
    Martha Stronge, Appellant, v. The Supreme Lodge, Knights of Pythias, Respondent.
    First Department,
    February 9, 1906.
    Membership life insurance association—change of beneficiary under by-laws — failure of insured to give indemnity on changing beneficiary —indemnity waived by insurer.
    When the certificate of'membership and the rules and regulations of a membership life insurance association provide that a member may change his beneficiary “as often as desired, consent of the existing beneficiaries not being required,” etc., a beneficiary first named, and who refuses to surrender the policy intrusted to her, acquires no vested rights which prevent a change of beneficiary by the member on his complying with the -provisions of the association in that respect.
    Although the rules of such insurer require the insured to furnish indemnity in case he is unable to surrender the policy when changing a beneficiary, such provision is for the security of the association only and the failure of the mem. her to furnish such indemnity when required cannot he taken advantage of by a former beneficiary when the insured has in oilier respects complied with the rule.
    The insurer may waive provisions designed only for its own protection.
    Houghton, J., dissented, with memorandum.
    Appeal by the plaintiff, Martha Stronge, from, a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of .ÍSTew York on the 7th day of July, 1905, upon the decision of the court, rendered after atrial before the court without a jury at the New York Trial Term, dismissing the complaint upon the merits.
    
      S. Livingston Samuels, for the appellant.
    
      James C. de La Mare, for the respondent.
   Ingraham, J.:

There is no substantial dispute as to the facts in this case. The defendant, under" its constitution, issued to one John M. Irvine a certificate of membership which recited that the said John M. Irvine was a member of'- section .85 of the Endowment Rank, Knights of ■Pythias, .and that in consideration of the payment by the said member of tile prescribed membership fee and'of all monthly payments, assessments and dues as required, and that he shall be in good standing under the said laws, rules and regulations, the defendant would pay to Martha Stronge, his sister-in-law, the sum of Three thousand'dollars out of the Endowment Fund of the Rank, in accordance with and under the laws governing the payment of benefits, upon due notice and satisfactory proof of' death and good standing in the Rank at time of death .and a full receipt and surrender of , this certificate," subject, however, to the conditions and agreements subscribed to by said member in his application, and .to the. further conditions ánd agreements hereinafter named and provided ; also that this certificate shall not 'have been surrendered by said member or canceled at his request and another, certificate issued in accordance with the laws of the Rank. * * '* Provided further, that the beneficiary herein designated shall acquire no interest whatever in the certificate nor in the Endowment Fund until the benefit shall have lawfully accrued by reason of the death of said member and no subsequent change in the beneficiary shall-have, been made.”

The rules and regulations of the defendant provide that each applicant for membership shall designate in his application “ some person or persons related to or dependent upon him for support, as hereinafter provided, to whom the benefit shall be paid when due, and the name or names and the relationship of the person or persons so designated shall be inserted in the Endowment certificate.” It was also provided that any member desiring to change his beneficiary or beneficiaries should make application on a form pro vided.by the board of control. “ The secretary of the section shall attest the same, and forward such application with the > certificate originally issued, or then in force, and a fee of fifty Cents, to said Board of Control; who shall, if the change be in accordance with law, asspecifiqd in section 380, issue a new-certificate, containing the name or names of the substituted beneficiary or beneficiaries. Such change may be made at any time and . as often as desired, consent of the existing beneficiaries no’t being required.” It was also provided that “ In case a member desiring to change his beneficiary shall be unable to surrender the original certifícate, or the certificate then in force, by reason of the act or refusal of the beneficiary named therein, or from any other cause, the Board of Control may issue a new certificate upon proof of the facts by affidavit of the member, and the execution by him of such instruments of release or indemnity as shall be deemed necessary.”

The certificate in question was issued on the 5th day of May, 1903. On the 13th day of May, 1904, the said Irvine executed and delivered to the defendant an instrument in writing, and an affidavit annexed thereto, by which said Irvine changed the beneficiary named in said certificate and nominated and appointed his adopted daughter, Annie Elizabeth Fee, as beneficiary in said certificate in the place of the plaintiff, and revoked the appointment of the plaintiff as beneficiary in the said certificate.

The court found that at the time of the delivery of this instrument and affidavit, Irvine had complied in every respect with the general laws, rules and regulations of the defendant so far as the defendant required him to comply with the same,.except as to the surrender of the said certificate of membership to defendant, and did all that-he was able to do as he was required by said general laws, rules and regulations. This instrument, with the affidavit, having been forwarded to the defendant, on May nineteenth the defendant wrote to Irvine acknowledging the receipt of the instrument changing the beneficiary, with the affidavit, and the fifty cents required by the rules to. be paid, saying: “ The papers that you submitted appear to be satisfactory and in conformity with the rules and requirements of the Board of Control. Before, however, a new certificate can be issued under the circumstances, the full requirement exacted by the Board in all cases and as provided for in Section 80, p. 67 of the Endowment Bank Laws must be complied with.” The letter then quoted the law, which provided that the member must execute a release or indemnity as should be necessary, calling his attention to this provision of the law and stating that if Irvine would file with the board a bond with one or more good sureties for the sum of $3,000, t0 protect the defendant in case it issued the certificate, as required, the papers would then be acted upon to Irvine’s satisfaction. The day after this letter was written, and on May twentieth, Irvine died in Texas. Annie Elizabeth Fee, substituted beneficiary, made due' proof of the death of the said. Irvine and claimed the amount due, and the court found as- a conclusion of law-.that Irvine, by the instrument dated May 13,-1904, duly revoked the designation of the plaintiff as his beneficiary in the certificate referred to and duly changed the beneficiary named in said certificate and appointed the said Annie Elizabeth Fee as his beneficiary in place of the plaintiff; that the act of the plaintiff in refusing to surrender,the said certificate for the purpose of changing the beneficiary was wrongful, and'that she could -not take advantage, of her refusal to surrender the certificate, and that the defendant was entitled to judgment dismissing the complaint.

The plaintiff claimed and asked the court to find that Irvine, for a valuable consideration moving to him from the plaintiff, agreed with the plaintiff to make her his beneficiary -and to have the defendant issue to her a certificate as such, and' in pursuance of such agreement designated the plaintiff as his beneficiary. In answer to that contention, however, I do not think that .the evidence established that this certificate was issued in pursuance of any such contract; ■but whether so issued or not, it was issued, subject to the provisions-therein contained and the laws, rules and regulations governing the rank and which may be adopted, by the board of control of said rank, and the agreement to pay to the beneficiary was in accordance with and under the rules governing the payment of benefits, and upon the condition that the beneficiary designated should acquire no interest whatever in the certificate nor in the endowment fund until the benefit shall have lawfully accrued by reason of the death of the said member, and that no subsequent change in the beneficiary shall have been made.

The only substantial question presented is, whether the instrument and- affidavit forwarded to the defendant on- the 13th day of May, 1904, and accepted by the defendant as á sufficient change of the beneficiary under the rules and regulations of the order, Was sufficient to change the beneficiary under the certificate of membership and the rules and regulations adopted by the order.- Bule 19 of the defendant provides that any person desiring to change the beneficiary or beneficiaries shall make-application on a form prescribed by the board of control; that such change may be made at. any time and as often as desired, consent of the existing beneficiaries -not being required; but no' change of beneficiary shall b.e valid until its acceptance by the board of control; and rule 80 provides that “ In case a member desiring to change his beneficiary shall be unable to surrender the original certificate, or the certificate then in force, by reason of the actor refusal of the beneficiary named therein, or from any other cause, the Board of Control may issue - a new certificate upon proof of the facts by affidavit of the member, and the execution by him of such instruments of release or indemnity” as shall be deemed necessary.” In pursuance of this provision Irvine transmitted to the defendant an instrument by which he made a change in the beneficiary named in said certificate, and he surrendered and released all rights in and to and under said certificate,- to take effect upon the issuance to him of a new certificate in lieu and place thereof. The instrument then directed that the benefit was to be paid to Annie Elizabeth Fee, his adopted daughter, and requested a new certificate to be issued to him in accordance therewith to take effect immediately; it stated, that he desired to name, and he thereby did name, as his beneficiary his adopted daughter in place of the plaintiff, and he revoked the appointment and named in her place and stead his adopted daughter, Annie Elizabeth Fee. This instrument was duly acknowledged, and attached to it was an affidavit which verified the facts stated, that the plaintiff was not a blood relative, but a sister of his deceased wife; that as the plaintiff was named as beneficiary in said certificate, he was induced by her and her husband to place the said certificate in their possession ; that he had made demands upon the plaintiff and her husband for a return and delivery of the certificate, but had been unable to secure the same. Annexed to this was the certificate of the adoption of the said Fee, which appeared to be in accordance with the provisions of the law of the State of Texas where Irvine and the said Fee then resided; and in answer to this communication. the secretary of the board of control wrote to the defendant on May 19, 190é, stating that upon Irvine’s filing with the board a bond such new certificate would be issued. After the death of Irvine the defendant decided to furnish Mrs. Fee with blanks for .proof of death, and declined to recognize the rights of the plaintiff.

Both under the certificate issued to the plaintiff and the rules and regulations of the defendant, a member had a right to change a beneficiary and the plaintiff acquired whatever interest she acquired in this certificate subject to that right. The conditions under which the defendant -was to accept such a change of beneficiary and issue a new certificate were entirely for its protection. If the defendant consented to the change; it could waive any of the conditions which it had "prescribed as a condition for issuing a new certificate or recognizing a change in consequence of the inability of a member to surrender the old certificate, and it would seem that the plaintiff could not take advantage of the failure of the defendant to insist upon an observance of these conditions imposed for its own benefit, (Kimball v. Lester, 43 App. Div. 27; affd., 167 N. Y. 570; Dexter v. Supreme Council, 97 App. Div. 545.)

In Lahey v. Lahey (174 N. Y. 146) the original certificate designated the member’s wife as the beneficiary, who had possession of the certificate. The1 member having become separated from his wife, went to live with his mother and subsequently executed an instrument by which he revoked the former certificate-and desired that $500 of the amount due should, be paid to his mother and $500 to, the treasurer of the association to pay doctor’s and funeral expenses. This instrument was filed with the officers, of the ass.or ciation with a request that a new certificate should be issued. The association failed and neglected to issue such new certificate, upon the ground that the original certificate should be surren-. • dered with the, application for the change. Subsequent to this proceeding the wife of the member induced him to go with her" to her home in the city of Buffalo,, where he -remained until his death. After his death the plaintiff, who was the wife, claimed the whole . of the fund by virtue of the original certificate. The defendant, the member’s - mother, claimed her interest in the fund under the second designatibñ. Upon these-facts the court below found as "a conclusion of law that the member changed the beneficiary of said insurance as 'provided in the instrument of October thirtieth, and that he did what was necessary to effectuate such a purpose.

The principle established in that case, I think, justified this judgment. There can be. no question but that the member of the defendant corporation intended to change the beneficiary to whom the payment was to be’ made- Upon his death. He communicated that intention to the defendant who accepted the proposed change and undertook to issue a- new certificate upon filing the bond as required by the by-laws of the association. There is nothing in the rules and by-laws that requires that a new certificate should be issued before a change of the beneficiary was accomplished. The change did not consist in issuing a new certificate, but the association required for its own protection that before a new certificate should be issued the old one should be surrendered, or security given to save the association from the expense or liability involved in having two. certificates outstanding, naming different beneficiaries. As between this defendant and a person claiming- to be the person designated.by a member as his beneficiary, the defendant would only be liable if the person making' the claim was in fact the person designated by the member as the one to whom the benefit should be paid. There is here, I think, sufficient so sustain the finding of the court below that prior to his death the member had changed the beneficiary, and that the plaintiff, although she held the certificate designating her as the one to whom the amount was to be paid on the death of the member, was not in fact the beneficiary entitled to. such payment at the death of the member, and, therefore, was not entitled to recover. The defendant recognized the right of this member to change the beneficiary, has accepted the new beneficiary as the one to whom the benefit was payable, and it' seems to me established that the plaintiff was not entitled to the payment which was provided by the constitution and by-laws of this association to be paid to the person who had been designated by-the member as the one entitled to the benefit upon his death.

' It follows that the judgment appealed from should be affirmed, with costs.

O’Brien, P. J., Laughlin and Clarke, JJ., concurred; Houghton, J., dissented.

Houghton, J.

(dissenting):

I dissent on the ground that the plaintiff holds the only certificate actually issued, no bond having been furnished as a condition of issuing a new certificate, and the action being at law, the plaintiff is entitled, as against the defendant, to recover.

Judgment affirmed, with costs,  