Mut. Reserve Fund Life Ass'n v. Taylor

• Decision Date: 12 February 1901
• Citation: 37 S.E. 854,93 Va. 208
• Court: Virginia Supreme Court
• Parties: MUTUAL RESERVE FUND LIFE ASS'N. v. TAYLOR.

93 Va. 208

37 S.E. 854

MUTUAL RESERVE FUND LIFE ASS'N.

v.TAYLOR.

Supreme Court of Appeals of Virginia.

Feb. 12, 1901.

LIFE INSURANCE—MUTUAL ASSOCIATION—ASSESSMENTS—INCREASE—VALIDITY—POLICY— CONSTRUCTION — UNAUTHORIZED DECLARATION OF FORFEITURE—HOLDER'S REMEDY-FRAUD — EVIDENCE — ASSENTING STOCKHOLDER — RIGHT TO COMPLAIN — REPRESENTATION BY PROXY—FRAUDULENT VOTE — CONTRACTS — CONSTRUCTION — RIGHT OF ACTION FOR BREACH—PLAINTIFF'S WILLINGNESS TO PERFORM—EFFECT.

1. If a life insurance association adopts an unauthorized basis of assessment, and, because a member refuses to pay, declares his policy forfeited and disclaims all liability, he may consider the policy at an end and sue immediately for its value.

2. A clause in the policy of an assessment association providing that the rate of assessment might be changed each five years to correspond with the actual mortality experience of the association allows it to change the rates as to different ages, to meet the result of its experience.

3. An increase in the rate of the assessments against a member of a mutual life association not being made to correspond with the actual mortality experience of the association, as his policy expressly provides in case of an increase, the assessment is unauthorized, and his failure to pay it does not forfeit his membership or his rights under his policy.

4. A willingness and readiness to perform on the part of one party to a contract, without any demand on the other party, who has wrongfully refused performance, or without doing anything which places the latter in a worse condition or increases the rights or immunities of the wrongdoer, does not show that he has not accepted the other's renunciation as final, and thereby terminated the contract, so as to authorize an action for the breath.

5. To determine whether a right exists under a contract, or what construction shall be placed thereon, acquiescence by one party in the other's known construction, and compliance with his demands based on the contract, are material.

6. In an action by a member against a life insurance association based, inter alia, on an alleged unauthorized increase in his rate of assessment, an agreed fact, that resolutions pursuant to which it was made were duly adopted under its charter, constitution, and by-laws, and the laws of the state applicable thereto, is conclusive as to the legality of the company's action.

7. A state officer appointed to examine into the workings of assessment insurance companies therein reported, more than three years before an increase in the rate of assessments was voted by a particular insurance association, that such a step was necessary and "should be taken at the first opportunity." Notice thereof was given to a member objecting thereto, and of the company's action thereon in increasing his assessment by adding to his age of entry, 60 years, one-half the number of years intervening between that and the time of assessment. Held, that a finding of fraudulent conduct could not be predicated thereon, inferable from the amount of the assessment.

8. A member of a life insurance association who assented to an increase in his assessments by voting therefor at a stockholders' meeting cannot complain that it is unreasonable.

9. A member of a mutual life insurance association, represented by proxy at a meeting thereof which increased nearly eight-fold assessments on members who entered at his age. 60 years, so that he was compelled to pay $141 per year on each $1,000 of his insurance, rather than forfeit it, cannot say that his agent acted fraudulently in voting for the increase, which was necessary to keep the company alive, conceding that he, if present in person, would not have done so.

Error to law and equity court, of city of Richmond.

Assumpsit by James M. Taylor against the Mutual Reserve Fund Life Association. Judgment for plaintiff, and defendant brings error. Reversed and judgment entered for defendant.

Chas. S. Stringfellow and L. L. Lewis, for plaintiff in error.

William L. Royall, for defendant in error.

PHLEGAR, J. This case is on a writ of error to a judgment of the law and equity court of the city of Richmond in an action of assumpsit brought by James M. Taylor against the Mutual Reserve Fund Life Association.

The declaration contains two counts, the first of which avers, among many other things, that the defendant association made a contract or policy of insurance or certificate of membership whereby, in consideration of certain dues and assessments paid and to be paid by the plaintiff, it promised to pay to his wife, or, if she did not survive him, to his legal representatives, 90 days after satisfactory proof of his death, the sum of $5,000; that Mrs. Taylor is dead; that the basis of all assessments which were to bemade appeared in a table printed on the certificate or policy, which, with the certificate, the constitutions (there being five of them, the result of general revisions), the by-laws, and certain mortuary and assessment tables, are made a part of this count.

The certificate or policy, as it is sometimes denominated in the declaration, contains the following provisions:

"Whenever the death fund of the association is insufficient to meet an existing claim by death, an assessment shall be made upon the entire membership in force at the date of such death, for such a sum as has been established by the board of trustees, according to the age of each member, as per table Indorsed hereon, and the sum received from such assessment, less twenty-five per cent, to be set apart for the reserve fund, shall go into the death fund.

"After the expiration of each period of five years during the continuance of this certificate of membership a bond will be issued, bearing interest at the rate of four per cent, per annum, payable annually to the death fund, for an equitable proportion of the reserve fund, and the principal of said bond shall be available ten years from its date towards paying future dues and assessments under this certificate; and, should membership hereunder cease by death or otherwise, any portion of said principal not thus used shall be applied to increase the bonds issued at the next quinquennial apportionment to other members of the association holding certificates issued during the same year as this certificate, and at which apportionment the rate of assessments may be changed to correspond with the actual mortality of the association.

"This certificate is issued and accepted subject to the express condition that if any of the payments above stipulated shall not be paid when due, at the office of the association in the city of New York, or to an agent of the association furnished with a receipt signed by its president or secretary,

* * * then and in each and every such case this certificate shall be null and void, and all payments made thereon shall be forfeited to the association."

These provisions were in accord with the constitution and by-laws then in force, and with those now in force, except that the last constitution, which was adopted in January, 1888, requires bimonthly assessments. Each constitution provided for revision or amendment at any annual meeting by a two-thirds vote of the members present. The table of rates indorsed on the certificate provided: "The assessment rate for each member according to the age taken from the nearest birthday shall be as follows: Age 15 to 35, rate $1.00: age 2G, rate $1.02;

* * * age 00, rate $3.00, "—and so on, providing a rate for every year's age from 15 to 05; those being the age limits within which the members were received.

This count also avers that the certificate and table indorsed thereon were a contract; that all assessments should be made on the same ratio as appeared in the original list (that is, if the assessment on one age was raised a given per cent, all should be raised the same per cent.); that the association had violated its contract, and had, February 1, 1898, made a new rate, whereby it increased the assessment against him and persons of his age at entry (60 years) nearly eight fold, while the assessment upon persons who entered with him at 25 years of age was increased only two and one-fifth fold; that this was not done to correspond with the actual mortality experience of the association, and was illegal and oppressive, and that he had refused to pay it; that in consequence of such refusal the association had declared the certificate forfeited and void, refuses to acknowledge any liability thereunder or to acknowledge him as a member, and has completely renounced and broken its contract.

The second count avers the issuing of the certificate, and Mrs. Taylor's death; makes the certificate and the table of assessment rate indorsed thereon, and the February 1, 1898, assessment table, parts thereof; avers the same construction of the contract as to rates of assessment as is averred in the first count; also avers that the assessment of February 1, 1898, was contrary to the contract, unjust, and illegal, but omits the averment that it does not correspond with the actual mortality experience of the association. It also avers the refusal of the plaintiff to pay the assessment, the...