Harold Hitz Burton

“ The weight of public policy behind the general statute of South Dakota, which seeks to avoid certain provisions in ordinary contracts, does not equal that which makes necessary the recognition of the same terms of membership for members of fraternal benefit societies wherever their beneficiaries may be. This is especially obvious where the state of he forum, with full information as to those terms of membership, has permitted such societies to do business and secure members within its borders. ”

“ The fact of membership in the Ohio fraternal benefit society is the controlling and central feature of the relationship. As long as he remains a member, the terms of his membership, including obligations and benefits relating to the insurance funds of the society, are subject to change without his individual consent. The control over those terms is vested by him and his fellow members in the elected representative government of their society as authorized and regulated by the law of Ohio. Upon that law the continued existence of the society depends. ”

“ As I have pointed out, those cases which hold that assessments against fraternal policyholders in their capacity as stockholders are governed by the law of the company's domicil, have no relation to a fraternal company's obligation to a beneficiary of an insurance contract. ”

“ A New Jersey statute sought to prohibit, in the courts of New Jersey, proceedings for the enforcement of any stockholder's statutory personal liability imposed by the laws of another state, except in suits for equitable accounting, to which the corporation, its legal representatives, and all of its creditors and stockholders were to be necessary parties. ”

“ The insurance phase of this company is set apart from the fraternal phase after election to membership, even though payment of assessments levied for insurance purposes is made compulsory. The provisions of its constitution show that insurance terms and conditions are precisely like those of non-fraternal companies. Insurance funds are administered on a business basis, and they cannot be used for fraternal purposes. In short, the insurance program and activities reveal that this is an insurance company, run like other insurance companies. ”

“ Starting with the recognized validity under the law of Ohio, of Article IV, § 11 of the constitution of the petitioning society, that society has a complete defense to the present action unless such § 11 is not enforcible in the courts of South Dakota because of a contrary public policy of that State. ”

“ The contradiction in terms is apparent which would rise from holding, on the one hand, that there was a collective and unified standard of duty and obligation on the part of the members themselves and the corporation, and saying, on the other hand, that the duty of members was to be tested isolatedly and individually by resorting not to one source of authority applicable to all, but by applying many divergent, variable, and conflicting criteria. ”

“ And further: 'Where a resident of one state has by stipulation or stock ownership become a member of a corporation or association of another, the state of his residence may have no such domestic interest in preventing him from fulfilling the obligations of membership as would admit of a restricted application of the full faith and credit clause. ”

“ The more critical factors are that the society is a voluntary fraternal association 'organized and carried on solely for the mutual benefit of its members and their beneficiaries, and not for profit, and having a * * * representative form of government, and which shall make provision for the payment of benefits' in accordance with certain statutory requirements. ”

“ If they are to be followed they stand for the propositions that a state which has no interest at all, or only a minor interest in the transaction sued on, cannot, because of the mere accident of supplying the judicial forum, apply its own statute of limitations so as to defeat the terms of a contract valid in the jurisdiction where the obligation was initiated, negotiated, and completed. The two cases cast considerable doubt on Ohio's power to have applied its limitation statute had this suit been filed there ”

“ Historically, many groups of people have been drawn together naturally into fraternal organizations for social and economic reasons. Some of these have developed into those forms of fraternal benefit societies now officially recognized by many states. The relationships between the members of such societies are contractual in that they are voluntarily undertaken in consideration of the like obligations of others. ”

“ The effect of such a doctrine on the rights of states to govern themselves is graphically demonstrated by the insurance business. The five largest legal reserve life insurance companies in the United States, with total assets of approximately $15,000,000,000, have their home offices in or near New York and Connecticut. ”

“ When the Commissioner refuses to license any society, or revokes its authority to do business in this State, he shall reduce his ruling, order or decision to writing and file the same in his office, and shall furnish a copy thereof, together with a statement of his reason, to the officers of the society, upon request, and the action of the Commissioner shall be reviewable by proper proceedings in any court of competent jurisdiction within the State, * * *.'↑ 'An Act Providing for the Regulation and Control of All Fraternal Benefit Societies,' approved Mar. ”

“ The nearest that this private association's 'law' comes to being a law of Ohio is that Ohio permits but does not require it. Because the private association's constitution was incorporated by reference in the policy contract, including the constitution's 'statute of limitations,' the Court now holds that this corporate 'statute of limitations' prohibits application of South Dakota's statute of limitations. Thus the Court's holding is that an Ohio private corporation's laws have a higher constitutional standing than an Ohio law or judgment would have-unless, as seems to be true, McElmoyle v. ”

“ In accordance with the requirements for maintaining such license in good standing, the society has kept on file, with the Commissioner of Insurance of South Dakota, a copy of the society's constitution, including § 11 of Article IV, here in controversy, limiting the time for bringing suits to recover claims for benefits based upon that Article. ”

“ The decisions passing upon this comparatively narrow issue are to be distinguished from those which deal only with the well established principle ofconflict o f laws that 'If action is barred by the statute of limitations of the forum, no action can be maintained though action is not barred in the state where the cause of action arose.' Restatement, Conflict of Laws § 603 (1934) . It is to that general principle that such early cases as Hawkins v. Barney's Lessee, 5 Pet. 457, 8 L.Ed. 190, and McElmoyle v. ”

“ The decedent, on July 31, 1920, applied for membership in the society through Rapid City Council No. 516, in Rapid City, South Dakota. He was 37 years old, a manager and salesman selling 'packing products' on the road, in good physical condition and employed in an occupation of precisely the type contemplated for membership in this society. [13] He named his wife as his beneficiary in case of his death from accidental means. On August 19, 1920, he was accepted by the Supreme Council as an insured member of the society under 'Class A.' The certificate, No. ”

“ Such shorter periods, written into private contracts, also have been held to be entitled to the constitutional protection of the Fourteenth Amendment under appropriate circumstances. See Home Ins. Co. ”

“ Justice J. R. Lamar. In another unanimous opinion in Hartford Life Ins. Co. v. Barber, 245 U.S. 146, at page 150, 38 S.Ct. 54, 55, 62 L.Ed. 208, Mr. Justice Holmes said, 'The powers given by the Connecticut charter are entitled to the same credit elsewhere as the judgment of the Connecticut court. ”

“ Equitable Life Ins. Co., 8 Cir., 32 F. 273, affirmed sub nom, Equitable Life Society v. Clements, 140 U.S. 226, 11 S.Ct. 822, 35 L.Ed. 497.↑ This contrast is dramatized by the consequences to Ohio's interest in the injury which would flow from South Dakota's disregard for this contract limitation which violates South Dakota's public policy. It is certainly a tenuous thread which would link South Dakota's refusal to enforce this and similar limitaions to th e undue depletion of the corporate funds. ”