Hughes v. Wis. Odd Fellows' Mut. Life Ins. Co.

• Decision Date: 11 January 1898
• Citation: 98 Wis. 292,73 N.W. 1015
• Parties: HUGHES v. WISCONSIN ODD FELLOWS' MUT. LIFE INS. CO.
• Court: Wisconsin Supreme Court

98 Wis. 292

73 N.W. 1015

HUGHES

v.WISCONSIN ODD FELLOWS' MUT. LIFE INS. CO.

Supreme Court of Wisconsin.

Jan. 11, 1898.

Appeal from circuit court, Dane county; Robert G. Siebecker, Judge.

Action by Elizabeth Hughes against the Wisconsin Odd Fellows' Mutual Life Insurance Company. From a judgment entered on a verdict directed by the court in favor of plaintiff, defendant appeals. Reversed.

This action was brought upon a contract of life insurance against the defendant, a corporation organized under chapter 43 of the Private and Local Laws for the year 1869, and acts amendatory thereof. It was organized to insure the lives of its members upon a mutual plan, similar to that generally adopted by so-called mutual benefit societies. Respondent's husband, B. B. Hughes, became a member of the company in 1876, and was insured in the sum of $1,000. He afterwards increased his insurance to the sum of $3,000 by separate contracts, the last $1,000 having been taken in 1881. In 1883 the plan of insurance was modified in some respects, and new certificates were issued in lieu of those previously held by members, including those held by Hughes, which new certificates were, however, based upon the former applications. At the time of effecting the insurance for which this action was brought the respondent's husband signed and presented to the company an application in writing, dated June 11, 1881, in the form of questions and answers, one of which is as follows: “(14) Will you make punctual payment of all assessments for which you may become liable, and conform in all respects to the by-laws, rules, and regulations of this company now in force, or which may hereafter be adopted by the same, or its board of directors? Yes.” At that time there was no provision in the charter or by-laws of the company for forfeiting or avoiding its contracts in case of suicide by the insured; but in February, 1886, the board of directors of the company duly adopted the following by-law: “Every certificate of membership shall be and become wholly forfeited and utterly void and of no binding force and effect whatever upon the company, * * * if the insured shall die * * * by suicide, felonious or otherwise, sane or insane, or by his or her own hand, in any manner whatever, or under any circumstances other than by accident; * * * and no money shall be paid upon any certificate of membership thus forfeited.” Section 4 of the charter, in force at the time of effecting the contract in suit, provides that “the directors are empowered to enact, repeal, alter, or amend all by-laws, rules, and regulations for the management of the affairs of this company not inconsistent with the provisions of this charter, or contrary to the constitution and laws of the United States or of this state.” The original charter contained this provision, and it was retained therein and in the amended or revised charter. The insured died by his own hand, December 7, 1894; all of the insurance held by him in the defendant company being then in force. The company paid $2,000 thereof, but refused to pay the $1,000 effected in 1881, for the recovery of which this action was brought. The contention of the company was that under the provisions of its charter and the stipulations contained in the application for membership it had the right to amend its by-laws so as to avoid certificates on account of suicide, and that the insured was bound by such by-laws, though enacted after he became a member. The trial court ruled that the company did not possess this power, and that members were not bound by by-laws enacted subsequently to their becoming members, and at the conclusion of the testimony directed a verdict for the plaintiff for the amount claimed, upon which judgment was rendered for the plaintiff, and from which the defendant appealed.L. H. Mead, C. E. Estabrook, and George Lines, for appellant.

Bashford, O'Connor and Aylward, for respondent.

PINNEY, J. (after stating the facts).

1. The principal question presented by this appeal is whether the assured, Hughes, was bound by the by-law adopted by the board of directors of the defendant company in February, 1886, after the contract of insurance had been perfected, by which “every certificate of membership shall be and become wholly forfeited and utterly void, and of no binding force and effect whatever upon the company, * * * if the insured shall die * * * by suicide, felonious or otherwise, sane or insane, or by his or her own hand, in any manner whatever, or under any circumstances other than by accident; * * * and no money shall be paid upon any certificate of membership thus forfeited.” It is contended that this by-law was void for want of authority on the part of the directors to adopt it, and that the assured never in any manner consented to this by-law. In 2 Cook, Stock, Stockh. & Corp. Law, § 700a, it is said that: “By-laws are to be made by the stockholders in meeting assembled. The directors have no inherent power to make by-laws. But the stockholders may delegate to the directors the power to make by-laws. Frequently the charter confers this power on the directors.” 1 Beach, Priv. Corp. § 311; Ang. & A. Corp. § 327. The charter of the defendant corporation has always provided, in respect to the defendant company, ever since it was organized, that “the directors are empowered to enact, repeal, alter or amend all by-laws, rules and regulations for the management of the affairs of this company not inconsistent with the provisions of this charter, nor contrary to the constitution and laws of the United States.” Original Charter (Priv. & Loc. Laws 1869) c. 43, § 4. Section 6 of the Revised Charter (chapter 1, Laws 1887) provides that: “The board of directors shall have power and authority * * * to enact, amend, alter or repeal all by-laws, rules and regulations for the management of the affairs of the company not inconsistent with the constitution or laws of the United States or of this state; and generally to manage and control the business and affairs of the company.” But for this provision of the charter, the power to pass by-laws would doubtless be vested solely in the stockholders. But it is very clear, we think, that the power to pass by-laws was by the charter expressly delegated to and vested in the directors of the company, and we cannot doubt that it had power to pass the by-law in question. The assured, in his application for membership, stipulated, in his answer to question 14 of his application, to “conform in all respects to the by-laws, rules, and regulations of the company now in force, or which may be hereafter adopted by the same or its board of directors.” The provisions of the charter, and the by-laws and regulations adopted pursuant thereto by...