Appellant, Eliza Gibson, petitioned the-' Marion Circuit Court, in behalf of herself and others, to order appellees,' as the assignees or trustees of the Masonic Mutual Benefit Society of the State of Indiana, to levy and collect assessments from all persons who had been members thereof within the past six years. The demand of the petitioner was that such an assessment, under the order of the court wherein such trust was pending, be made by the appellees as would create a sum sufficient to pay all death losses remaining unpaid, together with accrued interest thereon, and all costs of collecting such assessments, etc. A demurrer was sustained to the petition, and judgment was rendered against appellant for cost. The only error assigned is predicated upon this ruling and judgment.
The petition discloses substantially the following facts: Appellant is the beneficiary under a certificate or policy of insurance, numbered 12,009 in class four, issued by the said Masonic Mutual Benefit Society on the life of her husband, James H. Gibson, bearing date of July 15, 1887, whereby the said society agreed, in consideration of the representa-' tions made in the application for membership, and the sum of $6 in hand paid, and the further sum of $1.80, to be paid
This appeal may be said to present two questions: (1) Is there, under the terms and provisions entering into the contract or policy of insurance issued by the society to a member, an absolute undertaking upon his part to pay the stipulated assessments or premiums as will render him personally liable to the company for such payment, and which the latter can enforce by an action ? (2) In the event that such a liability exists, did the right to make an assessment and enforce it, as demanded by appellant, pass to appellees in and by virtue of the assignment made by said society?
The obligation imposed upon a holder of a certificate of insurance in this society must be determined by an interpretation of its own terms and provisions, regard being had, however, to the law under which the society was created, and to the terms and provisions of its constitution and by-laws, which may have any bearing thereon.
The petition refers the incorporation of the society in question to an act of the legislature of this State approved September 20, 1865, which 'act authorizes the organization of mutual life insurance companies. This statute appears to be supplemental to one approved June 17, 1852, which provided for the organization of mutual fire insurance companies. The supplemental • act authorized the creation of mutual life and accident companies under the same conditions and subject to the same duties and liabilities, so far as applicable, as were provided by the fire insurance statute, to which it was supplemental. See §§4876 to 4895, inclusive, Burns 1894, §§3745 to 3763 R. S. 1881 and Horner 1897.
Each applicant for membership -was required to subscribe to a written application, wherein, among other things, he agreed to abide by the constitution and by-laws of the association, and any amendments thereafter made, and fnrther agreed therein to accept and abide by whatever rules, regulations, and modifications which might be adopted or made by the board of directors, regulating or governing assessments or the payment of mortuary claims, in accordance with the provisions of the constitution and by-laws of the society. It was further agreed and stipulated in the application that any certificate issued thereon should be upon the following express conditions and agreements: “Eirst. That this contract shall be void if the party to whom it is issued shall die in consequence of a duel. * * * Second. If the insured shall die by his own. hand or act. -x- * * Third. No agent of the society is authorized to make, alter or discharge contracts or waive forfeitures.
The certificate or policy of insurance issued by the society to an applicant, upon the acceptance of his application, in part is as follows: “This certificate of membership witnesseth, that the Masonic Mutual Benefit Society of Indiana, in consideration of the representations made to it in the application for membership, which, by reference, is made a part hereof, and the sum of $6 to it in hand paid, and the further sum of-dollars, to be paid to the secretary of the society by the said-, upon due notice to him of the death of a member of the society, as provided in the by-laws of the society, such payment to be made on or before the last day of the month in which such notice is issued, or sent to him, the society does promise and agree with the said--(insured), his heirs, executors, administrators, and assigns, well and truly to pay to-(beneficiary) or, in ease of the previous death of the person or persons to whom this certificate is made payable, within ninety days
Section one of article six of the constitution adopted by
The certificate of insurance issued by the society to a member recites that it is in consideration of the representations made in the application for membership, and the sum of $6 cash in hand paid, and the further sum of — - dollars to be paid to the secretary of the society by the assured upon due notice to him of the death of a member, as provided in the by-laws of the society, such payment to be made on or before the last day of the month in which the notice is issued or sent. The certificate does not, by its own terms, declare what will be the result of the non-payment
The law is well settled that when a person enters into an association he must acquaint himself with its constitution and by-laws, as these are considered important factors in testing his rights, duties, and liabilities. Supreme Lodge v. Knight, 117 Ind. 489, 3 L. R. A. 409; Supreme Council v. Forsinger, 125 Ind. 52, 9 L. R. A. 501; 3 Am. & Eng. Ency. of Law (2nd ed.) p. 108.
In the application for membership in the case in question, the applicant expressly agrees to abide by the constitution and by-laws of the society as they then exist, or as they may be changed by subsequent amendments. Consequently there can be no question but what the constitution and bylaws enter into and form elements of the contract of insurance issued by the society to a member; and therefore the contract of insurance is to be considered along with the society’s constitution and by-laws so far as the latter are pertinent to the question involved. The object in construing a written contract is to ascertain, as far as possible, the intent of the contracting parties. So, in this case, the principal question involved must be solved by an interpretation, under the settled rules of the law, of the intent of the contract as it existed between the society and the insured member in respect to the liability of the latter for the payment of mortuary assessments.
The parties to the contract of insurance were apparently content to provide only in regard to future assessments that, after notice thereof, the failure to pay any such assessment within the stipulated time should ipso facto terminate the contract of insurance, and result as a forfeiture of all rights, money paid, and benefits thereunder, except the reserved right to reinstatement. That this should be the inevitable result of a non-payment of an. assessment wgs no doubt deemed to be the most efficient means of coercing or inducing the payment upon the part of the members of the assessments levied. That this result must follow the non-payment
We have seen that the act concerning voluntary associations, under which the society in question was organized, is silent in regard to the payment of assessments or withdrawal of members of such association, and hence this statute can cast no light upon the interpretation of the contract, as it apparently has left the whole matter to be controlled by the constitution and by-laws of the association.
It can not in reason be asserted that there is anything in the provisions of the society’s constitution or by-laws, or the application or certificate in question, which can be eonstruéd into an agreement upon the part of the assured that, after the forfeiture of all of his rights and benefits has taken place, he would continue as a member of the society for-the payment alone of assessments, and that the latter might be enforced against him by suit after all of his rights and benefits, under the contract, had been terminated and destroyed. The assessments provided for were made to pay the losses occasioned by the death of a member, and, when collected through the agency of the society, the money did not belong to it, but went into a fund to pay the beneficiaries of the deceased member or members.
While it is true that the society in controversy was a mutual benefit society, the object of which was to give financial aid and benefit to the widow's, orphans, and dependents of a deceased member, still that fact does not render it any the less a life insurance association, operating under the assessment plan it adopted. Courts have, as a general rule, treated such societies as life insurance companies, applying to them, and the policies which they issue, the principles
The contract of an ordinary life insurance company, under its contract of insurance wherein the assured is required to pay, at the time stated, the premium as provided, and wherein it is also provided that a forfeiture of the contract shall result in the event of the non-payment of such premium, is considered, in a legal sense, to be a unilateral contract. The premium or assessment to be paid, in order to continue'the risk, under such circumstances, is held not to constitute an indebtedness against the insured in favor of the company. The payment of such premium or assessment is considered as a condition precedent, upon the performance of which the company, under its contract, continues to carry the risk as originally assumed. As a general rule, under such contracts, in the absence of anything to the contrary, the insured has the right to elect whether he will continue to pay his premiums or assessments, as they become due, or forfeit the contract. He must make his election' after notice of the assessment within the time fixed for the payment, or suffer the loss of membership, and thereby terminate his rights and the liability of the company or society under the contract of insurance, save and except, as heretofore stated, the right of reinstatement, when the same is expressly reserved, as in the case at bar, or except any other right which may have been expressly reserved from the effect of the forfeiture. 2 May on Tns., (3rd ed.) §341a; Rood v. Railway, etc., Assn., 31 Fed. 62; Worthington v. Charter Oak Ins. Co., 41 Conn. 372; Goodwin v. Massachusetts, etc., Ins. Co., 73 N. Y. 480.
As a general proposition, this same doctrine applies to mutual benefit societies. The main feature of the plan adopted by such insurance societies is that death losses are to be paid by voluntary contributions upon the part of its surviving members. Accordingly, the society, on the death of a member in good standing, levies an assessment upon
The rule applicable to the question is well and aptly stated by Bacon in his work on benefit societies, supra. In §357, the author says: “In a contract of life insurance there is generally no absolute undertaking of the insured to pay the premiums, or assessments, and consequently no personal liability therefor. The payment of the premium, or assessments, is only a condition precedent of the liability of the company; the insured does not promise to pay the premiums and the company only promises to pay if it has received the agreed consideration. Therefore the insured may pay or not as he pleases, he has the perfect right to do either and need give no excuse for his choice. If he does not pay, the contract is ended. It follows, therefore, that the premium, or assessment, is only a debt when there is an absolute promise to pay embodied in .the contract. Whether or not such, absolute promise to pay is embodied in the contract is a question of construction.”
We have examined Ellerbe v. Barney, 119 Mo. 632, 25 S. W. 384, 23 L. R. A. 435, New Bra Life Assn. v. Rossiter, 132 Pa. St. 314, 19 Atl. 140, Dettra v. Kestner, 147 Pa. St. 566, 23 Atl. 889, Rundle v. Kennan, 79 Wis. 492,
It is true that the holding in Ellerbe v. Barney, supra, fairly supports the insistence of appellant. The action in that case was instituted by the receiver of the Masonic Mutual Benefit Society, of Missouri, which association had been operated as a life insurance company under, the assessment plan. The contioversy was as to whether the insurance policies issued by it to its members contained a promise on the part of the latter to pay the assessments. The majority of the court held that the policy or contract of insurance issued by the society must be so construed, and that the assessments were collectible by suit. Chief Justice Black and Justices Brace and Burgess dissented. The dissenting opinion, prepared by the Chief Justice is, in our judgment, more convincing in its reasoning, and is better fortified by authorities than, is the majority opinion.
It may perhaps be said that an irreconcilable conflict exists between the holding in Lehman v. Clark, 174 Ill. 279, 51 N. E. 222, 43 L. R. A. 648, and Ellerbe v. Barney, supra. The court in the latter case, however, seems, in our opinion, to have made the mistake of considering that the death assessments levied by the society were in the nature or character of society dues, and therefore a member could not escape the payment thereof by terminating his membership. That the assessments, under the provisions of the contract in this case, can not be so viewed or considered is a proposition too plain to be controverted.
To reiterate what we have previously stated, it is evident, Ave think, that when the policy or contract of insurance involved in this case is considered along with the society’s articles of association, its constitution and by-laAvs, and the application for membership, there is nothing which can in reason be interpreted as an agreement or obligation, upon the part of its insured members, to pay the mortuary assessments, such as Avould thereby constitute them debtors of the society, and hence authorize it to enforce the payment of the assessments by suit. If the contracts involved herein could he said to be doubtful in respect to the interpretation of the question presented thereunder, and thereby be open to the application of the doctrine of practical construction, it is possible that the acts of the society’s governing officers, in the administration of its affairs for a period of almost thirty years, might disclose that it, through its officers, had placed a construction upon the question in issue in this case wholly incompatible with the construction or interpretation for
The judgment is affirmed.