Langan v. American Legion of Honor

Gaynor, J.

The contract between the plaintiff and the defendant consisted of the statute under which the order is incorporated, the application for membership, the benefit certificate issued thereon, and the constitution and by-laws of the defendant. Such contract could not be changed unless the power to do so was reserved. This rests on principles too familiar to call for cita *632 tion of authority. I find in the contract no such reservation. The agreement by the plaintiff in the application for membership, and in the benefit certificate, to comply with all laws that might thereafter be adopted, as well as the power reserved in the bylaws to change them, had reference to changes which should not impair the substance of the contract. Nothing beyond this will be implied on the theory that it is reasonable. The amended by-law of 1900 abrogates the contract to pay $5,000 and substitutes an obligation to pay only $2,000, and is therefore void (Weiler v. Equitable Aid Union, 92 Hun, 277 ; Parish v. N. Y. Produce Exchange, 54 App. Div. 323 ; Kent v. Quicksilver Mining Co. 78 N. Y. 159 ).

Some opinions of judges seem to say (strangely enough, as it would seem) that a by-law changing the contract, where no such power was reserved, is unreasonable and therefore void. I do not understand it to be a question of reasonableness at all, but of power. If the power sought to be exercised to change the contract was not reserved, its exercise cannot be called reasonable. I therefore cannot consider the evidence given for the defendant to show the wisdom, reasonableness or even necessity of the new by-law, by reason of the declining membership of the order.

When the decisions in this state in respect of the measure of damage in a case like this are read closely, they will be found to Lave settled upon no rule, though there are unauthoritative suggestions on the subject in the opinions (People v. Security Life Ins. & A. Co. 78 N.Y. 114 ; Matter of Attorney-General v. Guardian Mutual Life Ins. Co. 82 N. Y. 336 ; Speer v. Phœnix Mutual Life Ins. Co. 36 Hun, 322 ; Farley v. Union Mutual Life Ins. Co. 41 Hun, 303 ; Skudera v. Met. Life Ins. Co. 17 Misc. Rep. 367 ). They all agree, however, that such measure is not the assessments or premiums paid. In actions for damages for breaches of contract generally after a part performance, as in building contracts, for instance, the plaintiff cannot recover back the installments paid, but his measure of damage is the amount in excess of the contract price, if any, which it would cost to complete. He cannot in justice get back what he has paid for work already done, for he has the benefit of it. The same reason is applicable to contracts for insurance, for up to the time of the breach the insurer has undergone the risk and the insured has had the benefit of it for the premiums which have been paid. If the plaintiff had in *633 sured himself for the same amount on the breach in some other organization or company, then his damage would be the present value of the excess in premiums which he would have to pay in the future to keep his insurance good, over the assessments or premiums he would have paid to the defendant except for the breach. But as he has not so re-insured, I do not see how that rule can he adopted. He may no longer be insurable, and there can be no presumption that he is; the known infirmities and uncertainties of health brought by advancing years forbid it. Nor does it seem that a court would take evidence in such á case on the question whether the insured is in insurable health. It would be an uncertain and an unseemly contest, and very trying to the insured. The law would not subject him to such an ordeal for the sake of the insurer.

It seems to me that the obvious measure of damage is the value of the policy at the time of the breach, which in this ease would be the present value of the $5,000 which the insurer was to pay on the plaintiff’s death, less the present value of the assessments which the plaintiff would have paid in the future if there had been no breach. Both sides have adopted the Northampton mortality table, and based their briefs on it, and I therefore adopt it instead of a more modern table. By it the plaintiff had an expectancy of nine years of life at the time of the breach. On that basis the present value of $5,000 would be $2,959.50 (reckoning the compound discount at 6 per cent, per annum) ; and the present value of the said future assessments would be $1,453.54. The difference, viz., $1,505.96, would be the plaintiff’s damage. In arriving at this result such future assessments were taken at $201.60 a year, for the reason that the assessments amounted to that sum during the last year before the breach. The defendant contends that that sum cannot be taken for the reason that it is a matter of uncertainty, or of speculation, whether the amount of the'assessments would not have increased. That is true; but the answer is that the defendant by its wrongful breach of the contract put the plaintiff in that evil case, and therefore in order that he may not go without justice, the law takes the best data the case is capable of, as it does in other cases. •

The evidence shows that to insure himself in a solvent company at the time of the breach would have cost the plaintiff an *634 annual premium of $235. If the measure of damage had to he taken as the difference between the present value ($1,694.35) of the premiums which would be thus paid, and the present value ($1,453.34) of the assessments the plaintiff would have had to pay in the future if there had been no breach, the amount of damage would be only $240.81.

If the measure of damage had to be taken as the difference between the present value of $5,000 ($2,959.50), and the present value of the said premiums necessary to insure in a solvent company ($1,694.35), the amount of damage would be $1,265.15. The plaintiff’s object was to secure a fund of $5,000 against his death. On the said breach happening he could by a present payment of the said sum of $1,694.35 to a solvent insurance company have secured such fund to be paid at his death. The present value of the said future fund would then have been $2,959.50: so that on this basis the value of the plaintiff’s policy or benefit certificate was at the breach worth the said sum of $2,959.50, less the said sum of $1,694.35 necessary to be paid in order to mature it, viz.*, $1,265.15.

While I deem the rule of damage which I h,ave adopted as the true one, let findings of fact be made on these other computations, so that if I have adopted the wrong rule the plaintiff may be required on appeal to consent to a reduction to avoid a reversal of the judgment. z

Judgment for the plaintiff for $1,505.96, with interest.