Olson v. Modern Woodmen of America
| Decision Date | 29 September 1917 |
| Docket Number | 31251 |
| Citation | 164 N.W. 346,182 Iowa 1018 |
| Parties | GUVINE OLSON, Appellant, v. MODERN WOODMEN OF AMERICA, Appellee |
| Court | Iowa Supreme Court |
REHEARING DENIED FEBRUARY 13, 1918.
Appeal from Polk District Court.--WM. H. MCHENRY, Judge.
ACTION on a benefit certificate issued to one J. W. Olson, payable upon his death to his wife, the plaintiff herein. Judgment for the defendant in the court below, dismissing plaintiff's petition. Plaintiff appeals. Opinion states the facts.
Reversed.
John L Gillespie and Edwin J. Frisk, for appellant.
Truman Plantz, Jesse A. Miller, and Geo. G. Perrin, for appellee.
This action is brought to recover on a certain benefit certificate issued by the Modern Woodmen of America, defendant, on the life of one J. W. Olson. The plaintiff herein is the wife of said J. W. Olson, and the beneficiary named in said certificate. The court below found for the defendant, and dismissed plaintiff's action. The cause was tried upon stipulated facts. From the stipulation it appears:
That, on the 27th day of September, 1894, J. W. Olson became a member of said association, and received the certificate sued on. The certificate provides for the payment of $ 2,000 to the beneficiary named herein, upon the death of said Olson. The contract consists of the application, the benefit certificate, and the by-laws of the order.
In the application, Olson agreed that, if he failed to comply with and conform to any and all laws now in force or hereafter adopted, his certificate should be void, and further agreed to make punctual payment of all dues and assessments for which he should become liable, and to conform in all respects to the laws, rules, and usages of the order now in force, or which may be hereafter adopted by the same. In the application, this question was propounded to him:
"Do you understand and agree that the laws of the order now in force, or hereafter enacted, enter into and become a part of every contract of indemnity between the members and the order, and govern all rights thereunder?"
He answered, "Yes."
The following agreement appears in the application:
"I agree to make punctual payment of all dues and assessments for which I may become liable, and to conform in all respects to the laws, rules and usage of the order now in force, or which may hereafter be adopted by the same; that the foregoing answers and agreements, with the preceding declaration, shall form the basis of the contract between me and the Modern Woodmen of America, and are offered by me as a consideration for the contract applied for, and are hereby made a part of any benefit certificate that may be issued on this application, and shall be deemed and taken as a part of such certificate; that this application may be referred to in said benefit certificate as the basis thereof; and that they shall be construed together as one entire contract."
The certificate provided that Olson, while in good standing in the fraternity, is entitled to participate in the benefit fund to the amount of $ 2,000, which shall be paid at his death to Guvine Olson, related to him as wife, subject to all the conditions of this certificate and fundamental laws of this order, and liable to forfeit if said member shall not comply with such conditions, laws and by-laws and rules as are or may be adopted by the head camp of this order, from time to time, or the local camp of which he is a member; and provided that the certificate was issued in consideration of the warranties and agreements made by Olson in his application. The by-laws, at the time the certificate was issued, provided that they might be amended at any special or regular session of the head camp, by a two-thirds affirmative vote of the members present. It was further provided that the beneficiary named in the certificate shall be entitled to participate in the benefit fund to an amount not exceeding the amount stated in the certificate, provided that all the conditions and requirements contained in the certificate and in the by-laws of the society, as the same now exist or may hereafter be modified, amended, or enacted, shall be fully observed and complied with. As will be noted, the certificate in question was issued on the 27th day of September, 1894.
From the stipulation entered into at the trial, it appears: That, on the 19th day of May, 1907, Olson left his home at Grinnell, Iowa, and his whereabouts since then have been and are unknown to the members of his family; that Olson, prior to his disappearance, and the plaintiff, since his disappearance, have paid to the clerk of the local camp of which Olson was a member, all assessments and dues levied on account of the benefit certificate sued on, up to and until the commencement of this action, on the 22d day of April, 1915. There was no proof of the actual death of Olson. The plaintiff relies upon his unexplained absence for seven years from his home and his family, as proof of death. It was further stipulated and agreed on the trial that, if the court found that the defense set up by the defendant in its answer was a good and valid defense, then the final judgment should be entered for the defendant; but if the court found that such defense so set up by the defendant was not good and valid defense, then judgment should be entered for the plaintiff.
The defense proposed is this: The duly and regularly constituted head camp of the defendant revised and amended its by-laws after the issuance of the certificate sued on, and enacted the following:
The term, "within the life of the benefit certificate," as here used, means that the benefit certificate has not lapsed or been forfeited, and that all payments required by the by-laws of the society have been made.
It is the claim of the defendant that this by-law is binding upon the plaintiff, and that, in the absence of proof of actual death, she is not entitled to recover until the full term of Olson's expectancy of life shall have expired, and then only in the event that all assessments have been paid.
It is stipulated that his expectancy, according to the National Fraternal Congress Table of Mortality, is twenty-six years after his disappearance. The question is this: Does this by-law defeat recovery, in the absence of proof of actual death? Of course, if binding on the assured, it is binding on the plaintiff. If it is a by-law which the company had a right to make, by reason of the reserve power in the society and the agreement of Olson, expressed in the application and contained in the certificate, and, when adopted, bound him, then, of course, it is just as effectual against the plaintiff, whose rights all rest upon the certificate, of which the application, by-laws, and constitution of the order are a part. We may assume, for the purposes of this case, that the society had a right to enact this by-law, and that it bound all who came into the order after its adoption. The question before us is, Is the by-law retroactive? Is it effectual to bind those who became members before its adoption, and can it be urged against one who relies upon a certificate issued at a time when this by-law was not in force?
There can be no question, under the authorities, that, in this case, the application and by-laws, together with the certificate, constituted the contract between the assured and the society. There is no question that the assured as sented and agreed to be bound by subsequent by-laws; but the reserve power in the society and the consent of the assured must not be construed to give to the company the right, after the issuance of the certificate, to amend its by-laws so as to unreasonably affect substantial rights and contractual obligations already entered into. We think it is the general holding of the courts that a reservation of power in a mutual benefit insurance company, or the consent of the assured to make future by-laws retroactive in their nature, must be understood to mean the power to make future by-laws which shall be reasonable; and we think it is the general, if not the universal, holding of the courts that, in construing this reserved power or consent, the reserved power or the consent must be construed so as to permit only reasonable by-laws and amendments to be adopted, in furtherance of the contract, and not such as would overthrow or materially alter its terms, or unreasonably affect the substantial rights of the assured under his certificate; that it does not confer upon the society the power to destroy the contractual rights of a member created by the certificate, or to unreasonably impair that obligation, or unreasonably reduce the indemnity which it has promised to pay, or unreasonably embarrass the assured's...
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Olson v. Modern Woodmen of Am.
... 182 Iowa 1018 164 N.W. 346 OLSON v. MODERN WOODMEN OF AMERICA. No. 31251. Supreme Court of Iowa. Sept. 29, 1917 ... Appeal from District Court, Polk County; Wm. H. McHenry, Judge. Action on a benefit certificate issued to one J. W. Olson, payable upon his death to his wife, the plaintiff herein. Judgment for the defendant in the court below dismissing ... ...