to
distinguish between benefit certificates and ordinary life
policies.
See Pittinger v. Pittinger, 28 Colo. 308.
[
Footnote 3]
Grimbley v. Harrold, 125 Cal. 24;
McGrew v.
McGrew, 190 Ill. 604;
In re Reid's Estate, 170 Mich.
476;
Catholic Benevolent Legion v. Murphy, 65 N.J.Eq. 60;
Stronge v. Knights of Pythias, 189 N.Y. 346;
Supreme
Lodge, Knights and Ladies of Honor v. Ulanowsky, 246 Pa. 591.
Section 758 of the Code of the District of Columbia (§ 10 of the
Act of March 3, 1897,
supra) provides in regard to
fraternal beneficiary associations that
"no contract with any such association shall be valid when there
is a contract, agreement, or understanding between the member and
the beneficiary prior to or at the time of becoming a member of the
association that the beneficiary, or any person for him, shall pay
such member's assessments and dues, or either of them."
[
Footnote 4]
Jory v. Supreme Council A. L. H., 105 Cal. 20, 30;
Supreme Lodge, N. E. O. P. v. Hine, 82 Conn. 315, 320;
Schiller-Bund v. Knack, 184 Mich. 95;
Spengler v.
Spengler, 65 N.J.Eq. 176, 180;
Fischer v. Fischer, 99
Tenn. 629, 636;
Preusser v. Supreme Hive L. O. T. M., 123
Wis. 164.
[
Footnote 5]
Ladies of the Modern Maccabees v. Daley, 166 Mich. 542,
545;
Fischer v. Malchow, 93 Minn. 396;
Lentz v.
Fritter, 92 Ohio St. 186, 194-195;
Noble v. Police
Beneficiary Association, 224 Pa. 298;
Schardt v.
Schardt, 100 Tenn. 276, 279-280.