1. While proceedings in the federal courts are not within the
terms of Art. IV, § 1, of the Constitution, they nevertheless must
be accorded the same full faith and credit by state courts as would
be required in respect of the judicial proceedings of another
state. P.
265 U. S.
33.
2. Where statutes of two states, couched in the same terms,
receive different constructions by the courts of their respective
localities, the constructions become parts of the respective
statutes, which are to be treated accordingly as different laws. P.
265 U. S.
34.
3. In an action to recover insurance under a benefit
certificate, issued by a fraternal order created by an act of
Congress which provided that its constitution, and the amendments
thereof, should not conflict with the laws of any state, a defense
based on the refusal of the insured to pay increased dues, as
required by an amendment adopted by the order, was overruled by the
Supreme Court of Nebraska upon the ground that the order had not a
"representative form of government" within the meaning of a statute
of Nebraska in force when the new rates were adopted.
Held:
(a) The meaning attributed by the Nebraska Supreme Court to the
Nebraska statute must be accepted by this Court, on review, as
though it had been specifically expressed in the statute. P.
265 U. S.
32.
(b) A decree of the federal court in Indiana holding that the
order had a "representative form of government" within the meaning
of a similar statute of that state was not binding in the Nebraska
litigation, because the two issues -- the meaning of the Nebraska
statute and the meaning of the Indiana statute -- were not the
same. P.
265 U. S.
33.
4. Under Jud.Code § 237, as amended by the Act of September 6,
1916, certiorari, and not error, is the remedy to review a state
decision on a right claimed under a federal statute or authority
where the validity of the statute or authority itself is not in
question. P.
265 U. S.
36.
109 Neb. 108 affirmed.
Page 265 U. S. 31
Error and certiorari to a judgment of the Supreme Court of
Nebraska affirming a judgment for the plaintiff, Meyer, in an
action to recover insurance under a benefit certificate issued by
the plaintiff in error.
MR. JUSTICE SUTHERLAND delivered the opinion of the Court.
This case is here on error and also upon petition for writ of
certiorari. Consideration of the latter was postponed until hearing
on the merits.
Defendant in error was the beneficiary named in a benefit
certificate of life insurance issued to one of its members, by the
plaintiff in error, a fraternal order created by Act of Congress of
June 29, 1981, c. 119, 28 Stat. 96. Upon the death of the assured,
an action was brought in a state court by the beneficiary to
recover the amount of the insurance, and judgment was rendered in
his favor. On appeal to the state supreme court, the judgment was
affirmed on the authority of the decision of the same court on a
former appeal.
After the insurance policy had gone into effect, the Supreme
Lodge, by an amendment, increased the dues from $5.70 per month to
$26.30 per month. Prior to the effective date of the new rates, the
assured had paid all dues assessed under the old rates. After such
date, he refused to pay at the new rates upon the ground, among
others, that, in disregard of a state statute, the society was not
operating under a representative form of government when the rates
were increased; but he regularly and duly tendered payment at the
old rates.
Page 265 U. S. 32
Section 4 of the congressional act provides:
"That said corporation shall have a constitution, and shall have
power to amend the same at pleasure:
Provided, that such
constitution or amendments thereof do not conflict with the laws of
the United States or of any state."
A statute of Nebraska in force at the time the new rates were
adopted defines a fraternal benefit society as a corporation, etc.,
organized and carried on for the sole benefit of its members and
their beneficiaries and not for profit, and provides: "Each such
society shall have a lodge system, with ritualistic form of work
and representative form of government." Laws of 1897, c. 47, § 1,
p. 266.
According to the stipulation of facts, the Supreme Lodge, when
it made the amendment increasing rates,
"was composed of 163 members, and that, of such members, nine
were Past Supreme Chancellors and eight were Supreme Officers of
the defendant, 98 were holders of certificates in the Insurance
Department, and 146 were delegates elected by the various Grand
Lodges within the order,"
all of whom participated in enacting the amendment. On the first
appeal, the state supreme court, after a full discussion of the
question and of the facts, and a review of its earlier decisions,
held that the body above described did not constitute a
representative form of government within the meaning of the state
statute. 104 Neb. 505. Upon rehearing, the court adhered to this
conclusion, 104 Neb. 511, and, upon the second appeal, again
affirmed it, 109 Neb. 108.
Under the settled rule of this Court, declared so frequently and
uniformly as to have become axiomatic, we must accept this decision
of the highest court of the state fixing the meaning of the state
legislation, as though such meaning had been specifically expressed
therein.
See, for example, 67 U. S.
Warren, 2 Black 599,
67 U. S. 603;
Green v. Lessee of
Neal, 6 Pet. 291,
31 U. S.
297-300. And we follow
Page 265 U. S. 33
the state construction even though it may not agree with our own
opinion.
Supervisors v. United
States, 18 Wall. 71,
85 U. S. 82.
Shelby v. Guy,
11 Wheat. 361,
24 U. S. 367;
Tioga R. Co. v. Blossburg
& Corning R. Co., 20 Wall. 137,
87 U. S. 143.
No question is raised as to the necessity for compliance with the
provisions of the state statute, but the defense pleaded and relied
upon is that the matter was concluded by a decree of the federal
district court of Indiana, affirmed by the circuit court of
appeals,
Holt v. Supreme Lodge Knights of Pythias, 235 F.
885, establishing the validity and enforceability of the increased
rates; that such decree was binding, as
res adjudicata,
upon Meyer, the plaintiff, and that the court below, in declining
to so consider it, denied full faith and credit to the judicial
proceedings of another state, in contravention of Article IV, § 1,
of the Constitution of the United States, and of § 905, Revised
Statutes.
While the judicial proceedings of the federal courts are not
within the terms of the constitutional provision, such proceedings
nevertheless must be accorded the same full faith and credit by
state courts as would be required in respect of the judicial
proceedings of another state.
Hancock National Bank v.
Farnum, 176 U. S. 640,
176 U. S. 644;
Embry v. Palmer, 107 U. S. 3,
107 U. S. 9. It
appears from the record in the
Holt case, which was in
evidence and is in the record here, that the court expressly found
that the society was, during its entire existence, operating under
a representative form of government. We assume, for present
purposes, that the plaintiff is bound by that decree, but the
question -- and the vital question -- still remains, is the issue
the same? We are of the opinion that it is not the same, and that
the plea of
res adjudicata fails.
The principal place of business of the order was in Indiana, and
the question presented in the
Holt case, which was brought
in Indiana, evidently was whether
Page 265 U. S. 34
there was a representative form of government within the meaning
of the statute of that state, § 5043; 2 Burns' Indiana Stats.1914,
p. 882, since the federal statute made no requirement on the
subject, and the finding, unless to satisfy the Indiana law, would
have been meaningless. The question of compliance with the statute
of Nebraska or those of other states was not involved. The Indiana
statute is reproduced in the margin,
* and, as will be
seen, differs from the Nebraska statute in that the former
specifically defines what shall constitute a representative form of
government, while the latter does not. But if we assume for the
moment that the two statutes are alike, nevertheless our
determination must be the same. It was within the competency of the
federal court to construe the Indiana statute in one way, and it
was equally within the competency of the Nebraska Supreme Court to
construe the Nebraska statute in an opposite way; and, since the
construction becomes part of the statute and is to be read as
though in its text in the one case as in the other, the result is
that they are, in effect, not the same, but different
Page 265 U. S. 35
statutes. In
Christy v.
Pridgeon, 4 Wall. 196,
71 U. S. 203,
this Court said:
"Nor does it matter that in the courts of other states, carved
out of territory since acquired from Mexico, a different
interpretation may have been adopted. If such be the case, the
courts of the United States will, in conformity with the same
principles, follow the different ruling so far as it affects titles
in those states. The interpretation within the jurisdiction of one
state becomes a part of the law of that state as much so as if
incorporated into the body of it by the legislature. If, therefore,
different interpretations are given in different states to a
similar local law, that law in effect becomes by the
interpretations, so far as it is a rule for our action, a different
law in one state from what it is in the other."
In
Louisiana v. Pilsbury, 105 U.
S. 278,
105 U. S. 294,
it was said:
"So far does this doctrine extend that, when a statute of two
states, expressed in the same terms, is construed differently by
the highest courts, they are treated by us as different laws, each
embodying the particular construction of its own state, and
enforced in accordance with it in all cases arising under it."
Shelby v. Guy, supra; May v. Tenney, 148 U. S.
60,
148 U. S. 64;
Detroit v. Osborne, 135 U. S. 492,
135 U. S. 498;
Chicago Union Bank v. Kansas City Bank, 136 U.
S. 223,
136 U. S. 235.
It follows that there is not identity of issue in the two cases,
since, so far as this Court is concerned, the statutes which
determine it are of exactly opposite import. In principle, it is
the same as though the Indiana statute, which controlled the
question decided in the first suit, had been superseded by a later
Indiana enactment to the contrary effect, and a second suit,
arising under and controlled by the later enactment, was brought
involving the same question. The intervention of the new and
antagonistic statute in either case furnishes a new basis for the
litigation, and the issue is no longer the same.
Memphis City
Bank v. Tennessee, 161 U. S. 186,
Page 265 U. S. 36
161 U. S. 192;
Utter v. Franklin, 172 U. S. 416,
172 U. S. 424;
Erskine v. Steele County, 87 F. 630, 636;
aff'd,
98 F. 215, 220.
Prior decisions of this Court are pressed upon our attention, of
which
Supreme Lodge, Knights of Pythias v. Mims,
241 U. S. 574, and
Supreme Council of the Royal Arcanum v. Green,
237 U. S. 531, are
examples. They are not in point. Neither the effect of state
statutes imposing conditions like the one here under review nor the
question in respect of identity of issue upon which the plea of
res adjudicata in the present case turns was involved or
considered.
Under § 709 Revised Statutes, Judicial Code § 237, this case
would be properly here upon writ of error,
Pittsburg, etc., Ry.
Co. v. Long Island Loan & Trust Co., 172 U.
S. 493,
172 U. S. 508;
Hancock National Bank v. Farnum, supra; Embry v. Palmer,
supra; but, as amended by the Act of September 6, 1916, c.
448, 39 Stat. 726, the remedy is by certiorari. We therefore
dismiss the writ of error, grant the petition for certiorari,
Yazoo & M. v. R. Co. v. Clarksdale, 257 U. S.
10,
257 U. S. 15-16,
and, for the reasons given above, affirm the judgment of the state
supreme court.
Affirmed.
* Section 5043:
". . . Each association shall shall have a lodge system with
ritualistic form of work and a representative form of government.
Any association having a supreme governing or legislative body and
subordinate lodges or branches by whatever name known, into which
members shall be elected, initiated and admitted in accordance with
its constitution, laws, rules, regulations, and prescribed
ritualistic ceremonies, which subordinate lodges or branches shall
be required by such association to hold regular or stated meetings
at least once in each month, shall be deemed to be operating under
the lodge system. Any association shall be deemed to have a
representative form of government when it shall provide in its
constitution and laws for a supreme legislative or governing body,
composed of representatives elected either by the members or by
delegates elected by the members through a delegate convention
system, together with such other members as may be prescribed by
its constitution and laws:
Provided, that the elective
representatives shall constitute a majority in number and have not
less than a majority of the votes, nor less than the votes required
to amend its constitution and laws. . . ."
The separate opinion of MR. JUSTICE McREYNOLDS.
Claiming as beneficiary, Meyer brought an action upon a policy
issued by the Supreme Lodge in the district court, Otoe County,
Nebraska.
The declaration alleges:
"That the defendant is, and at all times herein mentioned was, a
fraternal order or organization maintaining a life insurance
department for its members, organized and existing under an act of
the United States Congress, in the District of Columbia, and having
its principal offices and place of business in the city of
Indianapolis, in the State of Indiana, and duly authorized to
transact its business in the State of Nebraska. That on and prior
to the 11th day of June, 1885,
Page 265 U. S. 37
Louis J. Meyer, a resident of Otoe County, Nebraska, was a
member of a subordinate lodge of the defendant, and on said date
the said defendant issued and delivered to the said Louis J. Meyer
in Otoe County, Nebraska, its membership certificate No. 4651, by
the terms of which it insured the life of the said Louis J. Meyer
in the sum of $2,000, and agreed in the event of his death to pay
that sum to a beneficiary therein named. That on or about the 31st
of May, 1910, the said Louis J. Meyer surrendered said certificate
to the defendant for the sole purpose of changing the beneficiary
therein named, and thereafter the defendant issued in lieu thereof
to the said Louis J. Meyer its certificate of membership dated June
30, 1910, numbered 4651, insuring the life of the said Louis J.
Meyer in the sum of $2,000, by the terms of which the defendant
agreed that in the event of the death of the said Louis J. Meyer to
pay to George O. Meyer, this plaintiff, the sum of $2,000, a copy
of which membership certificate is hereto attached, marked Exhibit
A, and made a part thereof."
And further that the assured died April 11, 1916, after
performing all things required of him.
Certificate No. 4651 -- Exhibit A -- recites that Louis J. Meyer
had been accepted as a member of the insurance department and the
Supreme Lodge promised to pay the designated beneficiary two
thousand dollars, subject to certain conditions and payment of
$5.70 each month. Also:
"the member holding this certificate shall make all monthly
payments as they may be due from him, and also make any extra or
special monthly payments required from him. . . . His rate of
contribution hereunder may be changed, increased, or adjusted at
any time in accordance with the laws of this society when deemed
necessary to carry out the purposes of the insurance
department."
The defense was that, by a duly adopted rule, or law, the
Supreme Lodge had increased the monthly rates for
Page 265 U. S. 38
the time subsequent to January 1, 1911, and assured had refused
to pay them.
The act of Congress which incorporated the Supreme Lodge, among
other things, provided:
"That said corporation shall have a constitution, and shall have
power to amend the same at pleasure:
Provided, that such
constitution or amendments thereof do not conflict with the laws of
the United States or of any state."
Act of June 29, 1894, c. 119, 28 Stat. 96, 97. Under this
federal charter, it might amend its statutes or bylaws, and the
change of rates was effective unless prohibited by statute as to
Nebraska members. The obligation of the contract between the lodge
and the assured presents a question of federal law.
Royal
Arcanum v. Green, 237 U. S. 531;
Hartford Life Insurance Co. v. Ibs, 237 U.
S. 662;
Supreme Lodge, Knights of Pythias v.
Mims, 241 U. S. 574.
This is plain under the last-cited case, which reviewed and
reversed the judgment of the Texas court denying the validity of
the bylaw here questioned.
The court below held that, under c. 47, General Laws of Nebraska
1897, the action of the Supreme Lodge in undertaking to increase
rates was without effect because the association did not have a
"representative form of government." And this makes it necessary to
inquire whether that act is fairly susceptible of the construction
adopted by the state court. Generally this Court accepts the
construction of a local statute approved by the state court of last
resort, but the rule does not apply where this is fanciful and
amounts to a mere subterfuge.
Leathe v. Thomas,
207 U. S. 93,
207 U. S. 99;
Vandalia Railroad v. South Bend, 207 U.
S. 359,
207 U. S. 367;
Enterprise Irrigation District v. Canal Co., 243 U.
S. 157,
243 U. S. 164;
Superior Water Co. v. Superior, 263 U.
S. 125,
263 U. S.
136.
Chapter 47 contains twenty-four sections. The first
declares:
"A fraternal beneficiary association is hereby
Page 265 U. S. 39
declared to be a corporation, society or voluntary association,
formed or organized and carried on for the sole benefit of its
members and their beneficiaries, and not for profit. Each such
society shall have a lodge system, with ritualistic form of work
and representative form of government."
The remaining sections relate to the organization and government
of domestic corporations, and provide for reports by and the
licensing and duties of such corporations when organized in other
states. Section 16:
"Any such association refusing or neglecting to make the report
as provided in this act shall be excluded from doing business
within this state. The auditor of public accounts must, within
sixty days after the failure to make such report, or in case any
such society shall exceed its powers, or shall conduct its business
fraudulently, or shall fail to comply with any of the provisions of
this act, give notice in writing to the Attorney General, who shall
immediately commence an action against such society to enjoin the
same from carrying on any business. . . ."
There is nothing in the act which excludes an association with a
government like that of plaintiff in error. It does not undertake
to invalidate contracts of such companies after licenses have been
issued to them. Nor do I find that the laws of the state inhibited
the auditor from licensing an association with a nonrepresentative
form of government.
It is stipulated and agreed:
"that the defendant [plaintiff in error] is a fraternal order or
organization, maintaining a life insurance department for its
members, existing under an act of the United States Congress in the
District of Columbia, having its principal place of business in the
City of Indianapolis and State of Indiana, and authorized to
transact business in the State of Nebraska during the period
covered by the pleadings in this case."
With knowledge of its form of government, the duly designated
official licensed it to do business within the state.
Page 265 U. S. 40
Attributing a fanciful meaning to the term "representative form
of government," the court below declared that the challenged bylaw
was not adopted as required by the Nebraska statute, and therefore
was without force within that state. This was the excuse offered
for annulling an agreement entered into by an association
incorporated under federal law and duly licensed by the state.
A view of the statute is enough to show that it did not
undertake to prescribe rules for the internal government of foreign
corporations licensed to do business within the state or to control
agreements between such corporations and their members.
Moreover, it seems impossible reasonably to conclude that
plaintiff in error had no "representative form of government"
because a few officers, by virtue of their positions, constituted a
small minority (10%) of the lawmaking body, otherwise composed of
elected representatives. And certainly the conclusion of the court
is not strengthened by the opinion, which advances the following as
the reason therefor:
"To retain the exercise of governmental authority in the hands
of the people is the modern trend. Extended argument is not needed
to establish this fact. Witness the election of United States
senators by direct vote, the direct primary, and the initiative and
referendum. Fraternal societies are no exception to the rule."
In the circumstances, I think we should refuse to accept a
ruling so obviously contrary to reason, treat it as a mere
subterfuge, and hold that, under
Knights of Pythias v. Mims,
supra, the rates were properly increased, and, by failing to
pay them, the assured surrendered all rights under the policy.