French v. Society of Select Guardians

The defendant is a benevolent society incorporated under the Act óf 1875 (chap. 267), entitled “An act for the-incorporation of societies or clubs for certain ilawful purposes.’7 The subject of insurance is not among the purposes enumerated is the act, unless it falls within those designated as “ mutual benefit 73 and “ benevolent.” The certificate of incorporation of the defendant states that one of the objects of the society is “ to provide for rational, social enjoyment, and to establish a relief fund from which, its members, complying with its laws, rules and regulations, may receive assistance, so that its members may be mutually benefited,’7 and the by-laws (§ 5) name as one of the objects, “ to establish a relief fund from which members of the organization, who have complied with its laws, rules and regulations may receive (§ 6) the benefit of a sum not exceeding $25 per week, when, by reason of disease or accident, he becomes disabled from following his usual occupation; or, an amount of not more than $1,000 when he has held a continuous membership in the society for seven years; provided, however, that the sum drawn from the society by any’of its members shall never exceed in sick disability one-half the sum named in the certificate of membership.” On June 14, 1887, Patrick J. French became a member of the defendant, and received from it an “ investment and certificate,” in which he was declared to be entitled to all the rights and privileges belonging to his rank and standing, including a pro rata share not exceeding $1,000 from the investment fund of the society, upon certain conditions, the third of which provides: “In case the said member shall continue to pay all assessments, dues and demands which may be legally made against Mm, or against tMs certificate, for the full term of seven years from this date, and shall in all particulars maintain himself in good standing in this society, then the said-member shall be entitled' to a sum not exceeding the principal amount named herein, less the amount wMch he has received as benefits from the society on account of disability, or otherwise, with accumulated interest from date of each payment to date of expiration of certificate.” French retained his membership in the-society for seven years, having during that time discharged all Ms *88obligations to the society. He received in sick benefits during the seven years $325, and brought the action to recover $675, upon the theory that under the certificate he became entitled to $1,000. He died pending the action, and it has been continued by his legal representatives. Upon joining the society French signed an-agreement in these words: “ I agree, if admitted, to conform to all the laws, roles and usages of the society, and to promptly comply with all lawful requirements.” The certificate also refers to the laws, rules and usages of the society; so that these, with the application, evidently became part of the contract. Hellenberg v. Dist. No. 1, Ind. Ord., 94 N. Y. 580; Grossman v. Supreme Lodge, 13 N. Y. St. Repr. 596; Numrich v. Supreme Lodge, 24 id. 287; D.emings v. Supreme Lodge, 131 N. Y. 522; May v. N. Y. Safety Reserve Fund Soc., 14 Daly, 389; Farmers’ L. & T. Co. v. Aberle, 18 Misc. Rep. 257; s. c., 19 App. Div. 79; Redmond v. Ind. Ben. Ass’n, 78 Hun, 104; Syuchar v. Workingmen’s Ass’n, 14 Misc. Rep. 10; Matter of Globe Mut. Ben. Ass’n, 63 Hun, 263; Home Forum Ben. Order v. Jones, 50 Pac. Repr. 165; Hass v. Mutual Rel. Ass’n, 49 id. 1056; Holland v. Taylor, 111 Ind. 121; Protection L. Ins. Co. v. Foote, 79 Ill. 361.

The defense is founded on one of the by-laws, which provides that when the amount of one assessment on all the members, after deduction of one-third of the sum for the reserve fund, is less than $1,000, the sum payable to a member holding a certificate like that issued to French shall in no. case exceed, the amount realized from such assessment less one-third thereof for said reserve fund. The laws and roles of the society, therefore, expressly fits the “ pro rata ” interest of the holder of each! certificate, and in their own terms limit the amount to be received' under any certificate to not more than one assessment levied and paid, less the share passing to the reserve fund. In this instance the assessment realized $455.75, out of which one-third was paid into the reserve fund, leaving $303.83; and after charging French with the'sick benefits paid to-the amount of $325, and the interest thereon, he became and was a debtor to the defendant at the time his certificate matured, so that the defendant owed him nothing thereon. That this result is worked out according to the by-laws is certain. While, the plaintiffs must in consequence fail in the action, the result merits criticism. The avowed scheme of the defendant to pay a member $1,000 in seven' years, in consideration of less than one-third of that amount received by it in installments, depended for its sue*89cess upon so many doubtful contingencies that it would have been a miracle if it had not failed just as it did. It was nothing more or less than a game of chance or gamble, which has no place in any system of life insurance, for in that, if in nothing else, the utmost good faith must be observed. The officers of the defendant evidently did the best they could, but the scheme would not work; the logic of mathematics would not permit of its success. Fraternal societies should not engage in methods which are delusive, for they are fraught with danger to an unsuspecting and worthy class of people seeking to guard against improvidence. Their dealings should be open and fair, that the members may not be deceived. They should never intimate anything in a certificate that cannot be made good to the fullest expectation of the beneficiary. This, however, does not affect the legal rights and obligations of the parties as they arise here, for construing, as we must, the policy with the application and by-laws, the court has no alternative but to find for the defendant.

Ordered accordingly.