Gaines v. Supreme Council of Royal Arcanum

• Decision Date: 02 November 1905
• Parties: GAINES v. SUPREME COUNCIL OF ROYAL ARCANUM.
• Court: U.S. District Court — Middle District of Tennessee

140 F. 978

GAINES v. SUPREME COUNCIL OF ROYAL ARCANUM.

United States Circuit Court, M.D. Tennessee.

November 2, 1905

John Ruhm and Baxter Smith, for plaintiff.

John J Vertrees and Frederick H. Bacon, for defendant.

CLARK District Judge.

This case is now before the court on application for a preliminary injunction, based upon the restraining order heretofore allowed. The case is heard on the bill and on such evidence as has been offered in support of the bill and in opposition to the injunction. The defendant is a fraternal beneficiary organization, its membership in all parts of the country aggregating 300,000 members, and about 3,500 of these probably reside in the state of Tennessee. In May, 1905 certain modifications were made in the by-laws and regulations of the corporation by which, speaking broadly, its system of assessment was changed from a system based upon the age of admission of its members to a system based upon the actual attained age of its members, on the 1st day of October, 1905. The main object of this change in the laws of the association was to equalize and render more equitable, in accordance with the general laws of insurance, the premium paid for insurance at different ages by different classes of the members of the association.

It is an established fact, and is in accordance with the very nature of the subject, that the rate of mortality is greater and the demand on the benefit fund greater as the classes of members in the association grow older, in accordance with the principles of ordinary life insurance. It costs decidedly more to carry the class of members who have attained the age of 60 or 65 than it does to insure those who are 30 to 40 years of age; and hence the system operates inequitably and heavily upon the comparatively young members of the association, and operates lightly and very favorably as to the rates of assessment on the older members of the association, among whom the mortality is greater and the demands on the benefit fund to be made by assessment greater accordingly. The assessment, however, under the old system, when made, was equal upon all members, and it would necessarily result from this that comparatively younger members of the association were paying too much for life insurance, having regard to the doctrines of ordinary insurance, and the older members of the association were paying correspondingly too little for the risk of being carried or insured as members. It was to meet this situation that changes here complained of were made from the age of admission to the attained age of the members, and as this change increased decidedly the annual premium charged against older members, especially those passing the age limit of 65 years on October 1, 1905, the complaint is coming chiefly, if not exclusively, for that class of members.

The defendant is an association organized under the laws of the state of Massachusetts, and that is the state of the defendant's domicile and chief office. No...