Newman v. Supreme Lodge, Knights of Pythias

• Decision Date: 13 December 1915
• Docket Number: 17204
• Citation: 70 So. 241,110 Miss. 371
• Court: Mississippi Supreme Court
• Parties: NEWMAN v. SUPREME LODGE, KNIGHTS OF PYTHIAS

70 So. 241

110 Miss. 371

NEWMAN v. SUPREME LODGE, KNIGHTS OF PYTHIAS

No. 17204

Supreme Court of Mississippi

December 13, 1915

APPEAL from the circuit court of Hinds county. HON. W. A. HENRY Judge.

Suit by Carl Newman against the Supreme Lodge, Knights of Pythias. From a judgment overruling a demurrer to defendant's plea, plaintiff appeals.

The facts are fully stated in the opinion of the court.

Judgment affirmed.

Whitfield & Whitfield and Flowers & Brown, for appellant.

Watkins & Watkins and Watson & Esarey, for appellee.

OPINION

CAMPBELL, Special Judge

Appellee is a corporation organized under an act of Congress, having a lodge system, a ritual, and a representative form of government. It is of that class commonly known as a mutual fraternal, and benefit association. In 1877, it created an endowment rank, in which certificates of insurance were issued on the lives of its members for the benefit of their families, relatives, or other persons dependent upon them. The endowment rank was subdivided into sections, one of which was in Chicago, in the state of Illinois. In 1890, Carl Newman, the appellant, being then forty-six years of age applied for membership, and obtained a certificate of insurance on his life as a member of the section of the rank located in Chicago. His certificate of insurance obligated the rank to pay his widow, upon his death, one thousand dollars. The fund for paying the certificates of insurance issued by the rank to its members was derived from monthly assessments of the members. The act of Congress under which appellee organized provided that it should have a constitution, and should have the power to amend the same, and its constitution and laws provided that the same "may be altered or amended at any regular meeting of the Supreme Lodge by a two-thirds vote." At the time appellant applied for membership and received his certificate of insurance, section 1 of article 4 of appellee's constitution and laws was as follows:

"Each member of the endowment rank, shall, on presenting himself for obligation, to pay to the secretary of the section, in accordance with his age and the amount of endowment applied for, a monthly assessment, as provided in the following table, and shall continue to pay the same amount each month thereafter as long as he remains a member of the endowment rank; unless otherwise provided for by the Supreme Lodge, Knights of Pythias of the World."

Subjoined to this section 1 was a table, giving the amounts of the monthly assessment per one thousand dollars according to age, running from the age of twenty-one to fifty, both inclusive; and the amount of the monthly assessment therein designated for one forty-six years of age (appellant's age when he became a member) was one dollar and forty cents per one thousand dollars of insurance. Appellant's application for membership contained the following stipulation:

"I hereby agree that I will punctually pay all dues and assessments for which I may become liable, and that I will be governed, and this contract shall be controlled, by all the laws, rules and regulations of the order governing this rank, now in force, or that may hereafter be enacted by the Supreme Lodge, Knights of Pythias of the World, or submit to the penalties therein contained, to all of which I willingly and freely subscribe."

His certificate of insurance, issued in pursuance of said application, contained the following stipulation: "In consideration of the payment hereafter to said endowment rank of all assessments and dues as required, and the full compliance with all the laws governing this rank now in force, or that may hereafter be enacted by the Supreme Lodge, Knights of Pythias of the World, and shall be in good standing under said laws," the insurance therein provided for should be paid by the board of control of the endowment rank of Knights of Pythias of the World to his beneficiary therein named; and underneath that certificate was the following provision: "I hereby accept this certificate of membership subject to all conditions. therein contained"--which he signed. Appellant paid his monthly assessment of one dollar and forty cents until 1894, when the monthly assessment was raised to, one dollar and forty-five cents, and this he paid until 1901, when the monthly assessment was again raised to two dollars and twenty-five cents, and this he paid until January, 1911, having, in the meantime, paid some special assessments of the same amount. He acquiesced in these raises of his assessment, as he alleges in his declaration, because they were small in amount. In the latter part of 1910, the monthly assessment of the class to which appellant belonged was again raised from two dollars and twenty-five cents to seven dollars and thirty-five cents, and this latter amount he refused to pay, claiming that the same was arbitrary, and in violation of appellee's contract with him; and, as a result of this latter increase of the monthly assessment, he brought this suit to recover from the appellee all money that he had paid into the rank on account of his insurance, alleging, in substance, that, in making said increase of the monthly assessment, appellee had breached its contract with him, made at the time he became a member of said endowment rank. To appellant's declaration, appellee interposed a special plea, wherein it set forth its history, the acts of Congress under which it was organized, its constitution and by-laws, making them exhibits to its plea, claiming the right, under its constitution and by-laws and its contract with appellant, to increase the monthly assessments, as was done, and averred facts tending to show that said increase of the monthly assessment was necessary for the good of the rank, and was to enable it to carry out its contracts with its various members, in view of the great number of deaths and the impossibility, from its assets and low rate of assessment theretofore prevailing, of meeting its obligations to its members, and that it had no other motive or purpose in raising the assessments. Plaintiff (appellant here), interposed a demurrer to the plea, assigning various grounds, all of which, in effect, involved the contention that the increase of the assessments complained of was in violation of his contract. The demurrer was overruled, and, plaintiff declining to plead further, final judgment was rendered for the defendant (appellee here): Hence this appeal.

The single question for our determination, in this case, is whether or not the amendment of its laws, adopted by appellee, effective January 1, 1911, whereby the rate of monthly assessments of its members was increased, was valid and binding upon appellant, the general power to amend its constitution and laws having been therein reserved, and appellant, in his application for membership, having agreed that he would be governed, and his contract should be controlled, by laws then in force or that might thereafter be enacted, and the certificate of insurance issued to him providing that he should comply with all the laws then in force or that might thereafter be enacted. There is no claim that said amendment was not adopted in accordance with appellee's laws; but the claim is that it impaired appellant's vested rights and materially affected his contract, and was, for that reason, invalid. We are not disposed to lengthen this opinion by reviewing, or even citing, the great number of cases in which the power of a mutual benefit association or corporation to amend its laws has been considered. The rule is well established that such an association or corporation, under the reserve power to amend its laws, whether the power be reserved in the constitutions and laws or in its contracts with its members, may so amend its laws as to bind its members and affect their pre-existing contracts, provided the amendment be reasonable, does not impair vested rights, or radically alter its contracts with its members. As to what is a reasonable amendment, or an impairment of vested rights, or to what extent the amendment may alter pre-existing contracts, the decisions are in direct conflict.

It is also well established under the rule that it is entirely competent for parties to contract with reference to existing or future laws, and that, when application for membership in a mutual benefit association has been made, and a certificate of insurance from the association is issued to the applicant, the constitution, by-laws, application and certificate, all together, constitute the contract. This court in Woodmen, etc., v. Woodruff, 80 Miss. 546, 32 So. 4, made this statement of the rule:

"The constitution and laws of a benefit society are binding upon it and upon all of its members, and may be considered as written into contracts between it and its members; and all amendments or changes made in the constitution and laws of the order become at once the law of the order and of its members, and take the place and stead of the laws amended or changed, and thereafter govern the rights and liabilities of the order and of its members in relation to all contracts between them."

Having stated these general rules, we now proceed to consider the particular question in this case, limiting our opinion, as far as practicable, to a review of those decisions which have considered the question of raising assessments in a mutual benefit association or corporation; and, as to that question there is conflict in the decisions. The following cases cited by appellee's counsel uphold the validity of an amendment of the laws of a mutual benefit association increasing the rate of assessments of its members: Fullenwider v. Supreme Council, 180 Ill. 621, 54 N.E. 485, 72 Am. St. Rep. 239; Supreme Lodge, K. of P.,...