Makely v. Supreme Council American Legion of Honor

• Decision Date: 10 November 1903
• Citation: 45 S.E. 649,133 N.C. 367
• Parties: MAKELY et ux. v. SUPREME COUNCIL AMERICAN LEGION OF HONOR.
• Court: North Carolina Supreme Court

45 S.E. 649

133 N.C. 367

MAKELY et ux. v. SUPREME COUNCIL AMERICAN LEGION OF HONOR.

Supreme Court of North Carolina

November 10, 1903

Appeal from Superior Court, Chowan County; Moore, Judge.

Action by M. Makely and wife against the Supreme Council of American Legion of Honor. Judgment for plaintiffs, and defendant appeals. Affirmed.

The holder of a mutual benefit insurance certificate, which the association has illegally reduced in amount, is not compelled to remain quiet during his life, and leave the enforcement of the original contract to his beneficiary; nor is he relegated to a suit in equity to compel receipt of the full premium and other recognition of his rights thereunder, but he may maintain an action for damages for that proportion of the premiums paid by him which represents the canceled insurance.

The holder of a mutual benefit insurance certificate protested against its reduction by the association, and continued for a year to pay the full amount of his original premium, a proportionate part of which was always returned. Finding this a useless method of procedure, he again protested against the reduction, continued to pay the reduced premium, and sued to recover the premiums previously paid by him, representing the canceled insurance. Held, that there was no acceptance of the reduction amounting to a waiver of right to recover for the breach of contract.

W. M Bond and J. W. Hinsdale & Son, for appellant.

Pruden & Pruden and Shepherd & Shepherd, for appellees.

DOUGLAS J.

This is an action to recover the proportionate amount of certain premiums paid on a life insurance policy, or "benefit certificate," as it appears to be called in the nomenclature of the association, upon a reduction of the face value of the policy. On the 15th August, 1883, the defendant association issued to the plaintiff Metrah Makely a benefit certificate in the nature of a life policy, promising to pay to the wife of said Makely at his death a sum not exceeding $5,000. The insured paid all premiums and assessments up to September, 1900, when, without any default or consent on his part or the beneficiary of the policy, the face value thereof was reduced from $5,000 to $2,000, with a corresponding reduction in the amount of the premium. The plaintiff referring to the insured, testified as follows, without contradiction: "I was insured August 15, 1883. Was insured before this. Exchanged first policy for this one. I paid all premiums up to September, 1900. After that date I sent premiums to Newman, treasurer of council, but they were returned. They sent back three-fifths and kept two-fifths of premiums. I did not agree to this. I wanted to keep up my insurance for $5,000. Finally I wrote them, as they would not receive full amount of premium, there was no use for me to continue to send full amount. Sent full premiums for year after the change. Told Treasurer Newman I objected to my insurance being cut down. I did not acquiesce in my insurance being cut down to $2,000; I protested against it. I afterwards agreed to pay two-fifths of premium. No complaint has ever been made of my failing to keep other agreements referred to in the application. To January, 1902, I paid $3,006.40, not including interest. Including interest to January 1, 1902, have paid $4,231.46. Application dated August 9, 1881. No notice was given me that they were going to make change referred to in by-law before change was made. There was no friction between me and defendant until by-law was changed. I paid all the premiums. Sometimes had to pay one, sometimes two, and sometimes three premiums per month. A check dated December 28, 1900, was for the full amount of premium, and was returned. I paid full amounts all along as they became due. Think checks were not sent back to me right away. Can't tell when check was first returned to me. I commenced sending two-fifths of original amount, and have kept it up to present. I am still a member, and have recently paid two-fifths of original premium. Have kept it (two-fifths) up. I am, I suppose, still insured for two thousand dollars. I am still holding policy. Am suing for damages for destroying policy. We didn't expect damages for more than three-fifths. I claim damages for three-fifths of policy." Redirect examination: "I paid the two-fifths under protest, because they would not receive the whole amount. Protested when I sent two-fifths amount. Paid since September, 1900, $470." The defendant offered very little testimony, the greater part of which was properly excluded as irrelevant. What was admitted raised no material issue of fact.

Practically the case is before us on questions of law, which we think have been substantially decided in the following cases Strauss v. Life Ass'n, 126 N.C. 971, 36 S.E. 971, 54 L R. A. 605, 83 Am. St. Rep. 699; Id. (on rehearing) 128 N.C. 465, 39 S.E. 55, 54 L. R. A. 605, 83 Am. St. Rep. 699; Hill v. Life Asso., 126 N.C. 977, 36 S.E. 1023; Simmons v. Life Ass'n, 128 N.C. 469, 39 S.E. 966. With one exception the principles governing the case at bar are so nearly identical and have been so fully discussed in those cases that it seems useless for us either to repeat or enlarge upon what we have said. We must adhere to what may now be considered the settled ruling of this court that: "Whatever may be the power of a mutual association to change its by-laws, such changes must always be in furtherance of the essential objects of its creation, and not destructive of vested rights." While relying upon our own decided cases, we are not without authorities in well-considered cases of other jurisdictions. Kerr on Insurance, 127; Niblack, Benefit Societies, 58; Ebert v. Mutual Reserve Fund Life Ass'n, 81 Minn. 116, 83 N.W. 506, 834, 84 N.W. 457; Getz v. Am. Legion of Honor (D. C.) 109 F. 261; Newhall v. Legion of Honor, 181 Mass. 111, 63 N.E. 1; Knights Templar v. Jarman, 104 F. 638, 44 C. C. A. 93. In the last-mentioned case it was held by the Circuit Court of Appeals that: "A clause in an application for a policy of life insurance in a mutual assessment company that the applicant agrees, if accepted, 'to abide by the constitution, rules, and regulations of the company as they now are or may be constitutionally changed hereafter,' cannot...