The Supreme Lodge, Knights of Pythias v. Knight

• Decision Date: 06 March 1889
• Docket Number: 14,569
• Parties: The Supreme Lodge, Knights of Pythias, v. Knight
• Court: Indiana Supreme Court

20 N.E. 479

117 Ind. 489

The Supreme Lodge, Knights of Pythias, v. Knight

No. 14,569

Supreme Court of Indiana

March 6, 1889

From the Clay Circuit Court.

S. P Oyler, W. A. Johnson, E. S. Holliday and G. A. Byrd, for appellant.

D. E Williamson, A. Daggy, G. A. Knight and A. W. Knight, for appellee.

OPINION

Elliott, C. J.

The first paragraph of the appellee's complaint counts upon a certificate of insurance taken out in the order of the Knights of Pythias, and naming the appellee as the beneficiary. The certificate contains an agreement to pay the appellee the sum of two thousand dollars upon the death of the assured, but this agreement is subject to the condition thus expressed: "Provided, however, That if, at the time of the death of said Brother Edward S. Hussey, there shall be less than two thousand members in this class, there shall only be paid a sum equal to one dollar for each member in good standing in this class."

The effect of this stipulation is to confine the beneficiary to a specific fund. This fund is such as is yielded by the assessments laid upon the members of the class of which the assured was a member. There is no general, unconditional agreement to pay two thousand dollars, for the amount the order undertakes to pay is contingent upon the number of the members of the class to which the assured belonged. The contract is not the less one of insurance because made by a voluntary association or benevolent order, for the consideration was a valuable one, and was yielded in return for the agreement of the order to pay the beneficiary the designated sum upon the death of the assured but, nevertheless, it is not a general contract to pay a stipulated sum unconditionally. Presbyterian Mutual Assurance Fund v. Allen, 106 Ind. 593, 7 N.E. 317.

The policy only entitled the beneficiary to a sum equal to one dollar for each member of the class at the time of the death of the assured, but it does not follow from this that the beneficiary was bound to aver that there were two thousand members of the class at the time the assured died. The number of members was a matter peculiarly within the knowledge of the defendant, and the plaintiff was not bound to allege facts peculiarly known to it, and of which she could have little, if any, knowledge. Elkhart Mutual Aid, etc., Ass'n v. Houghton, 103 Ind. 286, 2 N.E. 763; Lueders v. Hartford, etc., Ins. Co., 12 F. 465; Supreme Council v. Anderson, 61 Tex. 296.

The plaintiff, in such an action as this, makes a prima facie case, entitling him to recover the sum named in his certificate, when he pleads the certificate, performance on his part and that of the assured, death of the assured, and failure of performance on the part of the insurer.

The third paragraph of the complaint presents a radically different question from that presented by the first, for it proceeds upon the theory that the governing body of the order, by establishing a new class, and offering more advantageous terms to members of the order who would enter it, so depleted the class to which the assured belonged as to reduce the value of the certificate to one hundred and seventy-three dollars, and that, for this reason the appellee is entitled to recover the difference between the value of the policy represented by the members that remained in the class and the maximum sum named in the certificate.

The paragraph under immediate mention alleges that the defendant is a foreign corporation, organized for benevolent purposes; that it established an endowment rank for the purpose of securing benefits to the members, and that in the year 1877 the endowment rank consisted of two classes, the first and the second; that at that time there was in force these provisions of the constitution of the corporation: "No person shall be eligible for membership in this rank unless he be a Knight of Pythias, in good standing in his lodge, and not over fifty years of age, provided that, until June 1st, 1878, all members of the Knights of Pythias may become members of the endowment rank, without regard to age; that when there are less than two thousand members in the second class, the benefit accruing therefrom shall be one dollar from each and every member thereof;" that, in the month of October, 1877, the father of the plaintiff became a member of the order, and of the second class of the endowment rank, as it then existed; that he received a certificate in which the plaintiff was designated as the beneficiary; that, at the time the plaintiff's father became a member, the provisions of the constitution quoted were in force, and the order possessed the right and the power to raise the sum named in the certificate by an assessment upon the members of the second class of the endowment rank; that within six months after the endowment rank was established the second class contained more than two thousand members, and that the members increased until they finally reached sixteen thousand; that, in May, 1884, at a session of its Supreme Lodge, the order changed its constitution and by-laws so that a fourth, or graded, class was created; that this was done without the knowledge or consent of the insured and the plaintiff; that, because of this change, and through the extraordinary efforts and inducements of the order, members of the second class under the age of sixty years were induced to leave the second class and enter the fourth; that, in that class, the members were required to pay a definite sum upon each one thousand dollars of insurance, based upon the American tables of life expectancy, instead of one dollar for each death; that the officers of the order represented to the members of the classes first established, who were under sixty years of age, that premiums would be less burdensome in the fourth class than the death rate under the assessment plan, and they were, and are, less burdensome to persons under that age; that the constitution and by-laws, as amended, allowed members one year's time in which to change from the first established classes to the fourth, or graded, class; that the year thus fixed expired in May, 1885; that, for the purpose of still further depleting the old classes, the time was extended until the 24th day of October, 1885, and it was ordered that no transfer to the fourth class should be permitted after that date; that neither the assured nor the plaintiff had any notice of the change until November, 1886; that immediately upon receiving notice of the change they notified the defendant that they protested against it; that by reason of the change the class to which the assured belonged was reduced to one hundred and seventy-three members; that the plan framed by the change largely increased the cost of insurance to persons over sixty years of age; that the act of the order in making the change was in violation of its constitution; that all assessments have been paid since the time the certificate of membership was issued, in November, 1877; that the plaintiff has paid, in addition to assessments, the sum of two dollars each year for nine years, and that the total amount paid by her is two hundred and forty dollars. The complaint also contains the proper allegations as to the death of the assured and the filing of the necessary proofs. The certificate incorporated in this paragraph contains, among others, the provisions which we have quoted.

The third paragraph of the appellant's answer is addressed to the paragraph of the complaint of which we have given a synopsis, and its contents may be thus summarized: It admits the allegations of the complaint as to the contract, the payment of assessments and the like, avers that there were only one hundred and seventy-three members of the class to which the assured belonged, and admits that the sum of one hundred and seventy-three dollars is due the plaintiff. It avers that the constitution and by-laws were changed by the representatives of the members of the order so as to create a fourth, or graded, class, and that these amendments were made at a regular session of the governing body of the fraternity. It sets forth at length the constitution and by-laws of the order, and in them the general plan of the order is exhibited, its objects set forth and the relations of the members to the order shown, and in them also is contained a reservation of the right and power to change or amend the constitution and by-laws of the association. It alleges that the amendments were made in conformity to the constitution and by-laws, and in good faith, and for the best interests of the order. It also appears that the system of insurance was changed by the amendments made in May, 1884, from the arbitrary assessment plan to that of the payment of premiums, graduated according to the age of the members.

The appellee's counsel have constructed a very ingenious and plausible theory, but it is not strong enough to bear the test of the law. The assumption upon which it rests is, that the appellant has invaded a legal right of the appellee, and as this assumption can not be made good, the theory must fall. An invasion of a legal right constitutes an actionable wrong. But there can be no actionable wrong unless there is a breach of contract or a tortious act. Nor is it in every case where there is a wrong that actual damages can be recovered, since damages that are purely speculative or conjectural are not recoverable. There must also be some connection between the act complained of and the injury alleged as the resulting one. These familiar principles constitute the groundwork of our discussion.

In such a case as the present, the only wrong that could give the claim of the plaintiff the complexion of a tort would be one in its nature fraudulent, for, without some...