Richey v. Sovereign Camp of Woodmen of the World

• Decision Date: 27 June 1918
• Docket Number: No. 31451.,31451.
• Parties: RICHEY v. SOVEREIGN CAMP OF WOODMEN OF THE WORLD.
• Court: Iowa Supreme Court

184 Iowa 10

168 N.W. 276

RICHEY

v.SOVEREIGN CAMP OF WOODMEN OF THE WORLD.

No. 31451.

Supreme Court of Iowa.

June 27, 1918.

Appeal from District Court, Polk County; W. S. Ayers, Judge.

The plaintiff had a recovery as beneficiary of a certificate issued by the defendant, and it appeals. Affirmed.Arthur H. Burnett, of Omaha, Neb., and Frank H. Dewey, of Des Moines, for appellant.

C. S. Cooter, of Des Moines, for appellee.

SALINGER, J.

I. In March, 1895, the defendant issued a benefit certificate to one Harry A. Richey. This certificate was accepted with a provision that the same should be liable to forfeiture if the assured should fail to comply with the “conditions, constitutions, fundamental laws, and such by-laws as are or may be adopted” by the insuring society. Some four years after what is claimed to be the disappearance of Richey the by-laws were made by the society which provide that it shall be a binding condition of the certificate that:

“The absence or disappearance of the member from his last-known place of residence for any length of time shall not be sufficient evidence of the death of such member, and no right shall accrue under his certificate of membership to a beneficiary or beneficiaries, nor shall any benefits be paid until proof has been made of the death of the member while in good standing.

The absence of disappearance of the member herein named, whether admitted heretofore or hereafter, from his last-known place of residence and unheard of, shall not be regarded as any evidence of the death of such member nor give or create any right to recover any benefits on any certificate or certificates issued to such member, or on account of such membership in the absence of the proof of his actual death, aside from and unassisted by any presumption arising by reason of such absence or disappearance, until the full time of his life expectancy at the time he disappears, according to the Carlyle Table of Life Expectancy, as compiled, and then only in case all assessments, dues, special assessments, and all other sums now or hereafter required under the laws of the state be paid on behalf of such member within the time required until the expiration of the term of such life expectancy. And the conditions of this certificate shall operate and be controlled as a waiver of any statute of any state or country of any rule of the common law or any state or country to the contrary.”

The appellant contends that this change in by-law is binding. The trial court held otherwise. Upon the decision of this question depends whether many things urged in argument pro and con need consideration.

There are many decisions, quite a few in our own reports, wherein changes of by-laws made after the insurance first becomes effective are upheld on the ground that the change made is a reasonable one; there having been an advance agreement to be bound by future changes. In the case before us there was such an advance agreement. But all this is not controlling; for here the question is whether, though future changes are authorized by contract, a change which is either unreasonable or violates the public policy of the state can be sustained, and whether the change asserted here is either unreasonable or violative of statute or public policy.

[1][2] II. There was an advance agreement that the obligation of the society was conditionedupon compliance by the member with the “conditions, constitutions, fundamental laws, and such by-laws as are or may be adopted” by the society. But it remains to be seen what the scope of such an advance agreement is. All by-laws must be reasonable and consistent with the general principles of the law of the land, and these are to be determined by the courts when a case is properly before them. Bacon, Benefit Societies (1888) § 82. An expressly conferred power to enact by-laws makes a change binding only as to benefits derived from mere membership, and not as to an independent contract made with the association. Hail Ins Co. v. Slattery, 115 Iowa, 410, 88 N. W. 949. An amendment of a by-law in a hail insurance policy which exempts the company from liability for loss occasioned by the blowing of snow and hail is not binding. It introduces new terms and conditions into the original contract which will bind the insured only if he assents thereto. Jordon v. Insurance Co., 151 Iowa, 73, 130 N. W. 177, Ann. Cas. 1913A, 266. We say in Fort v. Legion of Honor, 146 Iowa, 195, 123 N. W. 224 that:

“Many courts have held that, even where there is an agreement on the part of the assured to be bound by subsequent changes, the society cannot make essential amendments affecting the rights of the insured as the holder of a benefit certificate.”

[3][4] A change which operates to raise an assessment must be a reasonable one. 2 Cooley's Brief on Insurance, 1019. Mere general consent that the constitution and by-laws may be amended will not authorize a change that destroys the vested right of the assured under his contract by subjecting him to a greater rate of assessment than the contract calls for. Strauss v. Association, 128 N. C. 465, 39 S. E. 55, 54 L. R. A. 605, 83 Am. St. Rep. 699;Pearson v. Knight Templars, 114 Mo. App. 283, 89 S. W. 588. So of one scaling the certificate material. Fort v. Legion of Honor, 146 Iowa, 195, 123 N. W. 224;Wuerfler v. Order of Druids, 116 Wis. 19, 92 N. W. 433, 96 Am. St. Rep. 940;Supreme Council v. Batte, 34 Tex. Civ. App. 456, 79 S. W. 630. Such advance agreement may not reasonably be construed into an assent in advance to any change which the insurer may see fit to make in its constitution or laws, for instance, such as materially lessen the value of the policy by reducing the amount of the indemnity which its terms promise to pay. Knights Templar v. Jarman, 104 Fed. 638, 44 C. C. A. 93. It does not authorize a reduction of the benefit agreed upon. Gaut v. American Legion of Honor, 107 Tenn. 603, 64 S. W. 1070, 55 L. R. A. 465;Pokrefky v. Ass'n, 121 Mich. 456, 80 N. W. 240;Supreme Council v. Getz, 112 Fed. 119, 50 C. C. A. 153. It has been held, notwithstanding advance agreements to be bound by changes, to be an ineffective change, where as to one who had the right to engage in the occupation of a freight brakeman at the time he joined a society an amendment provided he should forfeit his membership certificate if he engaged in that work. In Olson v. Court of Honor, 100 Minn. 117, 110 N. W. 374, 8 L. R. A. (N. S.) 521, 117 Am. St. Rep. 676, 10 Ann. Cas. 622, the certificate provided that there might be liability where a suicide was committed while the assured was insane if at the time he was under treatment for insanity. It was held that an amendment which limited the benefit in all cases of suicide to 5 per cent. of the face of the certificate for each year that the assured had been continuously a member was void for being unreasonable.

[5] The most that appellant may claim is that it is very generally held that a by-law which interferes with no vested right and relates merely to procedure or merely provides a rule of evidence is reasonable. We have held there may be an amplification of by-laws existing when the insurance is effected so long as such change does not materially alter the effect of the original provision, such as that there shall be a forfeiture if there be an intemperate use of intoxicants (Ury v. Modern Woodmen, 149 Iowa, 706, 127 N. W. 665), and that a by-law which merely and reasonably defines what is to constitute a broken leg for which the association shall be liable is not unreasonable. Wherefore such change in by-law will be sustained where there is an advance agreement to be bound by future enacted by-laws. Ross v. Brotherhood, 120 Iowa, 692, 95 N. W. 207. Is the change we are considering such an unreasonable one as that it is not effective despite advance agreement that future changes may be made. It certainly is as much so as the one held ineffective in the cases to which we have referred.

[6] The change which the association asserts to be a binding one ingrafts upon the original agreement a condition that although the law of the state makes disappearance for a stated time presumptive evidence that the assured has died, such law of the state shall not be effective, and that, moreover, no payment shall be due no matter how long the disappearance has continued unless the premiums be paid for the number of years which form the expectancy of the assured. In the instant case this means that, unless proof of actual death become available, payments under the certificate sued on by plaintiff would have to continue for nearly 40 years yet, and possibly for a time many years longer than there would have been obligation to pay under the conditions of the certificate as it stood originally. It does not seem to be strained to say that such a change is so unreasonable as that it was never intended to be covered by the general advance agreement to be bound by future changes, and that, as plaintiff pleads, to uphold the amendment would be violative of law of the state and public policy. It was held in McLaughlin v. Sovereign Camp, 97 Neb. 71, 149 N. W. 112, L. R. A. 1915B, 756, Ann. Cas. 1917A, 79, wherein on a similar advance agreement similar change in by-laws was asserted to be valid, that where such by-law is adopted during the unexplained absence of the assured, such by-law may not be asserted without evidence on part of the insurer that the insured was living when such by-law was adopted; and in Samberg v. Knights, 158 Mich. 568, 123 N. W. 25, 133 Am. St. Rep. 396, that a by-law such as the one before us is void for being against public policy where the effect of it is to render ineffectual a statute provision providing that a person disappearing and his whereabouts remaining unknown for seven years shall be presumed to be dead, and that the beneficiary proving the disappearance of the member and a failure to hear from him for over seven years is...