Barrows v. Mutual Reserve Life Ins. Co.

• Decision Date: 02 January 1907
• Docket Number: 1,294.
• Citation: 151 F. 461
• Parties: BARROWS v. MUTUAL RESERVE LIFE INS. CO.
• Court: U.S. Court of Appeals — Seventh Circuit

151 F. 461

BARROWS v. MUTUAL RESERVE LIFE INS. CO.

No. 1,294.

United States Court of Appeals, Seventh Circuit.

January 2, 1907

'Plaintiff in error (hereinafter styled 'plaintiff') brings suit in assumpsit to recover moneys paid under protest upon assessments alleged to have been illegally made and collected from plaintiff by defendant in error (hereinafter styled 'defendant') upon a certain certificate of membership in defendant company. The declaration contained one special count and the common counts. To the special count, defendant interposed a general demurrer; to the common counts, the general issue. On hearing, the demurrer was sustained whereupon plaintiff elected to stand by his plea, and without further order, the cause stood until called for trial, when plaintiff dismissed the common counts. Thereupon judgment was rendered for defendant. To reverse this judgment, the writ of error herein was sued out.

From the declaration it appears that defendant is one of the so-called 'assessment life insurance companies'; that plaintiff duly became a member thereof, at the age of 51 years, on March 4, 1885, and, in consideration of the performance of certain conditions set out in the certificate of membership, application, constitution, by-laws, and regulations of defendant, and the laws of the state of New York, was entitled to have the sum of $10,000 paid to the beneficiaries in said certificate named within 90 days after his death. By the terms of the certificate, 'mortuary assessments,' so-called, were made payable at the home office of defendant in the city of New York within 30 days from the first week day of February, April, June, August, October, and December of each year, or from such other periods as the board of directors might from time to time determine. The said $10,000 was to be paid 'from the death fund of the association at the time of said death or from any moneys that shall be realized to said fund from the next assessment to be made as hereinafter set forth, and no claim shall be otherwise due or payable except from the reserve fund as hereinafter provided. If at such date as the board of directors of the association may from time to time fix or determine for making an assessment, the death fund is insufficient to meet existing claims by death, an assessment shall then be made upon every member whose certificate is in force at the date of the last death assessed for, and said assessment shall be made at such rates, according to the age of each member, as may be established by the board of directors, and the net amount received from such assessment (less 25% to be set apart for the reserve fund) shall go into the death fund.' It is in express terms provided therein that the certificate or contract of membership shall be subject to all the provisions of the constitution and by-laws of defendant and the amendments thereto, and that the contract contained in the certificate and the application taken together shall be governed by, subject to, and construed only according to the constitution, by-laws, and regulations of defendant and the laws of New York. It is further shown from a table of rates, so-called, attached to said certificate, that the basis of the assessment rate of plaintiff at the date of said certificate was $2.25 per $1,000, and that plaintiff paid the same from that date up to February 28, 1889 (approximately four years), when a new table of rates was adopted, whereby his assessment was raised to $3.41 per $1,000, which increased rate he paid without protest up to June 12, 1895-- something more than six years; that defendant, at the time of said increase, stated that he would never be called upon to pay more than $3.41 per $1,000; that the directors of defendant did on said last-named date, illegally and in violation of defendant's contract with him, reapportion the assessment rate of plaintiff, raising the same to the sum of $5.28 for each $1,000, which rate, in excess of the sum of $3.41, was illegal and void; that, on notice from defendant that if the same was not paid within 30 days from date of notice his rights under said certificate would be forfeited, and because he was on account of his age and state of health unable then to procure other insurance, he thereupon, but under protest, paid at said last-named rate up to February 1, 1898-- something less than three years. The declaration further alleges that thereafter plaintiff was in like manner compelled to and did, under protest, pay at continually increasing rates, the basis of which was illegally fixed by defendant, until the same, on July 28, 1905, amounted to $15.50 on each $1,000; that seven of the calls for assessments were in excess of the bimonthly calls, and were termed 'special calls,' and were illegal for that reason. The declaration further charges that said assessments were illegal for the reason that defendant induced many of its members to abandon the assessment policies and take level premium insurance, thereby depriving plaintiff of the benefit of his contract, and for the further reason that they were made by the directors and executive committee, instead of by the directors alone. The damages are laid at the sum of $7,500.

The assignment of errors is limited to the supposed error of the court in sustaining the demurrer and entering judgment thereon.

R. Adelbert Dewees and Frederick A. Brown, for plaintiff in error.

Chester E. Cleveland and Harry Goodman, for defendant in error.

Before GROSSCUP, SEAMAN, and KOHLSAAT, Circuit Judges.

KOHLSAAT Circuit Judge, after stating the case as above, .

It is urged by defendant that the plaintiff could have recovered, if at all, under the common counts, and that, having dismissed as to them after the demurrer was sustained to the special plea and before judgment thereon, he cannot assign for error that the court entered judgment. This is not the law as laid down by the Supreme Court of Illinois. The contrary was held in Hamlin v. Reynolds, 22 Ill. 207; Albany City Ins. Co. v. Keating, 46 Ill. 394; Hippach v. Makeever, 166 Ill. 137, 46 N.E. 790. We deem the point not well taken.

The main questions involved in this proceeding are whether defendant acted within the terms of the contract or certificate of membership existing between the parties hereto, in raising the rate of assessments and enforcing the collection thereof, as set out in the statement of facts. The objection that the assessments were made by the directors and executive committee, instead of by the directors alone, and that certain of the assessments were made on other than bimonthly calls, and termed 'special calls,' we do not consider well taken. In the first case, the directors acted in the matter, and the fact that the executive committee, whose membership the declaration does not disclose, joined with them, cannot, as pleaded, be held to vitiate the action of the directors. As to the second point, the certificate does not in terms limit the assessments to bimonthly calls, but does say that assessments shall be paid within 30 days from 'such other periods as the board of directors may from time to time determine. ' There is nothing in the declaration to show any abuse of this authority. Nor is the allegation that defendant persuaded members to abandon the so-called 'assessment policies' and take so-called 'level premium insurance,' to the detriment of plaintiff's rights, available as a defense in this proceeding as pleaded.

Whether defendant had the power, under the certificate of...