action, and a complaint setting up these facts as a basis. for recovery is demurrable.1

§ 681. Good standing.-In an action by the beneficiary on a certificate of mutual benefit insurance, it appeared that decedent on the day he was notified of his suspension for non-payment of a delinquent assessment of which he had had no notice, paid the same and all prior assessments due, and a subsequent one which had not yet become delinquent; that therefore when all assessments had been paid and accepted by the association, decedent gave notice of the substitution of the plaintiff for the original beneficiary in the regular manner; that after decedent's suspension, when one meeting having taken place and no action having been taken in reference thereto, he was not reinstated into full membership until shortly after this notice and shortly before his death. It was held that there was a sufficient finding that decedent was "a member in good standing" at the time of his notice.2

§ 682. Resort to internal remedy.—A beneficiary is entitled to recover on a valid claim, though he did not exhaust the remedies known to the society for the recovery of claims, as required by its laws before bringing suit, where he is prevented from doing so by the wilful refusal of the proper officer to certify to his sickness, from which refusal no appeal is given by the laws of the society.s

A benefit society may enforce a by-law requiring an appeal to be taken before suit brought on the membership certificate from a subordinate to a superior council or lodge, but such by-law is void in so far as it de

1 Gray v. Supreme Lodge Knights of Honor, 118 Ind. 293.

2 Millard v. Supreme Council American Legion of Honor, 81 Cal. 340.

3 Supreme Sitting Order of the Iron Hall v. Stein, 120 Ind. 270.

clares the decision of the appellate tribunal final so as to bar a resort to the courts.' A by-law of a mutual benefit society which provides that a member claiming benefits must make proof of loss before certain subordinate officers, and, if their decision is against him, appeal to higher officers, whose decision shall be final, is valid in so far as it requires such an appeal to be taken before suit may be brought on the membership certificate, and void in so far as it declares the decision of the appellate tribunal final so as to bar a resort to the courts. Such restrictions can only affect benefits to members of the lodge, and not benefits to which strangers were entitled by virtue of a contract made in their behalf by a member with the lodge.

§ 683. Disability, meaning of.-Where the agreement is to pay benefits to "every member who, through sickness or other disability, is unable to follow his usual

1 Supr. Council, etc., v. Forsinger (Ind.), 25 N. E. 129. A member of a mutual benefit society must resort, for the correction of an alleged wrong done to him to the tribunals of the society; and the judgment of such tribunals, when resulting fairly from the application of the rules of the society, is final. McAlees v. Supreme Sitting Order of the Iron Hall (Pa.), 13 A. 755. Plaintiffs were members of a beneficiary association which received its charter from and was subject to the laws and usages of a state association, both organizations being subordinate to a national association or council. Acting under its rules, the state association declared forfeited the charter of the first-mentioned association for non-compliance with the constitution, laws, and usages of the state council, and took the property of the latter, as provided in its charter. The general laws of the national council provided that a member of the order might appeal from the action of his state or subordinate council, pointed out the steps to be taken, and declared that the decision of a state council should be binding until reversed by the national council. No appeal to the latter was made by the plaintiffs. It was held, that a bill in equity by the plaintiffs to recover back their property so taken, on the ground that their charter had been illegally forfeited, could not be maintained until the plaintiffs had first sought the relief prayed for from the tribunals provided by the association. Oliver v. Hopkins, 144 Mass. 175; 10 N. E. 776.

2 Supreme Council of Order of Chosen Friends v. Forsinger, Ind. 25 N. E.

Strasser v. Stoats, 13 N. Y. S. 167.

business," the society must pay benefits to a member who becomes a lunatic.1

§ 684. Fraud of certificate holder-Failure to designate beneficiary.—If a member has paid assessments as demanded, and complied with all the requirements of the constitution and by-laws, the fact that no certificate has been issued to him, and that he has not designated a beneficiary, cannot be set up to defeat his action.2

A provision in a certificate that "no question as to the validity of an application or certificate of membership shall be raised, unless such question be raised within the first two years from and after the date of such certificate of membership, and during the life of the member therein named," embraces the defence of fraud of the insured and beneficiary in obtaining the certificate.3

Where the rules of a mutual aid society forbade the insurance of any person over 50 years old, and the agent thereof and the insured, both knowing of this restriction, conspired together to falsely represent that

1 McCullough v. Expressmen's Mut. Ben. Ass'n (Pa.), 19 A. 355.

Where the object of an association was to relieve its members while they are unable to work by reason of sickness, or injury, total inability to labor, provided for by the constitution, was held not to mean inability to labor at the same occupation, but if the member is able to work at other employments the benefits do not accrue. Baltimore & Ohio Employees' Relief Assn v. Post, 122

Pa. St. 579.

The constitution of a relief fund association provided that a member "permanently disabled from following his or her usual or other occupation" was entitled to a benefit; and in another section defined such inability as one which should permanently prevent the member from following any occupation whereby he or she can obtain a livelihood." It was held, that one who, disabled from his own profession, had been working at another totally dissimilar one, was not entitled to a benefit. Albert v. Order of Chosen Friends, 34 Fed. Rep. 721.

2 Bishop v. Grand Lodge, 112 N. Y. 627.

3 Wright v. Mutual Ben. L. Ass'n, 118 N. Y. 237; Vivar v. Supreme Lodge of Knights of Pythias (N. J.), 20 A. 36.

the applicant was under 50 years, the company was held not bound by the agent's acts.1

§ 685. Various defensive matters. The defences are as various and numerous as in other actions on contract, and the general rules governing liability and discharge therefrom must be consulted. Payment to the trustee of the beneficiary designated in the policy, and having the same in possession, constitutes a defence, as does a forfeiture or assignment of the contract by the insured during his lifetime. But when a forfeiture is relied upon it must be clearly established according to the contract or by-laws, and where defendant pleads the

1 Hanf. v. Northwestern Masonic Aid. Ass'n, 76 Wis. 450; 45 N. W. 315. The benefits of Rev. Stat. Mo. 1879, secs. 5976, 5977, which declare that in certain instances misrepresentations shall not be a defence, do not apply to this class of insurance. Whitmore v. Supreme Lodge Knights & Ladies of Honor, 100 Mo. 36.

2 Butler v. State Mut. L. Assurance Co., 8 N. Y. Supp. 411.

3 The assignment is not rendered void by the fact that the insured died insolvent, when it is not shown that he was insolvent at the date of the assignment. Milner v. Bowman, 119 Ind. 448.

Stanley v. Northwestern L. Ass'n, 36 F. 75.

Where the by-laws of a mutual benefit society require written notice of forfeiture of a policy, proof of any other notice is properly excluded in an action thereon. Dial v. Valley Mut. L. Ass'n, 29 S. Car. 560.

Non-payment of assessment after loss does not defeat an action on the policy, where the non-payment is of an assessment falling due after loss of the property insured. Such provision refers to the contract of indemnity. Seyk v. Millers' Nat. Ins. Co., 74 Wis. 67; Knights of Honor v. Wickser (Tex.); 12 S. W. 175. In an action by a benevolent society against a member (an incorporator) for money loaned him, it is no defence for defendant to aver in his answer that he has been unlawfully and wrongfully expelled from all the privileges and benefits of the association, and is therefore entitled to his proportionate share of the fund with the other members, and that his share will exceed the amount of the debt sued on. Schmidt v. Abraham Lincoln Lodge, 84 Ky. 490; 2 S. W. 156. In an action on a certificate issued by a temperance order, it appeared that the member died from the excessive use of liquor; that he agreed in his written application to comply with all the requirements of the order, as a condition precedent to his being entitled to its benefits; that the certificate contained a clause in substance and effect the same as to the application. It was held, that plaintiff could not recover. Hogins v. Supreme Council of Champions of the Red Cross, 76 Cal. 109; 18 P. 125; holding also that in an action on a certificate issued by an order, it is not necessary, in order to set up a forfeiture, to show that assured was suspended or expelled from such order.

failure of the insured to pay certain assessments the burden of proof is on defendant to prove such failure.1

Whether assessments were made according to the constitution and by-laws of a benefit society is a question of law, which, being left by the court to the decision of a jury, constitutes error.2 Where the action is by an assignee, the fact that he has no insurable interest in the life of the insured does not bar his recovery, where it is shown that the insured himself procured the insurance and paid the premiums.3

It is held in Illinois though contrary to principle and the weight of authority that where the contract is pro

1 Defendant set up that the member insured had failed to pay his assessments during a certain year. Plaintiff, by reply, denied such failure, and alleged that defendant had subsequently demanded, received, and retained annual payments, and had thereby waived the alleged prior breaches. Held, that the pleading of a waiver did not admit the failure to pay assessments, and was not inconsistent with the denial of such failure. Tobin v. Western Mut. Aid Soc., 72 Ia. 261; 33 N. W. 663. In an action on a mutual benefit insurance certificate, where forfeiture on the ground of non-payment of an assessment is relied on as a defence, and non-payment of such assessment has been proven, the burden is still on defendant company to show that the assessment was regularly and properly levied according to its laws. Demings v. Supreme Lodge Knights of Pythias of the World, 14 N. Y. S. 834.

2 Bagley v. Grand Lodge Ancient Order United Workmen, 131 Ind. 498. A corporation was organized for the purpose of providing for its members in case of permanent disability, and for their dependents in case of death, by assessments to be levied on the surviving members. Its constitution provided that "all claims against the association shall be referred to the board of directors, whose decision shall be final," and that assessments shall not be made except on its authority." Held, that after the decision of the board refusing payment of a death claim no suit upon such claim could be maintained. Rood v. Railway Passenger & Freight Conductors' Mut. Ben. Ass'n, 31 F. 62.

66

3 Milner v. Bowman, 119 Ind. 448. Where a certificate provided that the benefit should be payable to E. L. V. the wife of V., or to such other person or persons as he might subsequently direct, and a similar power was given to V. by the constitution of the endowment rank, it was held that the relationship to the payee, was not material in the contemplation of the insurer, and that, as in New Jersey, it is not necessary that the payee should have an insurable interest in the life of the insured. The fact that V. knew his statement as to the relationship of E. L. V. to be false did not preclude a recovery on the certificates. Vivar v. Supreme Lodge of Knights of Pythias (N. J.), 20 A. 36.