Smith v. Northwestern National Life Insurance

Dodge, J. The Madison Company entered into an agreement with plaintiff that, if he paid the specified assessments as called for up to January, 1902, it would pay him the amount of $2,000, provided .eighty per cent, of an assessment, at the specified rates, on all its members, would produce that — 593 — amount. Plaintiff bas performed bis part of tbe agreement, and defendant now contends, and tbe trial court bas beld, that be must be satisfied to receive tbe amount of an assessment on only about one tenth of all tbe members. Tbe inquiry is at once suggested, wbat bas occurred to accomplish such modification ? Not much aid is offered by respondent’s brief in discovering an answer to that query. Tbe burden of tbe argument is east in support of tbe contention that it might have been accomplished by a by-law or by a statute without invasion of constitutional prohibition against impairing obligation of contract; tbe former under reserved power to make or change by-laws, tbe latter under reserved power in legislature to change corporate charters. As to tbe first of these it is sufficient to note, first, that the’ reservation of power to change by-laws is expressly limited so that “tbe amount of the benefit shall not be reduced;” but, further, there is no evidence that tbe by-laws of tbe Madison Company ever were changed after 1892. If modification of plaintiff’s contract rights is to be ascribed to any statute, none is suggested, except cb. 210, Laws of 1899, which, generally speaking, einpowered corporations 'like the Madison Company to exercise an election to thereafter make contracts to accept from their members, as the price of their insurance, a stipulated sum at fixed periods instead of fixed sums at indefinite periods, as assessments might become necessary. In construing such statute it must be remembered that the state has only reserved power to modify the contract between itself and the corporation which is involved in the latter’s charter or franchise, and that the constitutional prohibition against impairing the obligation of contracts was in full force in protection of any contracts which a corporation might have made with others. Nazro v. Merchants’ Mut. Ins. Co. 14 Wis. 295; Kenosha, R. & R. I. R. Co. v. Marsh, 17 Wis. 13, 18. In the law in' question, however, we find the legislature expressly declaring that the adoption of the privilege it offers to such — 594 — corporations “shall in no way annul, modify or change any existing contracts or liabilities of such existing corporation, and any and all such existing contracts and liabilities shall ■continue in full force and effect the same as though such corporation had not reincorporated or qualified under this ■act.” (Sec. 4.) So we must conclude that the legislature intended no impairment of plaintiff’s contract, and any discussion of its powers in that resjoeet is but academic. Counsel seem to assume that the act of 1899 authorized, if not required, an existing corporation, availing itself of the privileges thereby granted, to make a classification of its members so that the moneys it derived from those existing before the act were alone applicable to the insurance contracts held by them, while the sums collected from members entering afterward must be exclusively devoted to their insurance. They press upon our attention ca'ses of which Supreme Lodge K. P. v. Knight, 117 Ind. 489, 20 N. E. 479, is perhaps the strongest, where a fraternal order, having at first only one class of members, afterward, by by-law, established other classes, each by itself mutual, but having no interest in the funds of any other class. Conceding, without deciding, that .some such legislation or by-law might have been valid, we ■find nothing of the sort in the act of 1899, and, as already stated, we find no by-law. That statute, while preserving unimpaired and unmodified the agreement to pay to each old member the sum specified out of an assessment to be collected ■from all its members, authorized the corporation to contract with new members for payment of the sum estimated to be sufficient to meet all expenses and insurance obligations of the company, at an agreed time and rate, with power of further assessment if the estimate shordd at any time prove Inadequate. In this is nothing to indicate that the sums so •collected from the new members could not be applied to the old obligations of the corporation; no authority to so agree. True, it is required that there be accumulated and maintained — 595 — ■a reserve fund of certain minimum to meet the life policies written under the new system, but there is no requirement that tbe premiums upon such policies shall be entirely devoted to that end. They might be fixed at such a rate as to produce a greater amount. Nor was there any requirement that such reserve be accumulated exclusively from the stipulated premiums. Any receipts of the corporation, except on limited payment policies (section Y), might be carried to such reserve, including assessments collected from old policy holders. True, it is in evidence that no assessments ever have been ■so used, but we find nothing in the statute to prevent it. After most careful study of ch. 2Y0 as applied to pre-existent assessment companies, we can find nothing to warrant any independence of one class of members from another. The methods of the collection of the price of the insurance differed, but all sums collected, by whatever method, became the funds of the corporation, subject to be-used to discharge its obligations as they matured. But it is said the plaintiff is only entitled to eighty per cent, of what the company can collect by an assessment, and, except as to the sum of $188.60, the company can collect nothing by an assessment, because it is bound by- contract ■with.the later members to acceptance of stipulated premiums; also it is objected that the by-laws existing when plaintiff’s policy was issued declared that his only, form of action should be to compel the levy of an assessment. These objections are superficial. If the contract had been made by an individual to pay the amount he could collect by assessment at .a specified rate upon a certain list of persons, we apprehend no one would doubt his liability to a money action if it appeared that such individual had entered into a subsequent agreement with some of his other policy holders to accept certain stipulated amounts in satisfaction of their liability to assessment and had received such amounts. None would doubt that, in legal effect, he had collected the assessments. We cannot — 596 — view the situation of tbe Madison Company differently. By tbe act of 1899 it was given tbe power to make exactly sucli an agreement as tbat above supposed, and did make it witli all tbe new members. Indeed, as to 2,960 of tbem, wbo bad formerly been assessment members, it allowed tbem a credit, or benefit because of tbeir interest in a fund wbicb bad been accumulated out of tbe excess of assessments wbicb plaintiff and others bad paid up to tbat time. Tbis, if done for tbe purpose of inducing tbem to withdraw from tbe assessment, class in order to reduce tbe amount of plaintiff’s demand against tbe company, would be such bad faith as to close tbe company’s mouth to any defense based thereon. We think it plain tbat, by taking tbe stipulated premiums from its new members, tbe Madison Company must be held to have commuted and collected from tbem in advance tbeir assessments to meet tbe plaintiff’s policy. It is further contended tbat, although tbe Madison Company might have been liable for tbe whole amount of plaintiff’s certificate, tbe respondent is not so liable because of limitations imposed in tbe contract of consolidation made between tbe two corporations. We pass tbe question whether tbe defendant could take over all tbe property, mortuary funds, reserve, and the like of another insurance company, and at tbe same time, by contract with tbat company, limit or diminish tbe existing rights of its policy holders. In tbis instance tbe consolidation agreement expressly assumes all the liabilities of tbe Madison Company, subject only to the-articles and by-laws of tbe defendant; but no such articles or by-laws were offered in evidence, except a statute of Minnesota wbicb, perhaps, enters into tbem, and wbicb provides tbat in case of consolidation tbe new company shall be liable-for tbe payment of all obligations of tbe consolidated companies. Hence there is no proof to limit tbe complete assumption by defendant of tbe Madison Company’s liability to-plaintiff. Any such question is, however, foreclosed by tbe — 597 — finding of the fact that such assumption -was made, since defendant reserved no exception thereto. Since it is conceded that eighty per cent, of an assessment at the agreed rates upon all the members of the Madison Company still members of the defendant company, or even upon those who, as we hold, have already paid their assessments in the commuted form of stipulated premiums, would considerably exceed the $2,000 maximum of plaintiff’s certificate, we can find no escape from the conclusion that defendant was and is liable to him for that amount. Some objection is suggested to plaintiff’s right to recover upondhe certificate because, by its terms, it was not payable until sixty days after proofs of loss. No formal proofs of loss had been made, because' the defendant declared the certificate forfeited and refused to send blank's for proofs. This action, however, was commenced within about twenty ■days after maturity of certificate, viz., February 7, 1902. This might be a serious obstacle to the maintenance of an action at law upon the certificate, but the fact is that this action was primarily one in equity to compel reinstatement of plaintiff’s insurance notwithstanding a forfeiture in August, 1901, and such reinstatement is adjudged without appeal by defendant. For these reasons it is entirely proper for the court, in equity, having acquired jurisdiction over the parties and the controversy, to proceed to do complete justice, though part of the relief consists of mere money recovery, and, the money being due before trial, no insuperable obstacle to judgment for its recovery exists. We find no sufficient evidence ■as to when proofs would have been made but for defendant’s repudiation of plaintiff’s right; hence we adopt the date of the service of the complaint, February 20, 1902, since that document gave all needed information for adjustment. The actual payment should have been within sixty days from that date, to wit, April 21st; hence interest should then commence. Laycock v. Parker, 103 Wis. 161, 187, 79 N. W. 327. — 598 — By the Court. — Judgment appealed from is modified as of its date by changing the amount of damages from $206.45 to $2,265, and the total to $2,310.49, and as so modified is affirmed; appellant to recover costs in this court. SJiebecKERj J., took no part.