183 Ind. 183 | Ind. | 1915
— This was an action on a benefit certificate, issued January 25, 1882, on the life of Barney Logsdon, by appellant, and the appellees are the beneficiaries. The issues in this ease are as follows: To the complaint which was an action on the contract for payment of the face of the certificate, five paragraphs of answer were filed. The first was a general denial. The second set out the by-laws
The facts presented at the trial are as follows: The appellant is a fraternal mutual benefit association incorporated under the laws of the state of Kentucky, by special act of the legislature, approved on April 1, 1880. The decedent, Logsdon, became a member of this association on January 25, 1882, having united with the local lodge at 'Waverly, in Union County, Kentucky, at which time a certificate of insurance was issued to him, insuring his life in the sum of $2,000, payable to the appellees, the wife and children of insured. Logsdon was forty-seven years of age at the time he became a member and under the constitution and by-laws was liable to an assessment of one dollar and fifteen cents. The appellant undertook to amend its by-laws in the year 1899 so as to increase his assessment from and after July 1 of that year to $2.40, and thereafter in the month of August, 1904, attempted to amend the by-laws so as to increase his assessment at his then age, of sixty-nine years to $15.38, from and after November 1 of that year. Logsdon paid all assessments and dues until the fall of 1904, but was marked by the appellant as suspended for nonpayment of assessment on October 23 of that year. On December 14 following, he died. The question is as to the validity of the assessment for nonpayment of which he was suspended and consequently as to the validity of such suspension. This question arises under a statute of the state of Kentucky enacted in the year 1893, which provided that copies of all amendments to the by-laws, among other things, must be
This court is compelled to follow the decisions of a court of last resort of a foreign state in construing the statutes of that state. Travelers Protective Assn. v. Smith (1915), ante 59, 107 N. E. 283, and cases cited. The same question is presented by appellant’s proposition that the by-laws of the society make provision that suit shall be brought within three years from the death of the assured. This provision of the by-laws was an amendment to the original by-laws and was adopted after the certificate was issued and was never attached to the certificate as provided by the act of 1893, therefore could not control the bringing of the action on the certificate.
The first important case in which the contract clause of the constitution was applied to the charter of a corporation was the Dartmouth College case and in the concurring opinion in that case Justice Story said: “In my judgment, it is perfectly clear, that any act of a legislature which takes away any powers or franchises vested by its charter in a private corporation, or its corporate officers, or which restrains or controls the legitimate exercise of them, or transfers them to other persons, without its assent, is a violation of the obligations of that charter. If the legislature meant to claim such an authority, it must be reserved in the grant. The charter of Dartmouth College contains no such reservation; and I am, therefore, bound to declare, that the acts of the legislature of New Hampshire, now in cpiestion do
In 2 Kent, Comm. 306, we find the following reference to this same subject. “A private corporation, whether civil or eleemosynary, is a contract between the government and the corporators; and the legislature cannot repeal, impair or alter the rights and privileges conferred by the charter, against the consent, and without the default, of the corporation, judicially ascertained and declared. This great principle of the constitutional law was settled in the case of Dartmouth College v. Woodward; (a) and it has been asserted and declared by the Supreme Court of the United States, in several other cases, antecedent to that decision, (b) But it has become quite the practice in all the recent acts of incorporations for private purposes, for the legislature to reserve to themselves a power to alter, modify, or repeal the charter at pleasure; and though the validity of the alteration or repeal of a charter, in consequence of such a reservation, may not be legally questionable, (c) yet it may become a matter of serious consideration in many eases, how far the exercise of such a power could be consistent with justice or policy.' If the charter be considered as a compact
The question came before the United States Supreme Court in Tomlinson v. Jessup, supra. Justice Field in delivering the opinion of the court m the case said: ‘ ‘ It is true that the charter of the company when accepted by the corporators constituted a contract between them and the state, and that the amendment, when accepted, formed a part of the contract from that date, and was of the same obligatory character. And it may be equally true, as stated by counsel, that the exemption from taxation added greatly to the value of the stock of the company, and induced the plaintiff to purchase the shares held by him. But these considerations can not be allowed any weight in determining the validity of the subsequent taxation. The power reserved to the state by the law of 1841 authorized any change in the contract as it originally existed, or as subsequently modified,_ or its entire revocation. The original corporators, or subsequent stockholders, took their interests with knowledge of the existence of this'power and of the possibility of its exercise at any time in the discretion of the legislature. The object of the reservation, and of similar reservations in other charters, is to prevent a grant of corporate rights and privileges in a form which will preclude legislative interference with their exercise if the public interest should at any time require such interference. It is a provision intended to preserve to the state control over its contracts with corporators, which without that provision would be irrepealable and protected from any measure affecting its obligation.
Without the legislative sanction, appellant has no standing in the state of its origin; would have no right to contract with any person at all. The very existence of appellant depends upon a legislative enactment which authorizes it to
The position taken by appellant that it could write a certificate of insurance and make provision in the certificate that the insured should pay such sums per month as the by-laws fixed or that might be fixed from time to time by amendments to its by-laws is inconsistent with its position that appellant is not subject to any amendment the legislature might make governing its transactions. The legislature says to appellant, you may write insurance and issue certificates to your members, on compliance with certain conditions, and if at any time we think the conditions under which you are issuing these certificates, and collecting premiums on the same, are not proper and right, we will change them. This law requiring the amendment to be attached to the certificate is one of the things the legislature concluded was proper to be done; hence it amended the charter requiring that, before the amendment to the by-laws increasing the rate of insurance should be effective, it should be attached to the certificate. This of course could not affect any increases in the rates made before the statute was enacted, but after the amendment of the charter, appellant had notice that, if it desired to increase the rate of insurance, there was but one way to do so. and that was to attach a copy of the by
Section 8 of the charter was as binding upon appellant as any other part of that act. It was as much a part of its by-laws as if written therein. Suppose the original charter had made the same provision as to amendments of by-laws, as the act of 1899 imposes, would it be said that the charter would be invalid for that reason? Certainly not. When this charter was granted, it contained the provision that this or any other condition might be imposed by the state of Kentucky. It was within the conditions of the charter and was binding upon appellant and also upon the insured, and was a salutary provision for the protection of all parties interested. Let us state another hypothetical case. Suppose the by-laws of this society provided that they could be amended only by a two-thirds vote of all members in good standing, and the president and secretary, for good reasons as they believed, decided to increase the rate of insurance, would it be contended that an amendment to that effect, ordered by these two officers alone would be binding upon the members? Nobody would seriously contend that it would. Yet here is one effort to amend the by-laws in a manner not authorized by the statutes of the state and it is insisted that the same is valid and binding. This contention can not prevail.
The legislature of the state of Kentucky in enacting §679, supra, requiring amendments to by-laws to be attached to the certificate, made no attempt to change the conditions of
No reversible error is presented by the record, and the judgment of the lower court is affirmed.
Note. — Reported in 108 N. E. 587. As to the law of beneficial associations, see 19 Am. St. 781. As to the questions arising under insurance policies where there is a conflict of laws, see 63 L. R. A. 833; 23 L. R. A. (N. S.) 968; 52 L. R. A. (N. S.) 275. As to the binding effect on a member of a benefit society of a by-law inconsistent with his contract of membership, see 20 Ann. Cas. 929. See, also, under (1) 29 Cyc. 68; (2) 11 Cyc. 750; (3) 8 Cyc. 971; (5) 29 Cyc. 170; (6) 38 Cyc. 1811; (7) 29 Cyc. 104; (8) 8 Cyc. 929.