Opinion
May Term, 1899.
W.R. Spooner, for the appellant.
Clarence A. Farnum, for the respondent.
It is established in this case that McClure, the insured member, was in good standing in his local lodge at the time of his death. As an individual he was not delinquent; he had paid every call made upon him. Whatever defense there may be to the payment of his benefit certificate arises from the remissness of the officers of the local lodge, or to a misunderstanding between them and the defendant. Inasmuch as the member himself was paying promptly and honestly endeavoring to keep alive his certificate, every reasonable intendment will be accorded the plaintiff to prevent a forfeiture of her certificate.
By the constitution and laws of the defendant assessments were due from the members, payable to the local lodge within thirty days, and the local lodge must remit to the supreme lodge within forty days from the date of the assessment calls. If the member failed to respond within the required period, he was suspended, and, unless reinstated in the manner provided by the constitution of defendant, his benefit certificate was annulled, and a like penalty befell all the holders of certificates of any lodge in case it was suspended.
On May 2, 1885, a call, No. 158, was made upon the Wellsville lodge for an assessment. The prescribed payments from the members to meet this demand were due June first of that year, and the last pay day of the local lodge to defendant was June eleventh. The draft for this assessment was mailed June sixteenth and received June eighteenth — seven days in arrears. On the 12th day of June, 1885, the defendant, by its supreme reporter, notified the subordinate lodge it was suspended, by reason of its omission to pay assessment No. 158, which matured on the day preceding. The constitution of defendant justified this suspension; it was entirely regular, and must be held to be effective, unless there was something in the conduct of the defendant tantamount to a waiver of a strict compliance with the requirement of payment on the day when the assessment became due. Prior to the making of assessment No. 158 there had been sent to this local lodge, since March 13, 1884, twenty-three similar calls, and, with three or four exceptions, the receipt of the money had been after the last date of payment. Each of the eight assessments immediately preceding No. 158 had been in arrears, varying from one to four days, and No. 157, which should have been paid May twenty-sixth, was not, in fact, paid until May thirtieth. So far as the testimony shows, there had been no complaint because of this uniform default, and certainly no intimation that a suspension would follow a failure to remit promptly on time. There was a provision in the laws of the defendant providing for immediate suspension of a lodge upon its failure to meet these assessments when due. But we have the invariable practice of the authorized officials of defendant of ignoring this strict requirement, until the subordinate lodge may well have understood that the defendant's officers would acquiesce in this dilatory method of payment, and, certainly, that no change in the course of dealing would be insisted upon without advising it such action was designed. There was no notice of the intended suspension, and the assessment was only one day overdue when the officials of the supreme lodge summarily suspended the Wellsville lodge, apprising them of that fact by mail. The jury were justified in holding the conduct of defendant's officers in accepting these payments for so long a period after they became due from month to month, was a waiver of prompt payment, estopping them from summarily suspending the local lodge. ( King v. Masonic Life Assn., 87 Hun, 591, 595; Teckemeyer v. Supreme Council, 4 App. Div. 537; De Frece v. M.L. Ins. Co., 136 N.Y. 144; Kenyon v. K.T. M.M.A. Assn., 122 id. 247; Pratt v. D.H.M.F. Ins. Co., 130 id. 206; Van Bokkelen v. Mass. Benefit Assn., 90 Hun, 330; Baker v. N Y State Mut. Benefit Assn., 9 N.Y. St. Repr. 653; affd., 112 N.Y. 672. )
The rule was stated in De Frece v. M.L. Ins. Co. (136 N Y at p. 150), as follows: "It was entirely competent for the parties to modify the terms of the original contract with respect to the time of payment, and the effect of a failure to make punctual payment, and the evidence is sufficient to support a finding that the defendant agreed subsequently to the execution of the contract to accept payment of the premiums quarterly, or within a reasonable time thereafter, and that the policy should continue in force until such payments were made, providing they were not unreasonably deferred. It has been repeatedly held, both in the State and Federal courts, that such an agreement may be inferred from the course of dealing between the parties."
The nub of this controversy is the effect to be given to this suspension. If it was unwarranted, there is nothing in the subsequent dealings of the defendant with the local lodge upon which a forfeiture can be predicated.
On the eighteenth day of June the supreme lodge treasurer received a draft for fifty dollars and seventy cents from the treasurer of the local lodge. This was evidently to pay assessment No. 158, as it corresponded precisely in amount with the sum due for that call; but the local reporter had erased the number "158," substituting "159," as if it were to pay the latter assessment. The supreme treasurer at once wrote the officer at Wellsville declining to accept this payment, "for the reason that 158 has not yet reached this office from your lodge, and consequently your lodge stands suspended on that assessment.
"I will hold your remittance subject to your order and at your risk, for a time, until the matter can be straightened out."
If this was an error, as is quite apparent, it was no cause for suspending the local order. Under law XXII of defendant's constitution, if a subordinate lodge failed to send the correct amount, credit was required to be given for the sum received, the local order must be advised in regard to the same, and, in the event of failure to make the necessary correction, suspension would follow. No credit was given, and no suspension was made in fact under the law mentioned, so the defense must rest upon the original attempt to suspend. After the defendant's refusal to credit this remittance, correspondence ensued between the officers of defendant and of the local lodge, with a view to reaching a conclusion as to what assessment was paid by the remittance received by defendant June eighteenth. On the twenty-fourth of June, the treasurer of defendant returned this draft, not because of the suspension of the local lodge; but the reason assigned is found in his letter of that date, as follows: "The report and draft for asst. 159, which I rec'd. on the 18th inst. may be of help to you in straightening the matter out. I, therefore, herewith return them to you. The dft. is No. 69931, on Importers Traders Nat'l Bank of N.Y. for $50.70."
This correspondence culminated in the reinstatement of the local lodge August 15, 1885, although the requirement as to the medical examination of the members seems to have been dispensed with.
During this interim, assessments were made by the defendant in the usual manner and notice thereof sent to the local lodge, continuing down to the call of August tenth. No suspension was made for the omission to pay those calls at maturity, and the order of reinstatement and the notice thereof were based wholly upon the suspension of June twelfth. If the suspension had been efficient, the subordinate lodge could have been rehabilitated with the defendant within thirty days upon paying the defaulted assessments and any intervening assessments accruing, with the fine of ten cents per member. If they failed in this, then, within ninety days after the suspension to the lodge, reinstatement could be made by the supreme dictator. A member himself, within thirty days after the suspension of his lodge, could identify himself with another lodge; but, during this period, the suspended lodge was not a vital institution. The insurance of the member was a dead letter, yet, notwithstanding the position of the local lodge, the defendant continued to pile up the notices of assessment, not simply during the thirty days when voluntary action on the part of the lodge could galvanize it into life, but down to the time of the reinstatement, two months after the period of alleged suspension. This might well be regarded as an indication that the suspension was not to be insisted upon. ( Shay v. National Benefit Society, 54 Hun, 109; King v. Masonic Life Assn., 87 id. 597.)
There was obviously an honest endeavor to correct the error in regard to the numbering of the assessment, and the whole matter was apparently held in abeyance awaiting adjustment, without any design at that time on the part of the defendant's officer to treat the lodge as suspended.
It is urged, however, that McClure was not in good standing with his local lodge. It seems the assessments made from time to time after the order of suspension were not met as they matured. This was common to all the members of the Wellsville lodge. On the twenty-second of July, however, McClure paid his three assessments in full. Various reasons make the position of defendant assailing the relations of McClure with his own lodge untenable: 1. The defendant had refused to receive payment of these assessments until there was a payment of No. 158. It was in the inconsistent attitude of demanding payment of those calls as they fell due, and then refusing to accept pay thereon. 2. The failure to pay during this period by McClure was purely an omission that his local lodge could take advantage of. ( Gaige v. Grand Lodge of A.O.U.W., 48 Hun, 137.) The subordinate order (lodge) not only did not seek to do so, but effectually debarred itself from so doing by accepting the assessments of July twenty-second. 3. The fact the defendant continued to send out these assessments was a notification that it desired the members to remain within the order, and that upon payment, not alone would the lodge preserve its life, but the certificate retain its vitality during the term in which the parties were reconciling the differences arising from the misnumbered assessment.
McClure, when he paid the three assessments, had the cards issued by defendant demanding payment. He paid, expecting his wife would be entitled to the amount specified in the certificate in case of his death.
4. But the defendant's counsel is foreclosed by his admission upon the trial from raising this question. The plaintiff was seeking to show that the members of the order in Wellsville attended the funeral services of McClure, when the following occurred: "The court: Is his membership put in issue? Defendant's counsel: There is no denial in the pleadings, nor will there be at the trial, that he was a member of the subordinate lodge. The contention is that he died under suspension, while his lodge was under suspension." The effect of the concession is that he was a member of the local lodge, and that the point of attack was not the suspension of the individual, but of the lodge of which he was a member.
On the pivotal question in the case, therefore, the deduction seems irresistible that the course of dealing between the defendant and the local lodge waived strict immediate payments of these assessments at maturity, and estopped the supreme order from invoking failure to pay as a forfeiture of the certificate of McClure; that the member was in good standing in the local lodge, and at the time of his death had paid every assessment which had ripened into liability against him.
It is claimed, however, that "satisfactory evidence of death" was never furnished to the defendant, conformably to its laws. The proofs show that, in the event of the death of a member, informal notice was given by the reporter of the local lodge to the supreme order, and blanks were then provided by the latter, upon which were engrossed the requisite facts, giving full information to the defendant. The local lodge was not supplied with these blanks for general use, but they were sent to meet each exigency as it arose. There was no form prescribed as to the manner in which the officers of the local lodge should give notice of the death of a member. Mr. Browning, the reporter of the Wellsville lodge, attended the funeral services of McClure, and was, of course, cognizant of his death. On August seventh he wrote the supreme reporter of defendant in reference to the death of McClure, but no blanks were returned to him upon which to make out the requisite statement. The report of August 26, 1885, contains the statement of McClure's death. The letter of Sloat, the supreme dictator of the supreme lodge, of September 17, 1885, alludes to the death of McClure, with the opinion he was in good standing Also his letter of October fifteenth, which disputes liability on the ground of the suspension of the lodge on June twelfth. And the letter of the supreme reporter of October twentieth refers to the death of this member. The officers to whom notice was to be given knew of the fact and omitted to supply the local order with the blanks essential to prepare this report. The remissness and default were, therefore, with them, not with the local order. ( Order of Chosen Friends v. Austerlitz, 75 Ill. App. 74; Anderson v. S.C. of O. of C.F., 135 N.Y. 107.) No complaint was ever made by the officers of the defendant that proofs of death should be furnished. No suggestion of any kind was ever given upon this subject. The plaintiff could do nothing; there was no duty insistent upon her to prepare the formal notice of death. The constitution of defendant provides that the local lodge is the agent of the member. I believe the law is not operative against a beneficiary where it relates to the furnishing of proofs after the death of the assured member. That would place the holder of a beneficiary certificate wholly at the mercy of the supreme and subordinate lodges.
The defendant interposed the defense of the Statute of Limitations. Article 9, section 2, of defendant's constitution, provides that a benefit certificate shall be "under seal of the Supreme Lodge," and signed by the supreme dictator and the supreme reporter. It is alleged in the complaint that the benefit certificate in question was issued conformably to this requirement. The copy of the certificate forming a part of the printed case purports to contain the seal of the corporation, and the certificate recites it has been affixed. We must conclude, therefore, that the seal was duly attached ( Barnard v. Gantz, 140 N.Y. 249, 258; Town of Solon v. Williamsburgh Savings Bank, 114 id. 134; Metropolitan Life Ins. Co. v. Bender, 124 id. 47.) The presumption is, the authorized officers of defendant complied with this express mandate of their constitution. They possessed no authority to issue certificates except in pursuance of this direction. Certainly, defendant cannot now assert the inference its officers violated the fundamental law of the order for the purpose of invalidating this certificate. The instrument being under seal, its life is for twenty years. (Code Civ. Proc. § 381; Royal Bank of Liverpool v. Grand Junction R.R. Depot Co., 100 Mass. 444; 7 Am. Eng. Ency. of Law [2d ed.], 691. Cases cited above.)
The defendant being a foreign corporation, process could not be served upon it, and, like any non-resident, the Statute of Limitations would not inure to its benefit. But the Code of Civil Procedure, section 432, subdivision 2, provides that the corporation may designate a person upon whom service can be made; and if that is complied with, the reason for the suspension of the statute does not exist. In this case, however, the attempt to designate such person was inadequate. The section mentioned provides the manner of making this designation, and three essential things were omitted in this endeavor: 1. It failed to designate the place where the service could be made. 2. It lacked the consent of the person designated. 3. It was not filed in the office of the Secretary of State. Inasmuch as the defendant is asserting its compliance with law in invalidating a certificate duly issued, it must show a fairly strict conformity to the law. The defendant's counsel insists the designation made was not intended to conform to the section of the Code cited, but was in accordance with chapter 175 of the Laws of 1883. That enactment was primarily for the organization of fraternal insurance societies by residents of the State of New York. Section 9, however, provides for the designation of a principal office in a city, village or town of the State, "and some person residing in the same city, village or town where such office is located, as a person upon whom service of legal proceedings and papers may be made, as upon such association." This statute, therefore, is intended for the designation both of the principal office and the person to be served, and each in the same locality. Under this statute it is not expected that the Superintendent of Insurance will be the person designated, and the defendant obviously was not seeking to meet the requirements of this statute. It did not name any principal office in the State. The whole tenor of its designation indicates an effort to comply with the Code.
The defendant's counsel again insists that no demand has ever been made by plaintiff for the amount which she claims to be her due by virtue of this benefit certificate, as required by the laws of defendant. The allegation of demand is affirmatively made in the complaint and not denied by the answer. While it may be spelled out from the answer that the reference therein to subdivision VIII was intended to refer to subdivision IX, which contains the averment of demand, yet in a technical defense of this kind the pleading will be construed most strictly against the pleader.
The judgment and order are affirmed, with costs to the respondent.
All concur; FOLLETT, J., not sitting.
Judgment and order affirmed, with costs.