The law of voluntary societies, mutual benefit insurance and accident insurance online

X



THE LAW



of



VOLUNTARY SOCIETIES,



MUTUAL BENEFIT INSURANCE



AND



ACCIDENT INSURANCE.



BY

WILLIAM C. NLBLACK,

OF THE CHICAGO BAH.



CBICAGO :
Callagiian & Company,

L894.



r

M57I8

IB?4



V



Entered according to act of Congress, in the year 1S88,

By Callaghan <fc Company,

In the office of the Librarian of Congress, at Washington, D. C.



Entered according -to act of Congress, in the year 1894,

By Callaghan & Company.

In the office of the Librarian of Congress, at Washington, D. C.



Stereotyped and Printed

by

The Chicago Legal News Co.



*

^



h>



PREFACE.



The growth of the law of mutual benefit insurance during
the six years which have elapsed since the publication of the
first edition of this work has been very great. A glance at a
monthly or an annual digest will show that quite as many cases
relating to mutual benefit insurance as to ordinary life insur-
ance are now decided by the courts. The law of voluntary
societies does not develop so rapidly, but the civil and property
rights of the members of such societies are of great impor-
tance.

The first edition was hurriedly prepared, and much of it
was written after the work of printing had begun. While
it was necessarily imperfect in many respects, its general out-
lines have been followed. The arrangement of the parts of
the work, the subjects of the chapters, and the headings of the
sections are such as to indicate where any point discussed may
be found.

In treating of incorporated voluntar}'' societies, it is difficult
to determine how much of the general law of corporations
should be included, and, in considering the contract of mutual
benefit insurance, the temptation is great to discuss many
interesting subjects which are applicable to life insurance gen-
erally. But it is of prime importance that the elements of
the contract of mutual benefit insurance should be considered
separately, and that, in treating of it, the contract of ordinary
life insurance should be mentioned only to show the distinc-
tions and differences between the two systems of insurance.
It has, therefore, seemed to be the wisest course to exclude
any general treatment of the law of corporations or of insur-

(iii)



^Qete;



IV PREFACE.

ance, and to confine this work strictly to the scope indicated
b}^ its title. Such subjects as are fully considered in standard
text books on corporations or life insurance are omitted from
this work, or are merely mentioned incidentally.

The law of accident insurance has been added to the work,
and it is earnestly hoped that the chapters relating to this
subject may not be found to be without value.

The writer has, for the most part, avoided theories and dis-
cussions, and has endeavored to present a complete and con-
cise statement of the present state of the law. He is under
obligations to E. Allen Frost, Esq., of the Chicago Bar, for his
kind assistance in the publication of this work.

William C. Niblack.

Chicago, December 1, 1894.



TABLE OF CONTENTS.



PART I.

CHAPTER I.

MUTUAL BENEFIT SOCIETIES.

Generally § 1, 2

The object is insurance 3

Plans of organization 4

Mutual assessment companies 5

Rights of members of mutual benefit societies 6

CHAPTER II.

CHARTER AND CONSTITUTION.

Of charters in general ( § 7

The object of a society must be authorized by its organic law 8

The plan of doing business must be authorized by the organic law 9

Manner of doing business set forth in certificate of incorporation. . 10

The object of a society must be legal 11

When corporate existence may not be attacked 12

Ultra vires 13

Constitution of a society 14

Incorporation of unincorporated societies 15

CHAPTER III.

BY-LAWS.

Inherent power of societies to pass by-laws § 16

Generally 17

"When by-laws are binding on members 18

By-laws must be legal 19

By-laws must be consistent with the charter • 20

By-laws of unincorporated society must be consistent with its consti-
tution 21

By-laws of unincorporated society must not be illegal 22

By-laws of an incorporated society must be reasonable and neces-
sary 23

Alteration, amendment and suspension 24, 25, 26, 27

Repeal of by-laws 28

CHAPTER IV.

MEMBERSHIP. — PART I.

Admission into incorporated societies § 29

Admission into unincorporated societies 30

Election to membership 31



yi TABLE OF CONTENTS.

Who are members of a mutual benefit society § 32

Membership in religious corporations 33

Expulsion, amotion, suspension 34

Power of amotion in incorporated societies 35

Power of incorporated societies to expel members 36

Modern doctrine of expulsion 37

Power of expulsion conferred by the charter 38

Breaches of corporate duty â–  39

Expulsion from religious corporations 40

Surrender of right to expel members 41

Double sentence of society _ 42

Statute of limitations 43

Eight to trial by jury 44

Eegularity of proceedings 45

Record of proceedings 46

MEMBERSHIP.— PART II.

Reinstatement of member; remedies hi society must be exhausted. § 47

Jurisdiction of appellate tribunal when appeal is irregular 48

Subordinate society refusing to obey order < >f superior body 48a

"When decision of appellate tribunal is final 49

Death pending appeal to courts of the society 50

Injunction to restrain illegal expulsion 51

Action for benefits where expulsion of the member is inquired into 52

Action for damages for unlawful expulsion 53

Injunction to reinstate expelled member 54

Reinstatement by courts of justice 55

Mandamus the proper remedy 56

Mandamus a discretionary writ r >^

Delay in applying for restoration 58

MEMBERSHIP. — PART III.

Return to writ of mandamus §59

Charges preferred against a member 60

Notice of charges, notice of meeting 61

When notice need not be given 62

Sufficiency of notice 63

Service and proof of notice 64

Waiver of notice 65

Answering charges immediately when presented 66

Tribunal of society expelling a member 67

Good faith hi proceedings in expulsion 68

Decree of court reinstating member must be presented to the so-
ciety 69

MEMBERSHIP. — PART IV.

Inherent power of unincorporated society to expel members § 70

Right of such society to pass by-laws providing for expelling its

members 71

Power of expulsion from usage 72

Expulsion agreed upon in articles of association 73

Charges against a member of such a society 74



TABLK OF CONTEXTS. Vll

Reinstatement in unincorporated society § 75

Proper remedy of expelled member 76

CHAPTER V.

LIABILITY OF MEMBERS.

For debts of incorporated society §77

Where attempted incorporation is valid 78

For debts of an unincorporated society 79, 80

Liability of person incurring the debt 81

Where debt is incurred, payable out of special fund 82

Notice of creditors of withdrawal from society 83

Actions for libel and slander 84

Actions between members 85

Liability of members in Pennsylvania 86

Liability of members hi New York 87

CHAPTER VI.

SUITS BY OR AGAINST AN UNINCORPORATED SOCIETY.

Proper parties to an action § 88

Actions by society or a member to recover property 89

Right of society 'to exclusive use of its name 90

Injunction restraining libel on society 91

Judgment against an unincorporated society 92

CHAPTER Vn.

OFFICERS.

Election of officers § 93, 94

Powers and duties 95, 96, 97, 98

Salaries, fees, commissions 99

Liabilities of officers 100

Official bonds, rights and liabilities of sureties 101

Liability of new sureties 102

Liability on a bond to a state 103

CHAPTER VIII.

MEETINGS.

Notice of meetings § 104

Rules governing future meetings 105

Duty of members present to vote 106

Presumption that a quorum was present 107

When corporate acts are binding 108

Meetings on Sunday 109

CHAPTER IX.

JURISDICTION OF COURTS OVER SOCIETIES.— PART I.

Visitorial power of courts § 110

Courts of society must first be resorted to Ill

Courts may not be ousted of jurisdiction 112

When courts will not take jurisdiction 113, 114



Vlll TABLE OF CONTENTS.

Injunction to restrain illegal act § 115

Injunction to restrain society from doing business on erroneous

plan 116

Status of incorporated societies 117

Dissolution of an unincorporated society 118

Dissolution of an incorporated society 119

When a society is dissolved by its own act or neglect 120

JURISDICTION OF COURTS OVER SOCIETIES.— PART II.

Dissolution, trust funds, distribution of property § 121-125

Trust funds of a society 126

Eights of contributors to funds 127

Rights of members in property and funds 128

Revocation of social and fraternal character 129

Mutual benefit society is not a public charity; taxation 130

JURISDICTION OF COURTS OVER SOCIETIES. — PART III.

Religious societies § 131

Ecclesiastical jurisdiction — Civil rights -. 132

Secession in religious society — Division of property 133

.Property and trusts of religious societies 134

Trustees and officers of religious societies 135

PART II.

CHAPTER X.

CERTIFICATE OF MEMBERSHIP.

Generally § 136, 137

When the contract is complete; delivery of certificate 138, 139, 140

Where executed 141

Delay of society in accepting application 142

Construction of the contract 143, 144

Construction given to the contract by the society 145

Construction of application and certificate 146

Where terms of a certificate are inconsistent with a by-law 147

By whom certificate must be signed 148

Delivery of certificate to beneficiary not necessary 149

Contract must be accepted in its entirety 150

Certificates are valued policies of insurance 151

Reformation of certificate 152

Reformation; inserting name of beneficiary 153

Novation of the contract 154

In good standing 155

Suicide 156

Known violation of law 157

â–  CHAPTER XI.

WHO MAY BE A BENEFICIARY — INSURABLE INTEREST. — PART I.

Classes of beneficiaries specified in the charter § 158, 159



TABLE OF CONTEXTS. IX

i

The terms of the charter are io be liberally construed § 160

Any person belonging to a specified class may be the beneficiary..- 161

Effect of amendment of the organic law of a society 162

When an unincorporated lodge may be the beneficiary 163

When a divorced wife may be the beneficiary 164

WHO MAY BE BENEFICIARY— ASSIGNEE OF CONTRACT. — PART II.

When the contract of mutual benefit insurance is assignable. ... § 165, 166

Equitable assignment 167

Limitation on the right to assign 168

The consent and approval of the society may be required 169

Eights of the assignee of a certificate 170

Assignment after death of the member 171

Assignment by the beneficiary ,. 172

Designation of new beneficiary is not an assignment of the certifi-
cate 173

Law governing the validity of an assignment 174

CHAPTER XII.

CONSTRUCTION OF THE DESIGNATION OF THE BENEFICIARY.

Rules of construction § 175

Provisions of the charter designating beneficiaries 176

Beneficiaries designated by the by-laws or certificate 177

Devisees; as designated in last will 178

Wife, widow 179-183

Fund payable to wife for the benefit of herself and children 184

Wife and children 185

Child 186

Children born after issue of certificate 187

Child, grandchild 188

Heirs, heirs at law, legal hens 189-192

Orphans 193

Family 194

Dependents 195

Relations, relatives 196

Legal representatives 197

The assured 198

"Guardian" of member 199

CHAPTER XIII.

CONCERNING BENEFICIARIES IN MUTUAL BENEFIT INSURANCE.

Estate of the member as a beneficiary § 200

When the member becomes a beneficiary by inheritance 201

Death of beneficiary during life of member 202

Death of one of two named beneficiaries; survivorship 203

Interest of beneficiary vests on death of member 204. SOS

Death in common disaster; survivorship; presumption 206

Death of member and beneficiary at same instant 207

Agreement between member and beneficiary as to disposition of

fund » 208



X TABLE OF CONTENTS.

When beneficiaries take equally § 209

In what proportions heirs take the fund 210

CHAPTER XIV.
CHANGE OF BENEFICIARY.

Rights of beneficiary in ordinary contract of insurance' § 211

Beneficiary has no vested rights in contract of mutual benefit in-
surance 212, 213

Where no manner of changing beneficiaries has been agreed upon. 214

Provisions of the charter concerning changes of beneficiaries 2ir>

A change may not be made when the charter forbids it 216

Where terms of by-laws or certificate pi'ohibit a change 217

When mode of changing is prescribed, it must be substantially fol-
lowed 218, 219

Authorities holding prescribed modes of changing beneficiaries to

be mandatory and exclusive 220

Authorities holding such provisions to be directory merely 221

Change of beneficiary; general observations 222

When the change is perfected 223

CHAPTER XV.

CHANGE OF BENEFICIARY.

Consent of society to the change § 224

When society is estopped to question the change 22')

A beneficiary may be estopped to assert that a change was not

properly made 226

Delivery or gift of certificate to the beneficiary; effect on the right

to change beneficiaries 227

Effect of an agreement between two members that each shall pro-
cure a certificate for the benefit of the survivor 228

A delivery of the certificate to the beneficiary is not necessary 229

Who may be designated as a new beneficiary 230

Does an inoperative change of beneficiaries revoke the original

designation ? v . 231

Incomplete designation; failure to exercise the power of appoint-
ment 232

Change of beneficiary by suspended member in application for

reinstatement 233

Right of a member to change his beneficiary when the certificate

is payable to his legal representatives 234

Fraudulent change of beneficiary 234a

CHAPTER XVI.

DESIGNATION AND CHANGE OF BENEFICIARY.

Designation by last will; where the right to devise the fund is con-
veyed by charter § 235

Designation of a new beneficiary or disposition of the fund by last

will 236

When a designation or disposition by will is invalid 237



TABLE OF CONTENTS. XI

When a disposition by will is invalid; power of appointment

reserved to the member § 238, 239

Where the designation of a beneficiary is tbe execution of a power
of appointment, it must be made according to the laws of the

society 240

Designation by special appointment 241

A designation is not necessarily revoked by the subsequent mar-
riage of the member 242

When the power to designate or change the beneficiary is ex-
hausted 243

Time within which the power of appointment or the right to

designate a new beneficiary may be exercised 244

CHAPTER XVII.

MEMBERSHIP FEE.

Note given for membership fee § 245

Gash payment of fee 246

Recovery of membership fee from society 247

CHAPTER XVIII.

ASSESSMENTS.

Generally § 24*. 249

Assessments must be properly levied and for proper purposes 251). 251

The act of levying an assessment is ministerial 252

Custom in levying assessments 253

Assessment for reserve fund 254

Assessment in anticipation of losses 255

Effect of the levy of an assessment 256

Notice of assessment 257-259

Notice by mail 260, 261

Date of notice given by mail 262

Date of assessment, date of notice 263

Notice by publication 264

Notice of date of payment 265

Service of notice 266

Agreement of society to give notice to the beneficiary 267

Insufficient notice of assessment 268. 209

CHAPTER XIX.

ASSESSMENTS.

Payment of assessment § 270

Payment out of funds in the hands of the society 271

By whom payment of an assessment may be made 272

When payment must be made during the lifetime of the member. . 273

Death within thirty days after notice 274

Payment of an assessment after the death of the member; days of

grace 275

Payment to subordinate lodge: agency of lodges 276

Authority of agents to collect assessments 277

A receipt for an assessment may be contradicted 278



XII TABLE OF CONTENTS.

Tender of an assessment § 279

Refusal to accept assessments; remedy of member 280

Effect of the return of assessments once paid 281

Recovery of assessments paid by a member 282

Promise of the society to receive a past due assessment 283

Reimbursement of one who has paid assessments for another 284

CHAPTER XX.

ASSESSMENTS.

Forfeiture for non-payment of an assessment § 285, 286

When an affirmative act of the society declaring the forfeiture is

necessary 287, 288

When an affirmative act of the society declaring the forfeiture is

not necessary 289, 290

Restoration after suspension or forfeiture for non-payment 291-294

Excuse for non-payment, insanity, act of God 295

Excuse for non-payment, Sunday, holiday 296

CHAPTER XXI.

ASSESSMENTS.

Waiver of forfeiture, agreement of officers, printed prospectus § 297

Waiver of forfeiture, custom of society 298, 299

Waiver of forfeiture, receipt of assessments, estoppel in pais 300, 301

Waiver of forfeiture, assessments retained by the society 302

Waiver of forfeiture, conditional acceptance of past due assess-
ments 303, 304

Waiver of forfeiture, the levy of an assessment on a delinquent

member 305, 306

Waiver of forfeiture, attempt to collect assessments 307

CHAPTER XXII.

ASSESSMENTS.

Property of society in assessments levied, or to be levied — Are un-
paid assessments assets of the society ? — Can payment of them
be enforced? § 308

Interest of the society in the fund collected by assessments 309

CHAPTER XXIII.

ACTION ON THE CONTRACT OF THE SOCIETY.

An action may be maintained on the contract of a society to pay

benefits § 310

The right of a society to provide methods for the settlement of

claims against it 311, 312

When the courts of a society must be resorted to 313, 314

A strict construction must be given to provisions abridging a com-
mon right 315

Authorities holding that the society may make the decision of its

tribunal final 316



TABLE OF CONTENTS. Xlll

Authorities holding that a society may not make the decision of

its tribunal final ' § 317

Arbitration clauses 317a

Actions on by-laws for benefits 318

Effect of expulsion on the claim of the expelled member for bene-
fits 319

CHAPTER XXIV.

ACTION ON THE CONTRACT OP THE SOCIETY.

Limitation as to the time when an action may be brought § 320

Limitation as to the place where an action may be brought 321

Pleading and evidence 322, 323

Competency of witnesses 324

Admissibility of the declarations of a member 325

Proofs of death 326

Attachment of benefit fund, garnishment 327

When fund may or may not be attached 328

CHAPTER XXV.

ACTION ON THE CONTRACT OF THE SOCIETY.

Plans and schemes of mutual benefit insurance § 329

Mandamus as a remedy 330

Remedy in equity 331

Contract to resort to equity 332

An action at law is a proper remedy 333

Pleading, breach of promise to pay 334

Pleading, evidence, breach of promise to pay 335

Averment of a demand for an assessment 336

Plea or answer setting up that no fund has been raised by assess-
ment 337

Evidence, effect of the collection of an assessment by the society 338
Evidence of the amount which might have been realized by an as-
sessment 339

Burden of proof 340

Nominal damages in an action at law 341

Substantial damages in an action at law 342

Burden of proof and measure of damages discussed 343

Measure of damages in certain cases 344

Measure of damages for change of the plan of insurance 345

CHAPTER XXVI.

PAYMENT OF THE BENEFIT FUND.

Payment is not a gift § 346

Payment of the benefit fund, rights of parties 347, 348

To whom the money is payable when the contract is for the benefit

of a creditor of the member 349 -351

Payment from reserve fund 352



XIV TABLE OF CONTENTS.

Contract to surrender the certificate when the fund is paid by the

society § 353

Payment of the fund into court, interpleader by the society 354

Payment of a less amount than is due, receipt in full 355

Settlement procured by the fraud of the society 35G

A member may not enjoin payment 357

Payment procured by fraud 358

Right to double payment 359

Interest on the amount of the benefit fund 360

Proceedings to obtain payment of judgment 361

Restricting the operation of the judgment against a society 362

PAET III.

CHAPTER XXVII.

ACCIDENT INSURANCE.

Generally § 363

What is an accident ? 364

Negligence on the part of the insured contributing to the injury. . . 365

Due diligence for personal safety and protection 368

Voluntary exposure to unnecessary danger; obvious risk 367-372

External, violent and accidental means 373-378

External and visible sign 379

The nature, cause or manner of death unknown, or incapable of

direct and positive proof; burden of proof 380, 381

CHAPTER XXVIII.

ACCIDENT INSURANCE.

Accidents while traveling by public or private conveyance § 382, 385

While traveling in compliance with all rules and regulations of

common carriers; violation of rules of employment 386

Walking on railway track 387

Intentional injuries inflicted by the insured or any other person. . . 388

Intoxication; under the influence of liquor 389, 390

Fits, vertigo, fainting 391

Drowning 392

CHAPTER XXIX.

ACCIDENT INSURANCE.

Poison : § 393

Inhaling gas 394

Death or disability caused by any surgical operation or medical or

mechanical treatment for disease 395

Hernia, erysipelas 396

Proximate cause of the death of the insured 397, 398

Bodily infirmity 399

Loss of foot, eye or hand 400



TABLE OF CONTENTS. XV

Permanent or total disability § 401-405

A company may be liable for sick benefits, thougb not liable for the

death of the insured 406

CHAPTER XXX.

ACCIDENT INSURANCE.

Occupation of the insured § 407. 408

Change of occupation 409. 4H»

Change of occupation; classified risks 411 414

N< itice of injury or death 415-41*

Waiver of notice 419

Payment of claim from a special fund or in a special manner 420



TABLE OF CASES.



[the references are to sections.]



Abbott v. Cobb, 85.

Abe Lincoln Society v. Miller, 285,

333.
Abels v. McKeen, 106, 127.
Accident Ins. Co. v. Bennett, 156,

157, 377, 380, 388.
Adams v. Otterback, 298.
Addison v. Association, 146, 191.
Adkins v. Ins. Co., 156.
Adm'rs of Stone v. Casualty Co.,

144, 366, 409, 413.
Adriance v. Roome, 18.
^Etna Life v. Brodie, 152.

Ins. Co. v . Brown, 35G.

v. France, 300, 322.
Life v. Hanna, 3(10.
Ins. Co. v. Maguire, 300.
Agnew v. A. O. U. W., 250, 257.
Ahlborn v. Wolff, 152.
Aid Society v. Lewis, 212.
Aiken v. Association, 165, 169, 171,

205.
Alabama Ins. Co. v. Garmany, 298.
v. Herron, 139.
v. Ins. Co., 300.
v. Mayes, 140, 142.
Albert v. Order Chosen Friends, 315,

318, 402.
Aldrich v. Accident Association, 411.
Alexander v. Association, 189, 190.
v. Bailey, 364.
v. Parker, 158, 195.
Allcmania Ins. Co. v. Little, 320.
Allen v. Hovt, 209, 210.
Allis v. Ware. 211.
Allnut v. High Court, 19, 39, 67.
Alsatian Ben. Society. 29.
Altaian v. Benz, 128.
American Ace. Co. v. Norment, 401,

406, 415. 416, 419.
American Accident Co. v. Reigart,

373.
American Ins. Co. v. Crawford, 358.

v. Day. 326.
American Life v. Robertshaw, 348,

350.
American Mutual v. Helburn, 252,
v. Quire, 257, 290.

(XV



American Order v. Merrill, 15.
Amesbury v. Bowditch Mutual, 17.
Amick v. Butler, 348, 349, 350, 351.
Anacosta Tribe v. Murbach, 49, 316

319.
Ancient Order v. Moore, 259, 271.
Anders v. Supreme Lodge, 183.
Anderson's Appeal, 201.
Anderson i\ Fitzgerald, 183,
v. Ins. Co., 397.
v. Supreme Council, 276,
313,326.
Andes Ins. Co. v. Fish, 320.
Andrews and Alexander's Case, 80.

v. Portland, 99.
Anthony v. Association, 196.
Appeal of Beatty, 227.
Appeal of Brown, 186.
Appleton Bank v. McGiloray, 346.
Armstrong v. Ins. Co., 142.

v. Mutual Life, 322.
Arnet v. Milwaukee Mutual, 321.
Artharsv. Baird, 176, 231.
Arthur v. Association, 177, 218, 237,
238.
v. Ins. Co., 320.
Ash v. Guie, 79, 92, 117.
Ashley v. Ashley, 165.
Aspinwall V. Sacchi, 78.
Assurance Society v. Clements, 141.

Co. v. Connor, 136.
Atkinson v. Ins. Co., 142.
Atlantic Mutual v. Moody, 250.

V. Saunders, 17, 250,
269.
Attorney General v. Bank, 119.
v. Moore, 134.
Aurora Ins. Co. v. Johnson, 365.
Austin v. Holland, 261.

v. Searing, 23, 49, 112, 129,
317.
Avery v. Baker, 134.
Avcson v. Lord Kinnard, 325.
Ayer v. New Eng. Mutual, 408.



1'.



Bachman r. Arbeiter Bund, 52, 58

319.
Bachman v. Supreme Lodge, 7.



XV111



TABLE OF CASES.



[the references are to sections.]