Shepperd v. Bankers Union of the World
| Decision Date | 20 June 1906 |
| Docket Number | 14,386 |
| Citation | 108 N.W. 188,77 Neb. 85 |
| Parties | ANNA E. SHEPPERD ET AL., APPELLEES, v. BANKERS UNION OF THE WORLD, APPELLANT. [*] |
| Court | Nebraska Supreme Court |
APPEAL from the district court for Douglas county: HOWARD KENNEDY JR., JUDGE. Reversed with directions.
Reversed and remanded with directions.
Weaver & Giller, for appellant.
Montgomery & Hall, contra.
This action was brought by the beneficiaries named in a certificate of insurance issued by the Bankers Union of the World to Mrs. Sarah B. Shepperd for $ 1,000, of date March 1902. During the life of Mrs. Shepperd she paid the monthly assessments provided by the by-laws of the society up to the time of her death. Section 7 of the constitution and by-laws of the society, relating to the payment of certificates on the death of a member, provides the following method of arriving at the amount due upon the certificate: "For the purpose of creating a reserve fund to guard against poor risks, protect healthy members, equalize the costs to all, and absolutely insure the perpetuity of the union, all insurance of the Banker's Union of the World will be adjusted and paid on the following plan: Should any member holding a policy die before having lived out his expectancy of life, based on his age at entry, according to the American experience table of mortality, there shall be deducted from the death benefit payable on such policy held by said member a sum equal to the amount of one payment (at the rate paid by the member) for each month of the unexpired period of such life expectancy with 4 per cent. on the unpaid balance of said sum." It is alleged in the answer that Mrs. Shepperd's life expectancy when the certificate was issued was 31 years. She died in October, 1903, and 29 years and 5 months prior to the expiration of her life expectancy. Under the method provided for computing the amount due upon the certificate under section 7 of the constitution above quoted, there would be deducted from the face value of the certificate the regular monthly payments for 29 years and 5 months, together with 4 per cent., and the remainder would be the amount due the beneficiaries. After this certificate was issued to Mrs. Shepperd and after the payment of a number of monthly assessments, the constitution and by-laws of the order were regularly amended so as to require the payment of a larger monthly assessment from members of all ages to be immediately collected from all members thereafter joining. As to the old members, the additional monthly assessment was not required to be paid in cash, but on the death of the member the additional amount was charged up against his certificate and deducted therefrom. Under this amendment the defendant claims the right to deduct from the face value of the certificate in suit the increased monthly assessments from the date of the amendment up to the time of the expiration of Mrs. Shepperd's life expectancy, the claim of the plaintiffs being that there should be deducted from the face value of the certificate an amount to be computed on the balance of her life expectancy at the rate in force when she joined the order. This, as we understand, makes a difference of about $ 220.
It is insisted by the beneficiaries, and the authorities are quite uniform to the effect, that no action taken by the order which will decrease the amount of the certificate or the amount due thereon at the time of the death of the insured is permissible. In Pokrefky v. Detroit Firemen's Fund Ass'n, 121 Mich. 456, 80 N.W. 240, it is held that the by-laws existing at the time the deceased became a member were a part of his contract with the association, which could not be changed against his protest, by a by-law subsequently enacted so as to deny the right of his beneficiaries to the entire proceeds of the certificate levied at his death. In Morton v. Supreme Council, Royal League, 100 Mo.App. 76, 91, 73 S.W. 259, the supreme court of Missouri said:
"There are numerous well-considered opinions in which it is ruled that subsequent by-laws undertaking to reduce the amount to be paid in certain contingencies do not take effect on previous contracts, and that a stipulation to comply with future regulations means the member will comply with such as relate to his duties as a member, but does mean that the society may interfere with the essential purpose of the contract, namely, the indemnity covenanted to be paid." To the same effect are, Campbell v. American Benefit Club Fraternity, 100 Mo.App. 249, 73 S.W. 342; Pearson v. Knight Templar & Masons Indemnity Co., 114 Mo.App. 283, 89 S.W. 588; Strauss v. Mutual Reserve F. L. Ass'n, 128 N.C. 465, 39 S.E. 55. In Parish v. New York Produce Exchange, 169 N.Y. 34, 61 N.E. 977, it is said:
"These cases, as we understand them, establish a principle, which we deem well supported in reason, that the power of a corporation such as this one to amend its by-laws is a power to regulate within reasonable bounds, not a power to destroy the contract rights of its members."
Langan v. Supreme Council A. L. H., 174 N.Y. 266, 66 N.E. 932, and Weber v. Supreme Tent, K. M., 172 N.Y. 490, 65 N.E. 258, both New York cases, are to the same effect. Experience in the...
To continue reading
Request your trial