THE PACIFIC REPORTER VOLUME 180 UB: LATHROP et al. v. FRANCIS. (L. A. 4680.) (Supreme Court of California. April 4, 1919.) 1. VENDOR AND PURCHASER 341(2)-REPUDIATION OF CONTRACT BY VENDOR-ACTION TO RECOVER MONEY PAID-PLEADING. In an action to recover money paid under a contract of sale of land, repudiated by vendor, complaint held to state a cause of action. 2. ATTACHMENT 225- MOTION TO DISCHARGE-SCOPE OF HEARING. A motion to discharge a writ of attachment cannot be made to perform the office of a de murrer to the complaint. Department 2. a certain supplementary contract was exécuted by Mary F. Francis and the West Virginia Oil Company modifying the contract of July 29, 1911, by extending the time of pay ment of certain of the installments of the purchase price; and that thereupon the corporation paid to Mrs. Francis $5,000 principal and $600 interest on the purchase price of $70,000. This sum, together with the $10,000 previously paid, nominally by Good, but really by the corporation, his assignee, makes up the sum of $15,600, for recovery of which the respondents insist was stated a cause of action justifying the issuance of the writ of attachment. Under the contracts set forth in the complaint the oil company entered into posses Appeal from Superior Court, Kern Coun- sion of the property and expended $70,000 in ty; Milton T. Farmer, Judge. an endeavor to develop oil. Both before and after the acquisition by the West Virginia Oil Company of Mr. Good's interest, Mrs. Francis had represented to that corporation that her right, title, and interest in said land was unincumbered by any claims or con C. E. Arnold and Matthews S. Platz, both tracts; whereas, there was at all said times of Bakersfield, for appellant. Geo. E. Whitaker, of Bakersfield, for respondents. MELVIN, J. Defendant appeals from an order refusing to dissolve an attachment for $15,600. an outstanding contract, executed by defendant's predecessor in interest, giving to one Fox a lease with an option to purchase, and the existence of said agreement was not known to the corporation before it had made the payments above described and had expended the $70,000 for development. Upon hearing of the defect of the title the officers of the corporation refused to make further payments, and on October 1, 1912, Mrs. Francis notified the West Virginia Oil Company, in writing, that all of its right, title, and interest to the land had been forfeited. Thereafter she re-entered into possession of the property and held it at the time of the institution of the action. Plaintiffs are trustees in liquidation of the West Virginia Oil Company. From the allegations of the complaint it appears that on June 10, 1911, defendant sold to one E. S. Good an option to purchase certain described land in Kern county; that in the following month said Good agreed to sell said option to the West Virginia Oil Company; that on July 29, 1911, defendant and Good entered into a written contract whereby she agreed to sell and he promised to buy all of her right, title, and interest in and to said property for a certain sum, a part of which, namely, $10,000, was then and there paid; that on January 9, 1912, E. S. Good executed | 000 expended in development work. and delivered to West Virginia Oil Company Respondents concede that the action for an assignment of all his interest in the last- the $70,000 is not based upon a contract for named contract; that on January 29, 1912, the direct payment of money by the defend There were allegations that the false representations regarding title were fraudulently made by Mrs. Francis. The plaintiffs demanded and prayed judgment for the $15,600 paid under the contracts and for the $70, For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes 180 P.-1 The local camp clerk having no power to waive requirements of law of defendant society as to time of payment of assessments or consequences thereof, failure of insured to pay assessments as required operated ipso facto to remove him from good standing and suspend his benefit certificate. ant. Their position is that they have joined, [ 2. INSURANCE 756(1)—FRATERNAL INSURas they have the right to do, an action sound- ANCE-SUSPENSION OF BENEFIT CERTIFICATE. ing in tort with one based upon an implied contract (subdivision 8, § 427, Code Civ. Proc.; Jones v. Steamship Cortes, 17 Cal. 487, 79 Am. Dec. 142); that when defendant chose to rescind, as they claim, the written agreement of sale,. there af once arose an implied contract to repay the installments of the purchase. price and interest; and that such an agreement is one upon which suit may be brought and attachment may be levLed for the amount involved. 3. INSURANCE 761 FRATERNAL INSUR ANCE-REINSTATEMENT. Statement in application for reinstatement in defendant fraternal organization, "I certify, bodily health," was one upon the literal truth warrant, and represent that I am in good sound or fulfillment of which validity of contract depended, and amounted to a warranty, so that there was no effective reinstatement where warranty was absolutely false. 4. INSURANCE 763-FRATERNAL INSURANCE - WARRANTY IN APPLICATION FOR REINSTATEMENT-FALSITY-ESTOPPEL. [1] Defendant's counsel insist that the complaint is fatally defective, in that it does not state facts sufficient to show that defendant has made any breach of her contract, and in this behalf they assert that any allegations concerning her representations of unincumbered title to the land are attempts to vary the terms of written contracts by averments of oral statements, because by her writings she promised not a full title but only such right, title and interest as she possessed. But this is not an action to rescind a contract. It is asserted that defendant has repudiated the contracts evidenced by the writings, and the part of the pleading with which we are here concerned has only to do with the alleged implied contract to repay the money received under. the agreements now 5. INSURANCE 763-FRATERNAL INSURANCE claimed to be canceled. [2] Large portions of the briefs of appellant's counsel are devoted to discussions of the alleged infirmity of plaintiffs' pleading. In this connection it is sufficient to call attention to the rule that a motion to discharge a writ of attachment cannot be made to perform the office of a demurrer. Hale Bros. v. Milliken, 142 Cal. 134, 75 Pac. 653; Pajaro Valley Bank v. Scurich, 7 Cal. App. 732, 95 Pac. 911. No other matters require analysis. We concur: LENNON, J.; WILBUR, J. VALENTINE v. HEAD CAMP, PACIFIC (Supreme Court of California. April 4, 1919.) In view of limitations upon the powers of local camp clerk under laws of defendant fraternal organization, he could not by any course of conduct or possession of knowledge of insured's bodily health bind defendant in such manner as to estop it from defending upon the ground that warranty of insured as to bodily conditions in application for reinstatement was false. REINSTATEMENT EFFECTIVENESS TOPPEL. -- Es The rights of the parties became fixed upon death of insured, and retention by local camp clerk of defendant fraternal order of money paid by insured's wife upon attempted reindeath, at which time the Head Camp had no statement, made a few days before insured's knowledge of the payment, would not constitute a waiver or estoppel on the part of defendant to dispute effectiveness of reinstatement. In Bank. Appeal from Superior Court, Alameda County; N. D. Arnot, Judge. Action by Flora A. Valentine against the Head Camp, Pacific Jurisdiction, Woodmen of the World. Judgment for plaintiff, and defendant appeals, Reversed. Robinson & Robinson and Harry L. Price, all of Oakland, and J. C. Nichols, of Berkeley, for appellant. San Francisco, and Wilder Wight, of Oak- 1. INSURANCE 755(2) FRATERNAL INSUR-land, for respondent. ANGELLOTTI, C. J. This action was In view of laws of defendant mutual frater- brought by plaintiff to recover upon a franal organization, held, that local camp clerk ternal benefit certificate issued by defendwas nothing more than a special agent of de-ant to her husband, Clarence A. Valentine, fendant with defined powers known to mem bers, so that he could not waive any requirements of the law of the organization or by any act or course of conduct create an estoppel against defendant. which provided for payment to her upon his death, if then in good standing, of the sum of $3,000. Judgment was given in favor of the plaintiff by the trial court and we have here an appeal by defendant from such judging. This requirement, which was one esment. sential to the maintenance of the mutual The defendant is a mutual fraternal or- benefit fund from which assessments were to ganization maintained on the lodge plan, be paid, was emphasized by repeated provipurely for the mutual benefit of its mem- sions in the constitution and by-laws of debers, and, among other things, to provide fendant, as well as in the benefit certificates and maintain, by means of assessments on issued by it. Apparently the only exception its members a benefit fund from which is provided was one for the benefit of a mempaid to designated relatives or dependents ber who, while in good standing, becomes of each deceased member who is in good sick or disabled, and while still in good standing at the time of his death, such sum, standing properly notified the clerk of the either $1,000, $2,000, or $3,000, as is specified local camp thereof. Such a member may be in his benefit certificate. It consists of a carried by such local camp for a limited time; national or supreme body known as the the latter remitting to the Head Camp from Head Camp, and local organizations or lodg- the local camp funds the amount of his ases, known as camps. As is usual in this sessments as the same accrue. This provikind of association, the supreme authority sion, however, has no materiality here. From of the association is vested in the supreme May, 1911, until two days before his death, body, the Head Camp, which at its Head | Mr. Valentine was continuously delinquent in Camp sessions composed of the officers of the supreme body, delegates from the local camps, and past head consuls, made its laws, elected its officers, etc. The matters of the issuance of benefit certificates, levy of assessments, etc., were in the hands of the Head Camp; the business relative thereto being conducted by the officers of the Head Camp in accord with the provisions of the constitution and by-laws adopted by the Head Camp sessions. The collection of the assessments was in the hands of the local camps, and particularly of the clerks of the local camps, who received from the members of their respective camps amounts due for assessments and local camp dues, forwarding the former as collected to the proper Head Camp officers, who were required to keep the accounts showing the situation as to each member. his payments on account of assessments to the clerk of the local camp, making small payments on account thereof from time to time to the clerk of the local camp to some time in June, 1912. The clerk of the local camp, in violation of the laws of the order, had continued to carry him as in good standing to August 1, 1912, at which time several assessments remained unpaid by him, the amount of all of which, however, except that due for July, 1912, had been advanced for him by the clerk of the local camp, and forwarded by such clerk to the Head Camp to his credit, with the result that, in so far as the Head Camp was informed, he was regularly paying his assessments as required by the laws of the order. The amount of the assessment due in July, 1912, was not so advanced by the clerk, nor forwarded to the Head Camp. On August 14, 1912, such Mr. Valentine became a member of de- clerk in his report sent to the Head Camp fendant association in the year 1901, his reported Mr. Valentine as delinquent for benefit certificate being dated January 16, failure to pay the July assessment. So far 1901, and subsequently affiliated with the as appears in the record, this was the first local camp at Oakland, Cal., known as "Bay intimation to the Head Camp of any delinTree Camp, No. 640." He died on August quency at any time on the part of Mr. Valen22, 1912. The controversy in this case is as tine; the reports theretofore received showto his good standing as a member of de- ing him as regularly paying all assessments. fendant association at the time of his death, On August 17, 1912, while engaged in his the terms of his benefit certificate expressly trade as a carpenter, he fell from a ladder a providing, as required by the constitution of distance of about 20 feet. His neck was the order, that the beneficiary is entitled to broken by this fall. The full extent of his "participate in its benefit fund after his injury was not at once known, and in view death when in good standing and not other- of the findings of the trial court it will be wise," and that the certificate will not be assumed that it was not known until after in force at any time when the member August 20, 1912. He was taken to a hospistands suspended and is not in good stand- tal, where he remained until August 22, ing pursuant to the constitution and by- 1912, when he died as a result of the injury. laws "now in force or hereafter regularly On August 19, 1912, Mrs. Valentine paid to adopted and in force at the time of his the clerk of the local camp all amounts ac death." To remain in good standing it was cruing for assessments and dues to Septemimperatively required by the constitution ber 1, 1912, including the July assessment, and by-laws of the order that the member the total so paid being $23.20. On August pay to the clerk of his camp every assess- 20, 1912, she paid such clerk the further sum ment levied and called during the month in of $2.95 as advanced assessment for Septemwhich it is payable; failure to do this ipso ber, 1912. The law of the order provided facto putting the member out of good stand- that a suspended benefit member could be come reinstated within a limited time after his suspension by complying with certain specified conditions, and not otherwise, one of which was the delivery by the member to the clerk of the local camp of an application for reinstatement, certifying, warranting, and representing that he was then "in good, sound bodily health," and another of which was the payment of all arrearages. The benefit certificate in terms provided, as required by the laws of the order, that if any assessment was not paid within the time allowed, "then this certificate shall be null and void and continue so until he is reinstated as required by the Head Camp constitution and by-laws of his camp." When the payment of August 19th was made by Mrs. Valentine, the clerk of the local camp informed her that a reinstatement application must be signed by Mr. Valentine and delivered to him, and he furnished Mrs. Valentine a form for that purpose, which he himself had filled in with name and date. It was not the form prescribed by the laws of the order, the difference being in the omission of a final paragraph to the effect that the member agreed that the representation of present sound bodily health is a strict warranty, and that, if his death occurred within one year as the result of any disease with which he was then afflicted, no beneficiary shall be entitled to receive benefits. The constitution provided in effect that no reinstatement could be accomplished except by the presentation of an application in the exact form required thereby. Mrs. Valentine procured Mr. Valentine's signature to this application so furnished and delivered it to the clerk the next death of Mr. Valentine. His statement that he informally offered to return the money is disputed by Mrs. Valentine. However, he did within a day or two of Mr. Valentine's death advance Mrs. Valentine $50, none of which has been returned. No Head Camp officer had any notice or knowledge of any attempted reinstatement until after the death of Mr. Valentine. At the time Mr. Valentine became a member of the order the constitution of defendant provided in express terms, as it has ever since, that "camp clerks and bankers are by this constitution expressly made agents of the camp and of the several members thereof, and not agents of the Head Camp." As amended and revised at the Head Camp session in 1910, which it will be observed was prior to any delinquency on the part of Mr. Valentine, the constitution was made to provide with relation to "every benefit certificate" "that no agent or representative of this society nor any officer or member of a local camp has the right or power, by any statement, agreement or promise, or by any method of transacting business with its members, to waive a strict observance and compliance with the laws, rules and regulations of this society as set forth in this constitution, and by-laws of his camp, and such amendment or alteration therein as may be hereafter made." It was expressly declared in the section including this provision, among others, that the conditions enumerated "shall apply to every benefit certificate and shall be binding on both the members and this order." Section 118. At the same time it was provided in section 130 that noncompliance with any of the conditions named in day. This application, as required by the the laws of the society shall be an absolute law of the order, stated: bar to any claim on the benefit fund thereof "under or by virtue of any benefit certificate that may have been issued, or that may hereafter be issued to an applicant, or by reason of any steps taken by an applicant to entitle him to the same, or by a subordinate camp or member thereof, and no officer or member of the Head Camp has any authority to change, alter, modify, or waive the foregoing requirements, or the consequences thereof in any manner." When the payments were made and the application for reinstatement was delivered by Mrs. Valentine to the clerk of the local camp, the latter was informed by her of the accident and that Mr. Valentine was seri- The theory upon which the trial court ously injured. The evidence fairly shows awarded judgment to plaintiff was twofold, that there was then no attempted conceal-being: First, that the imperative conditions ment of any of the facts from the clerk, and that no one then knew that the neck was "broken." But the clerk did know from the information given him that Mr. Valentine was not in "sound bodily health." Unquestionably his sympathies were with Mrs. Valentine in the effort to put Mr. Valentine in good standing. The amounts paid by Mrs. Valentine in August, 1912, were never forwarded to the Head Camp by the local clerk, but appear to be still in his custody. This and provisions of the laws of the order and the benefit certificate in the matter of the payment of assessments, etc., were waived by defendant by the course of conduct in receiving payments from Mr. Valentine from May, 1911, notwithstanding his delinquency, with the result that he was in good standing at all times up to the time of his death; and, second, that if out of good standing because of nonpayment of assessments, he was reinstated August 20th, and died in that, in the face of the provisions of the constitution we have quoted, the local camp clerk could waive any requirement of the law, or, by any act or course of conduct, create any estoppel against defendant. See Hartman v. National Council, 76 Or. 153, 147 Pac. 931, L. R. A. 1915E, 152. As was held in Northern Assurance Co. v. Grand View Bldg. Ass'n, 183 U. S. 308, 22 Sup. Ct. 133, 46 L. Ed. 213, it is competent for parties to provide in an insurance policy that the power of agents of the company be limited, and where a limitation is expressed it is binding in the absence of waiver or ratification by the company with knowledge of the facts. This is the settled doctrine in California both as to ordinary life insurance companies (see Elliott v. Frankfort Ins. Co., 172 Cal. 261, 156 Pac. 481, L. R. A. 1916F, 1026) and as to fraternal insurance societies (Marshall v. Grand Lodge, 133 Cal. 686, 66 Pac. 25). [1] It cannot be doubted that the laws of | but only agents of their local camps and of the defendant constituted a part of the con- the several members thereof. tract between Valentine and defendant (see In view of these provisions it cannot be Butler v. Grand Lodge, 146 Cal. 172, 175, 79 held that the local camp clerk was, to use Pac. 861), or that Valentine was charged the language of Marshall v. Grand Lodge, with full knowledge of the provisions of the 133 Cal. 686, 692, 66 Pac. 25, 27, "anything constitution of defendant (see Supreme more than a special agent of defendant with Lodge v. Price, 27 Cal. App. 607, 616, 150 Pac. defined powers which were known to the 803). These propositions are so well settled members." Whatever force there may be as to require no citation of authority. In in the theory, that, notwithstanding a prothis connection it must further be held that vision declaring a local camp officer to be the express provisions written into the con- the agent of the members, and not of the stitution of defendant in 1910 to the effect Head Camp, the law will nevertheless hold that no officer or member of a local camp him to be the agent of the Head Camp for or of the Head Camp has any power or au- the transmission of money properly paid thority to waive any of the requirements him by a member in accord with the law of of the constitution or the consequences the society (see Knights of Pythias v. Withthereof in any way were applicable. As we ers, 177 U. S. 260, 20 Sup. Ct. 611, 44 L. have seen, under the terms of the original Ed. 762), both principle and the great contract, the power to amend the constitu- weight of authority preclude a conclusion tion and by-laws was expressly reserved, and the question of good standing at the time of death was to be determined in accord with the provisions of the constitution and by-laws as they then were or might be subsequently amended. The amendments, as applied to Valentine's case were prior to any delinquency and were not such as to impair any vested right. They were mere regulations of the internal affairs of the society, in no degree affecting any right of the insured under his contract or in any way impairing the substance of his contract. They simply put into clear and unambiguous express provisions of the constitution a limitation upon the power and authority of any officer or member of a local camp, or any officer of the Head Camp, to waive any of the requirements of the contract. Perhaps this limitation was fairly inferable before, but in view of the amendments we need not discuss that question. The power of the Head Camp to make such amend[2-4] The local camp clerk having no powments applicable to those already members er by any course of conduct to waive the reand to the benefit certificates of such mem- quirements of the law of the society as to bers, in so far as all future conduct was the time of the payment of the assessments concerned, cannot be doubted. We have in or the consequences thereof, the failure of mind the rule enunciated in many states, in- Valentine to pay assessments as required cluding this state (see Bornstein v. District operated ipso facto to remove him from Grand Lodge, 2 Cal. App. 624, 628, 84 Pac. good standing, and consequently as a sus271), to the effect that alterations in the pension of his benefit certificate. See Butler laws will not be construed to operate retro- v. Grand Lodge, 146 Cal. 172, 79 Pac. 861; spectively unless the intent that they shall Marshall v. Grand Lodge, supra. This was so operate clearly appears. But we give the situation when he was injured on Auto these amendments in applying them to gust 17, 1912. Unless reinstated prior to Valentine's case no real retrospective or re- his death, he was not in good standing at troactive operation. And we further are of the time of his death, with the result that, the opinion that the intent to make the under the terms of his benefit certificate, amendments applicable to every benefit cer- his beneficiary could not participate in the tificate outstanding was clearly and definite- benefit fund. The question, then, is whethly expressed. In addition to these express er there was an effective reinstatement. It provisions of the amendments we have the seems perfectly clear to us that this quesprovision of the constitution that was in tion must be answered in the negative. Such force when the benefit certificate of Valen- a reinstatement could be accomplished only tine was issued, to the effect that camp by a full compliance with the law of the clerks are not agents of the Head Camp, society relative to reinstatement. Butler v. |