Miller v. Tuttle

• Decision Date: 10 July 1903
• Citation: 73 P. 88
• Parties: MILLER v. TUTTLE et al.
• Court: Kansas Supreme Court

73 P. 88

MILLER v. TUTTLE et al.

Supreme Court of Kansas

July 10, 1903

In Banc. Mandamus by John M. Miller against S. R. Tuttle financial secretary, Columbia Council No. 50, Knights and Ladies of Security, and the National Council of the Knights and Ladies of Security. Judgment for plaintiff.

D. C Tillotson, T. D. Humphreys, and T. H. Blain, for plaintiff.

David Overmyer and G. A. Huron, for defendants.

OPINION

GREENE, J.

This is an original proceeding in mandamus. The National Council of the Knights and Ladies of Security is a mutual benefit insurance association, and S. R. Tuttle was the financial secretary of Columbia Council, No. 50, a subordinate council of said association, and to whom dues were payable. John M Miller was a member in good standing of said association, and of council No. 50, up to July, 1902. His monthly dues were payable in July. During that month he tendered to S. R. Tuttle, as such financial secretary, all dues which he claimed were owing by him, necessary to retain and continue his membership in said association, as provided in his certificate of insurance theretofore issued by the association. The tender was refused, and on the 31st day of July said Tuttle, as the financial secretary of said council, declared and entered the plaintiff a delinquent, and suspended him for the nonpayment of his July assessment. This action was brought to compel the association and said Tuttle, as such financial secretary, to accept from plaintiff the amount so tendered in full of his assessment for the month of July, 1902, and reinstate him as a member in good standing. The plaintiff was carrying $2,000 insurance in this association. Prior to 1896 his dues were 50 cents per $1,000 per month. He was a level-rate member. In 1902 the association so changed its by-laws as to graduate the assessments according to age. This materially increased plaintiff’s monthly assessment. He contends that, his certificate having been issued to him under the by-laws of the association, which only required him to pay 50 cents per month on each $1,000, the amendment to the by-laws, materially increasing his monthly payment, was without his consent, and is therefore void. An alternative writ was allowed, to which the defendants answered that the amount so tendered was not the amount due from plaintiff for his July assessment.

It is contended by the defendants that, when the plaintiff became a member of the association, a level rate of 50 cents per month upon each $1,000 was the assessment for beneficiary insurance; that the constitution, by-laws, application, and certificate of the plaintiff constitute the contract of insurance; and that, by reason of certain provisions therein, the association was authorized to so change its by-laws, if necessary, as to place the level-rate members upon a graduated basis. The provisions referred to and relied upon are as follows: The application contained the following: "I further agree, if accepted as a member of the order, to faithfully abide by its rules and regulations.‘ The certificate held by the plaintiff has the following provision: "This certificate is issued upon the condition that said insured shall in every particular, while a member of the order, comply with all the laws, rules, and regulations thereof.‘ Whether the petitioner tendered the amount due depends upon the construction to be given to these provisions of the application and certificate, together with the amended by-laws and their application to the contract of insurance. The amount tendered was the full amount due from plaintiff in payment of his July assessment as a level-rate member, but was not the full amount due from him, if it shall be determined that he was subject to the amended by-laws.

There are several preliminary questions argued by both parties, which, upon examination, we have determined are not meritorious, and in no way control a decision of what is conceded by both parties to be the important and controlling question in this case. We only refer to them now to say that none are sustained.

The defendant contends that the provision of the application and certificate, that "said insured shall in every particular, while a member of the order, comply with all the laws, rules, and regulations thereof,‘ is an express delegation of authority to the association to change, alter, or amend any of the provisions of its constitution or by-laws, which are reasonable, or may seem to it necessary for the benefit of the association, even to the alteration or change of its contracts of insurance. With this contention we do not agree. The constitution and by-laws in existence at the time of the application, together with the application and certificate, are the contract between the parties. It is to these instruments we must go to ascertain the duties and obligations of each. By an examination of these we find the plaintiff expressly agreed that he would in every particular, while a member of the order, comply with all its laws, rules, and regulations; that he would pay 50 cents per $1,000 per month, as stated in his application and accepted by the terms of his certificate. In consideration of his performing these conditions, the association agreed, in case of his death while a member in good standing, to pay to his beneficiaries the sum of $2,000. Beneficiary insurance contracts are as sacred before the law as are any other contracts, and are to be tested and governed by the same rules. It is no more within the power of a beneficiary association to change the terms of a contract of insurance than for any other contracting party to do so, and where it is claimed that such contract has been changed by the consent of the insured the association must affirmatively show that such authority was granted.

It is said in Covenant Mutual Life Ass’n v. Tuttle, 87 Ill.App. 309, 310: "The better opinion is, if it is conced that by-laws in force when the certificate is issued enter into and become a part of the contract, that it is only those then in existence, and that the society has no right, by amending or repealing any of them, without the consent of the certificate holder, and in the absence of any such right reserved in the contract, to impose new conditions or burdens, affecting the contract to his injury, or by a new provision, passed after the making of the contract, to forfeit his rights under it. In a contract of mutual benefit insurance the member acts for himself, and not as a part of the society. His rights rest upon his contract of insurance, and not upon his contract of membership in the society. A corporator in a mutual benefit society, like a stranger, may enter into a contract of insurance with it, and his rights under the contract will be as fully protected as those of a stranger.‘ Notwithstanding that by the contract of insurance the plaintiff became a member of the association, the insurance is a contract which cannot be altered without the consent of both parties. His character as a party to the contract of insurance is not merged into his character as a member of the association. The fact that the plaintiff is a member of such beneficiary association does not of itself confer upon the association power to change or modify his insurance contract, without his consent, by subsequently enacted by-laws.

In Northwestern Ben. & Mut. Ass’n of Illinois v. Wanner, 24 Ill.App. 357, 361, the court said: "The contract of insurance between a mutual benefit association and one of its members will be as fully protected as if made with a stranger. The association cannot, without the assent of such member, impose any new condition affecting the contract to his injury. It cannot, by subsequent by-laws, forfeit any of his rights under the contract. It might well be that he would be bound by any by-law subsequently passed that only referred to mere regulations, not changing his contract in substance. It is the general policy of all our constitutions and laws that no law shall be passed invalidating a contract existing at the time of its passage. All implications are also indulged in against any subsequently passed laws, without express provision being given intended to refer to existing contracts.‘

In Insurance Co. v. Connor, 17 Pa. 136, the court said: "A corporator in a mutual insurance company, like a stranger, may enter into a contract of insurance with it, and his rights under the contract will be as fully protected as those of a stranger. The remedies existing at the time of the contract for enforcing it against him are all that can be resorted to. The company have no right, without his assent, to impose any new condition affecting the contract to his injury, or by a by-law passed after the making of the contract, forfeit his rights under it.‘ See, also, Protection Life Ins. Co. v. Foote, 79 Ill. 361.

The agreement of the plaintiff that he would be bound by the by-laws and regulations of the order was that he would be bound by them in his contractual rights as they then existed. The association had the power to make by-laws for the purpose of regulating the transaction of its business and its affairs in general. This was contemplated by the parties to the agreement. But no presumption can arise, from the stipulation in the certificate, that the insured contemplated such change in the by-laws as would materially change or modify his contractual relation.

The question presented here is not a new one to the courts. Many similar associations have found, after similar experiences that they had organized and were attempting to do business upon unbusinesslike principles, and thereafter have undertaken to so change the contract rates of the then existing members, by changing their by-laws or constitution, as to affect...