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plaintiff, his wife, was named as beneficiary. I beneficiaries and shall govern and control The contract provided that the insured the contract in all respects the same as should be bound by the laws of the order though such changes, additions or amendthen in force, or thereafter enacted. On ments had been made prior to and were in December 10, 1912, Ledy committed suicide. force at the time of the application for The laws of the order in force in 1908 pro membership.” $ 3544, Gen. Stat. 1913. vided that, if the assured committed sui- It is contended that the amendment excide within two years after receiving his tending the period during which the suicide certificate, the association should be liable provision should remain in force is unreafor only one fifth the amount of such cer- sonable and void as against contracts entificate. By an amendment to such laws, tered into before its adoption, unless the which went into effect in September, 1910, rule announced in Thibert v. Supreme the time during which the above provision Lodge, K. H. 78 Minn. 448, 47 L.R.A. 136, should be in force was extended to a period 79 Am. St. Rep. 412, 81 N. W. 220; Tebo of five years from the issuance of the cer. v. Supreme Council, R. A. 89 Minn. 3, 93 tificate. Ledy died by suicide about two N. W. 513; Olson v. Court of Honor, 100 months before the five years expired. Plain. Minn. 117, 8 L.R.A.(N.S.) 521, 117 Am. St. tiff sued for the full amount of the cer. Rep. 676, 110 N. W. 374, 10 Ann. Cas. tificate. The trial court held that she was 622; Rosenstein v. Court of Honor, 122 entitled to recover one fifth thereof, and no Minn. 310, 142 N. W. 331, and Ruder v. more. She moved for a new trial and ap- National Council, K. L. S. 124 Minn. 431, pealed from the order denying her motion. 145 N. W. 118, has been changed by the

The only controversy is whether she is above statute; and that the present case entitled to recover the full amount of the turns upon the construction to be given to certificate, or is limited to one fifth thereof that statute. We cannot assent to this by the above provision. In either event, proposition. certain deductions are to be made for the Where a fraternal beneficiary association, benefit of the reserve fund, but these in the contract for insurance entered into amounts were agreed upon and are not in with its members, stipulates that they shall controversy. The statute in force when the be subject to, and bound by, the subsequentcontract was made provided that "any ly enacted laws and regulations of the orchanges, additions or amendments to said der, the rule is well-nigh universal that the charter or articles of association, consti- association must exercise the power so retution or laws duly made or enacted sub- served in a reasonable manner, and that sequent to the issuance of the benefit cer. a law of the order enacted under such tificate shall bind the member and his power, which would make an unreasonable suicide, and which supplanted an earlier | might be impaired. Zimmermann v. Suby-law which provided for the payment of preme Tent, K. M. 122 Mo. App. 591 ; Moronly one half the benefit in case of suicide ton v. Supreme Council, R. L. 100 Mo. App. within five years, was valid. Kavanaugh v. 76, 73 S. W. 259. Supreme Council, R. L. 158 Mo. App. 234, It has been held by the supreme court of 138 S. W. 359.

Missouri in a recent case, however, that Generally, as to conflict of laws as to in- where, by the application and certificate, surance contracts, see notes in 63 L.R.A. the member agrees to be bound by by-laws 833; 23 L.R.A.(N.S.) 968; and 52 L.R.A. and regulations thereafter enacted, a sub(N.S.) 275.

sequently enacted by-law reducing the But the court stated that such a by-law amount to be paid in case of suicide is would be invalid under the Missouri deci- valid, since such an agreement contemplates sions, which had declined to give effect to that the contract might be changed so as to these general provisions sufficient to au- affect the amount of the insurance to be thorize the insurer to reduce, impair, or paid, especially in case of suicide. Claudy destroy the indemnity vouchsafed in the v. Royal League, 259 Mo. 92, 168 S. W. 593. certificate. Kavanaugh v. Supreme Coun- And in Washington in a case where it cil, R. L. supra.

was provided in the application, certificate, And in harmony with the Missouri court and by-laws that the insured should be of appeals cases set out in the earlier note, bound by by-laws which should thereafter although the insured undertook by his con- be enacted, a by-law extending the contract to be bound by all by-laws in force or testable period in case of suicide from two that might thereafter be adopted, it was years to five years was held valid, since unheld in the following cases that a subse- der the agreement there was held to be no quently enacted by-law which attempted to vested right to have the contract remain abolish the time during which a restricted unchanged, and since the right to commit amount should be paid in case of suicide suicide was not a right which the law would of the member was invalid, it being held recognize or enforce. Klein v. Knights & that the insured's agreement did not con- Ladies of Security, 79 Wash. 173, 140 Pac. template that the right to benefits to accrue | 72.

J. T. W.

change in the terms of prior contracts, is was a finding that the insured was insane void as against such contracts. While the at the time of the suicide, while there was courts differ little as to the general rule, no such finding in the case then under conthey differ much as to what amendments sideration, and held that the insured was are unreasonable within the meaning of the presumed to have been sane, and that the rule. They agree quite generally, however, amendment was valid in such cases and that an amendment which relieves the asso- barred a recovery.

In Supreme Conclave, ciation, in whole or in part, from liability I. O. H. v. Rehan, 119 Md. 92, 46 L.R.A. in case the assured intentionally ends his (N.S.) 308, 85 Atl. 1035, Ann. Cas. 1914D, own life, is not forbidden by the rule, and 58, the court, after discussing the authoriis valid. Supreme Commandery, K. G. R. ties, says: “We therefore hold upon what v. Ainsworth, 71 Ala. 436, 46 Am. Rep. we regard as the safer, sounder, and more 332; Fraternal Union v. Zeigler, 145 Ala. reasonable rule upon this question, that the 289, 39 So. 751; Scow v. Supreme Council, after-enacted by-law before us is not bindR. L. 223 Ill. 32, 79 N. E. 42; Knights of ing upon the plaintiff, if her husband took Maccabees v. Nelson, 77 Kan. 629, 95 Pac. his own life while insane, but that it is 1052; Daughtry v. Knights of Pythias, 48 binding upon her, if he committed suicide La. Ann. 1203, 55 Am. St. Rep. 310, 20 So. while sane." 712; Dornes v. Supreme Lodge, K. P. 75 In Plunkett v. Supreme Conclave, I. 0. Miss. 466, 23 So. 191; Lange v. Royal High- H. 105 Va. 643, 55 S. E. 9, it did not aplanders, 75 Neb. 188, 10 L.R.A. (N.S.) 666, pear affirmatively that the insured was in121 Am. St. Rep. 786, 106 N. W. 224, 110 sane. The court held that he must be N. W. 1110; Tisch v. Protected Home Cir- deemed to have been sane, and that the cle, 72 Ohio St. 233, 74 N. E. 188; Supreme by-law was therefore valid and binding, Lodge, K. P. v. La Malta, 95 Tenn. 157, 30 but say they do not determine whether it L.R.A. 838, 31 S. W. 493; Clement v. Clem- would be binding in case the member had ent, 113 Tenn. 40, 81 S. W. 1249; Hughes been insane. In Olson v. Court of Honor, v. Wisconsin Odd Fellows Mut. L. Ins. Co. 100 Minn. 117, 8 L.R.A.(N.S.) 521, 117 98 Wis. 292, 73 N. W. 1015. In the above Am. St. Rep. 676, 110 N. W. 374, 10 Ann. cases it appeared that the insured commit- Cas. 622, this court held that the by-law ted suicide, but it did not appear that he there under consideration was not valid or was insane. While the various amendments binding in a case where the member was considered in those cases purported to bar insane, and under treatment for insanity, a recovery whether the insured was sane or at the time he took his own life. Whether insane at the time of the suicide, and the an amendment enacting a suicide provision courts held them valid in language which is valid and binding in a case where the apparently upheld all the provisions there insured committed suicide while sane does in, the question actually decided was that not appear to have been considered or dethey were valid as against those claiming termined by this court. A few courts have under a member who committed suicide held such amendments void (Lewine v. Su while sane. Such amendments have also preme Lodge, K. P. 122 Mo. App. 547, 99 been held valid where the insured committed S. W. 821; Sautter v. Supreme Conclave, suicide while insane. Supreme Tent, K. M. I. O. H. 72 N. J. L. 325, 62 Atl. 529); but, v. Hammers, 81 Ill. App. 560; Court of as shown by the cases hereinbefore cited, Honor v. Hutchens,

Ind. App:

79 the great majority of courts hold them N. E. 409; Chambers v. Supreme Tent, K. valid. The reasons assigned are various. M. 200 Pa. 244, 86 Am. St. Rep. 716, 49 Attention is frequently called to the fact Atl. 784; Eversberg v. Supreme Tent, K. M. that, at common law, suicide was a crime 33 Tex. Civ. App. 549, 77 S. W. 246. Other which entailed forfeiture of property; that, courts have held such amendments valid while the successful perpetrator is beyond where the insured was sane at the time of the reach of the law, he commits an act the suicide, but invalid where he was in which is malum in se and which the law sane and not responsible for his act. In tries to prevent by all the means in its Weber v. Supreme Tent, K. M. 172 N. Y. power; that he has no moral, legal, or 490, 92 Am. St. Rep. 753, 65 N. E. 258, other right to commit such an act; that the New York court held that an amend the law cannot say that a provision which ment extending the suicide provision from prevents him from fastening liability upon one year to five years was unreasonable the association by his own criminal act and void as to a member who committed voluntarily committed is unreasonable; and suicide while insane. In the later case of that such a provision not only invades no Shipman v. Protected Home Circle, 174 N. legal or vested right, but takes away a Y. 398, 63 L.R.A. 347, 67 N. E. 83, the possible incentive to commit a heinous court approved the decision in the Weber offense. Case, but said that in the Weber Case there In the instant case there is no claim

nor,

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that the insured was insane, and he is president conveyed by indorsement, said presumed to have been sane. 2 Dunnell's note to one of its directors. Held, in a suit Dig. 4516. The fact that he committed thereon by him against the makers, that he suicide is not, in itself, sufficient to estab

was not a purchaser in good faith, and lish insanity. Wilkinson v. Service, 249

hence the court erred in sustaining a demur

rer to the evidence in support of that plea. Ill. 146, 94 N. E. 50, Ann. Cas. 1912A, 41,

Notice and cases cited in note. We think there

by director of affairs of cor

poration. is a wide distinction between a case where 2. A director of an industrial corporadeath results from the irresponsible act of tion is chargeable with knowledge of everyan insane person, and a case where it re- thing it is his duty to know concerning sults from the intentional act of a person commercial paper belonging to the corporain his right mind; that the amendment in tion which he undertakes, as a director, question cannot be declared unreasonable, to sell. either upon principle or authority, when applied to a case in which the insured com

(February 23, 1915.) mitted suicide while sane, even if the statute quoted should be construed as merely a E BORE to the Superior Court for Logan

County to recognized by this court; and that plaintiff tiffs' favor in an action brought to recover is bound by the provision as amended.

the amount alleged to be due on a promisOrder affirmed.

sory note.

Reversed.
The facts are stated in the opinion.
Messrs. J. F. McKeel and C. G. Hor.

for plaintiffs in error: OKLAHOMA SUPREME COURT. The provisions in the note sued on, and

especially the one providing that the time E. W. HARDIN et al., Piffs. in Err.,

may be extended without notice, destroy its

negotiable character. FRANK DALE et al.

Rossville State Bank v. Heslet, 84 Kan.

315, 33 L.R.A.(N.S.) 738, 113 Pac, 1052; (- Okla. —, 146 Pac. 717.)

City Nat. Bank v. Gunter Bros. 67 Kan. 227, Bills and notes sale by corporation 72 Pac. 842; Sykes v. Citizens' Nat. Bank, to director bona fides,

69 Kan. 134, 76 Pac. 393, 78 Kan. 688, 19 1. H. and others made, executed, and de- L.R.A. (N.S.) 665, 98 Pac. 206; Overton v. livered their promissory note in payment Tyler, 3 Pa. 346, 45 Am. Dec. 645; Woods for school furniture to a manufacturing v. North, 84 Pa. 407, 24 Am. Rep. 201; company as payee. Prior to its maturity, Mitchell v. St. Mary, 148 Ind. 111, 47 N. E. the consideration failed, and the company 224; Glidden v. Henry, 104 Ind. 278, 54 Am. was notified of that fact. By vote of its Rep. 316, 1 N. E. 369; Rosenthal v. Rambo, board of directors, for value and before maturity, the company sold, and through its 28 Ind. App. 265, 62 N. E. 637; Merchants

& M. Sav. Bank v. Fraze, Ind. App. 161, Headnotes by TURNER, J.

53 Am. St. Rep. 341, 36 N. E. 378; Oyler v. Note. Is officer or employee of cor- | stockholder as well. So, the decision in

poration chargeable with its knowl- Hardin V. DALE, based upon the doctrine, edge of infirmities in commercial the conclusion apparently being reached paper purchased from it.

independently of the McCarty Case, is some

indication that the present trend is toward The present note is supplementary to the holding corporate officers to a strict accountnote on the same subject appended to Mc- ability for neglect.of duty. Carty v. Kepreta, 48 L.R.A. (V.S.) 65. Some of the early cases cited by the court HARDIN V. DALE, holding that a director in HARDIN V. DALE support the general in an industrial corporation who purchases proposition that an officer of a corporation from it for value negotiable instrument will be deemed to have knowledge of facts not yet due cannot be a holder thereof in or corporate acts which the performance of due course, so as to take the paper free his official duty would necessarily disclose from equities of the maker that could have to him, but the applicability of that docbeen claimed against it had it remained trine to the holder of a negotiable instruthe property of the corporation, seems to ment which he has in good faith purchased be the only decision in point since the ear- from the corporation is not involved. For lier note.

example, in Re Newcastle-upon-Tyne MaIn McCarty v. Kepreta, 24 N. D. 395, rine Ins. Co. 19 Beav. 97 (see quotation 48 L.R.A. (N.S.) 65, 139 N. W. 992, Ann. in opinion) the question was whether or Cas. 1915A, 834, the court announced not a director who had sold his stock and and applied the doctrine later adopted ceased to be a member before the insolvency in HARDIN V. DALE, to the president of of the corporation could be made a contribua bank, who was, of course, director and I tory on the ground that all the formalities McMurray, 7 Ind. App. 645, 34 N. E. 1004; | McPherrin v. Tittle, 36 Okla. 510, 44 Matchett v. Anderson Foundry & Mach. L.R.A. (N.S.) 395, 129 Pac. 721; First State Works, 29 Ind. App. 207, 94 Am. St. Rep. Bank v. Tobin, 39 Okla. 96, 134 Pac. 272, 64 N. E. 229; Woodbury v. Roberts, 59 395; Cedar Rapids Nat. Bank v. Bashara, Iowa, 348, 44 Am. Rep. 685, 13 N. W. 312; 39 Okla. 482, 135 Pac. 1051; Twin-Lick Oil Second Nat. Bank v. Wheeler, 75 Mich. 546, Co. v. Marbury, 91 U. S. 587, 23 L. ed. 329, 42 N. W. 963; Smith v. Van Blarcom, 45 3 Mor. Min. Rep. 688; Borland v. Haven, 37 Mich. 371, 8 N. W. 90; Krouskop v. Shontz, Fed. 394. 51 Wis. 204, 37 Am. Rep. 817, 8 N. W. 241; Coffin v. Spencer, 39 Fed. 262; Citizens' Nat. Turner, J., delivered the opinion of the Bank v. Piollet, 126 Pa. 194, 4 L.R.A. 190, court: 12 Am. St. Rep. 860, 17 Atl. 603; Union On June 28, 1911, Frank Dale, defendant Stock Yards Nat. Bank v. Bolan, 14 Idaho, in error, sued E. W. Hardin and six others, 87, 125 Am. St. Rep. 146, 93 Pac. 508; Dan. as makers on their past-due promissory note Neg. Inst. 5th ed. 49; Eaton & G. Com. for $1,495.65, made, executed, and delivered Paper, 71, 220, 354; Hodge v. Farmers' on September 16, 1909, to Guthrie School Bank, 7 Ind. App. 94, 34 N. E. 123; Lamb & Office Furniture Manufacturing Comv. Story, 45 Mich. 488, 8 N. W. 87; Evans pany, as payee, and by the company inv. Odem, 30 Ind. App. 207, 65 N. E. 755; dorsed to the plaintiff Frank Dale. The Miller v. Poage, 56 Iowa, 96, 41 Am. Rep. petition alleged that plaintiff acquired the 82, 8 N. W. 799; 2 Am. & Eng. Enc. Law, note in good faith for value and before 2d ed. 253.

maturity. For answer defendants, in effect, The directors of a company, being the admitted the execution of the note and its executive officers of the company and indorsement as pleaded, and that plaintiff charged with the duty of conducting its had paid value therefor before maturity, affairs, would be presumed to have knowl- but set forth facts sufficient to constitute edge of them.

a failure of consideration, and denied that Williams v. Cheney, 8 Gray, 206.

plaintiff was a purchaser in good faith. Messrs. Dale & Bierer, for defendants There was trial to a jury and judgment for in error:

plaintiff, and defendants bring the case here. A person may deal in the purchase of To maintain the issues on his part, plaintiff commercial paper with a corporation of introduced the note in evidence and rested. which he is a director the same as any other Whereupon defendant demurred to the eviindividual may deal with such corporation. dence, which was overruled. There was no

Mann v. Second Nat. Bank, 30 Kan. 412, error in this. In Forbes v. First Nat. Bank, 1 Pac. 579; Fox v. Bank of Kansas City, 30 | 21 Okla. 206, 95 Pac. 785, we said: “PlainKan. 441, 1 Pac. 789.

tiff's possession of the draft, indorsed by The court did not err in its ruling on the payee in blank, was prima facie evidence the demurrer interposed at the conclusion that it acquired the same in good fait for of the evidence offered on behalf of plain- value, in the usual course of business, before tiffs, and which ruling resulted in a judg. maturity. ment in favor of plaintiff, Frank Dale. Although the note contained the follow

Forbes v. First Nat. Bank, 21 Okla. 206, ing: "The makers and all indorsers hereof 95 Pac. 785; Swift v. Tyson, 16 Pet. 1, 10 severally waive presentment for payment, L. ed. 865; City State Bank v. Pickard, 35 protest, and notice of protest, and consent Okla. 243, 129 Pac. 38; T. S. Reed Grocery that time of payment may be extended Co. v. Miller, 36 Okla. 134, 128 Pac. 271; 1 without notice thereof ."-the same of a regular transfer had not been observed | “as trustees of an express trust,” for the by him when he sold. It was held that a corporation or its creditors, and not as director must know the rules and by-laws purchasers for value. As trustees they of the company, hence he could be made a signed the agreement under which the notes contributory. In Greenville Gas Co. v. Reis, were given, and transacted the business of 54 Ohio St. 549, 44 N. E. 271, the bond in the corporation. Other cases are sufficientquestion was issued by the corporation and ly explained by the court in HARDIN V. placed in the hands of the president to sell DALE. No effort has been made to exhaust for it. A director received the bond from the list of this class of cases, as they are him as collateral security for an indorse not in point on the particular question ment for the president as an individual, of applicability of the doctrine to officers and after paying the note indorsed, claimed who purchase negotiable instruments from the bond. It was held that he was charge the corporation in good faith and without able with knowledge of the fact that the actual knowledge of the infirmities. Only president held the bond in trust for the those cited by the court in Hardin v. DALE company, and he could therefor be compelled and not fully explained are here discussed. to deliver to it the bond. In Nelson v. Wel.

J. W. M. lington, 5 Bosw. 178, the plaintiffs sued

was negotiable. Missouri-Lincoln Trust Co. thority, when it comes to uttering negotiav. Long, 31 Okla. 1, 120 Pac. 291.

ble paper to which, in the hands of innocent There is no conflict in the testimony. As holders, there can be practically no defense, suming the burden of proof upon the issue a strict rule applies. The agent must either of failure of consideration and want of good have express general authority to issue such faith, defendants introduced evidence tend-paper, or express authority to issue the ing to prove that the note was given in pay- particular paper, or there must be implied ment for school furniture, and, before it general authority arising from such frewas due, the payee indorsed the same in quent exercise of the power by the agent, blank to plaintiff. The indorsement was for followed by ratification, as to constitute a value, and reads: “The Guthrie School & custom of the corporation." Office Furniture Mfg. Co., by E. M. Hegler, Being authorized so to do by a vote of Pres." It was made October 9, 1909. Prior the board, each and every member thereof, thereto the consideration of the note failed, including plaintiff, was at the time of the and the payee knew it, and also knew that sale and indorsement in question chargethe makers would resist payment on that able with knowledge that the consideration ground. At that time plaintiff was a di- of this note had failed, and that it would rector in the company and also a stock. be worthless, should that defense to a suit holder. On October 4, 1909, defendants thereon against them be interposed by the wrote the payee thus: "The whole lot of makers. furniture is unsatisfactory, and unless some A director of an industrial corporation is adjustment is made, the state will refuse chargeable with knowledge of everything it to take it, and the payment of the note was his duty to know concerning commerwill be protested.”

cial paper belonging to the corporation About three days thereafter the payee which he undertakes, as director, to sell. sold and indorsed the note to plaintiff. On In Re Newcastle-upon-Tyne Marine Ins. Co. this state of the evidence the court sus- 19 Beav. 97, Sir John Romilly, master of the tained a demurrer thereto and directed a rolls, said: “A person, when he becomes a verdict for plaintiff. This was holding that director, accepts a trust which he underthe legal effect of the evidence did not rea- | takes to perform for the benefit of the comsonably tend to prove that plaintiff was not pany. If, in the due performance of that a purchaser in good faith. The court erred. trust, he must necessarily have acquired From this evidence it may be fairly in certain knowledge, it appears to me to be ferred that here is an industrial corporation, but fit that he should be charged with the the payee in a promissory note, with knowl. knowledge of those facts which it was his edge on its part, and that of each and every duty to have become acquainted with. It one of its directors, that the consideration is merely saying that a person should be for the note had failed, acting through the held to know that which it was his bounden same board, presumably by vote, selling duty to know." that note to one of the board. Can it be In Gay v. Young Men's Consol. Co-op. said that such member of the board took | Mercantile Inst. 37 Utah, 280, 107 Pac. 237, it in good faith? We think not. We say the court, quoting approvingly from 21 Am. this note was sold by vote of the board & Eng. Enc. Law, 896, said: “As a general for the reason that, as no one questioned rule, an officer or director of a corporation the authority of Hegler to indorse it in is chargeable with knowledge of all matters blank, as he did, it is fair to presume, as relating to the affairs of the corporation this corporation was not dealing in commer. which he actually knows or which it was cial paper, but in manufacturing, that Heg. his duty to know. Thus, in actions by ler was duly authorized so to do. And how strangers against an officer or director, the was he authorized ? As there is no evidence defendant will generally be charged with tending to prove that he had express gen. knowledge of all facts relating to the coneral authority to indorse such paper, and no dition and business of the company which evidence tending to prove any implied gen- he might have known by the exercise of eral authority so to do arising from such due diligence, whether actually known to frequent exercise of the power, we are him or not." forced to conclude, as stated, that he was In that case, the husband of respondent authorized to make this indorsement by ex. having a suit pending against him on press authority of the board, which could promissory note payable to the defendant only be done by vote of the board. In corporation, she, to settle the same, conElwell v. Puget Sound & C. R. Co. 7 Wash. veyed to it certain lands upon condition 489, 35 Pac. 377, it is said: “Whatever that the corporation would hold the title in else the general agent of an industrial cor. trust for her and sell the same at the best poration may do to bind his principal by price obtainable, but not for less than a contracts made by virtue of his implied au- sum certain, pay the demand out of the

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