Sawyer v. Camp
| Decision Date | 23 December 1920 |
| Docket Number | 21163 |
| Citation | 181 N.W. 191,105 Neb. 395 |
| Parties | CATHRYN SAWYER, APPELLEE, v. SOVEREIGN CAMP, WOODMEN OF THE WORLD, APPELLANT |
| Court | Nebraska Supreme Court |
APPEAL from the district court for Douglas county: LEE S. ESTELLE JUDGE. Reversed.
REVERSED.
Gaines & Van Orsdel and De E. Bradshaw, for appellant.
Byron G. Burbank, contra.
This is an action on a fraternal beneficiary certificate to recover $ 2,000 for life insurance and $ 100 for a monument. The certificate was issued by defendant, a fraternal beneficiary association, to H. W. Sawyer, insured, November 13, 1902. He died July 26, 1918. His wife was the beneficiary and is plaintiff. The defense pleaded is forfeiture of the insurance by insured's violation of a by-law alleged to be a part of the insurance contract. A waiver of the forfeiture is pleaded in the reply. Plaintiff recovered a judgment for the full amount of her claim, and defendant has appealed.
It is argued by defendant that the judgment is erroneous, and that there can be no recovery on the certificate for the reason that facts showing insured's forfeiture of the insurance are established by undisputed evidence. Insured became a member of the association while a laborer, and paid his monthly assessments or dues on that basis, namely $ 1.40 including a war tax of 10 cents, for sovereign camp dues and 25 cents for general fund dues. The right of his beneficiary to participate in the insurance funds of the society was conditioned upon his complying with existing and subsequently enacted by-laws. This condition was a part of his insurance contract, and he agreed to it in advance as an obligation of his membership. As early as 1917, while insured was in good standing, defendant enacted a by-law requiring him, in the event of his engaging in the hazardous occupation of switchman, to give his subordinate camp notice of the change within 30 days, and to pay in addition to his regular monthly assessments or dues 30 cents on each thousand of his insurance. Forfeiture of the insurance was the penalty for a violation of the new by-law, though the occupation of switchman was not a prohibited one or one requiring additional payments at the time insured's certificate was issued. Insured entered the employ of the Union Pacific Railroad Company as a switchman January 7, 1918, and worked in that capacity until July 15, 1918, when he became engine foreman of the switching crew in the switch-yards of the same employer. While engaged in his duties as such foreman July 26, 1918, insured was dragged from the top of a railroad car by contact with an overhead wire and killed. After changing his occupation as laborer insured paid his assessments at the old rates, but he did not give the notice or make the additional payments required by the subsequently enacted by-law.
The facts outlined are not in dispute, but plaintiff contends that the new by-law is void as being unreasonable and as depriving her of vested rights. In this connection it is argued that the agreement to comply with subsequently enacted by-laws applies alone to rules of conduct and other fraternal features of membership or to reasonable regulations relating to insurance, but not extending to new grounds of forfeiture or to impairment of vested rights. It is earnestly insisted that impairment or forfeiture of the insurance contract was not within the contemplation of the parties, and that such consequences were not within the purview of a future by-law. The doctrine invoked by plaintiff to save her insurance runs through a line of cases cited by her. It may be conceded also that the universal opinion of the courts is that no unreasonable or confiscatory by-law enacted by a fraternal beneficiary association is binding on a member. The power to adopt a rule of that nature has been taken away from the legislative department of government by the fundamental law of the state, and of course has not been granted to voluntary, fraternal associations. The test of validity, however, is reasonableness, when the powers, purposes and duties of the society are considered in connection with the by-law challenged as interfering with vested rights. The cases cited by plaintiff do not seem to justify the conclusion that the by-law in question is unreasonable and void, in the light of principles to which this court, like many others, is committed.
In considering the question presented the relationship of insured to the association is a material factor. His status was not merely that of an insured whose risk the association assumed. His membership made him a part of the fraternal insurer of all members. The association assumed no greater obligation to pay his individual insurance than he assumed to pay his share of a fund for the payment of all insurance losses of members in good standing. The obligations were mutual. Risks, occupations, assessments, dues and forfeitures were necessary subjects of fraternal legislation. In the legislative body each member was represented by delegates. The government of the association is representative, being made so by statute. Lange v. Royal Highlanders, 75 Neb. 188, 106 N.W. 224. Each member, either directly or indirectly, participated in the legislative proceedings and is bound by legal enactments. In agreeing to abide by subsequently enacted by-laws, insured contemplated all reasonable changes which might become necessary by experience or by changed or new conditions. In his contract he was apprised of unexercised, reserved power to enact future by-laws. In the very nature of the organization changes relating to occupations, dues, assessments and the means of enforcing payments are as essential as rules of conduct or other fraternal features of membership. Changes in both respects are contemplated by a member's agreement to conform to present and future by-laws. Farmers' Mutual Ins. Co. v. Kinney, 64 Neb. 808, 90 N.W. 926; Lange v. Royal Highlanders, 75 Neb. 188, 106 N.W. 224; Funk v. Stevens, 102 Neb. 681, 169 N.W. 6.
There is nothing in the evidence to show that the period of 30 days for giving notice of a change of occupation from laborer to switchman, as required by the new by-law, was too short, or that the additional payments were not required by the imperative demands of insurance obligations. On the face of the by-law itself both notice and increase are reasonable. From the standpoint of insurance the occupation of switchman is obviously more hazardous than that of laborer. The cost of insurance increases with hazards. There is no proof that the assessments were unnecessarily increased or that the increase was excessive. In absence of such proof the provision for forfeiture is not shown to be unreasonable.
Notice of a change of occupation is a reasonable requirement. Occupation is an essential feature of an insurance risk and knowledge thereof is a prerequisite to membership. It follows that notice of a change of occupation may be required by a subsequently enacted by-law, and that it is reasonable.
Forfeiture is a reasonable and necessary penalty for the enforcement of contributions to a fraternal insurance fund and for the protection thereof. Mitchell v. Lycoming Mutual Ins Co., 51 Pa. 402. It seems clear, therefore, that insured, having made compliance with subsequently enacted by-laws a condition of his membership and of his contract for fraternal insurance, had no vested right which prevented the association from requiring him to give notice of his change of occupation from laborer to switchman and to contribute his just share to the general insurance fund on penalty of forfeiture. By such exactions and penalties only can a fraternal beneficiary association perpetuate its insurance feature and meet its insurance obligations to all of its members. According to the better reasoning and the weight of authority, the subsequently enacted by-law is reasonable. Under it and other terms of his contract insured forfeited his insurance by his failure to conform to its requirements. Gienty v. Knights of Columbus, 105 N.Y.S. 244; Schmidt v....
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