Pearson v. Knight Templars' & Masons' Life Indem. Ins. Co.

• Decision Date: 17 October 1905
• Citation: 89 S.W. 588,114 Mo. App. 283
• Court: Missouri Court of Appeals
• Parties: PEARSON v. KNIGHT TEMPLARS' & MASONS' LIFE INDEMNITY INS. CO.

89 S.W. 588

114 Mo. App. 283.

PEARSON v. KNIGHT TEMPLARS' & MASONS' LIFE INDEMNITY INS. CO.

St. Louis Court of Appeals. Missouri.

October 17, 1905.

1. INSURANCE—MUTUAL BENEFIT INSURANCE —CONTRACT—CONSTITUTION AND BY-LAWS.

A policy issued by a mutual benefit association, which contains on its back the constitution and by-laws of the association, and which declares that they shall form a part of the contract, makes the constitution and by-laws a part of the policy.

2. SAME—MODIFICATION OF CONTRACT — AUTHORITY OF ASSOCIATION.

A beneficiary association, doing an insurance business on the assessment plan, has no authority to materially modify the contract of insurance without the assent of the member.

3. SAME—INCREASE OF ASSESSMENTS.

A beneficiary association, issuing a policy of insurance pursuant to an application in which the assured agrees to abide by the constitution and regulations of the company "as they now are, or may be constitutionally changed hereafter," has no authority to materially increase the assessments, thereby increasing the cost of insurance, without the assent of the assured.

4. SAME—CONSTRUCTION OF CONTRACT.

The constitution of a mutual benefit association provided that policies might be issued on a basis of benefits ranging in amounts to $5,000 and all the money paid in assessments on the policy. It issued a policy which recited that, in consideration of the member's paying a specified sum and all assessments, the association would pay, after satisfactory proof of his death, to the beneficiary $3,000 "and all money paid on the policy in assessments." Held, that the association agreed to pay on the member's death the face of the policy and all money paid in by him on assessments.

5. SAME—ASSESSMENTS—AMOUNTS.

The constitution of a mutual benefit association made $1,000 the unit of assessments. The association issued a policy for $3,000 and "all money paid on the policy in assessments." Held, that assessments paid in could not be assessed until they aggregated $1,000, and the basis for levying assessments could not be again raised until a second $1,000 had been paid in assessments.

Appeal from Louisiana Court of Common Pleas; David H. Eby, Judge.

Action by Erasmus D. Pearson against the Knight Templars' & Masons' Life Indemnity Insurance Company. From a judgment for plaintiff, defendant appeals. Affirmed.

Appellant is a life insurance company, engaged in furnishing life indemnity to widows, orphans, relatives, and devisees of deceased members on the assessment plan, and, as such, is incorporated under the laws of the state of Illinois. On January 12, 1887, respondent, then 57 years old, and a resident of the city of Louisiana, Mo., made a written application to appellant for a policy of insurance on his life, which said written application contained the following language: "I further agree, if accepted, to abide by the constitution, rules, and regulations of the company, as they now are or may be constitutionally changed hereafter." Appellant accepted respondent's application for membership and issued to him its policy, No. 2,724, for "three thousand dollars and all the money paid on the policy in assessments." One of the provisions of the policy is as follows: "It is further agreed that the constitution and by-laws printed on the back of this policy shall separately and collectively form and be a part of this contract."

Section 4 of article 4 of said constitution and by-laws, as printed on the back of said policy, is as follows:

"Upon the death of any member an assessment, increasing with age, shall be made upon the surviving members (provided an assessment is needed) according to the following table of rates. Said table is drawn for $1,000, which shall be the unit in determining all other amounts.

                Table of Rates.           Assessments per $1.000
                Years of age, inclusive, 21 to 30.........$   .50
                *   *   *   *   *   *   *
                Years of age, inclusive, 66 and upward.... 2.55
                

"But no assessments shall be made so long as the money in the death fund will pay the maximum loss in full."

The above provision of appellant's constitution and by-laws continued in force until February 16, 1900, when the same was amended, constitutionally and regularly, so as to read as follows:

"Upon the receipt of proof, satisfactory to the board of directors, of the death of a member, an assessment, increasing with age, shall be levied upon the surviving members, provided an assessment is needed, according to the following table of rates; said table is drawn for $1,000, which shall be the unit determining all other amounts:

                Years of age, inclusive, 21 to 30......$ .50
                *    *    *    *   *   *    *
                Years of age, inclusive, 66 to 70...... 2.55
                                         71 and upward, the
                   amount which should be charged for each age
                   according to the American Experience Table
                   of Mortality, proportioned to the above rate
                   for 66 to 70 years of age."
                

Respondent paid all assessments required of him as provided by the constitution and by-laws of appellant, until the same was amended as above set forth. At the date of said amendment respondent was 69 years of age, and, according to the constitution and by-laws in force at the time of becoming a member of appellant company, he was paying an assessment, on the death of each member, of $2.55 per thousand. Since the date of said amendment, however, appellant has, on the death of a member, assessed respondent at the rate provided in the amended by-law, which assessments respondent has paid under protest, claiming that the effect of said amendment, in providing that he be assessed the amount "which should be charged for his age according to the American Experience Table of Mortality," instead of $2.55 per thousand, on the death of each member, as provided by the by-laws at the time he became a member, was to increase the cost of his insurance. By the increase in the amount of his assessments, plaintiff, up to the time of the commencement of the suit, had paid $253.05 more than his assessments would have amounted to under section 4 of the constitution of the defendant order, as it existed at the date of the issuance of the policy.

The court, to whom the issues were submitted, found for plaintiff and assessed his damages at $253.05, with 6 per cent. interest thereon from the date of the commencement of the suit, October 14, 1903. Defendant appealed.

Ball & Sparrow, for appellant. Pearson & Pearson, for respondent.

BLAND, P. J. (after stating the facts).

1. We quote the following from appellant's brief: "Appellant contends that as respondent agreed in his application that he would `abide by the constitution, rules, and regulations of the company, as they now are or may be constitutionally changed hereafter,' and inasmuch as it was provided in respondent's policy `that the constitution and by-laws printed on the back of this policy shall separately and collectively form and be a part of this contract,' and as the constitution and by-laws provided for their own change or amendment, thereby providing that the contract itself might be changed or amended, it has not violated respondent's rights. Appellant also contends that as respondent's policy, instead of being one for $3,000, is one for the `sum of three thousand dollars and all the money paid on the policy in assessments,' and as his beneficiary would be entitled, at his death, not only to $3,000, but to `all the money paid on the policy in assessments,' respondent should be assessed, on the death of each member, not only on $3,000, but, in addition thereto, on the sum of all assessments paid on the policy. Respondent sues in this action to recover the amount of said assessments claimed to have been in excess of $2.55 per thousand." That the constitution and by-laws printed on the back of the policy became a part of the contract of insurance by virtue of the following provision, written on the face of the policy, to wit, "that the constitution and by-laws printed on the back of this policy shall separately and collectively form and be a part of the contract," is unquestionably true. Laker v. Royal Fraternal Union, 95 Mo. App. 353, 75 S. W. 705; Richmond v. Supreme Lodge, 100 Mo. App., loc. cit. 19, 17 S. W. 736.

2. Respondent, in his application, made a part of the contract of insurance, agreed "to abide by the constitution, rules, and regulations of the company as they now are or may be constitutionally changed hereafter." Section 4 of the constitution was amended February 16, 1900, in a constitutional manner, and is binding upon the respondent, unless, without his consent, it materially modified the contract of insurance. It is conceded that the amendment, increased respondent's assessments, but it is insisted by the appellant that respondent agreed in the contract of insurance that this might be done. This contention is founded on the clause in the policy whereby respondent agreed to abide by the constitution, rules, and regulations of the company as they were at the date of the policy or as they might be constitutionally changed in the future. It has been...