106 Neb. 220 | Neb. | 1921
This is an action on a benefit certificate issued by the Supreme Tribe of Ben Hur, a foreign fraternal beneficiary association. The defendant contends that the policy had become forfeited by default of payment of the assessments. These assessments were levied by virtue of amendments to the by-laws made after the certificate sued on was issued, and plaintiffs claim the amended by-laws were unreasonable, impairing vested rights under the benefit certificate, and were therefore not binding on insured. At the close of the testimony the court directed a verdict for the plaintiffs. Defendant appeals.
The certificate sued on contained the usual provision that the insured would be bound by all the laws, rules
At the time this certificate was issued the by-laws of defendant association provided for the monthly payments-of $1 for insurance, the amount of the benefit being rated according to age, so that while members entering between the age of 18 and 25 received benefit certificates in the amount of $1,500 for a monthly payment of $1, members entering at 50 years of age received certificates of $500 only. All members were also required to pay a per capita tax of 75 cents semiannually, together with lodge dues, or what were called “court dues,” levied by the subordinate court.
The benefit certificate in question provided that, in the event of the insured becoming physically disabled from old age after reaching 70 years and making proof of such fact, he should receive one-tenth of the face of the policy that year and a like sum each year thereafter until the whole benefit was paid or until the member should die, and it also, however, further provided “that such member shall continue to pay his or her court dues and per capita tax” though the monthly payments for insurance were not required from that time forward.
In May, 1908, the by-laws of this defendant association were amended in the manner of which plaintiffs complain, whereby all holders of benefit certificates issued prior to July 1, 1908, Avere put in Avhat is called Class A, and all holders of certificates issued after that time were put in Class B. The two classes were kept distinct. Eách, it was provided, should raise its own funds and pay its own losses. In case the monthly payments of Class A members, as previously fixed, should be insufficient, additional payments would be required to be paid from time to time. The rates required to be paid by the Class B members were determined by valuation upon the basis of tables of
It was further provided that any Class A member could, at any time up to July 1, 1910, by surrendering his- certificate and paying the rates fixed by the age of such member at such time, according to the schédule of rates adopted for Class B members, become a member of Class B without being required to pass medical examination, such examination, however, to be required in case he desired a disability clause in his certificate such as appears in the certificate here involved, and, in that case, it was necessary before a transfer would be allowed that he be found to be in good health and not physically disabled at the time of the transfer. It was further provided by these amended rules that the disability benefit for members in either Class A or Class B would be allowed only upon the condition that, after such disabilities were proved and insured became entitled to the disability benefit, he would still continue, not only to pay the per capita tax and court dues as theretofore provided, but would in addition continue to pay all monthly payments and assessments required. In order to change from Class A to Class B, in other words, it was necessary for the Class A member to surrender his certificate and take a new one at a rate based upon his age at the time of the transfer, as if he were an entirely neAv applicant for insurance in the association, and, except in the instances as stated, he would not be required to pass a medical examination.
The insured, after these amendments were adopted, remained in Class A and made all payments called for up to September 1, 1916. On July 12, 1916, he became 70 years of age, and on September 12, 1916, he applied for the old-age disability benefit. His application Avas approved, and he was paid the first instalment of $50. In this application, signed by insured, which was on a printed form furnished by the company, there was a printed statement that insured agreed to continue to pay, in addition to the court dues and the per capita tax, the
It is claimed by plaintiffs that insured did not know of this statement in the application. The officer of the defendant association, whose duty it was to help make out and receive such applications, testified, and her testimony stands alone on that issue, that she read the application to him and also that she told him it was her understanding that no further payments were required from him thereafter except the per capita tax and dues, and that his policy so far as insurance payments were concerned was fully paid up.
From the time that the association allowed insured the disability benefit in September, 1916, and paid him, the $50 instalment, he made no further insurance payments, as provided by the amended by-laws, nor in accordance with the statement made in the application just above referred to. The per capita tax and court dues were tendered by insured, but the defendant refused to accept these and demanded the regular monthly payments and assessments as fixed at that time, and so the matter stood from September, 1916, until the insured died in° February, 1917; the association claiming that the insured’s policy had lapsed by reason of his failure to pay the regular monthly payments and assessments for insurance from and after the time of the granting of the disability benefits to him.
The questions presented are: (1) Whether the classification under the amended by-laws was unreasonable and discriminatory so as to make invalid the increased assessments levied upon the insured in this case; (2) whether the provision that insured should continue to pay insurance rates, when, by the terms of his certificate, it was tc be paid up in case of disability at 70, in effect reduced the benefits and thereby destroyed vested rights under the contract; and (3) whether insured had waived his rights to refuse to pay insurance rates after reaching 70 by signing the agreement to pay such additional assessments
It is the rale in this state that, when an insured agrees to be bound by future changes of the by-laws, a fraternal association may make amendments increasing the rate and changing the plan of assessments for the general good of the order, so long as such changes do not work an injustice between the individual members, are not discriminatory, and are reasonable. Insured, in the case before us, remained in the class of old members who had entered the association prior to 1908. The exact amount of increase in assessments levied against him the record does not disclose. There is no averment nor proof that the assessments made were unreasonable in amount, nor greater than sufficient to the proper operation of this division of the association as a separate entity, raising its own funds and paying its own losses. On the other hand, it does not appear that the rates fixed for the members of the new class were more than was necessary to the operation of that class, nor larger than required to properly raise funds to prepare against and pay death claims as they should accrue. The rates in this class were based upon mortality tables and in accordance with the principle that each member should pay in proportion to the hazard of his own individual risk.
The next question is, therefore, whether the creation of the two divisions of members, each operating independently of the other, did in itself work an unjust discrimination as against the insured. There is no vested right to a continuance of a plan of insurance which experience might demonstrate would result disastrously to the society or its members. Wright v. Minnesota Mutual Life Ins. Co., 198 U. S. 657; Polk v. Mutual Reserve Fund Life Ass’n, 207 U. S. 310. It is also true that, in the absence of averment or proof to the contrary, it will be presumed that an increase of rates or change of plan of assessment to increase revenues was reasonable as to the amount of the increase in the charges, if the amended regulation was duly enacted by the association. Supreme Council, Cath
Considering the Class B members as a separate division, the plan devised of requiring each member to pay a rate in conformity .to the cost of insurance based on age is a reasonable regulation as among the members in that class. And it would further, as settled by the laws of this state, have been a reasonable regulation to have required all the members of this association at the time when the amended by-laws were enacted to have commenced anew and to have paid assessments based upon mortality tables, the amount of such rate to be determined by the age attained by the respective members at the date of such change in the rule of assessment. Funk v. Stevens, 102 Neb. 681; Thomas v. Knights of Maccabees of the World, 85 Wash. 665, L. R. A. 1916A, 750; Hollingsworth v. Supreme Council of Royal Arcanum, 175 N. Car. 615; Supreme Lodge, Knights of Pythias, v. Mims, 241 U. S. 574; Reynolds v. Supreme Council of Royal Arcanum, 192 Mass. 150. Though the increase of the assessment provided by a fraternal association should be so high as to make it unprofitable and prohibitive to older members, that fact, standing alone, would not make the rate unreasonable, if the assessment is no more than experience has shown is necessary properly to meet the cost of covering such individual with insurance at his attained age. It may be here, and in fact in most, if not all, such fraternal companies, insurance has been furnished in the past at rates far below cost. The member has lived and had the value of his assessments in the protection given him, and, when it is found that each must pay in exact accord with the risk the company has assumed in carrying him, he can
But when such increase in assessments is made it must progress upon a uniform plan. It must be remembered that the promises of this association are the mutual promises of all the members in it, individually and collectively, to one another. Each member also has the right to see that all new members shall equally assume such mutual obligations. The basis ' for rates must be just and not discriminative. In this case all members of the order, prior to 1908, are severed from the association and become a distinct entity apart from it. It is manifest that to thus cut off the old members, undesirable risks, into a company by themselves and make them pay their own losses and raise their own funds without the aid of growth and the addition of young blood, since no new members can under the amended by-laws be placed in this division, would result in a separate division of membership; in fact, a distinct company in itself which would have a constantly dwindling membership and a rapidly increasing assessment until the lone survivor would have to pay his own death claim. Such classification and division of members, destroying the mutuality of the promises of the members of the association as a whole and requiring older members to be thrown out upon their resources and alone compelled to proceed without the accession of new members, which destroyed the very working power of the plan under which they were operating, has been held an effectual repudiation of the contract obligation owing them by the society, and has quite universally been held an unreasonable and unjust regulation as to them, and therefore void. Wilson v. Supreme Conclave, I. O. H., 174 N.
In the cases just cited, the facts as to classification and assessment were in all instances very similar to, and in some identical with, the method followed in the case at bar. In the Tusant case, supra, members joining before a certain date were put in Class A, and those joining after in Class B, each operating separately as if a distinct association, raising its own funds and paying its own losses. Class A was assessed on the old plan, by increasing amount of assessment and was allowed no new members, and Class B was assessed upon an insurance risk basis as determined by the age of the member. The court in that case said: “It is sufficient to say that it is of the very essence of. mutual insurance and of the efficiency thereof that it shall grow, and that it shall continue to receive new and younger blood. * * * When these men joined the order they joined themselves to a membership, many of whom had already reached their expectancy. These plaintiffs began at once to pay death losses on such. When they paid such losses they had nothing to expect in return from those whose membership had ceased by death. Their only way of compensation was from those who should come after. They relied and had a right to rely for the security of their insurance upon the new blood which was to come.”
By this reasoning it is shown how the shutting off of new members into Class A, operating under the old plan, in effect actually destroyed its working ability. Obviously, then, if this class were to be continued under the old plan, the shutting off of neAV members was in fact an - actual destruction of their plan of operation. Defendant’s answer to this is, however, that insured had the
It is unnecessary to discuss at length the cases above
It seems to us that in the latter case cited it was those rights, required to be surrendered up, which the courts had principally in mind when they said that to require the old members to enter the class of new members destroyed what rights those members had theretofore attained. This must have been so in the North Carolina cases. In that jurisdiction it has been held in Hollingsworth v. Supreme Council of Royal Arcanum, 175 N. Car. 615, following the same principle as enunciated in the holding of our court in Punk v. Stevens, 102 Neb. 681, that an amendment of the by-laws requiring all member’s to rerate according to their attained age on the basis of risk as based on mortality
It therefore appears to us that the increased and .added assessments upon the certificate of insured in this case, being based upon an unjust discrimination, were illegal and unenforceable. Insured, however, paid the increased assessments until in September, 1916, when, being 70 years of age and disabled on that account, he received' his first instalment of disability benefit, and he refused from that time on up to the time of his death, a few months later, to pay the insurance assessments, contending that his policy was fully paid up, and, according to its terms and the rate of assessment fixed prior to the amendment complained of, such was the fact.
Plaintiffs contend further that, since the benefit certificate itself did not provide for payment of insurance assessments after, disability was proved, an amendment of the by-laws requiring payment of the assessments during such period was in effect a reduction of the benefits .and impaired vested rights of insured under the policy. We think this position is untenable. The argument put forth
We come, then, to the question of whether the insured had waived his rights to attack the unwarranted increase in the amount of assessments, or the levy of the additional illegal assessments, here complained of. The payment of the increased assessments up to the time of his applying for disability benefit in September, 1916, would not prevent him from claiming subsequent assessments unlawful; there being no element of estoppel shown and none pleaded nor urged in this action upon that ground. The record is silent upon facts pertaining to that question. It is true the printed application which was signed by insured recited an agreement to pay these illegal assessments from that time forward, but the officer of the company whose duty it was to collect assessments explained to him when he signed the application that the policy was then paid up and no further assessments could be required of him. When the next following insurance payment became due, insured refused to pay it. , He did not become in default as to payment of the per capita tax and court dues called for in his certificate.
We therefore are of opinion that plaintiffs in this case are entitled to recover upon the policy, and that the judgment of the lower court should be affirmed.
Affirmed.