Cotter v. Grand Lodge A. O. U. W.

57 P. 650, 23 Mont. 82, 1899 Mont. LEXIS 81

• Court: Montana Supreme Court
• Decided: June 26, 1899
• Docket: No. 1157
• Status: Published

Opinion

MR. JUSTICE PIGOTT

delivered the opinion of the court.

This was an action brought to recover §2,000, the amount of a beneficiary certificate issued by the defendant to one Daniel P. Cotter, and payable, in the event of his dying while a member in good standing of the defendant, to his daughter, the plaintiff. Trial was had by jury, who found for plaintiff. From an order denying its motion for a new trial, defendant appeals.

Some thirty-seven errors are specified as having been committed by the district court. Of the many questions presented, a detesmination of those relating to one issue will suffice to dispose of the appeal. Questions touching the legal capacity of the defendant to be sued, the admission of Daniel P. Cotter to the Ancient Order of United Workmen, his duty as a member, his alleged suspension and failure to be restored, and the duties and agency of the subordinate lodge to which Cotter belonged, have been raised, but, a decision of them being unnecessary, they are reserved.

The Ancient Order of United Workmen is a voluntary mutual benefit society or association composed entirely of such persons as may become and remain members thereof in compliance with its laws. Its objects, as promulgated by the supreme lodge, are to unite white male persons over 21 and under 45 years of age, regardless of nationality, political preference, or denominational distinctions, who believe in a Supreme Being, into a “fraternal brotherhood” (sic), and to “pledge the members to the payment of a stipulated sum to such beneficiary as a deceased member may have designated while living, under such restrictions and upon such conditions as the laws of the order may prescribe. ’ ’ The supreme lodge is the governing body of the society, having exclusive jurisdiction of all subjects pertaining to the general welfare of the order, and clothed with appellate jurisdiction, as a final tribunal of review and appeal, of the decisions of the grand lodges. The defendant is the Grand Lodge of the Ancient Order of United Workmen of Montana. It has exclusive original jurisdiction over all lodges of the society in Montana, subject to the constitution and laws of the supreme lodge and the right of appeal. It has power to make rules for conducting its beneficiary system. Its revenues are derived from the fees for the organization of new subordinate lodges, issuing of beneficiary certificates, the sale of lodge supplies, a per capita tax on the membership, and from an assessment of $1 on each member who has received the Workman degree, imposed whenever the beneficiary fund in the grand lodge treasury is less than §2,000, or whenever the beneficiary fund would, by the payment of the beneficiary certificates whose liquidation is unavoidably delayed, be reduced below that sum. The members pay the poll taxes and assessments to the subordinate lodges to which they belong, and such lodges forward the money collected to the grand lodge. Upon receipt of the official notice and proof of death of a member in good standing entitled to the benefits of the order, the recorder of the grand lodge shall refer the same to the finance committee, and, when approved by this committee, a warrant shall, with the consent of the grand master workman, be drawn upon the receiver of the grand lodge in favor of the beneficiary of such deceased member, and forwarded to the subordinate lodge to which decedent belonged. The chief officer of the grand lodge is the grand master workman. He must sign all orders drawn upon the grand receiver for such sums as may be voted by the grand lodge, and all warrants authorized by the finance committee between sessions of the grand lodge, if he concur in the approval of the claims for which warrants are authorized. The only method provided through which the grand lodge may pay money is by orders or warrants on its receiver, signed by the grand master workman, and attested by the grand recorder, under the seal of the grand lodge. The constitution of the defendant grand lodge requires the appointment at each annual session of a board of arbitration to hear and determine all controverted questions which may arise as to the disbursement of its beneficiary fund, and controversies touching its liability for demands against it by those claiming to be beneficiaries of deceased members, and as between those who assert rights as beneficiaries when conflicting claims are set up, “and the decision of a majority of said board shall be final and conclusive, unless reversed by the grand lodge or supreme lodge, it being the purpose and intention of this provision that all these rights shall be determined without recourse to courts of law. ’ ’ The board shall report its action to the grand lodge, which may affirm or reverse the same, and, as a tribunal of review and appeal, make such disposition .of the matter as to it may seem proper, subject to an appeal to the supreme lodge. Whenever any claim under a beneficiary certificate issued by the defendant grand lodge ‘ ‘shall be rejected by the grand master workman and finance committee of this grand lodge, before any other proceeding shall be had thereunder, it shall be necessary for the claimant or claimants to demand a hearing, and offer to submit their claim or claims for the consideration of the board of arbitration of this grand lodge, and if, after such offer of submission and hearing thereof, such claimant or claimants are not satisfied with the conclusions of the board of arbitration, such claimant or claimants must, by appeal, submit their claim or claims to the grand lodge for its consideration, and, if such claimant or claimants are not satisfied with the action of this grand lodge, such claimant or claimants must, by appeal, submit their claim or claims to the supreme lodge Ancient Order United Workmen for its consideration and action, as provided by the general laws of this order; and any claimant or claimants seeking to enforce a claim or claims without such submission and appeal shall be estopped, by virtue hereof, from maintaining any suit or action upon such claim. ’ ’

In December, 1888, Cotter became a member of Butte Lodge No. 1, which was then within the jurisdiction of the grand lodge of Nevada, but which since January 1, 1891, has been under the jurisdiction of the defendant grand lodge. On August 13, 1894, beneficiary certificate No. 764, which is the subject of this action, was issued, countersigned by the master workman of the local lodge in conformity with the laws of the defendant as of December 27, 1888, — the day when the workman degree was conferred on Cotter. This certificate was issued for the purpose of effecting a change in the beneficiary. Cotter died on September 28, 1895. The plaintiff then gave notice and furnished proof of the death of Cotter to the grand recorder through the local lodge. The recorder thereupon presented the notice and proofs to the finance committee of the defendant, which committee made the following report: “In the matter of the death report of D. P. Cotter, there is presented to the committee at this time death report executed by Butte Lodge No. 1, the undertaker and attending physician, but there has been filed in the grand recorder’s office up to this time no beneficiary report from Butte Lodge No. 1, containing any reference to D. P. Cotter’s standing in the order since the report filed March 7, 1894, which shows D. P. Cotter to have been suspended on assessment No. 2, levied in January, 1894, and there is nothing before this committee on which it can act.” It was further shown that the finance committee orally rejected the claim, and advised the grand recorder of such rejection, and that he reported the oral rejection, ,as well as the written report of the committee, to Butte Lodge No. 1, through which the claim had reached him.

In support of a defense pleaded, the defendant offered to prove that the plaintiff never demanded a hearing before, or submitted or offered to submit her claim to, the board of arbitration of the defendant, although she knew of the action taken by the finance committee. All evidence tending to support such offer was excluded, the defendant excepting. This exception presents the only question which we deem necessary to consider; for the brief of plaintiff admits that arbitration was not had, and we understood her counsel to concede upon the argument that she had not demanded a hearing, or offered to submit her claim to the board of arbitration.

1. Plaintiff contends that the provisions made by the society and by the defendant order establishing a series of tribunals for the hearing and determination of all controverted questions which may arise as to thq liability of the grand lodge of Montana upon death claims under beneficiary certificates issued by it, and declaring the decision of each final and conclusive, unless an appeal be taken to the next higher tribunal, the last being the supreme lodge, which is called a final tribunal of review and appeal, are void, — their expressed purpose being that such claims shall be investigated and finally determined within the society or order without recourse to the courts of law. It is to be observed that the constitution of the defendant, after requiring the claimant to demand a hearing and offer to submit his claim to the tribunals of the order, declares, in effect, that he shall not maintain any suit upon the claim, unless it has first been submitted and appealed.

Much contrariety of opinion is revealed by the adjudications with respect to the question of whether the laws of mutual benefit societies of the character of the Ancient Order of United Workmen which establish tribunals whose decisions are declared to be final and conclusive may be permitted to effect the result sought to be attained, — the prevention of resort to the courts by a member or one claiming to be a beneficiary. The common-law doctrine that a provision in an ordinary contract requiring all differences between the parties touching their rights and liabilities thereunder to be submitted to arbiters, whose decision or award shall be conclusive and final, will not be allowed to bar the litigation of such differences in the courts of the land, is an anomaly, and inconsistent with the right freely to contract; and, if it were not so firmly and well-nigh universally established, we apprehend that it Avould be over-turned, as resting upon no solid foundation of reason. Its operation should not be extended by construction, nor should it ever be invoked to nullify or impair contractual provisions not clearly infected with the supposed evils intended to be cured or prevented. (See President, etc. of Delaware & H. Canal Co. v. Pennsylvania Coal Co., 50 N. Y. 258.) The doctrine is, however, recognized and approved by the decisions of this court (Wortman v. Montana Central Railway Co., 22 Mont. 266, 56 Pac. 316, and the citations therein),, and also by section 2245 of the Civil Code of 1895, which, having been enacted since the constitution and laws of the defendant were promulgated and adopted, and after Cotter became a member of the defendant, has no pertinency to this case. On principle, there seems to be no good reason why the members of a purely mutual and semicharitable benefit society may not agree and contract .with each other by laws of their own making that future differences and controversies, arising out of their relation to each other and to the society, shall be finally determined by the tribunals created and selected by themselves. We are inclined to think the better reasoning is with those courts which, while recognizing and following the common-law rule where ordinary contracts are involved, nevertheless hold that the members of, and those claiming benefits from, the society are bound, in the absence of fraud or palpable error, to seek redress of their grievances in the mode prescribed by the society, wherein vests the sole jurisdiction to right their wrongs, and that they are precluded from resort to the courts. (Robinson v. Templar Lodge, 117 Cal. 370, 49 Pac. 170; Canfield v. Great Camp, etc., 87 Mich. 626, 49 N. W. 875, and cases there referred to; Fillmore v. Great Camp, etc., 103 Mich. 437, 61 N. W. 785; Id., 109 Mich. 13, 66 N. W. 675.) But it is not now necessary to decide whether the provision of the defendant’s constitution attempting to prevent the maintenance of an action at law upon a beneficiary certificate is enforceable or not. Even though such provision be void, the requirement that the claimant shall seek and exhaust his remedies within the order before he may litigate his rights in the courts is valid, and must be complied with. We feel no hesitancy in declaring that the provisions are reasonable and valid in so far, at least, as they demand a resort to the several tribunals of the order as a condition precedent to maintaining an action at law to recover a money judgment upon a death claim, and such is our opinion without reference to the clause that ‘ ‘any claimant * * * seeking to enforce a claim * * * without such submission and appeal shall be.estopped, by virtue hereof, from maintaining any suit or action upon such claim”; for the claimant would still be required, by virtue of the other provisions, to pursue the course and exhaust the remedies prescribed by the order as a prerequisite to the right, if any there be, of resort to the courts. Similar provisions in the laws of like societies have been frequently the subjects of judicial inquiry. The view that they are inoperative has been expressed in but few cases, of which Daniher v. Grand Lodge, A. O. U. W., 10 Utah 110, 37 Pac. 245, is a type. An extended and critical examination of the reported adjudications justifies us in making the assertion that the substantial unanimity of opinion, based upon correct principles, upholds sufii provisions as valid and enforceable so far as they require, as a condition precedent to the bringing of an action, an exhaustion of the prescribed remedies within the order. Out of a multitude of decisions supporting this view, we cite: Robinson v. Templar Lodge, supra; Supreme Council v. Forsinger, 125 Ind. 52, 25 N. E. 129; Jeane v. Grand Lodge, 86 Me. 434, 30 Atl. 70; Supreme Lodge v. Raymond, 57 Kan. 647, 47 Pac. 533; Smith v. Ocean Castle, 59 N. J. Law 198, 33 Atl. 849; Robinson v. Irish-American Ben. Society, 67 Cal. 135, 7 Pac. 435; Poultney v. Bachman, 31 Hun, 49; Harrington v. Workingmen’s Ben. Association, 70 Ga. 340; Wood v. What Cheer Lodge (R. I.) 35 Atl. 1045; Levy v. Order of Iron Hall, 67 N. H. 593, 38 Atl. 18; Oliver v. Hopkins, 144 Mass. 175, 10 N. E. 776; McAlees v. Supreme Sitting Order of the Iron Hall (Pa. Sup.) 13 Atl. 755; Grant v. Langstaff, 52 Ill. App. 128.

2. The suggestion that the constitution and laws of the defendant order may not be binding upon the plaintiff as the beneficiary of a deceased member is without merit. Whatever right she may have arises from, and depends solely upon, the voluntary act of her father in becoming and remaining a member of the defendant order, and she is as much bound as was he. (Canfield v. Great Camp, etc. supra.)

3. The plaintiff insists that her claim was not rejected by the grand master workman and the finance committee of the defendant, and that a rejection by each is, under the laws of the defendant, a prerequisite to the existence of a right in her to demand a hearing before, and submit her claim to, the board of arbitration, and that therefore she was under no obligation to demand a hearing, or submit her claim prior to bringing the present action. The provision referred to has already been stated. It is that, whenever a death claim “shall be rejected by the grand master workman and finance committee of this grand lodge,” the claimant must, before taking any other proceeding, demand a hearing, and offer to submit his claim for the consideration of the board of arbitration. The language, literally interpreted, means that an appeal does not lie, unless both the grand master workman and the finance committee reject the claim. No difficulty is experienced in reaching the conclusion that a rejection by either the grand master workman or the finance committee is sufficient to require the claimant to seek relief from the board of arbitration. The copulative ‘and’ ’ between ‘ ‘grand master workman’ ’ and ‘finance committee’ ’ should be read as if it were the disjunctive “or.” It is to be noted that all warrants and orders for the payment of money by the grand lodge must be signed by the grand master workman. When the grand lodge itself orders a warrant drawn, the grand master has but one duty to perform with respect to it, to wit: the signing of the warrant. He has no discretion in the matter. He is without authority to approve or disapprove. When, however, the finance committee approves claims, and authorizes warrants between sessions of the grand lodge, their action is subject to the approval or disapproval of the grand master workman; for without his consent to the allowance by the finance committee, disclosed by his signing the warrant, the action of the committee is without effect. If he approves the allowance, he signs the warrant for its payment. If he disapproves, his duty is performed when he omits to sign. His approval, as well as that of the committee, is, in the absence of an appeal, required for the valid allowance of a claim. A disapproval by either is a rejection. The finance committee may approve a claim which the grand master workman disapproves, or the finance committee, acting independently of the grand master workman, may refuse to allow a claim,- — in either case the rejection is effectual. The grand master workman has nothing whatever to do in the matter of approving or disapproving when the finance committee has rejected; in such case his attempted rejection adds nothing to the effect already produced by the action of the committee. In short, neither the grand master workman nor the finance committee alone can allow a claim, but either may reject, although the other may favor payment. According to the theory of the plaintiff, an appeal does not lie when the finance committee approves, and the grand master workman rejects a claim. Her theory is also that an appeal does not lie, unless the grand master workman performs the vain and useless act of disapproving the claim already rejected by the finance committee. He has no duty whatever to perform where the finance committee rejects a claim. It is only when the committee approves that the power to reject is confided to him.

The duty of the finance committe was to act upon the claim. This duty was ministerial, the performance of which, if refused or unreasonably delayed, could doubtless be compelled by mandamus, to the end that the rights and privileges of both the plaintiff and defendant might be preserved and enforced in conformity with the laws of the society. Under such circumstances, in view of the provisions in respect of the obligation to submit to arbitration, mandamus would seem to be the only remedy at law available to the plaintiff, unless, indeed, the refusal or delay were tainted with bad faith, of which the record presents no evidence. But discussion or decisión of this question is unnecessary, since there was evidence tending to show a rejection. The written report of the committee may possibly not have been a complete rejection. It was, however, at least a qualified rejection, or a failure or refusal to approve at the time the report was made for the reason therein stated, which reason prevented favorable action on the claim. In addition to the written report, the committee orally rejected the claim. Such report and rejection were communicated to Butte Lodge No. 1, by which, on plaintiff’s behalf, the notice and proof of death had been sent to the defendant, and the inference is that she was duly advised of the disallowance.

In excluding the offer to show that plaintiff never demanded a hearing or offered to submit her claim' to the board of arbitration, the court erred to the prejudice of the defendant.

The order denying a new trial is therefore reversed, and the cause is remanded.

Reversed and Remanded.