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SUPREME COUNCIL CATHOLIC KNIGHTS OF AMER

ICA V. FITZPATRICK.

[28 R. I. 486, 68 Atl. 367.] BENEFIT SOCIETY–Beneficiaries not Members of Family.Where the charter and constitution of a beneficial order provide for the payment of a benefit on the death of a member to his family or “as he may direct,” he may designate whom he will as his beneficiary, and is not limited in his choice to members of his family. (p. 753.)

BENEFIT SOCIETY—Ultra Vires Contract.—The fact that a benefit society transcends its powers in issuing a certificate to beneficiary not a member of the family of the member does not render the contract ineffectual under the statutes of Rhode Island. (p. 754.)

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Cooney & Cahill, for the complainant.
Hugh J. Carroll, for respondent Quinn.
Gorman, Egan & Gorman, for respondent Fitzpatrick.

486 DOUGLAS, C. J. This is a bill of interpleader brought to determine the ownership of a fund of two thousand dollars paid into court by the supreme council of the Catholic Knights of America as the proceeds of a benefit certificate issued to William Quinn, a member of a local branch of that order, payable at his death.

The claimants are Patrick Fitzpatrick, Jr., who is named as beneficiary in the certificate, on the one part, and the children of Quinn on the other.

The evidence shows that Quinn, being embarrassed pecuniarily and being in arrears for his dues to the order, after negotiations with Fitzpatrick and others, sold his interest in the benefit certificate which he held, in which his wife, then deceased, was named as beneficiary, and, with the approval of the local branch, surrendered it, and thereupon the supreme 487 council issued the certificate now under consideration, in which, at Quinn's request, Fitzpatrick was named as beneficiary.

On receipt of the certificate Fitzpatrick paid Quinn one hundred and fifty dollars in money, paid to the local branch the dues in arrears, and agreed to pay all future dues during the lifetime of Quinn, and to pay the further sum of one hundred dollars for his funeral expenses, or, if the expenses should be less than one hundred dollars, then the balance of that sum to Quinn's heirs. These obligations have been fulfilled.

The counsel for the heirs of Quinn contends that the transaction by which Fitzpatrick was constituted the beneficiary was void, and hence that the fund belongs to the heirs. He argues that the certificate is void under the charter and constitution of the corporation and by the laws of Rhode Island.

In the first contention he is refuted by the documentary evidence in the case. The charter of the order in force at the time of this transaction specifies as one of the objects of the order, “to establish and maintain a benefit fund, from which a sum not to exceed five thousand dollars shall be paid at the death of each member to his family, or be disposed of as he

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may direct."

The constitution provides (Part 6): "The objects of the order shall be to establish a Benefit Fund, from which, on satisfactory evidence of the death of a beneficiary member of the order, a sum not exceeding two thousand dollars shall be paid to the beneficiaries of male members, and a sum not exceeding one thousand dollars shall be paid to the beneficiaries of female members, as he, or she, may have directed in his or her Benefit Certificate."

(Par. 165.) “Each member, at his initiation into the Order, shall have a Benefit Certificate issued to him free of charge. Each member may enter upon his application the name, or names, of the members of his family, or those to whom he desires the benefit paid, and they shall be entered in the Benefit Certificate according to said direction, and in accordance with Paragraph 6. A member may at any time, when in good standing, change his beneficiary, upon comply. ing with the requirements hereinafter provided, and upon surrender of his Benefit Certificate and payment of a fee of fifty cents, etc.

488 This language plainly gives to the member to whom the certificate is issued the right to nominate a beneficiary either in his family or outside of it. The argument of counsel that the words should be construed to give the option of choice only among the member's family so long as he leaves blood relations is fanciful and unconvincing.

In discussing very similar provisions in Highland v. Highland, 109 Ill. 366, the court say (page 374): “No doubt it is an object to provide a widows' and orphans' benefit fund, and it will remain as such a fund, unless the member directs to the contrary. But notwithstanding the description as a "widows' and orphans' fund,' it is equally the purpose that

Am. St. Rep., Vol. 125–48

the member should have the power of directing to whom pay. ment of his benefit should be made, as that the fund should be for the benefit of his family. The language that the sum shall be paid to the member's ‘family, or as he may direct,' gives to him in the most plain terms the power of absolute direction to what person or persons the payment shall be made. Evidently the language of the charter will not bear the construction which appellant's counsel would place upon it."

The same construction is adopted in Gentry v. Supreme Lodge, 23 Fed. 718; Independent Order v. Allen, 76 Miss. 326, 71 Am. St. Rep. 532, 24 South. 702; Delaney v. Delaney, 175 Ill. 187, 51 N. E. 961; Supreme Lodge K. of H. v. Martin, 16 Phila. 97; Sabin v. Phinney, 131 N. Y. 423, 30 Am. St. Rep. 681, 31 N. E. 1087; Berkeley v. Harper, 3 App. Cas. (D. C.), 308; Lamont v. Hotel Men's Mut. Ben. Assn., 30 Fed. 817; Brown v. Brown, 6 Misc. Rep. 433, 27 N. Y. Supp. 129, and many other cases.

“In all cases the member may have as broad a range of choice in selecting his beneficiary as the organic law of his society gives him. If there is nothing in the charter or bylaws of the organization, or in the statutes of the state, restricting the appointment, the member may designate whomsoever he pleases, and no one can question the right”: 1 Bacon on Benefit Societies, sec. 246.

The second branch of the argument of counsel for the Quinn heirs is, if we understand it, that the scope and intention of the establishment of the fund is the benefit of the family of the member; that the power of the organization in the management 489 and distribution of the fund is restricted to the promotion of the welfare of the member and his family, and that when the order issues such a certificate as is now before us, it transgresses the limits of its legitimate powers and becomes in effect a simple life insurance company, and hence becomes liable to the provisions of the statutes which apply to such companies. Without discussing the merits of this argument we may say that, if the position is tenable, it does not nullify the contract.

Chapter 182, General Laws, “Of Foreign Insurance Companies and of the Insurance Business Generally," provides (section 17), as follows: “If any insurance company, cooperative or otherwise, shall make insurance without complying with the provisions of this chapter the contract shall be valid," etc.

We conclude, therefore, that the certificate as issued was valid under the organic law of the order and under the statutes of this state, and that the defendant Fitzpatrick is entitled to the fund in the registry of the court.

The appeal is dismissed, the decree of the superior court is affirmed, and the cause is remanded to the superior court for further proceedings.

A Member of a Benefit Society may Designate whomsoever he pleases as his beneficiary, where there is nothing in the charter, constitution or by-laws of the organization restricting his right of designation: Independent Order etc. of Jacob v. Allen, 76 Miss. 326, 71 Am. St. Rep. 532; Sabin v. Phinney, 134 N. Y. 423, 30 Am. St. Rep. 681; note to Bankers' etc. Assn. v. Stapp, 19 Am. St. Rep. 788.

IN RE PROVIDENCE JOURNAL COMPANY.

[28 R. I. 489, 68 Atl. 428.] FREEDOM OF PRESS.-It is the Right of a Newspaper, as of any citizen, in public or in private, to discuss the opinions of a court, to criticise their reasoning or to question by sober argument the soundness of their conclusions, but not to misstate these conclusions. (p. 758.)

NEWSPAPER CONTEMPT_Publication of Court Decisions.When a newspaper takes up the task of informing the public of the decisions of courts, it holds itself out to be equipped with suitable instruments for that work; the task, though a very proper one, is self-assumed, and is undertaken at the peril of the publisher. (p. 758.)

NEWSPAPER CONTEMPT-Publication of Court Decisions.A newspaper of general circulation which, through the recklessness or incompetence of persons in its service, publishes an editorial misstating an opinion that has been rendered by the supreme court, may be adjudged guilty of contempt. (p. 759.)

Edwards & Angell, for the respondent.

490 PER CURIAM. The opinion in Supreme Council Catholic Knights of America v. Fitzpatrick, 28 R. I. 486, ante, p. 752, was delivered December 17, 1907. On the morning of December 19, 1907, on the editorial page of the “Providence Daily Journal," a newspaper of general circulation in Rhode Island and elsewhere, published by the respondent corporation, appeared the following article:

“FRATERNAL ORDERS AND INSURANCE. That an ordinary life insurance policy is a negotiable instrument is well recognized. All that is necessary to make it transferable is the consent of the prospective beneficiary. An opinion of the Rhode Island Supreme Court in the matter of a benefit certificate of the Catholic Knights of America sustains the right so to dispose of a fraternal insurance policy, even where such organization, through its charter and bylaws provides against transfer of the benefits to one not of blood relation to the members. The circumstances of the case as tried in an equity action are familiar in life insurance practice. A member of the order had transferred his policy, the consideration being that it be kept alive by the payment of certain defaulted and all subsequent assessments. The Court holds that the charter provision of the order, which would exclude the arrangement described, is ‘fanciful and unconvincing.' It is, of course, clear that the intent of the policy, that it be devoted to the welfare of the member's family, is thus defeated. The Court, however, maintains that the higher consideration of integrity of contract should determine the issue.”

As soon as this article came to the knowledge of the court it directed a citation to be issued to the “Providence Journal Company” requiring it to show cause why it should not be 491 adjudged guilty of contempt for publishing a false statement of the decision.

The respondent appeared by attorney in answer to the citation, and presented the following statement:

“The Providence Journal Company, appearing in obedience to the citation in this matter issued out of this Honorable Court on the 19th day of December, A. D. 1907, and showing cause, as commanded in said citation, why it should not be adjudged in contempt, respectfully says:

"First. It admits the publication of the Article set forth in said citation and further admits that said Article is an erroneous statement of the opinion handed down by this Court on the 17th day of December, A. D. 1907, in the cause entitled Supreme Council Catholic Knights of America v. Patrick Fitzpatrick, Jr., et al.

“Second. It avers, nevertheless, that the erroneous statements in said article contained were made entirely through misunderstanding and misapprehension of the language used by the court in said opinion and not with the purpose or intent to reflect upon the Court, or upon either of the parties to said cause, nor in any other manner to embarrass or corrupt or interfere with or obstruct the due administration of justice.

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