Grimbley v. Harrold

California Supreme Court Jun 9, 1899 No. Sac. No. 541Published

Before: Britt

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Holding. A contract by a member of a benefit society to designate a specific beneficiary for an insurance certificate is valid and enforceable against the member's subsequent attempt to change the beneficiary, and such contractual disputes are subject to judicial review rather than exclusive internal arbitration.

Issues

Whether a member of a benefit society can validly contract to designate a specific beneficiary for an insurance certificate.
Whether a benefit society's internal arbitration rules can divest courts of jurisdiction over disputes involving contractual rights to insurance proceeds.
Whether a beneficiary's failure to disclose a contract to a subsequent designee creates an estoppel against the original beneficiary.

Disposition. affirmed

Quotations verified verbatim against the opinion

“a contract, when valid and not in conflict with the lawful conditions upon which the order grants the insurance, is effectual as against the subsequent attempt of the member to violate, or annul it”

“the questions whether Shelton contracted with the plaintiff, as she alleged, and, if he did, what right she acquired in the subject of the contract, pertained to the jurisdiction of the courts of the political sovereign, the state”

Synopsis

Benefit Society—Contract of Member with Beneficiary.—The valid contract of a member of a benefit society, such as the Ancient Order of United Workmen, whereby he assumes to dispose of his interest in the beneficiary fund of the order—virtually the proceeds of a policy of life insurance—and agrees not to change the beneficiary in consideration of the payment by the beneficiary of all dues and assessments against such member, if not in conflict with the lawful conditions upon which the order grants the insurance, is effectual as against the subsequent attempt of the member to change or annul it.

Id.—Beneficiary Certificate—Property Bight—Power of Judicatories.—The beneficiary certificate issued to the member, like a policy of insurance, evidences a valuable right of property, of which he may dispose by valid contract; and it is not competent for the order, while clothing the member with such right, to confer upon its internal judicatories the sole power of determining the fact and consequences of any disposition which he may make of it.

Id.—Bights of Beneficiary—Decision of Board of Arbitration—Appeal—Jurisdiction of Courts.—The decision of the board of arbitration of the order upon the rights of a beneficiary who is not a member of the order is not conclusive as to those rights; and the beneficiary is not bound to appeal therefrom to the grand lodge, but may submit to the jurisdiction of the courts of the state the questions whether the member contracted with the beneficiary, as alleged, and what rights, if any, were thereby acquired.

Id.—Presentation of Proofs—Arbitration.—The presentation of proofs by the beneficiary to the order cannot convert a hearing before a committee of the order, in whose selection the beneficiary had no choice, into an arbitration binding upon the beneficiary; and it is immaterial that such committee is called a board of arbitration.

Id.—Change o? Beneficiary—Superiority of Bight—Estoppel—Notice Putting upon Inquiry.—Upon an attempted change of beneficiary by the member, after having disposed of his rights by valid contract with a prior beneficiary, the newly-appointed beneficiary cannot claim a superior equitable right, nor an estoppel, as against the prior beneficiary, merely because no information was given as to the terms of the contract under which the prior certificate was held when its surrender was demanded by the member, it being sufficient to put the new beneficiary upon inquiry as to the ground of the claim of the former beneficiary that he had notice that the right of the member to change the certificate was denied by the prior beneficiary.

Id.—Consideration of Contract—Pleading—Evidence—Findings.— Under a complaint alleging that the consideration of the contract pleaded was the agreement of the beneficiary to pay all dues and assessments against the member, evidence that part of the consideration was that care was bestowed on the member, who was an uncle of the beneficiary, during his illness, is admissible and relevant as tending to make probable the matter averred; and a finding based upon such evidence is not prejudicial, if not within the issues, when the facts found within the issues show a' valid contract.

BRITT, C. There was evidence at the trial of this action that in the summer of the year 1894 the plaintiff, a young woman, upon the request and at the expense of one Frederick Shelton, her uncle, left her home in England and came to this state, where said Shelton resided, for the purpose of caring for him in sickness; he proposing in rather indefinite terms to make some provision for her, saying, among other things, that he had some papers he wanted her to have. Shelton was then and had been for several years previously a member of the society called the Ancient Order of United Workmen, which has for one of the purposes of its organization the payment of a sum of money —two thousand dollars—upon the death of any member “to such person as he may while living direct, according to the rules, laws, and regulations of the order”; he held the usual “beneficiary certificate,” declaring his right of membership in said order and his right to designate the beneficiary of said fund. The rules, laws, and regulations aforesaid allow any member to change his direction for payment of such money, and on August 16, 1894, Shelton surrendered the said certificate previously issued and obtained from the defendant Grand Lodge of said order the issuance of another, wherein he designated the plaintiff as the beneficiary thereunder; which new certificate he at once delivered to the plaintiff. Regarding this transaction, the plaintiff alleged in her complaint, and the court found in substance, on sufficient evidence, that at and prior to the time of the delivery of such certificate to plaintiff it was agreed between Shelton and herself that she should thereafter pay all his dues to said order and all assessments levied by it against him, and that she should be the beneficiary to receive said sum of two thousand dollars at his death, and that he would not change the certificate in that behalf; that plaintiff accordingly did pay such dues and assessments after said August 16, 1894, and until July, 1895, when the order declined to receive the same from her further, for the reason that Shelton, in April, 1895, had again changed the designation of the beneficiary of his insurance, naming the defendant Harrold, and had procured a new certificate to be issued in Harrold’s favor, although plaintiff did not con[28]sent to such change and still held the certificate of August 16, 1894, and refused to surrender the same. The court also found, though this circumstance was not alleged in the complaint, that plaintiff further undertook, as part of her said agreement with Shelton, that she would personally care for him as long as she was able, and that she performed this promise except as excused or prevented by Shelton from so doing. There were other findings that besides procuring the new beneficiary certificate of April, 1895, in Harrold’s favor, Shelton also conveyed to him other property, real and personal—all upon certain trusts which Harrold undertook to execute; that out of funds thus derived Harrold paid certain debts of Shelton and his dues and assessments as a member of said order in July and August, 1895; and that Harrold had no knowledge of any contract between Shelton and plaintiff respecting said insurance money until after Shelton’s death, but did know of her refusal to surrender the certificate she had received from Shelton or to consent to his proposed change of the beneficiary thereof. Shelton died August IS, 1895.

Grimbley v. Harrold

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