International Styles

Organization, Government, and Legal Status of Fraternal Societies

The primary purpose of these societies is to enable their members, composed chiefly of persons with limited means whose aim it is to secure the protective benefits of insurance at the smallest possible cost, to unite in a fraternal way for mutual protection. In fact the strength of the system and the survival of most of the large societies for so many years, despite the inherently defective methods which have characterized their insurance business, are attributable chiefly to the fraternal tie which closely binds the members together.

Generally speaking, the organization and government of a fraternal society assumes the following form: A parent society (or grand lodge), governed according to the terms of its constitution and by-laws, creates numerous local subordinate lodges. These local bodies, while usually allowed to regulate their affairs to some extent, especially as regards their purely benevolent features, are nevertheless subject in all important matters to supervision by the parent society and are governed by the rules which it adopts. As a rule some ritual is also observed. Another feature of such societies is the purely democratic form of government that prevails, all the members having the right to vote in their respective lodges on matters that affect the society as a whole, such as the selection of officers and the adoption of laws. The grand lodge usually consists of the representatives elected by the members of the local lodges, although in some instances there is a supreme lodge, composed of representatives selected by the various grand lodges, each of which in turn is made up of representatives chosen by the members of its subordinate local lodges. Some of the societies are incorporated bodies, while others are voluntary associations.

From a legal point of view fraternal societies differ essentially from companies whose insurance operations are organized on a strictly business basis. Most of the states have enacted legislation regulating the organization and conduct of such societies, but in all instances their benevolent character is insisted upon. Unless illegal, their rules are generally enforced by the courts. The other important legal characteristics of fraternal orders have been concisely summarized by Mr. Walter S. Nichols as follows :

Nearly all of the societies have their own adjudicators for determining the standing and rights of their members, by whose decision the members must abide. These the courts will refuse to interfere with so long as they act honestly and fairly within their legitimate province. They are mutual societies, in which, like churches, the members are expected to abide by the form of government to which they have subscribed. A local lodge may be cut off from affiliation with a parent society or may cut itself loose just as a church may cut loose from its denominational connection. In neither case is the society itself dissolved. It simply loses the rights which belong to it as a member of the parent society and must surrender whatever is in its possession and belonging to the parent. If it has a charter from the state, the state laws governing it as a corporation are superior to any rules of the association itself.

On one point, however, whether incorporated or not, the courts are insistent, that is, no rule or action of the society can deprive a local lodge or a member of insurance or other property interests which are already vested, that is, in which an unconditional ownership has been established. Where they are incorporated, like other corporations they are regarded by the law as artificial persons acting through their officers as their agents and with no personal liability on the part of the members except those imposed by the rules of the society itself. Where they are not incorporated their legal character is not so easily confined. They are often regarded as a peculiar kind of partnership qualified by the special purposes for which they were organized.

Copyright © 2004-12
International Styles
All Rights Reserved
Site Map