Wineland v. Knights of the Maccabees of the World
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Ostrander, J.
(after stating the facts). Assuming that a court of equity may take jurisdiction to restrain action of the defendant corporation violative of contract rights, and to preserve in force a contract of insurance according to its terms (Langan v. Supreme Council Am. L. of H., 174 N. Y. 266 ; Messer v. Grand Lodge A. O. U. W., 180 Mass. 321 ; Meyer v. Insurance Co., 73 N. Y. 516 ), a jurisdiction which in this case is not questioned, we have investigated, with no little labor, the respective claims of counsel, the statutes which have been referred to, the history of defendant so far as it is disclosed, and the relations which have existed between defendant and this complainant. Complainant’s protest does not attack the regularity of the action which the representative body has taken. It is admitted that his status as a member cannot be learned from his certificate, and that the laws of defendant, the statute, and his application must be consulted to ascertain and to state his rights. His contention is that the rate of assessment is *617 fixed, for him, by the certificate and by the by-law in force at the time he became a member. He concedes' that the rate of assessment he should pay is $1.40 a thousand, instead of $1 a thousand, not because the defendant had the right to increase the rate without his consent, but because by paying the increased rate he waived the right to complain. He contends that by the certificate he is promised a benefit upon attaining the age of 70 years, the amount thereof being fixed by the by-law in force in 1893 at one-tenth, annually, of the sum for which he was insured, and that the contract was not in this respect ultra vires. If it was ultra vires the powers of defendant when made, the objection was removed by the act of reincorporation, aided by the by-law passed in 1895, which not only re-enacted the law of 1893 as to the amount of endowment to be paid annually, but relieved the member from payment of any assessments after becoming 70 years of age. Stated broadly, the contention for defendant is that, to the extent that the certificate promises benefits to complainant, they may not be diminished by any change in the articles or in the laws of defendant; to the extent that benefits are made to depend upon the laws of defendant in force when the certificate was issued, and (or) thereafter adopted, complainant is bound to accept the benefits which, when his certificate matures, the laws then in force provide to be paid; that the rate and the number of assessments are made by the contract to depend, and must of necessity depend, upon the exigencies and the experience of defendant.
In so far as arguments have been addressed to the point that the parties to a mutual benefit certificate máy expressly agree to be bound by after-enacted by-laws, they are answered in favor of the validity of such contracts by a previous decision of this court (Borgards v. Insurance Co., 79 Mich. 440 ), and, we think, by the weight of authority ( Ross v. Modern Brotherhood of America, 130 Iowa, 693 ; Supreme Commandery K. of G. R. v. Ainsworth, 71 Ala. 449 ; Beach v. Supreme Tent K. of M., 177 N. *618 Y. 100, 105 ; 1 Bacon on Benefit Societies and Life Insurance [3d Ed.], §§ 185-188). See collection of cases in note to Supreme Council Am. L. of H. v. Champe, 63 C. C. A. 282 . Such an agreement being found — and there can be no doubt that it was made in the present case — the effect of the particular by-law upon the particular member depends upon whether it was one which the association might lawfully make, whether it should be applied retroactively, whether it disturbs vested rights, whether it is reasonable; some or all of which considerations, and others, may be, notwithstanding the agreement, involved in any case. So far as any such considerations seem to be involved here, they will be noticed, and may be conveniently discussed under the heads the “assessments,” and the “disability benefits.”
As to assessments. No limit is fixed in the statute of 1869, or in that of 1893, or in the laws of the order, of the number of assessments which may be made. Indeed, -it is contemplated that assessments shall be made whenever necessary to pay promised benefits. It is true that the laws of 1893, 1895, .1897, and 1899 fixed a rate of assessment and provided that a member should pay the same rate of assessment so long as he remained continually in good standing. This provision did not exist at the time complainant became a member, unless its equivalent is found in the statute of 1869. It is there provided that the right to change the by-laws should exist, “except so far as they relate to the rights of the corporation, to assess their members, or the members of a particular class of such corporation, and except, also, so far as said by-laws affect the rights and benefits belonging to, or to be derived by the members of such corporation.” One of the powers incident to corporate existence, and implied in the absence of express restrictions, is the power to make bylaws for the government of the corporation. Under the law of its organization, this power of this corporation was restricted. The provision above recited, read in connection with the requirement that the terms and conditions of *619 membership should be stated in the articles of association, must be construed to mean that the terms and conditions of membership so expressed should not be changed by the adoption or amendment of by-laws. In this view, the application and the certificate, supplemented by the laws of defendant, fixed complainant’s rate of assessment, and his agreement that the laws thereafter adopted should be the basis of the contract means those laws which the defendant had the right to adopt. But there was no such restriction in the law of 1893, under which defendant reincorporated, presumably with the consent of complainant, and the question arises whether such reincorporation, and the consent of members thereto, had any effect upon the terms and conditions of complainant’s contract. We are of opinion that after the lapse of 10 years it is too late for one who was a member when the reincorporation took place to insist that the certificates then in existence shall be treated otherwise than as if they had been issued by the defendant after such reincorporation, especially when the member is insisting that a provision of his contract, ultra vires, the powers of defendant under the act of 1869, is binding upon defendant because of increased powers given by the statute of 1893. Whether the changes with respect to assessments made in 1904, against which he protested, are within these powers, remains to be considered. We have no doubt that it was lawful, and no violation of contract rights, for defendant to increase the number of assessments to meet the demands arising from the death of members. There seems to be no good reason why fewer assessments, at a greater rate, should not be levied, so long as the increase in rates is proportional; young and old members, alike, contributing. Whether such action be a mere detail in management aimed at procuring for distribution the same sum of money in a different way, or intended to actually increase the contributions over present necessities for distribution and to accumulate a fund,' it may be, so long as it is proportional and reasonable, supported, as against a *620 protesting member, by his agreement in his application to conform to and be governed by laws to be from time to time made by the representative governing body of the association. While courts are not agreed upon this proposition, we are inclined to the views expressed in Fullenwider v. Supreme Council Royal League, 180 Ill. 621 ; Messer v. Grand Lodge A. O. U. W. , 180 Mass. 321 ; Reynolds v. Supreme Council Royal Arcanum, 192 Mass. 150 ; Conner v. Supreme Commandery Golden Cross (Tenn.), 97 S. W. 306 . We agree with the court below that the increased assessments are not, in view of the conditions disclosed, unreasonable. Whether they evidence a departure from the statute purpose and plan of existence of such association is a question not presented.
As to disability benefits. The complaint is that the plan of defendant has been modified in such manner that upon attaining the age of 70 years appellant may not receive' $200, annually, without payment of assessments. As to the assessments after attaining the age of 70 years, no provision exempting members from paying them existed when complainant became a member. Such a provision was adopted in 1895, and was subsequently repealed. The certificate contains no such provision, and the whole matter of assessments was one of management to be from time to time amended as the experience and necessities of defendant required. The claim of complainant is based upon an amendment to defendant’s laws made after he received his certificate. Manifestly, a member may not agree to the exercise of the power to amend and repeal by-laws until such time as an amendment suits him, and then insist upon the want of power to further amend or repeal. But we rest our decision upon the ground that complainant agreed to be bound by amendments to the laws affecting only the part of the endowment which he should receive and the conditions of continued membership reasonably imposed. No contract rights were violated. See cases hereinbefore cited, and, also, Wright v. Insurance Co., 193 U. S. 657 .
*621 The provision for paying some benefit to a member on his attaining the age of 70 years is, we think, affected by different considerations. It is an express promise, found in the certificate. It became effective, so far as power to make it is concerned, by the reincorporation of defendant. A reasonable construction of the contract, and the one we adopt, is that by the agreement complainant is not bound to submit to an elimination of the provision for old age benefits, but only to the reasonable fixing, by the laws, of the part of the endowment which he shall receive. That such a construction should be made, when it is reasonable, is held in Supreme Council Am. L. of H. v. Jordan, 117 Ga. 808 ; Russ v. Supreme Council Am. L. of H., 110 La. 588 ; Newhall v. Same, 181 Mass. 111 ; Langan v. Same, 174 N. Y. 266 ; Williams v. Same, 80 App. Div. (N. Y.) 402; Beach v. Supreme Tent K. of M., 177 N. Y. 100 ; Hale v. Equitable Aid Union, 168 Pa. 377 ; Gaut v. Supreme Council Am. L. of H., 107 Tenn. 603 (55 L. R. A. 465); Wuerfier v. Trustees, etc., Wisconsin Order of Druids, 116 Wis. 19 . See, also, Knights Templars’, etc., Indemnity Co. v. Jarman, 187 U. S. 197 . The determination of defendant to no longer engage in the business of furnishing benefits to members upon their reaching the age of 70 years does not necessarily relate to certificates outstanding when the change was made. The power of defendant to make such a law retroactively effective is not involved, and for this reason and others this case and Borgards v. Insurance Co., supra, and Chambers v. Supreme Tent K. of M., 200 Pa. 244 , may be distinguished. The conclusion herein expressed is in agreement with that reached in the court below; but that court was of opinion that complainant had waived his right to now protest against the changes made in 1893, and again in 1901, relieving defendant of the obligations to pay anything upon the member reaching the age of 70 years. The court found the waiver in the following facts: The law of 1899 eliminated the provision as to benefits at age of 70 years. The *622 law of 1901 eliminated old age as a cause of disability. Complainant without protest continued his membership and paid his assessments until July, 1904. Certain other changes were made which might be treated as compensating for rights withdrawn. We do not think these facts controlling of complainant’s rights. The law of 1904 contains the first demand upon him to agree that defendant’s construction of the effect of its earlier action shall bind him; that the amendment of 1899 applied to existing contracts. For the reasons given, we regard his protest against increase of rates unfounded, as is also his claim to be released from rate paying at age of 70 years. Subject to future reasonable regulations, his contract with defendant entitles him to receive, at the age of 70 years, a part of the sum mentioned in his certificate, not less than one-tenth part thereof, annually.
The decree of the circuit court is reversed, and a decree conforming with this opinion will be entered in this court. Complainant will recover costs of both courts.
McAlvay, C. J., and Grant, Blair, and Montgomery, JJ., concurred.
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