220 F. 438 | 2d Cir. | 1915
The policy in question was issued No-
vember 8, 1889, for $3,000, complainant to pay assessment of $3 each month. It is that kind of policy under which the fund to pay death losses consists of the assessments on survivors of the insured’s class and contains a provision that if at the time of death the proceeds of one assessment on all members of the class shall not be sufficient to pay the endowment stipulated for in full, then the amount paid shall be equal to the proceeds of one full assessment on all remaining members of the class, less 10 per cent, for expenses.
Complainant paid his monthly $3 assessments as they came due, until December, 1910', when defendant notified him that unless he surrendered his policy and accepted another containing different terms and agreements, and paid $14.70 per month, instead of $3, his policy would be canceled. This notification was based on a clause in complainant’s application, which was made a part of the contract, providing that the “contract shall be controlled by all the laws, rules, and regulations of the order governing this Rank, now in force, or that may hereafter be enacted by the Supreme Lodge.” The increase of assessment was provided for in amendments to the constitution and by-laws adopted some years after complainant’s insurance was effected.
The facts are stated at great length and in minute detail by Judge Ray and need not be repeated here. In the constitution as it stood in 1886, article IV provided that each member of the Endowment Rank (insurance class) shall pay the assessment provided in a table included in the article ($3 for a person of complainant’s then age) “each month thereafter as long as he remains a member of the Endowment Rank.” It is contended that in 1888 the article was amended by adding after the passage quoted supra the words “unless otherwise provided for by the Supreme Lodge.” The argument is that because the constitution, which was made a part of the contract, provided that another sum than $3 a "month might be assessed on each member at the option of defendant, and because the assessment had been increased as kbove slated, complainant was bound to pay at the increased rate or forfeit his policy.
Complainant, at Amsterdam, N. Y., applied for insurance in October, 1889; he was furnished by the local secretary, or agent, of defendant with a .form of application, which he filled up, signed and. dated October 26, 1889. Upon this the home office issued its “certificate of insurance,” dated Chicago, November 7, 1889, which was sent to Amsterdam and approved by complainant November 26, 1889. It is contended that the constitution of 1888, with its new provision giving power to increase rates, was adopted June 1, 1888, “effective August 1, 1888.” That same constitution, however, prescribed several changes in the form of “certificate of insurance.” Examination of the certificate issued by. the Chicago office and given to Smyth shows that it was in the form prescribed by' the constitution of 1886, without the amendments which the constitution of 1888 provided. If a year and more after the alleged adoption of the constitution the home office was still using the certificate forms of 1886 unchanged, it would not be surprising that its agents were still supplied only with copies of the constitution of that year. Certainly the chance of their getting new members would be greater if applicants supposed they were joining under a constitution which did not provide for an increase of rates.
; I,n this connection it may be noted that complainant produced a cir
On the whole, we find nothing to overcome complainant’s testimony that he was asked to contract, and did contract, on printed representations which advised him that the constitution of 1886 was the basis of this contract, and that therefore the “power to increase” referred to in constitution of 1888 was not a part of the contract entered into between defendant and himself.
“While a ‘mutual benefit fraternity,’ or fraternal insurance society, may so amend its by-laws as to make reasonable changes in the methods of administration, the manner of conducting its business, and the like, no change can be made which will deprive a member of a substantial right conferred expressly or impliedly by the contract itself. That is beyond the power of the Legislature, as well as the association, for the obligation of every contract is protected from state interference by the federal Constitution.”
In Judge Ray’s conclusion on the facts of this case to the same effect we fully concur.
Decree affirmed, with costs.