Farmers Mutual Hail Insurance v. Slattery

Ladd, C. J. 2 Under the by-laws as they were when ■defendant became a member of the association, there was no provision for the suspension of the policy for failure to pay an assessment duly levied. A penalty of 25 cents, merely, was imposed, and the assessment might be recovered by suit. Thereafter, and long before the loss, the twelfth by-law was amended by adding thereto, “Members of this company whose assessments and penalties remain delinquent or unpaid after 60 days from the date of the first notice shall not be entitled to recover in ease of loss during such delinquency.” An assessment to pay losses was levied in October, 1897, and three'notices of it sent to the'insured. Each of these included a copy of the bylaw as amended, but in none was the suspension of the policy mentioned. As then forfeiture thereunder was not •claimed, he could not be expected to object thereto; and remaining silent under the circumstances did not indicate .acquiescence in the change, especially as it did not affect the obligation of the association to him. 3 II. The articles of incorporation and by-laws in mutual associations enter into and become part of the contract with each member. Simeral v. Insurance Co., 18 Iowa, 319; Walsh v. Insurance Co., 30 Iowa, 133; Fitzgerald v. Association, 106 Iowa, 457; Fee v. Association, 110 Iowa, 271. And here the promise ■of indemnity is predicated on an express promise by him to be governed by these articles and by-laws. The authority •of the board of directors to enact by-laws is expressly conferred, and the contention that each member of the association must have had notice of the purpose of exercising this ppwer in advance is utterly untenable. The suspension of the policy is not made to depend on notice to that effect, but upon the lapse of 60 days after the first notice of the assessment. 414 4 III. The sole remaining question to be determined is whether the insured was bound by the change in the by-law made after, his policy was issued. The case, as we think, is ruled by Sieverts v. Association, 95 Iowa, 710. There the assessment was payable in 30 days after notice, but a delinquent might be reinstated upon payment within 15 days thereafter by adding a penalty of 25 cents. After the certificate was issued the by-laws were so changed as to add to the condition of reinstatement a requirement that the member then be in good health, and it was held that, as the contract had not so provided, the change in the by-laws could not have a retroactive operation. There the change might have had the effect of forfeiting the contract; here, that of suspending it. In principle both are alike. The same doctrine is distinctly declared in Hobbs v. Association, 82 Iowa, 107. See, also, Carnes v. Association, 106 Iowa, 281. But appellant attempts to1 distinguish the case at bar from these in that the insured expressly agreed to be governed by the articles of incorporation and by-laws of the association, the former of which expressely conferred upon the board of directors the right to enact by-laws. As already said, the articles and by-laws in force when the policy issued became a part of the contract, and the promise to be bound by them added nothing. Iiis contract was governed by them, regardless of such an agreement. Nor .is it material that the articles empowered the directors to make by-laws. Without this that power was expressly conferred by the statute. Section 1698, Code, is a substantial re-enactment of section 1129 of the Code of 1873, authorizing the directofs “to adopt such by-laws and regulations not inconsistent with law as should appear to them for the regulation and conduct of the business.” But without this statute the power to enact by-laws is generally recognized to be inherent in all corporations aggregate, including incorporated mutual associations. Niblack, Mutual Benefit Society, section 16; 3 Am. & Eng. Enc. Law, 1060. It was exercised in 415 both Sieverts’ and Hobbs’ Oases, and the right not questioned. Indeed, it must be presumed that parties, in becoming members of such associations, do so with the knowledge that the by-laws and even the articles of incorporation may be changed. Supreme Lodge v. Knight, 117 Ind. 489 (20 N. E. Rep. 479, 3 L. R. A. 409). This does not prevent them from contracting with reference to these as they exist at the time the agreement is made. There is nothing in the policy indicating that articles other than those in force when it was issued were to govern the rights of the parties. Though the association might amend its by-, laws, it was in reference to those in existence, and not to probable amendments, the piomise of defendant had reference. Appellant relies on Poultney v. Bachman, 31 Hun, 49; Stohr v. Society, 82 Cal. 557 (22 Pac. Rep. 1125); and Fugure v. Society, 46 Vt. 362. But in each of these cases the benefits conferred depended solely on membership, and not on an independent contract with the association. As said, Sieverts v. Association, supra, is decisive. Contra, see, Supreme Lodge v. Knight, supra. — Affirmed.