Barbot v. Mutual Reserve Fund Life Ass'n

• Decision Date: 29 March 1897
• Citation: 28 S.E. 498,100 Ga. 681
• Parties: BARBOT v. MUTUAL RESERVE FUND LIFE ASS'N.
• Court: Georgia Supreme Court

28 S.E. 498

100 Ga. 681

BARBOT v. MUTUAL RESERVE FUND LIFE ASS'N.

Supreme Court of Georgia

March 29, 1897

Syllabus by the Court.

1. A certificate of membership in a mutual benefit life association, which carries with it insurance on the life of the member, is taken and accepted under the terms and conditions of the charter, constitution, and by-laws of the association in force at the time of the issuance of the certificate, whether reference to the same is or is not made in the certificate. (a) When an application for membership in such association declares that the constitution and by-laws are to be made a part of the certificate, when issued, the certificate, constitution, and by-laws of the association constitute the contract between the member and the association. (b) In such a case, when the certificate has attached thereto an assessment rate table, showing, by amounts, the proportion of assessments which are to be made at ages from 15 to 65 years on each $1,000 insured, and the constitution and by-laws provide that, at stated intervals assessments shall be made by the governing authorities on the entire membership, for such sums as may be deemed sufficient to meet existing death claims, which shall be apportioned among the members according to age, the table attached to the certificate will be construed only to fix the ratio of payment by each member on the basis of age.

2. A resolution passed at a convention of the members held under the terms prescribed in the constitution and by-laws, which simply gives to the board of directors power to pay death claims from current receipts, which, under the constitution and by-laws, are applicable to another fund, while good as a by-law, is not mandatory, but merely suggestive of what might be done. Without additional words, such a grant of power leaves its exercise in the discretion of the board; and, when an assessment is made by the board, larger in amount than it would have been if such current receipts were so applied this assessment cannot be held illegal or excessive, under the terms of such resolution or by-law.

Error from city court of Richmond; W. F. Eve, Judge.

Action by Louis J. Barbot against the Mutual Reserve Fund Life Association. From an order sustaining a demurrer to the complaint, and dismissing the petition, plaintiff brings error. Affirmed.

F. W Capers, for plaintiff in error.

Fleming & Alexander, for defendant in error.

LITTLE J.

Louis J. Barbot filed in the city court of Richmond county his complaint against the Mutual Reserve Fund Life Association, a corporation duly incorporated under the laws of New York, and doing business in the state of Georgia and county of Richmond, in which he alleged that on the 31st day of July, 1882, the defendant made and entered with petitioner into the following policy contract, to wit:

"Mutual Reserve Fund Life Association. Number 4,914. Policy, $10,000. Age, 51. 149 Broadway, New York. In consideration of the statements, representations, and warranties contained in the application for this certificate of membership, and of the admission fee paid, and of the dues for expenses to be paid on or before the 31st day of July in every year during the continuance of this certificate, and all mortuary assessments, payable at the office of the association within thirty days from the date of each notice, the Mutual Reserve Fund Life Association does hereby receive Louis J. Barbot, of Charleston, county of Charleston, state of South Carolina, as a member of said association. Whenever the death fund of the association is insufficient to meet an existing claim by death, an assessment shall be made upon the entire membership in force at the date of such death, for such a sum as has been established by the board of trustees, according to the age of each member, as per table indorsed hereon, and the sum received from such assessment (less 25%, to be set apart for the reserve fund) shall go into the death fund. Within ninety days after receipt of satisfactory evidence to the association of the death of the above-named member during the continuance of this certificate of membership, there shall be payable to Josephine M. Barbot (wife), of Charleston, county of Charleston, state of South Carolina, if then living, otherwise to the legal representative of said member, the sum of ten thousand dollars, from the death fund of the association at the time of said death, or from any moneys that shall be realized to the said fund from the next assessment to be made as herein above set forth; and no claim shall be otherwise due or payable, except from the reserve fund, as hereinafter provided. The net earnings of the association, together with the 25% received from each assessment, shall constitute a reserve fund, which shall be deposited with a trust company, and be securely invested in United States bonds, mortgages, or other interest-bearing securities, by said trust company, as trustee, for the exclusive benefit of the members of the association; and the interest on the same, as it accrues, shall be placed by said trustee to the credit of the death fund. The reserve fund above $100,000, and in excess of sums represented by outstanding bonds, shall be applied to the payment of claims in excess of the American Experience Table of Mortality, and, when any claim by death is due, to making up any deficiency that may then exist in the death fund. After the expiration of each period of five years, during the continuance of this certificate of membership, a bond will be issued (bearing interest at the rate of 4% per annum, payable annually to the death fund) for an equitable proportion of the reserve fund, and the principal of said bond shall be available, ten years from its date, towards paying future dues and assessments under this certificate; and should said membership hereunder cease, by death or otherwise, any portion of said principal not thus used shall be applied to increase the bonds issued at the next quinquennial apportionment to other members of the association, holding certificates issued during the same year as this certificate, and at which apportionment the rate of assessments may be changed to correspond with the actual mortality experience of the association."

Then follow various conditions which are immaterial to an adjudication of the questions raised, and in conclusion it is provided that the application for membership shall constitute a part of the certificate. Indorsed on the policy is the following:

"Table of Rates.

"Admission Fee: $1,000, $8.00; $2,000, $12.00; $3,000, $15.00; $5,000, $20.00; $10,000, $30,00. The dues are limited to $2.00 on each $1,000, payable annually in advance.

"Assessment Rate Table.

"No assessments will be made while there remains in the death fund a sum sufficient to pay a claim in full. When an assessment is required, each survivor shall pay, for each $1,000 of the amount of his certificate, as follows:

RPT.CC.1897010258.00010

(Image Omitted)

After setting out the certificate of membership and insurance, the material portions of which are copied above, Barbot further alleged: That he had complied with the terms of said contract, and with the constitution and by-laws of the defendant, and, on demand, had paid regularly the annual dues and all legal assessments made on him by defendant, as in his certificate of membership he had agreed to do. That from the 31st day of July, 1882, to the 31st day of July, 1895, he paid as follows: Beginning September 1, 1882, $18.20, 60 days from each payment to September 1, 1885; from September 1 1885, $28.20, 60 days from each payment to September 1, 1887; from September 1, 1887, $31.20, 60 days from each payment to September 1, 1895,--the said sum of $31.20 being the maximum rate of assessment fixed by the constitution and by-laws of defendant. The reserve fund, being accumulated by the defendant in the manner and for the purpose stated in its contract, has grown steadily under the rates of assessments heretofore of force, and on July 1, 1895, had reached the amount of $3,928,479.55. Independent of this reserve or emergency fund, the income of the defendant has steadily increased, so that for the six months immediately preceding the 1st of July, 1895, the balance of income of the defendant over and above disbursements for the same period was $4,428,766.84. The reserve or emergency fund having grown large enough to meet any unlooked-for death rate, and still growing larger under the then rate of assessment, the members of the defendant company, in annual session, on January 23, 1889, enacted a by-law limiting the rate of assessment upon all those who were members prior to January 1, 1890, to the maximum rate at age of entry. That on August 1, 1895, the directors, of their own motion, repealed this by-law limiting their assessments as hereinbefore stated, and levied, without the knowledge or consent of plaintiff, an excessive assessment on those who were members of said association prior to January 1, 1890, fixing the assessment at double the amount of the maximum rate at the date of their entry as members of the association; and the defendant demanded payment of said increased sum of plaintiff. That plaintiff tendered to defendant's agents in this state the sum of $31.20, being the maximum rate of its assessments at date of his entry into the company, and the maximum sum fixed in the by-law aforesaid, which the said agents refused to receive; that plaintiff then renewed the tender to the company at its home office, in the city of New York, through the vice president of said company, who was authorized to receive the same. He likewise rejected and refused the same. Both of which tenders were made said defendant company within the...