Dowdall v. Supreme Council of Catholic Mut. Ben. Ass'n

• Decision Date: 23 November 1909
• Citation: 196 N.Y. 405,89 N.E. 1075
• Parties: DOWDALL v. SUPREME COUNCIL OF CATHOLIC MUT. BEN. ASS'N.
• Court: New York Court of Appeals Court of Appeals

196 N.Y. 405

89 N.E. 1075

DOWDALL

v.SUPREME COUNCIL OF CATHOLIC MUT. BEN. ASS'N.

Court of Appeals of New York.

Nov. 23, 1909.

Appeal from Supreme Court, Appellate Division, Fourth Department.

Action by Michael Dowdall against the Supreme Council of the Catholic Mutual Benefit Association. A judgment for plaintiff was reversed by the Appellate Division (123 App. Div. 913,108 N. Y. Supp. 1130), and plaintiff appeals. Reversed, and judgment of Special Term affirmed.

W. J. Shields, for appellant.

J. T. Keena and Daniel J. Kenefick, for respondent.

EDWARD T. BARTLETT, J.

The defendant was incorporated on the 9th day of June, 1879, under chapter 496, p. 541, of the Laws of that year, entitled ‘An act to incorporate the Supreme Council of the Catholic Mutual Benefit Association.’ On the 9th day of July, 1879, a branch of the defendant was organized at Avon, N. Y. The plaintiff became a member of the defendant on or about July 9, 1879, and was thereafter assessed at the rate of $1.10 for each assessment until January 1, 1904. When he became a member of the defendant, the number of assessments that could be made was unlimited. Since January 1, 1904, the plaintiff has been assessed at the rate of $5.56 for each assessment. It was admitted on the trial, which took place on the 12th day of June, 1906, that the plaintiff was 74 years of age on the 20th day of June, 1905, and that he had paid his dues or assessments up to the date of the trial. When the plaintiff became a member of the defendant there was issued to him a certificate which stated, in substance, that he was to participate, in case of death, in the amount of $2,000 in the beneficiary fund. It also contained the following provision: ‘This certificate is issued upon the express condition that the said Michael Dowdall shall, in every particular while a member of said association, comply with all the laws, rules, and requirements thereof.’ On July 2, 1883, the defendant issued and delivered to the plaintiff the certificate of membership contained in the findings and which he now holds. It was conceded on the argument that this certificate was precisely like the original, except a slight verbal change as to the name of the council issuing the same; the first certificate was headed ‘Grand Council,’ the second ‘Supreme Council.’

The single question is now presented whether by amendment of the constitution, or any of the rules or regulations, made after the plaintiff had entered into his contract of insurance, it is possible for the defendant to change the rate of a single assessment from $1.10 to $5.56. The trial judge was of opinion that no such change could be made under a fair construction of the contract entered into by the parties and decided in favor of the plaintiff. The learned Appellate Division reversed the judgment entered upon this decision, writing no opinion, but stated in the order of reversal that it was upon the authority of Mock v. Supreme Council of the Royal Arcanum, 121 App. Div. 474,106 N. Y. Supp. 155, and Wright v. Knights of the Maccabees of the World, 122 App. Div. 904,106 N. Y. Supp. 1150. There is a conflict of judicial decisions in the various states on the point now presented, but a careful examination of the cases shows that the great weight of authority is in favor of the position that the original contract cannot be impaired. It would be quite impossible to harmonize the conflicting views of the learned judges, and it remains to be considered whether the decisions of this court have not laid down the rule of law which must now govern, to the effect that the contract of insurance cannot be changed by any act of the defendant. We have on the one hand the plaintiff standing upon the plain letter the spirit of his contract, and on the other the insistence of the defendant that unless, under its construction of the contract, it is vested with the power to increase the amount of a single assessment, as the exigencies of the company may require, it will be unable to continue its financial life and pay its death losses.

The precise question now presented may be thus stated: The plaintiff received from the defendant a certificate insuring his life for $2,000, which contained a single covenant, as follows: ‘This certificate is issued upon the express condition that the said Michael Dowdall shall, in every particular while a member of said association, comply with all the laws, rules, and requirements thereof.’ The defendant also delivered to the plaintiff a printed book or pamphlet containing the constitution and by-laws of the association. Section 6 of article 3 of the constitution provided, in substance, that all members should be assessed according to their age when admitted. The defendant asked the trial court to find that said section 6 of article 3 so appearing in the printed constitution stitution had not been adopted, nor had it been approved by the Supreme Council, and its publication in said pamphlet was unauthorized. This request was very properly refused in view of the fact that some thousands of the pamphlet had been sent to members. The plaintiff insists that the covenant contained in the certificate issued to him by the defendant, requiring that he should in every particular comply with all the laws, rules, and requirements of the association, refers only to such laws, rules, and requirements as existed at the time he entered into his contract; that any future changes or alterations made therein or additions thereto seeking to modify or alter said contract in any respect, do not bind him.

The following cases lay down the legal principles which must control the decision in the case at bar: In Weber v. Supreme Tent of the Knights of Maccabees of the World, 172 N. Y. 490, 494,65 N. E. 258, 259,92 Am. St. Rep. 753, an action was brought upon a certificate of insurance. The defense interposed was that the insured took his own life, and hence a recovery could not be had, because, at the time of his death, the by-laws and rules of the order provided that should an insured commit suicide within five years from the time of admission into the order, whether sane or insane, the contract should be void. Weber's contract of insurance provided that it should be void if the insured committed suicide within one year whether sane or insane. During Weber's lifetime, after the issuance of the certificate, the defendant amended its by-laws and rules so as to extend the time from one year to five in the suicide clause. The opinion of the court near the close states: ‘This contract insured Weber against unintentional self-destruction after one year, and defendant had not the power to take away the right thus secured without his consent.’ In Beach v. Supreme Tent of the Knights of the Maccabees of the World, 177 N. Y. 100, 105,69 N. E. 281, 283, this court again examined the question as to the power of insurance associations or corporations to alter the contract of insurance by amendments in the constitution and by-laws made after the certificate was issued. Cullen, J., after the examination of the facts and authorities in that case, stated in closing his opinion as follows: ‘It is quite easy for fraternal organizations such as the defendant, if they deem the provisions for benefits to their members tentative only, and desire to have them subject to such modification as the business of the order may require, to express that in the certificate. So, in the present case, if the certificate had provided that the payments therein specified should be subject to such modification as to amount, terms, and conditions of payment and contingencies in which the same were payable as the endowment laws of the order from time to time might provide, the amendments would be applicable to existing members. But I think that nothing less explicit than this appearing in the certificate itself should be effectual for such a purpose. Fairness to persons joining the order required such plain dealing.’

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