MUT. BEN. ASS'N' V. BROWN. HOTEJ.-MEN'S MUT. BEN. ASS'N
(Oircuit Oourt, No
BROWN and another.
December 5, 1887.)
!.NSURANCE-MuTUAL BENEFIT SOCIETIES-DESIGNATION OF BENEFICIARY.
The constitution of an "hotel-men's mutual benefit association" permitted a change in the beneficiary, but provided that it "must" be done on a prescribed form of blank, the signature to which should be attested before a notary, and the change entered on the books. It also provided that, at death, benefits should be paid "to the person designated in the application for memo bership, as shown by the books, or as ordered by last will." An applicant for membership named his wife as beneficiary in his application, and her name was so entered upon the books. His application also set out that the receipt of the party to whom he designated his death loss to be paid should discharge the association. He SUbsequently executed a paper assigning his policy to one of his creditors as collateral security; but no application for a change was made to the association. nor was the· assignment made upon the prescribed blank, nor had the association any notice of it until after the death of tl:;le member intestate, when both the widow and the.assignee claimed the benefits. Held, on bill of interpleader, that the widow was entitled ,to the fund. '
,In Equity, H. H. O. Miller, for complainant. Abbott Balcer, for Daws. Nathan e. Miller, for Brown.
BWDGETT, J. This is a bill of interpleader, filed by the Hotel-men's MutualBenefit Association, to determine who is entitled to the payment of a benefit fund or death loss accruing by reason Or the death of George C. Brown, a member of the association. It appears from the proof that George C. Brown held a certificate of membership in the complainant company, and wasil, member in good standing from the fifth of February, 1881, until his death, on the sixth of December, ]886. 'At the request and by.the direction of Brown, his wife, Kate W. Brown, .WltS designated in his application for membership as his beneficiary, to whom all benefits accruing from the association in the event of his death were to be paid, and her name stood upon the books of the association as his beneficiary at the time of his death. Section 7 of article 2 of the constitution of the association provides that any member wishing to change his beneficiary must procure a blank fOTIn from the secretary, which, being filled out and properly attested, shall be returned to the secretary, when the necessary changes' will be made on the books of the association. And section 1, art. 5, provides that benefits payable on the death of a member shall be paid to the person designated in his application for membership as shown by the books of the association, or as ordered by his last will and testament. Before August 6, 1886, Brown had become indebted to defendant A. Daws in the sum of $1,763, as shown by his promissory notes, and on the day last mentioned, Brown executed a paper assigning his policy in the complainant company to Daws, to be held by Daws tillalJ amounts due him were paid; And after this paper was' executed and delivered,
Brown became indebted to Daws in the further sum of $725.50. No application was made by Brown to change the name of his beneficiary on the books of the association, and no notice was given by Daws of any of this policy prior to Brown's death; and at the death of W. Brown appeared by the books to be entitled to the Brown, Mrs. paymentof the benefits accruing on his death. Daws, as the assignee of the policy, and Mrs. Brown, as the beneficiary named in the application and on the books of the company, both claimed payment of the death loss, and complainant company filed this bill of interpleader to have the question of their respective rights settled by the court. In the case of Lamont v. Mutual Ben. Ass'n, 30 Fed. Rep. 817, (decided in this court,) the assured had during his life-time changed his beneficiary, and the change had been accepted by the company, and entered on its books, and it was held that this transfer was operative, and divested the rights of the beneficiary named in the application; but in that case the provisions of section 7, art. 2, had been substantially complied with. Here there has been no attempt to effectuate a change of beneficiary by a compliance with the terms of this section 7. It will be noted that constitutional provision for a change of beneficiary says it must be done on a prescribed form of blank, which is given in the by-laws, which also require the signature to be attested by an acknowledgment before a notary public or justice of the peace; and the applicatioll for membership signed by the assured in this case stipulates that the receipt of the parties to whom he designates his death loss is to be paid shall be a full satisfitetion of all claims that any of his heirs or assigns may have upon the association. Here is a very cogent reason why, if the beneficiary is changed, it shall be done according to the forms prescribed. This mode of transferring the fund or changing the beneficiary was undoubtedly adopted in order to secure certainty as to who was entitleJ to the payment of the death loss, that the association might Jwow on the death of a member who they could safely deal with. There -can b'6 no doubt, I think, but what a voluntary association of this kind can prescribe the manner in which its benefits may be assigned or transferred, and that these regulations become a part of the contract. There would, I think, be no right to change the beneficiary of this assured, but for the provisions for doing so in the constitution and by-laws of the association; and a transfer, to be valid, must conform to the mode in which the constitution and by-laws of the company say it may be ,;changed. Any attempt to make such a transfer should be strictly construed. Holland v. Taylor, 9 W. Rob. 606; Hellenberg v. Independent Order,elc., 94 N. Y. 584. The application for membership designated Mrs. Kate W. Brown, the wife of the assured, as his beneficiary, and she was so designated on the . books of the association. This made a contract in her favor on which a suit could have been maintained for this death loss. The constitution and by-laws of the association provided a mode by which her right to this benefit fund could be divested; but, in order to so divest it, that mode must be strictly followed. It was not so followed, and hence I
HOWARD IRON CO. V. COUNCIL BLUFFS W. W. CO.
am of opinion that what was done in that direction was not operative to divest her of her right, and the amount of the death loss which has been paid into court by the association should be paid to Mrs. Brown, less the costs of this suit.
SHICKLE,HARRISON & HOWARD IRON Co. V. COUNCIL BLUFFS WATERWORKS Co. and others.
(Circuit Court, S.
December 12, 1887.)
MIllCHANICIl' LIEN-Loss OF-ACCEPTANCE OF COLLATERAL SECURITY.
A sum of money deposited as security for the performance, on the part of a construction company, of a contract with a material-man, and out of which the latter is to be paid on default of the other party, is such collateral security as will, underActs 16th Gen. Assem. Iowa, c. 100, § 2, divest the material-man of his right to a mechanics' lien.
In Equity. In substance, the bill in this cause sets forth that the complainant, . the Shickle, Harrison & Howard Iron Company, made a contract with theAmerican Construction Company,of New York, and the Council Bluffs City Water-Works Company, whereby oomplainant agreed to furnish material for the construction of the water-worKS at Council Bluffs, the construction company agreeing to pay therefor the prices fixed in the contract, and the water-works company guarantying the faithful performance by the construction company of the obligations imposed upon it by the contract; and to that end the water-works company bound itself "to deposit, as security therefor, the sum of $10,000 in the hands of the Commercial Bank of St. Louis, the sum to be applied in payment to said iron company' of any sum the said construction company may fail to pay," etc. The complaint further alleged that the American Con:>truction Company had procured its right to construct the waterworks under the· provisions of certain ordinances passed by th6' city council, and averred that in fact all the materials furnished were furnished to the city water-works company, to whom the construction company had sold its interest. Complainant prays for judgment against the water-works company, and for the enforcement of a mechanic's lien. Defendants demurred, and the demurrer was sustained. Plaintiff amended, and the case was again submitted. Sapp & Puse, for complaina.nt. Wright, Baldwin & Haldane,' for defendants. SHIRAS, J. This cause has already been before the court upon a demurrer to the bill, and upon that hearing it was held that if a deposit of $10,000, provided for in the contract under which complainant furnished the pipe and other materials used in the construction of the waterworks at Council Bluffs, was in fact deposited for the benefit of complain-
ahtB,.g\1ch deposit would be the taking of collateral security, and would defeat the right to a mechanic's lien according to the express provisions of section ,2 of chapter 100 of .the Acts of 16th General Assembly of the "tate of Iowa. For a full statement of the case, and the conclusion _'eached, see report of the case in 25 Fed. Rep. 170. In accordance with leave granted, complainant amended the bill by averring that the waterworks company did not deposit the sum of $10,000 provided for in the contract, but that such cleposit was made by the American Construction Company; and the cause is now submitted on the pleadings and evidence. The question is, did the complainant at the time of making the contract for the sale and delivery of the materials, or during the progress of the work in which the same were used, take collateral security on the contract? If so, then, by the express declaration of the statute, the complainant is not entitled to a lien. Relying upon the ruling of the supreme court of Iowa in Gilcrest v. Gottschalk, 39 Iowa, 313, that "the taking of notes is not deemed the taking of collateral security, and that the taking of a mortgage from the debtor upon the same indentical property covered by the mechanic's lien, arid for· thesarrie debt, cannot be deemed collateral security on the same contract;"', and in Gm8tructwn Co. v. Railroad 00.,46 Iowa, 412, to the effect that an agreement to pay for the work done out of the ms:mey to be paid by the citizens 'of a county was not collateral security, but only the designation of the source whence payment was to be expected, there being no assignment or transfer of the money; and in· Bissell v. Lewis, 56 Iowa, 236, 9 N. W. Rep. 177, wherein it is held that, where "two sons contract for the erection of a building on the land of one of them, it cannot be said thatcollateral security was taken on such contract, "-counsel for complainant have made a very ingenious argument in support of the proposition that collateral security was not taken by. complainant upon the contract for the delivery of the materials furnished and used in the construction of the water-works at Council Bluffs; but the ingenuity of the argument cannot change the facts of the case. . Upon the face of the written contract, the primary agreement of purchase and sale of the materials to be furnished was in fact between the complahiant and the American Construction Company; the latter companyagreeing to pay the agreed prices at certain fixed dates, and the water-works company, by the fifth section of the contract, agreeing "that it does hereby guavanty the. faithful performance by the f:iaid construction company of all the obligations herein set forth; and.all of the provisions of this agreement; and to this end will and hereby agrees to deposit, as security for the full performance of said obligation, .the sum of ten thousand dollars in the hands of the Commercial Bank of 81. Louis, the Mme to he applied to the payment to the said iron,corp.pany of any such sum as the said construction company mayiail tb'pay in the man,ner herein set £orth," etc. Upon the face of it, this contract does not ,bind the construction company and the water-works. comp!J.l1Y asprincipals"within the rule in Bi8sell v. Lewis, supra. On the the
SRICKLE, HARRISON & HOWARD IRON CO. V. COUNCIL BLUFFS W. W. CO.
water-works company is a guarantor only, and its contract is clearly col· lateral to that of the construction company. In Mervin v. Shmnan, 9 Iowa, 331, it is said: "A party who takes collateral security on the same -contract is hot entitled to a mechanic's lien. This means either a separate obligation attached to the contract named, to guarantyits performance, or it znay be the transfer of property, or of other contracts, to, in-sure the performance of the principal agreement." In the present case, the primary contract of payment is between the complainant and the .consttuctioncompany, and this contract is secured by the contract of ·guaranty entered into by the water-works company, and this constitutes .an agreement for ,collateral security within the meaning of the statute. But if we adopt the view of the case urged in argument by complain-ant's. counsel, that in fact the construction company and the water-works .company were. one and the same, then the point would be presented in this wise: The complainant had contracted with the water-works company, through the agency of its double, for the furnishing of the materials in question, and the water-works company had·in the original contract bound itself to secure performance of its contract by depositjng the sum of $10,000 in the Commercial Bank of 8t.Louis,to be applied in payment of any sum not promptly paid to complainant at the dates named in the contract. .The evidence shows that this sum: was in fact -deposited with-the Commercial Bank of 81. Louis, and was in iactused in partpaym'ent of the indebtedness due to complainant for materials furnished under the contract in question. ·If this does not amou.nt to -contracting ;for arid obtaining collateral security, within the n;reaning of the Iowa statute, I cannot conceive how it would be ever possible to show that collateral security had been contracted for. No other concillsion ·can be reached than that the complainant,not being willing to rely upon . the con'tract for payment entered into with the construction company, required the additional security of a guaranty of payment by the waterworkscompany, and further required and obtained an actual deposit of .$10,000 for its benefit in the Commercial Bank. By so doing, it oon· 'tracted for and received collateral security for the performance of the contractof purchase, and thereby defeated its right to claim a mecl:J.anic's , lien. The decree must therefore he for a dismissal of the bill for want of '.equity; without prejudice to complainant's right to proceed .at law for the sums due.'
FEDERAL REPORTER. SECURITY CO.
RICHARDSON et 01.
(Ozrcuit Oourt, S.D. IO'UJa. 0. D. December 12, 1887.)
In an action for the foreclosure of a mortgage, the defendant pleaded pay' ment and discharge. From the evidence, it appeared that the broker to whom payment had been made had been engaged in negotiating loans for complainant for about eight years; that during that time he had collected nearly all the interest as it became due on the different loans, and in many instances the principal also, though payable elsewhere; that, with reference to these loans, he had the management of the. complainant's entire business, notifying delinquents, paying taxes, and attending to the foreclosures. Letters of inthe manner of payment of the loans, and the broker's author· quiry ity to accept paYI!lent of the prmcipal before maturity, were referred by com· plainant: to the broker for reply. Held, sufficient evidence that the broker was a general agent, duly authorized to accept payment of interest and principal, even before maturity. . .
Bill for the Foreclosure of Mortgage. Oummin8 &: Wright, for complainant. Lehmann &: Park, for defendant. SBIRAS, J. In January, 1878, Thomas H. Richardson borrowed of William Bolles the sum of $2,500i arid as security therefor executed a note or bond, and a mortgage on certain realty situated in Wayne county, Iowa, the principal and interest being payable at B. R. Abbe's office in Hartford, Connecticut, and the present suit is instituted for the purpose of foreclosing this mortgage; .the defense being that the debt is fully paid, and the mortgage discharged and released on the record. It is admitted that the complainant holds the note and mortgage merely as trustee for William Bolles, and not in its own right, and the questions in dispute are to be determined the same as though William Bolles was the complainant. By its terms, the note came due November 1, 1882. On the first day of May, 1882, Richardson paid to one Hugh R. Creighton, of Des Moines, $1,700, and on the twenty-fourth of April, 1883, a sum sufficient, if added to the $1,700, to pay the note in full; and the question to be determined is whether these payments made to Creighton are to be deemed to be payments to Bolles, and binding upon him,Creighton having failed to account for the same. To determine this question it is necessary to ascertain the relation held by Creighton to the respective parties, and the authority he had from Bolles touching the matter of collecting and receiving moneys due him. It appears that Creighton had orgnnized at Des Moines, Iowa, a company, known as the "Union Loan Association," for the purpose of procuring and making loans of money on real estate in Iowa. To the borrower it was represented that the company had facilities for procuring loans from eastern capitalists; to the latter it was represented that through the agency of the company desirable loans could be made on first-class security. When a person in Iowa desired to procure a loan, he would apply to the company, and was required to sign a written application,
SECURITY CO. V. RICHARDSON.
by the terms of which he appointed the Union Loan Company his agent to procure the loan; and the application also contained a statement of the amount desired to be borrowed, the time of loan, the security offered, and other like facts. These applications would be generally forwarded to some broker in the east, and he would place the loan with some one willing to take the same. The borrower paid a fixed commission to the Union Loan Association, and a portion thereof was paid to the broker in the east who finally placed the loan. The broker through whose agency the loans taken by William Bolles were negotiated was B. R. Abbe of Hartford, Connecticut. It also appears that in process of time Creighton virtually controlled all the business done in the name of the Union Loan Association, and practically the company became merged into Creighton. In all, nearly 200 separate loans were taken by Bolles, amounting in the aggregate to over $200,000. Upon these loans, for several years, Creighton collected interest, and also the principal of some. Finally, he absconded, and it appeared that he had received upon the loans made by William Bolles some $29,000 or more for which he had not accounted, including the payments made, as already stated, by the defendant in this case; and the question is, upon which of the parties must this loss fall? On behalf of the complainant, as the representative of William Bolles, it is contended that the note or bond was made payable at Hartford, Connecticut; that Bolles retained possession of the note and mortgage; and that no payment became complete until it reached Bolles' hands at Hartford; and that, as the defendant paid the. same to Crllighton when he did not have in his possession the note or mortgage, he paid at his peril, and simply constituted Creighton his agent to convey or forward the money to Bolles. On part of the defendant, the contention is that Bolles had made Creighton his general agent, with authority to collect all sums due on loans made through Creighton, and that Creighton had authority to receive the payments made, and that his reception thereof binds Bolles. 'l'he decision of the case must tarn upon the conclusion reached as to the extent of the authority of Creighton as agent for Bolles·. On the argument, it was suggested that the Union Loan Association or Creighton must be deemed to be, thrQughout the transaction, the agent of the defendant, because such agency existed at the beginning. The agency conferred by defendant upon the company was to procure the loan, and when this was accomplished the agency terminated. In fact, the loan company or Creighton occupied different positions in these transactions; being at one time the agent of the borrower, and at another the agent of the lender. To determine under what circumstances he acted for the lender, and the extent of his authority, regard must be had to the dealings between Bolles and Creighton, which extended from 1877 until in 1885, during which time very many letters were exchanged between Bolles andCr-eighton, and between the latter and B. R. Abbe. Excqption is taken to the letters passing between Creighton and Abbe, us not being evidence against Bolles; but it is not necessary to consider this exception, as the facts decisive of the case sufficiently appear from v.33F.no.1-2
'the correspondence to which Bolles was a party. or of which he had actual knowledge, taken in connection 'with the other facts duly proven. From the evidence it appears that, in the beginning of the transactions between Creighton and Bolles, copies of the abstracts of title were for·warded for the latter's inspection; but finally he instructed Creighton that it was unnecessary to. forward the same, as he (Bolles) would rely on Creighton's judgment in this regard. It also appears that Bolles relied upon Creighton to keep track of.the taxes upon the various tracts ofland mortgaged to the former, and also to keep him fully posted in regard to the conduct of the parties indebted, and their modes of doing business. When it became necessary to foreclose any of the mortgages, Creighton was intrusted therewith; and he brought the requisite suits, attended the sales; bought in the property when necessary, and had full charge of tlie ·property thus purchased. In many instances, he had sent to him the .satisfaction pieces to be recorded, for the purpose Of discharging the mortgage of record. Of the large amounts of interest paid on the loans made by Bolles, the larger part, if not the whole thereof, was collected by Creighton; and the same is true of so much of the principal sums as was· paid by the mortgagees. Unless William Bolles understood that Creighton was acting in his behalf. and as his agent, in the management of the loans in question, and in attending to the collection of the interest and principal thereof, it would follow that Bolles was willing to invest nearly $200,000 in loans to many different parties, and to leave the same without supervision in his interest; intrusting the control and management thereof to the agent of the debtors..· The correspondence between Bolles alid Creighton covers hundreds of pages and is too voluminous to be copied into an opinion. All that need be said of it is that it clearly shows that· the relation existing between the parties thereto was that of principal and agent, and that Bolles understood that Creighton, in his behalf; was exercising full control over the loans made by Bolles in Iowa, and in his interest was keeping watch over the payment of taxes, the collection of interest and principal, and all other matters necessary for the protection of Bolles' interests ·in the investments thus made: In fact, had. it been .shown that Bolles had in Writing OrIginally appointed Creighton his agent and attorney in fact for the purpose of fully representing Bolles in these transactions, it is difficult, to conceive of anything he would have been expected to do under such written authority which he was not, in fact, called upon to do in. the Jetters written him by Bolles. That Bolles recognized and treated :Creighton as his general agent, having charge over the invest·ments made, with power to demand and receive payment of the principal and interest, thereof, is the only reasonable conclusion deducible from ,the correspondence and acts of the parties. That Creighton so under·stood his authority is clear from his acts. Thus we find him issuing cards to: mortgagees indebted to Bolles, in which it is said, after giving amount due, "Please remit at once, and save further costs;" in others. "If not pai,d at once, mortgage will be foreclosed." These cards required payment to be made to Creighton, and the recipients thereof could con·