made in the manner expressly provided therefor they cannot operate to deprive a member of his contract right to sick benefits.20 Nor can restrictions as to liability for accidental injury, which are not in the certificate, be imposed by a new law so as to impair a member's contract.1 So, where a member is entitled to benefits for an injury he cannot be deprived thereof by amendments to the constitution adopted after said injury is sustained. Again, the adoption of a new article of incorporation by a mutual benefit association, making certificates void where the holders engage in extra-hazardous occupations, does not become part of the contract with a member to whom a certificate had been previously issued, or destroy a right which he previously had to change his occupation without making his certificate void. But an amendment made under a contract in which assured agrees to be bound by the laws, rules, and regulations then in force or thereafter to be enacted, does not deprive him of any vested right by a subsequent classification of a risk as extra-hazardous, which risk was only classed as an extra-hazardous one when the certificate was issued and was not then prohibited, nor is such an amendment unreasonable when applied to switchmen in railroad yards although brakemen who also do switching, are not excluded, especially so where said change was made while insured was still a brakeman, and after the occupation of switchman was placed in the prohibited class he voluntarily engaged therein. Again, a member holding an endowment certificate in 20 Mutual Aid & Instruction Soc. bound by the change. Hobbs v. Monti, 59 N. J. L. 341, 36 Atl. 666. 1 Young v. Railway Mail Assoc. 126 Mo. App. 325, 103 S. W. 557. See Order of United Commercial Travelers of America v. Smith, 192 Fed. 102, 112 C. C. A. 442, distinguished and held not in point in Smythe v. Supreme Lodge Knights of Pythias, 198 Fed. 967, 987 and held not in point. 2 Brotherhood of Painters, Decorators & Paperhangers v. Moore, 36 Ind. App. 580, 76 N. E. 262. 3 Hobbs v. Iowa Mutual Benefit Assoc. 82 Iowa, 107, 11 L.R.A. 299, 31 Am. St. Rep. 466, 47 N. W. 983. 4 Norton v. Catholic Order of Forresters, 138 Iowa, 464, 24 L.R.A. (N.S.) 1030n, 114 N. W. 893. The court, per Sherwin, J., said: "We are of the opinion that no vested right was impaired, and that he was V. Iowa Mutual Benefit Assoc. 82 Iowa, 107, 31 Am. St. Rep. 466, 11 L.R.A. 299, 47 N. W. 983; Ross v. Brotherhood of America, 120 Iowa, 692; Gilmore v. Knights of Columbus, 77 Conn. 58, 107 Am. St. Rep. 17, 58 Atl. 223. In Parish v. New York Produce Exchange, 169 N. Y. 34, 56 L.R.A. 149, 61 N. E. 977, relied upon by appellants, it is held that a reasonable change in by-laws may be made, but not so as to destroy vested rights or make a new contract. There was no agreement for a change in that case, and the rule announced is undoubtedly correct. In Tebo v. Supreme Council of Royal Arcanum, 89 Minn. 3, 93 N. W. 513, it was held, that a change in the by-laws without actual notice to the insured was unreasonable and void. No other point was decided. Olson v. Court of Honor, 100 Minn. 117, 8 L.R.A. (N.S.) a fraternal order is not, even though he has agreed to be governed. by thereafter enacted by-laws, bound by a by-law enacted without his knowledge or consent, imposing a condition of forfeiture for engaging in active military service, it also appearing that the corporation before its charter expired, obtained, without assured's knowledge, a special charter from Congress and the old company's assets and obligations including said member's certificate were transferred to the re-incorporated company and dues were paid on such certificate until the member died. Nor can the pre-existing contract rights of a member under the laws of the order concerning his occupation or business of selling liquor be arbitrarily destroyed by a forfeiture amendment. And a member cannot be deprived of his rights under his certificate, and in the benefit fund, by the adoption of a by-law, the terms of which do not apply to him; as where it prohibits engaging in a certain business thereafter and the member had before its adoption and subsequently thereto been engaged therein continuously. Nor can a member be deprived of such rights even though a by-law prohibits indulging in intemperate habits before its adoption or thereafter, where, prior to the enactment of such by-law he had been addicted to such habits and continued so thereafter. And vested rights must not be impaired by a reduction of the certificate amount in case of death from intoxicating liquors even though there is a policy agreement to comply with thereafter enacted by-laws. And a time limitation for suing cannot be imposed by a subsequently enacted by-law where no no 521, 110 N. W. 374, relates to the 5 Richter V. Supreme Lodge Knights of Pythias, 137 Cal. 8, 69 Pac. 483. As to prohibition as to entering military or naval service, see § 2237 herein. 6 Deuble v. Grand Lodge Ancient Order of United Workmen, 72 N. Y. Supp. 755, 66 App. Div. 323, aff'd 429, 117 N. Y. Supp. 125. Examine Supreme Lodge of Fraternal Union of America v. Leight, 195 Fed. 903, considered and explained in Smythe v. Supreme Lodge Knights of Pythias, 198 Fed. 967, 981. 7 Grand Lodge Ancient Order of Union Workmen v. Haddock, 72 Kan. 35, 1 L.R.A.(N.S.) 1064 (annotated on effect of adoption of by-laws by fraternal insurance order upon benefit certificates already issued) 82 Pac. 583. Cited in Fort v. Iowa Legion of Honor, 146 Iowa, 183, 123 N. W. 224, 39 Ins. L. J. 3. 8 Taylor v. Modern Woodmen of America, 72 Kan. 443, 5 L.R.A. 283 (annot.) 83 Pac. 1099. 9 Lloyd v. Supreme Lodge Knights 172 N. Y. 665, 65 N. E. 1116. See of Pythias, 98 Fed. 66, 38 C. C. A. also Barrett v. Grand Lodg. Ancient 654, 29 Ins. L. J. 744. Order United Workmen, 63 Misc. tice of said enactment is given and the certificate contains no time limitation within which suit may be brought.10 And pre-existing relief fund certificates are not affected by by-laws prohibiting their transfer and prescribing a limited time after their maturity for the payment of the same." A by-law adopted by a mutual benefit society that all claims against it must be adjudicated in its own tribunal, applies to holders of existing certificates. 12 And where power to alter, amend and repeal charters is reserved in a statute, members of a co-operative or assessment company have no such vested rights as will prevent such an association to reincorporate under the law as a regular life insurance company. Therefore, the obligation of contract existing between such members and the original company is not impaired by such reincorporation; 13 nor can a member be deprived of vested, valuable statutory rights under a by-law changing venue contrary to statutory provisions.14 But the burden of proof to show that the rights of one claiming under a benefit certificate have been impaired is upon said party.15 § 380c. Same subject: changes in by-laws, etc.: increasing assessments or dues or reducing amount payable.-Although there is an irreconcilable conflict between the decisions in certain jurisdictions, and although varying circumstances necessarily so affect the adjudications that no absolutely governing rule can be applied to all the cases, and although it is difficult to determine what constitutes the weight of authority, nevertheless the rule, outside of any statutory provision to the contrary, seems to be settled that an amendment or change in the constitution, articles of association, by-laws, rules and regulations, which increases the dues or rate of assessment to which a member is subject under his original contract with the society, association, or order, or which reduces the amount payable 10 Rosenstein v. Court of Honor, 122 Minn. 310, 142 N. W. 331. Followed in Ruder v. National Council Knights & Ladies of Security, 124 Minn. 431, 145 N. W. 118. 11 Wheeler v. Supreme Sitting Order of Iron Hall, 110 Mich. 437, 3 Det. Leg. N. 446, 68 N. W. 229. 12 Monger v. New Era Assoc. 156 Mich. 645, 24 L.R.A.(N.S.) 1027, 121 N. W. 823. See Monger v. New Era Assoc. 171 Mich. 614, 137 N. W. 631, 41 Ins L. J. 1788. As to conditions precedent to resort to courts, see §§ 352-352c herein. As to conditions excluding resort to civil courts, see §§ 372-372b herein. 13 Polk v. Mutual Reserve Fund Life Assoc. 207 U. S. 310, 28 Sup. Ct. 65, 52 L. ed. 222, quoted from and distinguished in Smythe v. Supreme Lodge Knights of Pythias, 198 Fed. 967, 986, but held not to support defendant's contention in that case. 14 Eaton v. International Travelers' Assoc. of Dallas, Tex. Civ. App. —, 136 S. W. 817. As to effect of stipulation limiting action to particular forum, §§ 3194, 3195 herein. see 15 United Moderns v. Rathbun, 104 Va. 736, 52 S. E. 552. under his certificate, impairs the obligation of said contract and divests his vested rights, notwithstanding a general reservation or agreement in the constitution, by-laws, etc., or in any or all of them, that changes therein may thereafter be made. If a power is vested by said general reservation or agreement to repudiate a part of the contract by such an increase or reduction, logically the exercise of the same power authorizes a repudiation in toto of all the insurer's obligations and the insured would be bound thereby. It seems unreasonable that such a conclusion could be deduced as being the intent of the parties in entering into the original contract of membership. If it was intended that changes increasing assessments or dues, or reducing the amount payable, or both, should bind the member, it would seem that the terms of the consent should have been so clearly and explicitly expressed that no room would be left for construction. The reasoning and deductions of the courts are, however, set forth in the following pages. 16 Under a Federal Supreme Court decision an agreement in the application, made a part of the contract, to abide by changes in the constitution, rules and regulations of the society, does not authorize amendments of the constitution, reducing the amount of indemnity, which amendments imply a prospective operation, and not retroactive. So it is decided, in the Federal Circuit Court of Appeals that where a member of a fraternal beneficiary society contracted, upon printed representations, that a constitution of a certain date was the basis of the contract governing the amount of assessments to be paid he is not bound by a constitution of a later date even though adopted prior to the contract, which increased the amount of, assessments, nor is he bound even though under a stipulation in the application the contract was to be governed by thereafter enacted by-laws.18 And it was held in the same case in the court below that if power is reserved to increase assessments, as such a beneficial association or society has the right to do, it must be expressly, explicitly and clear 16 As to vested rights and changes in by-laws, etc. reducing benefits or forfeiting them in case of suicide, see §§ 2647 et seq. herein. On right of mutual benefit society to decrease benefits, see note in 31 L.R.A. (N.S.) 423. On right of mutual insurance company to increase rates, see notes in 7 L.R.A. (N.S.) 1154, and 31 L.R.A.(N.S.) 417. 17 Knights Templars' & Masons' Life Indemnity Co. v. Jarman, 187 U. S. 197, 47 L. ed 139, 23 Sup. Ct. 108, 32 Ins. L. J. 57, aff'g 104 Fed. 638, 44 C. C. A. 93, 30 Ins. L. J. 230. But see Mutual Assurance Soc. v. Korn, 7 Cranch (11 U. S.) 396, 3 L. ed. 383. Quoted from with approval in Whitfield v. Etna Life Ins. Co. 205 U. S. 489, 493, 51 L. ed. 895, 27 Sup. Ct. 578 (rev'g 144 Fed. 350) where the same Missouri statute was passed upon. 18 Smythe V. Supreme Lodge Knights of Pythias, 220 Fed. 438, 137 C. C. A. 32, aff'g Smythe v. Supreme Lodge Knights of Pythias, 198 Fed. 967, 42 Ins. L. J. 6. , ly stated in such a manner as to constitute a part of the contract so as to fully inform and advise the member that such increase may be made and the contract so changed.19 Again, contract obligations cannot be impaired by a reduction of the amount specified as payable in the certificate of a member.20 In California an association cannot even, though power is reserved to amend, destroy without assured's special consent his contract rights by reducing death benefits. And a subsequent resolution classifying risks and increasing assessments violates assured's contract.2 But it is also held in that state that an amendment, enacted after a person becomes a member, providing that the balance of the amount of certificates, over and above the number of members, shall be payable out of the reserve fund only when there is a sufficient excess over a specified sum to meet such further payment, is not detrimental where such amendment was made in pursuance of a by-law permitting changes to be thereafter made, and in addition no reserve fund was created under any by-law or rule although all the net assets were treated as belonging to that fund which was not specially devoted to other purposes.3 In Georgia the agreement in the certificate to pay a certain sum constitutes a contract which cannot be repudiated by the association by a subsequently enacted by-law reducing said amount even though the certificate made the payment conditional upon compliance with all existing or future enacted by-laws. In Illinois a member's contract rights cannot be impaired by a change of by-laws increasing assessments where there was no agreement to be bound by subsequent changes except such as might be implied from his being charged with knowledge of by-laws provid 19 Smythe V. Supreme Lodge 2 Benjamin V. Mutual Reserve Knights of Pythias (U. S. D. C.) Fund Life Association, 146 Cal. 34, 198 Fed. 967, 980, 42 Ins. L. J. 6, 79 Pac. 517, 34 Ins. L. J. 614, conaff'd Smythe v. Supreme Lodge sidered more fully under § 380c hereKnights of Pythias, 220 Fed. 438, in. 137 C. C. A. 32. 20 Supreme Council American Legion of Honor v. Champe, 127 Fed. 541, 63 C. C. A. 282. 1 Bornstein V. District Grand Lodge No. 4, Independent Order B'nai B'rith, 2 Cal. App. 624, 84 Pac. 271. As to right to sick benefits not being subject to change of by-law reducing same, see Berlin v. Eureka Lodge No. 9, Knights of Pythias, 132 Cal. 294, 64 Pac. 254. 3 Hass v. Mutual Relief Assoc. of Petaluma, 118 Cal. 6, 49 Pac. 1056, 26 Ins. L. J. 992. The point of vested interest, however, was not discussed by the court, except in so far as it was stated that the contention was that the contract was one for the payment of an absolute, specified sum. 4 Supreme Council American Legion of Honor v. Jordan, 117 Ga. 808, 45 S. E. 33. |