Simcoke V. tificate is a mere expectancy-an anticipat- the contract are concluded. Grand Lodge A. O. U. W., 84 Iowa, 383, 51 [8] No question is made but that the parties may stipulate conditions under which the power to substitute beneficiaries may be effected. When the contract gives the insured member merely a naked power of substitution, it is the prevailing rule that to be available the power must be exercised according to the terms of the contract. Such terms qualify the right of substitution, are a matter of substance, and, unless substantially complied with, no change of beneficiary will take place. Finnell v. Franklin, supra; Holden v. Modern Brotherhood of America, 151 Iowa, 673, 132 N. W. 329; Stephenson v. Stephenson, 64 Iowa, 534, 21 N. W. 19; notes 5 L. R. A. 95, and 19 Am. St. Rep. 790, and cases cited. It follows that Headle's desire to change his beneficiary expressed to the officers of the local camp and evidenced by his attempt to make a change is not controlling. Mere intention to make a change is not enough. The acts prescribed are forms imposed upon the execution of the power and are designated for the protection of the society, the member and the beneficiary. Fink v. Fink, supra. [9] While the interest of the beneficiary designated in the original certificate is, during the lifetime of the insured member, a contingent interest-a mere expectancy-liable at any time to be defeated by the designation of a new beneficiary, it does not follow that such beneficiary has no interest in the certificate. He has an expectancy in the nature of an inchoate interest which, it is held in some jurisdictions, gives him the right to insist that a change of beneficiary be made, if attempted, in substantial conformity with the stipulations of the contract. Holland v. Taylor, supra; Farra v. Braman, 171 Ind. 529, 86 N. E. 843; Faubel v. Eckhart, 151 Wis. 155, 138 N. W. 615; note 5 L. R. A. 95. [10] The prevailing rule seems to be that, unless the case presents a question of equity, the provision of a by-law respecting change of beneficiaries may be waived by the society at any time before the death of the member, and that the beneficiary whose expectancy is thus defeated cannot object. If the society, before the rights of the beneficiary become vested, sees fit to waive strict compliance with its by-laws and issues a new certificate changing the beneficiary, all questions as to * * was "The original contract between the parties, evidenced by the old certificate member and the society, before the death of abandoned by both parties to it, to wit, the Martin Delaney (the member). 'It is difficult to see what rights remain to the beneficiary under it. * The member and the society are the parties to a contract, ** and they may, during the life of the member, agree to a change of the beneficiary in any manner which is satisfactory to both parties. ficiary at the request of the member, all When a society has actually changed the benequestions as to whether the manner * changing the beneficiaries provided in the contract have been followed are concluded and absolutely disposed of.'" * of It is urged that the society waived the requirements of the by-laws by issuing the new certificate. While the society may waive tract made for its protection, as for example compliance with the requirements of the conby issuing a new certificate without requiring the old certificate to be surrendered, it cannot be held in this case to have waived any right that it had to object to the attempted certificate, since at the time it was done the change of beneficiary by issuing the new head clerk was ignorant of the prior death of Headle. this fact, it waived nothing by that act. It The society being ignorant of furnishes no evidence of an intentional relinquishment of a known right, which is necessary to constitute a waiver. Barber v. Vinton, 82 Vt. 327, 73 Atl. 881; Duggan v. Heaphy, 85 Vt. 515, 528, 83 Atl. 726. [11] It is also said that it waived the provisions of the by-laws by paying the fund into court and asking that the adverse claimants be required to interplead. By the great weight of authority the society cannot be regarded as having waived the requirement of the by-laws by bringing the bill of interpleader and paying the fund into court. By so doing the society admitted its liability under one or the other of the certificates and asked the court of chancery to protect it by determining the conflicting rights of the claimants; but it cannot be held that the rights of either claimant are prejudiced thereby. The rights of the parties became fixed at the moment of the death of the insured member, and the society was powerless to do anything to affect vested rights. They are controlled by the contract as it was at that time. Freund v. Freund, 218 Ill. 189, 75 N. E. 925, 109 Am. St. Rep. 283; Finnell v. Franklin (Colo.) 134 Pac. 122; Faubel v. Eckhart, 151 Wis. 155, 138 N. W. 615; McLaughlin v. McLaughlin, 104 Cal. 171, 37 Pac. 865, 43 Am. St. Rep. 83; Independent Order of Foresters v. Keliher, 36 Or. 501, 59 Pac. 324, 1109, 60 Pac. 563, 78 Am. St. Rep. 785; Ancient Order of Gleaners v. A. (N. S.) 277; Londry v. Sovereign Camp of certificate (Sofge v. Supreme Lodge K. of H., 98 Tenn. 446, 39 S. W. 853), and the burden is upon the new beneficiaries to show that the change has been made in the man[12] The general rule is usually stated ner provided for in the contract or that the thus: When the laws of a benefit society | case is one calling for equitable relief (Grand prescribe a mode of changing the beneficiary, the mode prescribed must be followed, and no change can be made in any other manner. Niblack on Mut. Ben. Soc. § 221 et seq.; Bacon on Ben. Soc. § 307. The rule touching waiver of the by-law by the society is stated in a comprehensive manner in Niblack on Mutual Benefit Societies (2d Ed.) § 222: "The member and the society may, during the life of the member, waive these requirements, and may agree upon a new beneficiary of the contract in any manner satisfactory to both parties. It does not follow, however, that after the death of a member the society may waive these requirements and recognize as valid an attempted change of beneficiaries made by the member in a manner different from that set forth in the contract. The rights of the parties are controlled by the contract as it was at the date of the death of the member, and, after these rights have attached by the death of the member, no consent or act of the society can defeat or even affect them. The payment of the fund into court for the benefit of the person who may be declared to be entitled to it in no way improves or prejudices the legal position of either the original or the substitute beneficiary." On this question, see, also, Freund v. Freund, 218 Ill. 189, 75 N. E. 925, 109 Am. St. Rep. 283; Fink- v. Fink, supra. Lodge A. O. U. W. v. Edwards [Me.] 89 Atl. 147; Am. Legion of Honor v. Smith, 45 N. J. Eq. 466, 17 Atl. 770). The rule seems to be that the party that succeeds must make a case that would have entitled him to prevail against the society. Ballou v. Gile, 50 Wis. 614, 7 N. W. 561; Ireland v. Ireland, 42 Hun (N. Y.) 214. There are several reported cases in which it has been held that the failure of the appointment of a new beneficiary to reach the home office before the death of the member did not defeat the change, applying the rule that in equity that will be deemed done which ought to have been done; and the designation has been considered as relating back to the time when the member executed the application. No case has been called to our attention, and a careful review of the cases fails to disclose one, giving effect to the new designation which did not reach the home office during the lifetime of the member when, as here, the contract expressly provides that such an attempted change of beneficiary shall be void. Moreover, in none of the cases examined does it appear, as here, that the by-laws provided that the old certificate should remain in force until the new In Counsman v. Modern Woodmen of Amer- certificate was issued in the lifetime of the ica, 69 Neb. 710, 96 N. W. 672, 98 N. W. 414, member. In most of these cases some equity it was held that the power to change the existed in favor of the new beneficiary, as beneficiary under the contract there under that the delay was due to the fault or fraud consideration rested with the member and of the original beneficiary or to the neglithe society; that the change was conditional gence or collusion of the officers of the soupon compliance with the by-laws of the so-ciety, and equity gives effect to the intention ciety; that the designation of a beneficiary of the member to change the beneficiary by was a matter of agreement between the member and the society; that under the by-laws there in force the member was powerless to effect the change of beneficiary alone; that after his death the society was powerless to do it for him. The court said in passing that doubtless if the member had procured the certificate to reach the head camp during his lifetime properly filled out, so that he would have been entitled to the approval and the issuance of a new certificate, in the absence of an express restriction in the bylaws, the new beneficiary would be entitled to the fund. [13] The rights of the original beneficiary and of the beneficiaries named in the new certificate depend, as between themselves, on the contract between Headle and the society at the time (the instant) of his death. Stemler v. Stemler, 31 S. D. 595, 141 N. W. 780; Supreme Lodge K. & L. of Honor v. Menkhausen, 209 Ill. 277, 70 N. E. 567, 65 L. R. A. 508, 101 Am. St. Rep. 239. The respective rights of the claimants must be determined with reference to the power reserved to treating that as done which ought to have been done. The leading case cited by the minor claimants, Supreme Conclave, Royal Adelphia, v. Cappella (C. C.) 41 Fed. 1, is of this class and is readily distinguishable from the case at bar on that ground. In that case the original beneficiary had possession of the certificate and, though she had agreed to see that the change was made, neglected to deliver it to the member that it might be surrendered. The request for the change properly made out reached the society in the lifetime of the member, but before the new certificate was made out the member died. The court on equitable grounds treated that as done which ought to have been done and gave effect to the attempted substitution. In disposing of the question, Mr. Justice Brown states that there are three exceptions to the general rule that a change of beneficiary in a benefit certificate must be made in the manner pointed out by the rules of the association, any material deviation from which will invalidate the transfer, viz. : (1) If the society has waived a strict compli contract in terms disposes of the claims of the new beneficiaries, in the absence of circumstances calling for equitable relief. The special features of the contract under con a request of the insured to change the beneficiary has issued a new certificate to him, the original beneficiary will not be heard to complain that the course indicated by the regulations was not pursued. (2) If it is be-sideration render an extended analysis of the yond the power of the insured to comply literally with the regulations, a court of equity will treat the change as having been made. (3) If the insured has pursued the course pointed out by the laws of the association, and has done all in his power to change the beneficiary but before the new certificate is actually issued he dies, a court of equity will decree that to be done which ought to be done and act as though the certificate had been issued. cases unnecessary. The recent case of Hughes v. Modern Woodmen of America, decided by the Supreme Court of Minnesota in February, 1914, reported in 145 N. W. 387, deserves especial attention, as the contract there under consideration is identical with this and the case is directly in point. One Hyland was a beneficial member of the defendant society. His sister was named as beneficiary in the certificate and had possession thereof. Desiring to change his beneficiary and not having the certificate in his control, he executed, as the by-laws provided he might, a writing in which he stated that the certificate was beyond his control and therein appointed his daughter as a new beneficiary. This writing with the required fee was delivered to the local camp clerk to be forwarded to the head camp. Before the writing reached the head clerk, Hyland died. Notice of his death reached the head clerk at the same time as the writing and a new certificate was not issued. The court held that, under the contract between John Hyland and the association, the old certificate remained in full force and effect, unless a new one was issued within his lifetime; that the request for the new certificate was not presented in time to reach the head clerk before his death; and that at his death the plaintiff (the sister) was still the beneficiary and her rights to the proceeds of the certificate then vested.. By the express provisions of this contract, Headle agreed that the designation of a new beneficiary should not be effectual unless ac The first exception seems to be supported by the authorities with this qualification: If the member has failed to comply with the requirements of the by-laws regarding the change of beneficiaries, and the society during his lifetime waived the requirements not complied with, the former beneficiary cannot take advantage of such failure. See Knights of Maccabees v. Sackett, 34 Mont. 357, 86 Pac. 423, 115 Am. St. Rep. 532. It is clear that the exception to the rule must be subject to this qualification else it violates the prevailing rule that the society can do nothing to effect the rights of the beneficiary that become vested upon the death of the member. [14] The second and third exception to the general rule are founded upon the same principle, viz., that equity will treat that as done which ought to have been done. The cases falling within either of these exceptions turn upon some fact or set of facts that make it inequitable to apply the general rule to the particular case, as, for example, when it is beyond the power of the member to comply with the requirements of the by-law through the fault of the society or the original bene-complished in his lifetime. Without fault ficiary, or where the things required of the member have been done and the failure to perfect the change in the member's lifetime is due to the fault or neglect of another. In those circumstances equity may well regard those things done that should have been done. But we know of no case that goes to the extent of holding that equity will regard as done those essential things that are beyond the power of any one to do. Such a construction would make it necessary to treat as nugatory the stipulations in all beneficiary contracts designed to limit the time, with reference to the member's death, within which a change of beneficiary can be effected. See note 15 L. R. A. 350. The general rule, with the possible exceptions referred to above, is calculated to safeguard the rights of the society, the member and the beneficiary-and should receive sanction, as it will at all times make it possible without difficulty to determine who is entitled to the benefit fund. is simple, consistent, and easily applied. In the case at bar there is no basis for the It of any one, he failed to exercise the power in the prescribed manner. As effect must be given to the contract made by the parties rather than to the belated intention of Headle to change the beneficiaries, it follows that the original certificate continued in force, and Lottie Headle is entitled to the fund as sole beneficiary. The case of Fugure v. Mut. Soc. of St. Joseph, 46 Vt. 362, is not in conflict with this conclusion. The benefit there contracted for was not a fixed amount payable on the death of the member but a weekly indemnity payable during the widowhood of the beneficiary. The by-laws of the society, with reference to which the member contracted, provided for the possible change of the indemnity. This being so, the beneficiary did not have such a vested interest in future payments of the indemnity as would prevent the society from exercising the right reserved to change the indemnity, even after the member's death. The result is we find no error in the decree of the court of chancery. (88 Vt. 59). SMYTHE v. CENTRAL VERMONT RY. CO. (Supreme Court of Vermont. Franklin. May 20, 1914.) answer; but it will be treated on the merits as it was below. [Ed. Note.-For other cases, see Appeal and Error, Cent. Dig. 88 1053-1063, 1066, 1067, 1161-1165; Dec. Dig. § 171.*] 1. RECEIVERS (§ 97*) — OBLIGATIONS OF RE-S. RECEIVERS (§ 97*)-OBLIGATIONS-TRANS-. CEIVER-NEGOTIABILITY. While obligations issued by receivers, without personal liability, but constituting a lien on by property, are not strictly negotiable instru-in ments, because there is no certainty as to the in payor, yet where they are authorized by the court, which undertakes to issue them as negotiable paper, they will be accorded the usual attributes of such obligations. [Ed. Note.-For other cases, see Receivers, Cent. Dig. §§ 181, 214; Dec. Dig. § 97.*] 2. RECEIVERS (§ 97*)-RECEIVERS' NOTES-NEGOTIABILITY. Where it was the obvious intent of the court in authorizing the issuance of receivers' notes that they should be negotiable, they will be accorded that quality so far as it could be done without conflict with the doctrine of lis pendens, whether they were under seal or not. [Ed. Note. For other cases, see Receivers, Cent. Dig. §§ 181, 214; Dec. Dig. § 97.*] 3. RECEIVERS (§ 97*) - RECEIVERS' NOTES PAYMENT OF DEBT RENEGOTIATION OF NOTES. Where receivers' notes or bonds, part of an authorized issue, were pledged to secure a loan to the receivers, the pledgee's special title to the notes ceased on payment of the loan, so that any subsequent negotiation of the notes by the pledgee would be invalid, and the notes unenforceable, except in the hands of a bona fide purchaser for value, without notice. [Ed, Note. For other cases, see' Receivers, Cent. Dig. §§ 181, 214; Dec. Dig. § 97.*] 4. BILLS AND NOTES (§ 195*)-TRANSFER-TI TLE. Title to a negotiable instrument is defective if it is negotiated unlawfully or under circumstances which amount to a breach of faith. [Ed. Note. For other cases, see Bills and Notes, Cent. Dig. §§ 464, 474-476; Dec. Dig. 195.*] 5. COURTS (§ 107*)-DETERMINATION OF APPELLATE COURT-EFFECT. FER-BONA FIDE PURCHASER. Where income and extension bonds issued receivers of a railroad company had been litigation in the Supreme Court of the state which the receivership proceedings were pending, and the court had determined that only $1,689,500 of the $2,500,000 issue was lawfully outstanding, a purchaser of certain of such bonds at a large discount thereafter was put on inquiry as to the litigation in the course of which the obligations were issued, both as to the prior and subsequent proceedings therein. [Ed. Note.-For other cases, see Receivers, Cent. Dig. §§ 181, 214; Dec. Dig. § 97.*] 9. RECEIVERS (§ 97*) — Bonds - TRANSFER BONA FIDE PURCHASER. In a suit to enforce certain income and extension bonds issued by receivers of a railroad company, and unlawfully transferred by a pledgee after payment of the debt for which they were pledged, evidence held to sustain the master's finding that the orator was not a bona fide purchaser for value. [Ed. Note. For other cases, see Receivers, Cent. Dig. 88 181, 214; Dec. Dig. § 97.*] 10. RECEIVERS (§ 97*) - BONDS - ISSUANCE BONA FIDE PURCHASER-EVIDENCE. tension bonds issued by receivers of a railroad company, the orator's conduct in concealing and misrepresenting the character of the transaction by which he obtained the bonds long aftthat the transaction had been consummated in er they had been issued was competent to show In a suit to enforce certain income and ex bad faith. [Ed. Note.-For other cases, see Receivers, Cent. Dig. §§ 181, 214; Dec. Dig. § 97.*] 11. EVIDENCE (§ 317*)-HEARSAY. In a suit to enforce certain bonds issued by receivers of a railroad company, evidence of S. that he was continually associated with the property from 1871 to 1877 with his father, one of the receivers, without holding any offiwith the property as attorney, director, vice cial position, that after 1877 he was associated Where the Supreme Court, in determining ecessor of defendant company, and as one of president, and president, successively, of a predthe indebtedness of a railroad company in the its receivers, having custody of its books, and hands of a receiver, determined that the amount that the books so kept were books of original of income and extension bonds issued, negotiat- entries made by the proper persons, whose ed, and outstanding was made up of two sums, handwriting he identified, they being dead, as to wit, $680,900 issued in exchange for other well as all the receivers who signed the bonds' bonds, and $1,008,600 otherwise negotiated, tak-in question, etc., was not objectionable as hearing no notice of any bonds which had been pledged by the receivers as collateral, it thereby in effect determined that the bonds so is sued as collateral had either been returned or were unlawfully held, and not lawfully outstanding. [Ed. Note.-For other cases, see Courts, Cent. Dig. 360; Dec. Dig. § 107.*] 6. EQUITY (§ 252*)-PLEADING-MORE SPECIFIC ANSWER. Where an orator is entitled to a more specific answer, his remedy is by exceptions to the answer filed. [Ed. Note. For other cases, see Equity, Cent. Dig. §§ 523, 524; Dec. Dig. § 252.*] 7. APPEAL AND ERROR (§ 171*)-EQUITY SUIT -REVIEW ON APPEAL. Where a suit has gone to hearing with an insufficient answer and cross-bill, and the case has been referred to a master, who has reported without any demurrer to the cross-bill, the orator is not entitled to have the Supreme Court on appeal dispose of the case on bill and say. Cent. Dig. §§ 1174-1192; Dec. Dig. § 317.*] Where books of receivers of a railroad company, showing the issuance and disposition of certain income and extension bonds, were in the nature of books of account made in the reg ular course of business by persons since dead, they were not objectionable in a suit to enforce certain of the bonds under the rule excluding mere memoranda or diaries as independent evidence. [Ed. Note. For other cases, see Evidence, Cent. Dig. §§ 1432-1483; Dec. Dig. § 354.*] 13. EVIDENCE (8 147*)-Books OF ACCOUNTBOOKS OF RECEIVERS. Books of receivers of a railroad company, all of the receivers being dead at the time suit was instituted to enforce certain income and extension bonds issued by them, not being books of a party, but rather books of the court, accessible to everybody interested in the entries made therein, were admissible generally, and were not within the rule that a party's books are not evidence in his favor except as to what they affirmatively show. [Ed. Note.-For other cases, see Evidence, Cent. Dig. 88 435-437; Dec. Dig. § 147.*] 14. EVIDENCE (§ 83*) - PRESUMPTIONS - RECEIVERS' Books. Where receivers of a railroad company were required to keep books showing a history of their transactions, it would be presumed that they faithfully performed their duties and made such entries as they were required to make; and hence the absence of an entry would be some evidence that the act which would otherwise have been recorded had not occurred. [Ed. Note.-For other cases. see Evidence, Cent. Dig. § 105; Dec. Dig. § 83.*] 15. EQUITY (410*)-MASTER'S REPORT-EX CEPTIONS-SUFFICIENCY. of was reserved to the defendant, and the defendant was given leave to make answer. Thereafter the defendant filed its answer and a cross-complaint. In due course the complainant joined issue with the defendant on its answer and filed an answer to the crosscomplaint. The cause was referred to and heard by a special master, and after the filing of his report the complainant filed exceptions thereto. In 1912 the cause was brought on for hearing before a chancellor, and a decree in favor of the orator was rendered strictly pro forma, and without prejudice to either party by reason of the pro forma character of the decree. The defend ant appealed to this court. The bonds in question are five in number, each of the face value of $1,000, not includExceptions to the master's refusal to com- ing interest coupons, and are numbered 163, ply with four certain requests so far as they | 166, 167, 178, and 179 of an issue of “Income were not complied with, and an exception for and Extension Bonds" so called, dated May errors, not in any way indicated, manifest on the face of the record, were too vague for con- 1, 1872, and payable 30 years after date, that sideration. is, May 1, 1902. It was shortly after the latter date that this suit was brought. [Ed. Note.-For other cases, see Equity, Cent. Dig. 88 905-919; Dec. Dig. § 410.*] 16. APPEAL AND Error (§ 1078*)-EXCEPTIONS Exceptions not briefed will be deemed -WAIVER. waived. [Ed. Note.-For other cases, see Appeal and Error, Cent. Dig. §§ 4256-4261; Dec. Dig. 1078.*] 17. EQUITY (§ 241*)-PLEADING-DEMURRERRESERVATION. Where defendant's demurrer was overruled, but the court reserved the benefit of the demurrer to defendant until final hearing, such action did not formally reinstate the demurrer, but only reserved to defendant the right thereafter to raise and insist on all the questions made under the demurrer; and hence it was technical error to consider the demurrer again separately and overrule the same as a part of the decree on the merits. [Ed. Note.-For other cases, see Equity, Cent. Dig. § 515; Dec. Dig. § 241.*] Appeal from Chancery Court, Franklin County; E. L. Waterman, Chancellor. Suit by Roland M. Smythe against the Central Vermont Railway Company. A decree pro forma was entered in favor of the orator on the pleadings and the master's report, from which defendant appealed. Re versed and remanded, with directions. The pro forma decree, in favor of the complainant was for $33,429.73, as of the date of the decree, to secure the payment of which sum a valid and subsisting lien was declared to exist upon property of which the defendant is the present holder and owner, and as a part of the decree an order of foreclosure against such property was made, unless the sum above mentioned should be paid to the complainant within 60 days of the date of the decree. With respect to the signers of the bonds, the circumstances under which the issue was made, and the rights and obligations thereby arising, the following facts appear: In 1855 the Vermont & Canada Railroad Company brought a bill of complaint against the Vermont Central Railroad Company in the court of chancery for Franklin county, and thereafter such proceedings were had in the cause that both companies were placed in the hands of receivers, who later were also designated as trustees and managers. During the receivership it was necessary that the receivers, trustees, and managers should, from time to time, borrow money on the se Argued before ROWELL, C. J., and MUN-curity of the property in their possession, SON, WATSON, HASELTON, and POWERS, JJ. W. B. C. Stickney, of Rutland, and C. W. Witters, of St. Albans, for appellant. Hollis R. Bailey, of Boston, Mass., and H. Charles Royce, of St. Albans, for appellee. and this they did by virtue of authority conferred by various decrees of the court of chancery. In the spring of 1872 the trustees and managers, being in need of money to meet debts and liabilities already incurred, and to meet current obligations, were authorized by a decree of the court of chancery to issue and HASELTON, J. This is a suit in chancery | dispose of their notes to an amount not exbrought by the holder of certain bonds or notes and attached coupons to secure payment thereof through the enforcement of a claimed lien on property held and controlled by the defendant company. The cause was first heard on demurrer to the bill. The de murrer was overruled and the benefit there ceeding $2,500,000. The time of payment was to be not more than 30 years from date, and the interest was to be payable semiannually. The trustees and managers were to be without personal liability in respect to the issue, and it was ordered and decreed that the notes issued in accordance with the decree |