
    BERKELEY v. HARPER. HARPER v. BERKELEY.
    Life Insurance ; Mutual Benefit Association ; Change of Beneficiary; Insurable Interest.
    1. The constitution and by-laws of mutual benefit associations should be liberally construed in order to efCectuate the main purposes of their organization.
    2. Where the charter and articles of incorporation of such an association provide that a death benefit shall be paid to the member’s family or disposed of as he or she may direct, and a member surrenders his original certificate and applies for a new one payable to another beneficiary, but dies before the application can, in the regular course of business, be acted upon and a new certificate issued, 'a court of equity will treat the new certificate as having actually been issued, and the last named beneficiary will be entitled to the benefit.
    3. In such a case a friend and benefactor of the member, is within the class of persons capable of being made a beneficiary under the constitution and by-laws of the order, whether he has an insurable interest in the life of the member or not.
    4. The naming of the new beneficiary, in the order surrendering the original certificate in such a case, as the “ executor ” of the insured, is mere description of the person and does not invalidate the act.
    Nos. 237 and 238.
    Submitted February 19, 1894.
    Decided May 11, 1894.
    Hearing on cross-appeals from a decree of the Supreme Court of the District of Columbia, holding an equity term. The case arose on a bill of interpleader by the Supreme Commandery United Order of the Golden Cross of the World, a mutual benefit association, against Linda W. Berkeley and Samuel D. Haddaway, adverse claimants of a death benefit of two thousand dollars, payable on a certificate ¿.issued to John C. Wood. The defendant Haddaway claimed the fund (which was, after the filing of the answers, paid into court) both as executor of Wood’s estate, and in his own right. The decree appealed from denied altogether the claim of the defendant Berkeley, and the claim of the defendant Haddaway, in so far as he claimed it in his own right, but ordered it to be paid to him as the executor of the estate of Wood. Pending the appeals Haddaway died, and Albert Harper, his executor, was made party appellant in his stead in both capacities.
    
      Decree reversed.
    
    The Court in its opinion stated the case as follows:
    This case arises upon a bill of interpleader filed by the Supreme Commandery United Order of the Golden Cross of the World, a corporation formed under the laws of the State of Tennessee, and having subordinate commanderies located in the city of Washington, one of which is styled Goodwill Commandery No. 21. The bill was filed against Samuel W. Haddaway and Linda W. Berkeley, alleging the conflicting claims of those parties to a certain fund, being the amount payable in respect of a benefit certificate of membership issued by the complainants to a certain John C. Wood, since deceased, and which fund the complainants brought into court and made deposit thereof, to be paid over to whichever of said parties defendants that should show and establish right thereto. The claim of Linda W. Berkeley is founded upon the fact that she was named in the original certificate as the beneficiary, and Samuel W. Haddaway claims as a substituted beneficiary. The complainants prayed that those parties might be required to interplead as between themselves in respect to the rights, claimed by them; and the court so ordered, and discharged the complainants from further participation in the proceeding, upon their paying the fund into court.
    The defendants, by their answers, set up and insisted upon their respective claims to the fund, and evidence was taken in support and refutation of the opposing claims thus set up by the parties.
    The principal question in the case is, whether the power of the member Wood to change the beneficiary named in the benefit certificate, and to substitute another in her stead, was well executed under the constitution and by-laws of the order.
    The objects and purposes of the order are set forth in its charter and articles of incorporation, and among these is the following article:
    “To establish a benefit fund, from which a sum not to exceed $2,000 shall be paid at the death of each member, to his or her family, or to be disposed of as he or she may direct."
    
    Among the general laws of the order we find these provisions, under the head of “ Benefit Certificates ”:
    “ Sec. 2. Applicants shall enter upon the medical examiner’s blank the’ name or names of the members of their family, or those dependent upon them, to whom they desire their benefit paid, and the same shall be entered in the benefit certificate by the supreme keeper of records.
    “ Sec. 3. Members may, at any time, when in good standing, surrender their certificate and have a new one issued, by paying a fee of one dollar.”
    It appears that John C. Wood became a member of Goodwill Commandery No. 21, United Order of the Golden Cross, located at the city of Washington, as contributor to the junior class benefit fund of the order, on the 30th of October, 1891, and obtained the usual certificate of membership issued by the order. This benefit certificate appears to have been obtained as means of security to enable the member Wood to obtain control of a legacy or fund bequeathed to him for life under the will of his wife. And to accomplish that purpose,.the original benefit certificate was taken in favor of his daughter, Linda W. Berkeley, who was entitled to the fund under her mother’s will after the death of her father. But the security thus procured and offered was not satisfactory, and Wood, the father, became very indignant, and the relations between himself and his daughter became very much estranged and embittered. He, from that time, manifested his determination that his daughter should not have the benefit of the certificate; and this determination found expression in his letters, his conversations, his will, and in the application for the change of beneficiary on the records of the order.
    It appears that Wood, for several years prior to his death, had made his home with his friend Haddaway, and had been provided for in the house of the latter as a member of the family; and the relations between himself and Haddaway were those of the warmest and most intimate friendship; and that Wood acknowledged and appreciated his obligations to Haddaway as his benefactor. Haddaway was not a man of means, and Wood had proposed to raise money to assist Haddaway to build a house; and it was for that purpose that Wood had sought to obtain the use and control of the fund bequeathed by the will of his wife.
    The original benefit certificate was kept by Wood himself, and it never was in the possession of Mrs. Berkeley, and all the premiums or assessments were paid by Wood. On the 8th of January, 1892, Wood, then being sick at the house of his friend, signed a formal surrender of the original certificate, and also an application for change of benefit certificate, in which he directed a new certificate to be issued to himself, as a full rate member, for $2,000, and to be made payable to Samuel W. Haddaway, as beneficiary. On the day following, notice of change of benefit certificate was addressed to the proper officer of the order, in which notice he stated: “ I herewith surrender and return to you my benefit certificate, No. 28,532, and direct that a new one be issued to me, payable to Rev. Sami. W. Haddaway, my executor, in whose family I have lived for more than four years, and of whose family I form a part. Fee of one dollar enclosed.”
    These papers were duly enclosed, with the fee of one dollar, and directed to and received by the proper officer of the subordinate commandery in Washington; but Wood died three days thereafter, and before the papers could be transmitted to and acted on at the principal or home office of the order.
    
      Wood left a will, dated the xst of May, 1891, by which he made Haddaway general devisee and legatee of everything he owned; he also made Haddaway his sole executor.
    Wood did everything in his power, and everything that, was required of him under the laws and regulations of the order to effect a change in the benefit certificate and in the beneficiary therein named. There is no question made by the order itself grounded on the non-issue in fact of the substituted benefit certificate directed to be issued by Wood. On the contrary, the order offers to pay the amount called for by the original certificate to Haddaway, the substituted appointee, provided the court should determine him to be entitled as against the original beneficiary named in the certificate. As between these two parties, then, which of them, is entitled?
    
      Mr. C. G. Lee and Mr. John St. C. Brookes for the appellant, Berkeley.
    1. The amendment to the charter, the constitution and bylaws of the Supreme Commandery, United Order of the Golden Cross of the World, read together, and they are in harmony, require that the beneficiary in a benefit certificate, whether original or substituted, shall be a member of the family or one dependent upon the assured. The defendant Haddaway was neither a member of the family of nor dependent upon the assured John C. Wood. May on Insurance, Sec. 399 F.; Knights of Honor v. Nairn, 60 Mich., 44; Bacon on Benefit Societies, Secs. 256, 261.
    2. Haddaway had no insurable interest in the life of the-assured, being neither a relative nor a creditor, nor dependent on Wood, and interested not in ‘his living, but in his death. He was simply Wood’s friend. But mere friendship will not of itself constitute this interest as will the natural affection arising from the close relationship of parent and' child or husband and wife. A benefit certificate, therefore, granted to John C. Wood, naming the defendant Hadda-way as beneficiary, would have been void on the ground of public policy, independent of its being void under the amendment to the charter, the constitution and by-laws of the order, as against the defendant Linda W. Berkeley, the daughter and only child of the said John C. Wood, and the beneficiary in the benefit certificate issued. Cammack v. Lewis, 15 Wall., 643 ; Warwick v. Davis, 104 U. S., 77 5 ; Stevens v. Warren, 101 Mass., 564; Lord v. Dali, 12 Mass., 115 ; Lewis v. Ins. Co., 39 Conn., 104; Singleton v. Ins. Co., 66 Mo., 63.
    ■3. The estate of the said-Wood is clearly not entitled to the fund in controversy. Such a disposition of it, independent of other considerations, would be contrary to the object of the order in the establishment of its benefit fund.
    4. Upon her father’s death, without obtaining a new or substituted benefit certificate, naming a member of his family or one dependent upon him as beneficiary, but simply attempting to obtain a new or substituted benefit certificate, naming the defendant Haddaway, neither a member of his family nor dependent on him as beneficiary, the right of the defendant, Linda W. Berkeley, to the benefit became vested, and she became “the absolute owner of the fund,” unaffected by this attempt of her father. Holland v. Taylor, in Ind., 121 ; Bacon on Benefit Societies, Secs. 244, 307, 311-
    
      Mr. E. H. Thomas and Mr. W. D. Davidge, Jr., for the appellant Harper.
   Mr. Chief Justice Alvey

delivered the opinion of the Court:

The principle of construction, as applied to the clauses and conditions in the constitution and by-laws of these beneficial associations, is required to be liberal, in order to effectuate the main purposes of their organizations. Among the principles that distinguish the benefit certificate of membership in these associations from an ordinary policy of insurance issued by an insurance company, is that which secures to the member the right to appoint or direct the payment of the proceeds of the contract to a person other than the one named in the original certificate. This power of revocation and appointment as to the beneficiary, as allowed by the constitution and laws of most associations of this class, partakes very much of the nature of a testamentary power of disposition; it may be revoked and a new appointment made at any time before the death of the member. It is now settled, in this class of cases, that the beneficiary nominated in the benefit certificate has no vested right or interest in the benefit contemplated by such certificate, simply by virtue of being designated therein as the beneficiary; for the member may at any time before the contract matures, substitute another person or class of persons, as beneficiaries, unless restrained by the constitution and by-laws of the association. Even in the case where the beneficiary named in the certificate dies before the member, the representatives of such beneficiary have no interest in the benefit, though the member dies without making another nomination. 2 Am. & Eng. Encycl. of Law, 177, and cases there cited. Up to the times of his death the member may change his designation of beneficiary, at will, against the consent of the beneficiary, .and that, too, though the latter may have advanced the money to pay the premiums or assessments upon the certificate. Supreme Conclave, Royal Adelphi v. Cappella, 41 Fed. Rep., 1; Gentry v. Supreme Lodge, Knights of Honor, 23 Fed. Rep., 718 ; Martin v, Stubbings, 126 Ill., 387 ; Union Mut. Assn. v. Montgomery, 70 Mich., 587 ; Titsworth v. Titsworth, 40 Kan., 571 ; Masonic Society v. Burkhart, 110 Ind., 189.

Upon the evidence in this case no doubt can exist as to the intention of Wood, the member. He intended to change the beneficiary in the certificate of membership, and he did all in his power to accomplish that purpose. He did not live long enough to have all the forms prescribed actually complied with; but the particulars in which the defect existed were purely of a formal nature, and such as the order could and did properly dispense with. The revocation and new appointment were substantially made; and it was the right of the member to have the substituted certificate issue as he directed, and though death interposed before all the forms could be complied with, the right of substitution of beneficiary previously exercised was not lost.

The case already referred to, of Supreme Conclave, Royal Adelphi v. Cappella, is an important authority upon this subject. In that case it was held that the general rule that the insured is bound to make change of beneficiary in the manner pointed out by the policy and by-laws of the association, is subject to three exceptions: (1) If the society has waived a strict compliance with its own rules, and, in pursuance of a request of the insured to change his beneficiary, has issued a new certificate, the original beneficiary will not be heard to complain that the course indicated by the regulations was not pursued. (2) If it be beyond the power of the insured to comply literally with the regulations, a court of equity will treat the change as having been legally made. (3) If the insured has pursued the course pointed out by the laws of the association, and has done all in his power to change the beneficiary, but, before the new certificate is actually issued, he dies, a court of equity will treat such certificate as having been issued, and will decree accordingly.

In the course of the opinion of the court in that case, the learned justice refers to the case of the Association v. Kirgin, 28 Mo. App., 80, where “ the insured having met with a fatal accident, called a friend and requested him to take his certificate to the association and surrender it, paying a fee of 50 cents, and request them to issue a new one payable to his wife. This was done, and a minute of the transaction was made on the records of the association for that day. On the following day the insured died. It was held that in doing this, he had done all that the laws of the order required to be done on his part in order to have a new certificate issued; that his right to make the change was absolute; and that the association had no right to refuse his request; and, further, that the fact that the certificate was issued after his death was immaterial, since the certificate was not the right itself, but merely the evidence of the right.” To the same effect are the cases of Kepler v. Supreme Lodge, Knights of Honor, 45 Hun, 274, and Scott v. Relief Assn., 63 N. H., 556. These authorities would seem to be founded upon principle, and we entirely concur in the propositions maintained by them.

The next question is, whether Haddaway was within the class of persons capable of being made a beneficiary under the constitution and by-laws of the order? And this question, we think, can hardly admit of serious doubt. As we have seen, one of the expressed objects of the charter was to establish a benefit fund, from which a sum not to exceed $2,000 shall be paid at the death of the member to his or her family, or to be disposed of as he or she may direct. Without undertaking to determine who would be embraced by the terms “the members of his family,” we think the succeeding terms of the power amply comprehensive to authorize Wood, the member, to appoint his friend and benefactor, Haddaway, to the position of substituted beneficiary in the place and stead of his daughter. The provision should be construed liberally, to enable the member to gratify and fulfill his moral as well as his legal obligations; and in view of the authorities construing the same or equivalent terms authorizing the change of beneficiaries,, we think it clear that Haddaway was in no manner incompetent to take the benefit of the insurance on the life of Wood, under the power reserved to the latter. Gentry v. Supreme Lodge, 23 Fed. Rep., 719; Massey v. Mut. Relief Society, 102 N. Y., 523; Beatty’s Appeal, 122 Pa. St, 435; Lamont v. Grand Lodge, 31 Fed. Rep., 177. And it is immaterial that Haddaway had no insurable interest in the life of Wood; and the mention of Haddaway as executor in the notice of surrender of the certificate, was mere description of the person. Lamont v. Grand Lodge, supra ; Lamont v. Hotel Men’s Assn., 30 Fed. Rep., 817.

The court below decreed against the claim made by Mrs. Berkeley to the fund, and to that extent the court entirely concurs in the decree appealed from; but in that part of the decree which rejects the claim made by Haddaway as substituted beneficiary, and adjudges the fund to belong to the estate of Wood, the deceased member, we cannot concur, and must therefore reverse the decree of the court below, and thereupon remand the cause with direction to enter a decree adjudging the fund in the court below to be paid to the executor of Samuel W. Haddaway, deceased, the substituted beneficiary; the said Haddaway having died during the pen-dency of these appeals, and his executor having become a party to the record under the rules of this court. The costs of these appeals to be paid by Mrs. Linda W. Berkeley; and it is so ordered.

Decree reversed and cause remanded, to the end that a decree be entered in accordance with the foregoing opinion.  