BROTHERHOOD ACCIDENT CO. v. LINEHAN

Streeter, Walker Hollis, for the plaintiffs. The defendant says that, while the statute of 1895 does not apply to the plaintiffs, they are subject to the burdens imposed by chapter 56, Laws 1891. This raises the question whether the legislature, after having repealed the statute of 1891 by section 15, Laws 1895, so far as it applied to fraternal beneficiary societies, intended in the next sentence to revive it so far as Masonic and Odd Fellow beneficiary societies are concerned. It would seem more probable that the intention was to leave these benevolent societies subject to no supervision by the commissioner, and to make that intention emphatic it was provided that "nothing herein contained shall apply to or in any way interfere with" such societies. The evident purpose was to confer a benefit upon them, to encourage and foster their growth and formation, and not to interfere with them in any way. The fact that the repealing clause occurs in the first part of the section and before the exempting clause — a very unusual position — is evidence that the legislature understood that all previous legislation relating to fraternal beneficiary associations was repealed, and that they then desired to exempt the societies specified from the provisions of the new act.

The statute of 1891 is a very stringent statute, while the statute 1895 is a very liberal one. Did the legislature of 1895 intend to apply the former statute to Masonic and Odd Fellow societies, and the latter to all other fraternal beneficiary associations? It may admit of serious doubt whether chapter 56, Laws 1891, ever applied to societies like the plaintiffs. If it was not intended to apply to them, it follows that it cannot now have that effect. It is a matter of common knowledge that at the time of that enactment so-called assessment bond societies were very numerous. For a very small sum of money they agreed to pay their members a very large sum of money in a very short time. The business they carried on was not based upon sound business principles, and consequently resulted in defrauding innocent people whose desire to acquire money blinded them to the inherent defects in the system, or induced them to engage in a scheme which was nothing more or less than a gambling venture. To suppress these societies and to prohibit their continuance, the legislature of 1891 enacted the statute in question. Before such a society could do business it was obliged to satisfy the commissioner that it was "reliable and worthy of public patronage, "that its "methods are worthy of public patronage, and that such corporation . . . is reliable and entitled to public confidence." Thereupon it might obtain a license to do business, which the commissioner was authorized to issue in his discretion. The effect of this law was that all the bond companies doing practically a gambling business were at once driven out of the state, and the business was effectually suppressed.

Whether this enactment applied to fraternal. beneficiary associations, conducting their business upon the lodge system and composed exclusively of Odd Fellows, is a question of grave doubt which we do not propose to argue at this time; for, assuming that it might be construed to apply to them, the question is: Has it had any such application since 1895? In other words, did the legislature of that year intend to provide that all other fraternal beneficiary societies organized under the laws of some other state shall be admitted to do business within this state upon filing with the commissioner certain statements, and that the commissioner shall thereupon "issue to such association a permit in writing authorizing such association to do business within this state," and at the same time and as a part of the same act provide that a fraternal beneficiary association composed of Odd Fellows could only do business here upon satisfying the commissioner that its methods were "worthy of public patronage," and that it was "reliable and entitled to public confidence, "provided he could then be induced to grant a license? In the one case the commissioner has no discretion but to grant the society a license or permit when the necessary statements are filed; but in the other it is his duty before granting a license to determine whether in his opinion the society's methods are prudent and entitled to public confidence. Under the law of 1891 he can arbitrarily refuse a license; while under the law of 1895 he cannot refuse a license to a fraternal beneficiary society which has furnished him with the required statements. Under the later statute he cannot exclude an applicant on the ground that its operating expenses are too large, or on the ground that it is not in his judgment "reliable and entitled to public confidence."

The former statute lodges very extreme and arbitrary power in the commissioner; while the latter statute gives him little or no authority, so far as the exclusion of fraternal beneficiary societies is concerned.

In view of this analysis of the two statutes, it is inconceivable that the legislature of 1895 should single out fraternal beneficiary societies composed of Odd Fellows, or Masons, or others insuring members of a particular class, and say that these bodies should exist or not according to the mere will or caprice of one man, while all other fraternal beneficiary societies should be entitled to exist and do business in this jurisdiction upon filing with the commissioner certain information relating to their methods of doing business. If there is no reason for such a palpable discrimination, and if, as we believe, the discrimination ought to be the other way, then it is submitted that the evidence deduced from the practical operation of the two acts shows that the legislature of 1895 did not intend to leave the excluded societies subject to the statute of 1891, and that the latter statute was repealed so far as it related to fraternal beneficiary societies.

Suppose a corporation is organized in Montana for the sole benefit of its members and beneficiaries, and not for profit; its membership consists of everybody who may desire to join; it works upon the lodge system, with a ritualistic form of work and representative form of government; it issues certificates for the payment of money upon the happening of certain contingencies, and raises the necessary money by assessment upon the members. Its system of business may be essentially a fraudulent, gambling scheme; and yet upon the defendant's theory, this society, which is not entitled to public patronage and would be refused a license if the statute of 1891 were applicable, may foist itself upon the people of this state under the liberal provisions of the law of 1895, while a fraternal beneficiary order of Odd Fellows, organized in New Hampshire or Massachusetts and paying accident benefits, may not be allowed to exist except at the special favor the commissioner, granted in accordance with the statute of 1891. This may be the defendant's theory of statutory construction; but we confidently submit that the legislature never intended such an absurd result, and therefore never enacted such legislation.

Chapter 86, Laws 1895, and the statute of 1891 cannot stand together in their application to fraternal beneficiary societies: (1) because the statute of 1895 purports to be an entire revision of the law relating to such societies; (2) because it in terms repeals all inconsistent legislation; (3) because it then exempts certain societies from its provisions; and (4) because the apparent legislative purpose to especially encourage such societies forbids such a construction. It has always been the policy of this state, as shown by the history of legislation, to encourage and promote the formation and incorporation of benevolent societies composed Odd Fellows and Masons. They have been regarded as charitable organizations existing for the mutual benefit of the members — not for profit or gain; and the known character of the men composing them has been deemed a sufficient guaranty that no objectionable business methods would be introduced. Did the legislature 1895 reverse this policy, and say, in effect, that such well-known benevolent societies should be subject to the strict supervision provided in the law of 1891, while all other fraternal beneficiary bodies should be governed only by the liberal provisions of the statute of 1895?

Eastman Hollis, for the defendant.