Middelstadt v. Grand Lodge of Order of Sons of Hermann

ELLIOTT, J.

Upon this record we can determine only whether the conclusions of law are justified by the findings of fact. From such findings it appears that on December 14, 1891, Johann Link became a member of the Order of the Sons of Hermann, and thereby was entitled to the benefits of the life insurance feature of the organization. The usual benefit certificate was issued to him, but no beneficiary was named therein. Link remained a member of the order in good standing and paid all dues and assessments for about seven years, when, being unable to pay further dues and assessments, he entered into a contract with three parties by the name of Daily, by which they agreed to pay him the amount which he had paid as dues and assessments from the time he joined the order until that time, and to make all future payments necessary to keep the insurance in force. Link, on his part, agreed to have the Dailys named as beneficiaries in the certificate to the extent of $970; the balance of $30 to be made payable to his relatives Charles A. Link, Mary L. Beach, and Frederick Manahan, who are the appellants herein. Link also agreed to make a will bequeathing $970 of the proceeds of the certificate to the Dailys. This contract was duly executed, and all the parties thereto faithfully carried out its terms. Link had the names of the Dailys inserted in the certificate, and the proper record thereof made in the records of the order, and executed his will bequeathing the $970 to the Dailys. The Dailys paid him about $200 to reimburse him for what he had previously paid to the order, and thereafter paid all dues and assessments which were necessary to keep the insurance in force until the death of Link, by which time they had invested about $400.

Upon the death of Johann Link, his will was duly probated, and A. C. Middelstadt was appointed executor. Soon thereafter the executor brought this action to recover the $1,000 due on the benefit certificate. The money being claimed by both groups of beneficiaries named in the certificate, the defendant asked that they be required to intervene in order that the court might determine to whom the money belonged. The defendant then paid the money into court and was discharged from further liability. The Dailys claimed $970 of the money by virtue of the will and certificate. Charles A. Link, Beach, and Manahan claimed the entire fund on the theory that, as the Dailys *231 had no insurable interest in the life of Johann Link, and were not within the class of persons who, under the constitution and laws of the order, might be named as beneficiaries, the entire fund went to them. The executor, asserting for similar reasons that the Dailys were not entitled to the money, claimed that it became a part of the estate of Johann Link, and should be paid to his personal representative for administration through the probate court.

The trial court held that the executor was not entitled to the money; that Link and Beach were entitled only to the $10 given each of them by the terms of the certificate; that the Dailys were entitled to $970 by virtue of the fact that they had been properly named by Johann Link as beneficiaries in the certificate; that the will neither enlarged nor diminished the rights of the Dailys; and that the interveners, Link, Beach and Manahan, could not raise the question of the Dailys’ insurable interest in the life of Johann Link. The executor did not appeal. Link and Beach appealed, and their rights only can be considered.

The trial court properly held that the appellants were not entitled to receive the $970, but we rest our conclusions on somewhat different grounds. As the law now stands, the payment of death benefits in any beneficial association can be made only to the families, heirs, blood ^relations, adopted children, fiancée, or persons dependent upon the member. Section 1703, R. L. 1905. But the rights of these parties must be determined' by the law which was in force at the time of the transaction in question. When this certificate was issued, and when the Dailys were named as beneficiaries, there were no such statutory restrictions, and the choice of beneficiaries was left to be determined by the parties, subject to the provisions of the articles of incorporation and the constitution and by-laws of the association. Walter v. Hensel, 42 Minn. 204 , 44 N. W. 57 ; Gruber v. Grand Lodge A. O. U. W., 79 Minn. 59 , 81 N. W. 743 .

This association was organized under title 3, c. 34, G. S. 1878. The articles of incorporation, as found by the trial court, state that one of the objects of the corporation is to “provide for the creation of a fund out of which to pay a certain amount to the widow, descendants, heirs, or parties properly designated, as the case may be, of the deceased member, * * * all according to the constitution, rules, regulations, and by-laws of this order.” The corporation was thus *232 authorized to provide that persons other than those named in the articles might be designated as beneficiaries. Paragraph 7 of article 23 of the constitution provides that the benefit certificate may be executed in favor of the wife, children, father, mother, or grandparents, brothers, sisters, and th'eir children, foster parents or foster children, brothers and sisters of father or mother, or the lodge to which the member belonged, and that any beneficial certificate issued to any other person should be null and void. But the next paragraph in the same section provides, in the somewhat crude language of the translation which was offered in evidence, that: “Notwithstanding the above

determinations, has every member the right to abolish the same and by a last declaration of his will and testament dispose of the money and say to whom it is to be paid out. In such a case the restrictions named in paragraph 7 are of no effect.” For the protection of the order it then provided that, when the money is thus disposed of by will, the certificate must be marked as transferred and the secretary of the lodge informed of the fact.

The effect of this provision was to authorize the member to deprive a beneficiary who had been named in the certificate of his right to the money and dispose of the fund in any manner he desired by his last will and testament. A member had the power to change the beneficiary at any time prior to his death, but his right of selection of a new beneficiary was limited to the classes designated in the constitution of the order, which expressly provided that the designation of other persons would be null and void. The constitution gave him the right to annul the previous designation of a beneficiary, thus making the money payable to his estate,' and subject to disposition by his last will. This right was exercised by Johann Link, and the Dailys were entitled to the money by virtue of the testamentary disposition, and not as beneficiaries named in the certificate. Not being within either of the classes from which the member was required to select a beneficiary, their designation as beneficiaries was, in the language of the constitution, null and void. They could neither be made beneficiaries directly, nor indirectly by the assignment of the certificate. The contract should be construed as imposing the obligations therein created, so far as legal, upon the parties thereto, and as it was fully performed It served its purpose.

*233 As the Dailys acquired their right to the money under the will, the question of their insurable interest in the life of Johann Link is of no importance. The will had no binding effect during the life of Johann Link, and the public policy, which forbids a mejre stranger having no insurable interest to take out or otherwise acquire insurance on the life of another, does not prevent one holding life insurance from disposing of the benefit by will. This is no more a wager than is the testamentary disposition of any other species of property. Stoelker v. Thornton, 88 Ala. 241 , 6 South. 680 , 6 L. R. A. 140; Rison v. Wilkerson, 3 Sneed (Tenn.) 565; Weil v. Trafford, 3 Tenn. Ch. 108; Williams v. Corson, 2 Tenn. Ch. 269; Tennessee v. Ladd, 5 Lea (Tenn.) 716; Highland v. Highland, 109 Ill. 366 , 13 Ill. App. 510 ; Catholic v. Priest, 46 Mich. 429 , 9 N. W. 481 ; Clark v. Durand, 12 Wis. 248 ; Gambs v. Covenant, 50 Mo. 44 ; Swift v. Railway, 96 Ill. 309 ; Bickerton v. Jacques, 28 Hun (N. Y.) 119; Union Mut. Life Ins. Co. v. Stevens (D. C.) 19 Fed. 671 .

The trial court properly held that the appellants were not entitled to the fund in question, and, as that is the only question before us, the judgment is affirmed.