FRATERNAL BENEFIT SOCIETY—MEMBER RELATIONSHIP
And the same principle applies to the relationship which is formed when one takes out a policy in a "fraternal benefit society." Thus in Royal Arcanum v. Green,[109] in which a fraternal insurance association chartered under the laws of Massachusetts was being sued in the courts of New York by a citizen of the latter State on a contract of insurance made in that State, the Court held that the defendant company was entitled under the full faith and credit clause to have the case determined in accordance with the laws of Massachusetts and its own constitution and by-laws as these had been construed by the Massachusetts courts.
Nor has the Court manifested lately any disposition to depart from this rule. In Sovereign Camp v. Bolin[110] it declared that a State in which a certificate of life membership of a foreign fraternal benefit association is issued, which construes and enforces said certificate according to its own law rather than according to the law of the State in which the association is domiciled denies full faith and credit to the association's charter embodied in the statutes of the domiciliary State as interpreted by the latter's court. "The beneficiary certificate was not a mere contract to be construed and enforced according to the laws of the State where it was delivered. Entry into membership of an incorporated beneficiary society is more than a contract; it is entering into a complex and abiding relation and the rights of membership are governed by the law of the State of incorporation. [Hence] another State, wherein the certificate of membership was issued, cannot attach to membership rights against the society which are refused by the law of domicile." Consistently therewith, the Court also held, in Order of Travelers v. Wolfe,[111] that South Dakota, in a suit brought therein by an Ohio citizen against an Ohio benefit society, must give effect to a provision of the constitution of the society prohibiting the bringing of an action on a claim more than six months after disallowance by the society, notwithstanding that South Dakota's period of limitation was six years and that its own statutes voided contract stipulations limiting the time within which rights may be enforced. Objecting to these results, Justice Black dissented on the ground that fraternal insurance companies are not entitled, either by the language of the Constitution, or by the nature of their enterprise, to such unique constitutional protection.
INSURANCE COMPANY, BUILDING AND LOAN ASSOCIATION—CONTRACTUAL RELATIONSHIPS
Whether or not distinguishable by nature of their enterprise, stock and mutual insurance companies and mutual building and loan associations, unlike fraternal benefit societies, have not been accorded the same unique constitutional protection; and, with few exceptions,[112] have had controversies arising out of their business relationships settled by application of the law of the forum State. In National Mutual B. & L. Asso. v. Brahan,[113] the principle applicable to these three forms of business organization was stated as follows: Where a corporation has become localized in a State and has accepted the laws of the State as a condition of doing business there, it cannot abrogate those laws by attempting to make contract stipulations, and there is no violation of the full faith and credit clause in instructing a jury to find according to local law notwithstanding a clause in a contract that it should be construed according to the laws of another State.
Thus, when a Mississippi borrower, having repaid a mortgage loan to a New York building and loan association, sued in a Mississippi court to recover, as usurious, certain charges collected by the association, the usury law of Mississippi rather than that of New York was held to control. In this case, the loan contract, which was negotiated in Mississippi subject to approval by the New York office, did not expressly state that it was governed by New York law.[114] Similarly, when the New York Life Insurance Company, which had expressly stated in its application and policy forms that they would be controlled by New York law, was sued in Missouri on a policy sold to a resident thereof, the court of that State was sustained in its application of Missouri rather than New York law.[115] Also, in an action in a federal court in Texas to collect the amount of a life insurance policy which had been made in New York and later changed by instruments assigning beneficial interest, it was held that questions: (1) whether the contract remained one governed by the law of New York with respect to rights of assignees, rather than by the law of Texas, (2) whether the public policy of Texas permits recovery by one named beneficiary who has no beneficial interest in the life of the insured, and (3) whether lack of insurable interest becomes material when the insurer acknowledges liability and pays the money into court, were questions of Texas law, to be decided according to Texas decisions.[116]
Consistent with the latter holdings are the following two involving mutual insurance companies. In Pink v. A.A.A. Highway Express,[117] the New York insurance commissioner, as a statutory liquidator of an insolvent auto mutual company organized in New York sued resident Georgia policyholders in a Georgia court to recover assessments alleged to be due by virtue of their membership in it. The Supreme Court held that, although by the law of the State of incorporation, policyholders of a mutual insurance company become members thereof and as such liable to pay assessments adjudged to be required in liquidation proceedings in that State, the courts of another State are not required to enforce such liability against local resident policyholders who did not appear and were not personally served in the foreign liquidation proceedings; but are free to decide according to local law the question whether, by entering into the policies, residents became members of the company. Again, in State Farm Ins. v. Duel,[118] the Court ruled that an insurance company chartered in State A, which does not treat membership fees as part of premiums, cannot plead denial of full faith and credit when State B, as a condition of entry, requires the company to maintain a reserve computed by including membership fees as well as premiums received in all States. Were the company's contention accepted, "no State," the Court observed, "could impose stricter financial standards for foreign corporations doing business within its borders than were imposed by the State of incorporation." It is not apparent, the Court added, that State A has an interest superior to that of State B in the financial soundness and stability of insurance companies doing business in State B,—which is obviously more the language of arbitration than of adjudication, as conventionally regarded.
WORKMEN'S COMPENSATION STATUTES
Finally, the relationship of employer and employee, so far as the obligations of the one and the rights of the other under workmen's compensation acts are concerned, has been the subject of similar treatment. In an earlier case,[119] the cause of action was an injury in New Hampshire, resulting in death to a workman who had entered the defendant company's employment in Vermont, the home State of both parties. The Court held that the case was governed under the full faith and credit clause by the Vermont workmen's compensation act, not that of New Hampshire. The relationship, it said, "was created by the law of Vermont, and so long as that relationship persisted its incidents were properly subject to regulation there."[120]