GRAND LODGE IOWA LE'GION OF HONOR.
GRAND LODGE IOWA LEGION OF HONOR and another.
(Oircuit Oo'l1/l't, No D. Iowa, E. D. June 20, 1887.)
MUTUAL BENEFIT ASSOCIATIONS-BENEFICIARY 0ERTIFICATE-SUBST,ITUTION OF' BENEFICIARY.
The beneficiary named in the certificate of a mutual benefit association does not acquire such a interest as will prevent. the substitution oia n.ew beneficiary, at the optIOn of the holder of the certIficate, where the constItution of the association provides "that any member holding a beneficiary cer-. titiCll.te, desiring.at any time to make a new direction as to its payment, may do so by authorizing such a change in writing, "etc,l A provision in the constitution of such association, declaring that the object of the "order" is to "afford financial aid. and benefit to the widows, or· phans, and heirs or devisees of the deceased members of the order, "will not necessarily restrict the holder of a certificate to the selection of a beneficiary frOm .a:ll1ong the members of his own family.1 case, the voluntary selection of a new beneficiary, who has no insuraHle- interest in the life of the holder of the certificate, does not render the transaction void as a wagering eontract. where there. is no evidence from whjph it can be inferred th,at the parties intended it as such. 2
INTlilREST,....WAGERING CONTRACT. . .
SAME-SELECTION OF BENEFICIARY-MEMBER OF FAMILY.
Bill and cross-bill.
Jarne8A.IJ,eed and Charles Ogden, for complainants. Wright, Baldwin Haldane, for Emily R. Graft.
SaIRAS, J. On the seventh day of April, 1883, J. P. Heulett became a member of the organization known as the "Iowa Legion of Honorj" It certificate of membership being issued to him, reciting that, as member of the Garfield Lodge No. 126, he was "entitled to all the rights and privileges of membership in the Iowa Legion of Honor, and to participate in the beneficiary fund of the order to the amount of two thousand dollars, which sum shall, at his death, be paid to his daughter Mary H. Heulett Lamont." In the constitution of the order It is declared that the business and object of this order are to promote fraternity, and to afford financial aid and benefit to the widows, orphans, and heirs or devisees of the deceased members of the order. Article 1, § 2. By article 7, § 1, it is provided that, "upon the death of a member in good standing of this order, such person or persons as said member may have directed, subject to the limitations of article 1, § 2, of this grand lodge, shall be entitled to receive of the beneficiary fund of this order the sum of two thousand dollars: provided," etc. And by article 8, § 11. that "any member holding a beneficiary certificate, desiring at any time to make a new direction as to its payment, may do 80 by authorizing such a change in writing on the back of ,such certificate, in the form preISee note at end ofcase. Respecting the rights of strangers in life insurance policies, see LamOli.t v. Hotel Men's Mnt. Bell. Ass'n. 30Fed. Rep. 817; Batdorf v. Fehler, (Pa.) 9 At!. Rep. 468; Shu· gar v. Garman, (Pa.) 4 At!. Rep. 60; Ruth v. Katterlllan. (Pa.) 3 At!. Rep. 835, aud note; Price v. Supreme Lodge K. of H., (Tex.) 4 S. W. Rep. 633.
scribed, attested by the recording secretary with the seal of the lodge attached, and the recording secretary shall at once report action to the grand secretary." . . On the thirtieth day of July, 1884, the said Heuler., on the back of the original certificate issued to him, signed the following revocation: "I, J. P. Heulett; to whom the within certificate was issued, do hereby revoke my former direction as to the payment of the beneficiary fund due at my death, and now authorize and direct such payment to be made to Emily R. Graft. · "Witness my hand and seal this thirtieth day of July. 1884. "J. P. l!EULETT. [Seal.J "Attest: A. VAN ORDER, Recording Secretary." [8001 Garfield Lodge. J On the twenty-fifth day of August, 1884, a new certificate was issued by the p;rand lodge to Hetl1ett, in which it is declared that the amount of his interest in the beneficiary fund, to-wit, $2,000, shall at his death be paid toEmily R. Graft. 1885, the said Heulett died at Atlantic, Iowa, and, as both Mrs. Lamont and Mrs. Graft claimed the Bum provided to be paid out of the beneficiary fund of the order, the present proceeding was instituted for the putpose of deciding the question, the grand lodge on its part paying the full sum, $2,000, into court, thus leaving the litigation to be carried on by the 6ther parties. Mrs. Lamont is a daughter of the deceased, and Mrs. Graft isnot a relative of deceased, but only a personal frierid. . On .of the complainant it is claimed, in the. first place,. that when she was named in the original certificate of memoership isstl'ed to J. P. as the person to whom the beneficiary fund was'to be 'paid, an interest was therebY' vested' in her, and that she could not be deprived thereof, s'ave with her own consent. That such is the rule when a contract of insurance is entered into between a life insurance cOmpany and a third party, whereby the company agrees to pay the amount due on'the policy to such third party, is not questioned. In sucb cases the party or beneficiary is a party to the contract orinsurance:. When, however, a person joins a mutual benefit assoCiation of the character of the Iowa Legion of Honor, his rights in the beneficiary"fund, and his control over the same, are usually determined by the cOLstitution oitha order. The contract by which 'Heulett became interested in the benefit fund of defendant was between him and the order, and is evidenced by the constitution of the association, by which it ls, in substance, provided that each member in goodstariding is entitled to have the sum of $2,000 paid at his death to such person as he may designate, and tbathe may at any time make a new direction or selection oithe person to whom such sum shall be paid·. The fact that when Heulettjoined the Iowa Legion a certificate of membership was issued to him, in which his daughter wasnamed as the person to whom payment was to be made of the $2,000, did not change the contract between the order and Heulett, nor deprive him of the right, secured by the constitution, of inaking a new selection of a beneficiary.
LAMONT'll. GRAND LODGE IOWA LEGION OF HONOR.
Mrs. !4n1onf acqtiired no interest therein which would prevent Mr. Heulett from revoking the selection made in the first instance, and designating another as the person to whom payment was to be made. It is also urged on behalf of complainant that, under the constitution of the order, Heulett could not select as a beneficiary one who was not a member of his family; that the object of the order is to make provision for the widow and orphans of deceased members; and that the order is not bound to make payment to anyone not occupying this relation. The order, however, is not questioning its liability to pay. It has paid the amount into court, and the is not over the question whether the order il> bound to pay to anyone not a member of the family of a deceased member, but over the question of the respective rights of Mrs. Lamont and Mrs. Graft. The constitution does not, however, limit the selection of a beneficiary to the family of members. lfinancial aid is to be afforded "to the widows, orphans, and heirs or devisees of the deceased members of the order." It is evident that the word "heirs" is used, not in its restricted sense, but to include anyone to whom the estate of the deceased might pass by operation of law; and thus would, in many cases, include persons who were but distantly related by blood to the deceased member, who had not in fact ever been members of the family, and with whom, perhaps, he had no personal acquaintance. But, in addition to the widows, orphans, and heirs, it is also provided that aid may" be afforded to '(devisees." It is clear that this word cannot be intended tobear the technical legal meaning of one to whom real estate is given by the last will of another. There is nothing in the constitution of the order from which it can be inferred that it was one of the purposes of 'the order to provide a beneficiary fund to be paid to such person as should, under the ladt will of a deceased member, have devised to him the whole or part of the realty owned by such testator. It is, however, entirely clear, from the provisions of the constitution, that it was one of the objects of the order to create a beneficiary fund to be paid to such person as the members might designate; apd the word "devisee," therefore, is u8ed in its primary sense of one separated or designated. In many instances a person may wish to provide at his death for the future of. one who is neither his wife, child, nor heir, and the constitution oithe order enables this to be done by providing that the member may select and designate the person to whom payment of the beneficiary fund. is to be made. It is, however, urged that if the construction of the contract is such that Mrs. Graft be held to be the party entitled under its tems to the fund, then it will be, as to her, a wagering contract, and, .on the grounds of public policy,she cannot be allowed to recover thereon.' In Warnock v. Davis, 104 U. S. 775, it was held that, to sustain a contract of insurance between a company and another, on the life of a third party; it must appear that the assured had an insurable interest therein; that is, "a reasonable ground1 founded upon the relations of the parties to each other, either pecuniary or of blood or affinity, to expect some benefit or advantage from the continuance of the life of the assured.
Otherwise the, contract is a mere wager, by which the party taking the policy is direotly interested in the early death of the assured" It is further held in that case" that assignment of a policy to a party not having an insurable interest is as objectionable as the taking out a policy in his name." In other words, it is immaterial with what form the wagering contract may be clothed. It is void because of its intrinsic character, irrespective of the mode or manner of its creation. If, therefore, in the present case, it appeared that in fact the object and purpose of having Heulett become interested in the beneficiary fund of the Iowa Legion had been to epable Mrs. Lamont or1\frs. Graft to speculate on the death of HeuleH, then the transaction would be contrary to public policy,and no recovery thereon could be had,:in favor of the party participating in such wagering contract. It does not appear, however, that Hel,l,lett joined the order for the purpose of benefiting Mrs. Graft in any way, or that she ha,d any knowledge thereof. He originally designated his daughter as the person to whom payment was to.1;Je made. In: its inception, the contract with the order was, entirely valid. .The subsequent cpange in the person named as the beneficiary did not create in Mrs. Graft a vc;Jsted interest in tpe fund. She did not procure the change. It was a purely voluntary .act on part of Heulett, which he could revoke ata,ny time, and there is nothing in the evidence froro which it can be inJerred that the parties iutended the transaction as a mere cover to an illegal contract. Where a third party, without any insurable interest. in the life of another, procures a policy of insurance on the life of such person, either by having a policy issued directly to himself, or by having the person whose life is insured take out a policy to himself, and then assign it, these facts, as is held in Warnpck v. Davis, conclusively show that the transaction is a mere speculation on the life of another, and as such is «ontrary to public policy. and there. fore void. If, however, 8 person takes out a policy upon his own life, by the provisions of his will ?irects that the proceeds of the policy shall be paid to a third party having no insurable interest in his life, such a transaction would be. upheld, unless it was shown that it was a mere cover, resorted to to enable the third party to speculatA on the death of the other. A person has an insurable interest in his own life, and a policy issued thereon is his property, and by will .or any other proper mode he can designate the person to whom, at his death, the proceeds of the policy shall be paid; and the right of a person to thus provide for the future of another cannot be Public policy requires that a person having no insurable interest in the life of another shall not be permitted to speculate on such life, and thereby become interested in its early termination; but public policy does not forbid a person from in good faith making provision for the future of another in Whom he may be interested, even though the latter may not have an insurable interest in his life. If this were not so, then a person would be debarred from giving a legacy or by will to one who had not an insurable interest on his life l because thereby the legatee would become interested in his eLrly
LAMONT V. GRAND LODGE IOWA LEGION OF HONOR.
death. To. prevent the evils resulting from allowing persons having no interest in prolonging theliie of another to speculate on such life, the rule is adopted that one having no insurable interest in the life of other shall not be permitted to contract, either directly or indirectly, for the payment of a sum upon the death of the other, but it has never been held that public policy forbids a person from insuring his own life, and by will or otherwise controlling the disposition of the proceeds of the policy. In such case the beneficiary has no part in the contract of surance, and has no control over it. The insured can change the beneficiary at his pleasure j and as the latter has in fact no legal interest in the contract, and had no part in creating it or keeping it in force, it cannot be said that such a contract of insurance is a wagering policy, or that it, in any sense, contravenes the rule of pubHc policy forbidding one without an interest from lating on the life of another. The facts of the case are simply these: As a member in good ip, t,he order, Beulett in the benent fund of the clation, and was entitled to have the sum of $2,000 paid at his death to such person ashe should designate. In the first instance, he sele9ted his daQghter as the one to whom the money was to be paid, but he subsequently revoked the selection in the manner provided by the constitution of the order, and Mrs. Graft as the beneficiary, and this designation was in force at the date of his death. It is beyond question, therefore, that it was, the intent of Heulett that this money should be paid to Mrs. Graft. The contract of the association was to pay the sum to the person designated by Beulett, and, as Mrs. Graft is such person, flhe is entitled to the money. Accordingly, bill of complainant will be dismissed at her cost, and on cross-bill decree in favor of Emily R, Graft 'Will be entered, adjudging her entitled to the money paid into court.
NOTE. :BENEI!"I:r ASSOCIATIONS-BENEFICIARIES. The general rule is that, when not forbidden 'by t,he charter or by-laws, a member of a mutual benefit association may change the beneficiaries named in the certificate; but when t,he charter provides who shall be tile beneficiaries, in the event that,those named in the policy cannot receive the insurance, the parties cannot make any other persons beneficiaries except those in the charter. Holland v. Taylor, <Ind.) 12 N. E. Rep. 116; Massey v. Mutual Relief Soc., (N. Y.) '1 N. E. Rep. 619; Presbyterian Assur. Fund v. Allen, (Ind.) ld. 31'1; Miteheil v. Grand Lodge Iowa K. of H., (Iowa,) 30 N. W. Rep. 865; Whitehurst v. Whitehurst, (Va.) 1 S. E. Rep. 801. The right to change a benefiCiary by mutual agreement of the association and the mem ber exists indepimdently of its constitution and by-laws, and may be exercised whenever it is not limited by such constitution or by-laws. Masonic Mut. Ben. Soc. v. Burkhart, (Ind,) 11 N. E. Rep. 449'A beneficiary acquirbS no vested rights to the benefits which are to accrue upon the .death of a member, until such death occurs, and .the mem bel'. may exercise the power ,of appointment without SllCh beneficiary's consent, subject only to the rules and regulations of the society. Masonic Mut. Ben. Soc. v. Burkhart, (Ind.) 11 N. E. Rep. 449. But when a benefit association issues a policy to one uJ?on his own life, payable at his .oeath to a third penon, and the insured ':'fIys the prenuums. which are accepted by the .company, it cannot resist payment of the policy to the beneficiary on the ground that he is neither a relative, helT, nor devisee of the insured. and that its charter authorizes it to pl'y to such persons only. BloolUington Mut. Life Ben. Ass'n v. Blue, .(IlI,) 11 N. E. Rep. 8 8 1 . . . 'fhe Massachusetts statute, prior to 1882, limitfld the ben'eficiariesto the widow, .orphans, or other dependents of the member. Elsl1Y v. Odd Fellows' Mut. Relief
Ass'n, 7 N. E. Rep. 844. This was held to exclude tbemother oftbe member, who WM not living with him as one of the members of his family, ld.; also his sister, who was not dependent on him for support, Supreme Council A. L. ofH. v. Perry. 5 N. E. Rep. 634. By the act of 1882 the class entitled to become beneficiaries was extended to include any niember of the family. ld. The designation Of his" estate" as the beneficiary member is ineffective; and, if the money has been received by the executor. he holds it for those entitled to it under tbe by-laws 'of the association. if such there are; and, if there are not any such, then for those entitled under the statute of distributions. Daniels v. Pratt, (Mass.) 10 N. E. ReJ;!. 166. Under the laws of Missouri, the benetici.aries are limited to the member's family and dependents. Knights of Honor v. Nairn, (Mich.) 26 N. W. Rep. 826.
BANKERS' & MERCJIANTS' TEL. CO. and others.
June 16, 1887.)
(Oircuit (Jourt 8. D. New York.
The rule that the court first taking cognizance of a controversy is entitled to possession and control of the subject-matter thereof to the exclmlion of all other of co-ordinate jurisdiction applied, denying ,a motion for a receiver, and an injunction pendente lite in a euit by a creditor in a federal court to get in the assets. and distribute the property of an insolvent corporation among its creditors, where suits, had already been brQught in the state court by other creditors to obtain the sam.e relief. and a receiver appointed in 8u,ch suits was in possession and control of t'helproperty of the corporation.
Motion for Receiver a,nd Injunction Pendente Lite. D. O. Olw.twood, for complainant.' H. B. Turner and R. G. IngerBOU, for defendants. WALLACE, J. This motion fora receiver and an injunction pendente lite, if granted, would result in an tinseemlyand unnecessary interference . with the jurisdiction of the supleme court of this state in the proceedings now pending in that court. The complainant by his bill asks this court to get in the assets and distribute the property of an insolvent corporation among its creditors., of WhOD;l he is one, when the state court, at the instance of other creditors, has already taken jurisdiction in suits brought against'the corporation to obtain the same relief, and is now by its receiver in possession and control of the property of the corporation. Three suits are now pending in the supreme court of the state of New York, -one brought by a judgment creditor to obtain a sequestration of the brought by a holder of mortgage property of the corporation; . bonds situated similarly to ,tile present cOD;lplainant, in behalf of him. self and all other bondholders, to secure an equitable distribution of the property of the corporation among its creditors; and another brought by the trustees for the bondholders in the mortgage for a foreclosure of the mortgage. Receiverswere appointed in the firstsuit, and, after the second suit was commenced, the receivers appointed in the first suit were appointed receivers in the second suit, and all their proceedings in the first were approved by the order of the court in the second suit; so that both snits have been treated by the state court practically as one proceeding.'