Trisler v. Mutual Reserve Fund Life Ass'n

BLAND, P. J. (after stating the facts). — 1. Resolutions under which the assessment were readjusted upon the basis of attained age, were not amendments of the by-laws, and for this reason plaintiff contends the assessments were unlawfully increased. The constitution and by-laws of the association provide that the board of directors shall adjust calls or assessments, and in 1895, the board of directors adopted the policy of assessing each member on the basis of his -attained age and expectancy of life, and authorized the executive committee to carry out the terms of the resolution. Under this resolution, each member was required to pay for his insurance in bimonthly payments the actual cost of carrying the same, according to- the experience of the association, and this is denominated in the testimony of the actuary as an “equitable adjustment of the assessments,” and also in the preamble of the resolution — 513 — of June 12, 1895. This readjustment, according to the evidence of the actuary, was recommended by the superintendent of insurance of the State of New York, for the reason, he claimed, that members in the fifteen-year class were not paying for their insurance and were enjoying an undue advantage over members in the ten and five-year classes. Both the by-laws and the certificate of insurance authorized the board of directors to make this adjustment. Plaintiff’s contention is, that while members in the fifteen-j^ear class are required to pay assessments based on attained age, the ten and five-year classes are only required to pay a flat bimonthly premium or assessment, based on their age at the date of entry, and that it is not expected that members of these classes will be required to pay more than the flat-premium stated in their policies, at any time in the future, irrespective of the age they may attain, and that a division of the association’s membership into classes and the issuance of certificates upon the flat premium plan largely increased the mortuary assessments of members in the fifteen-year class from what they would have been had not the classification been made and certificates issued on a flat premium plan. The evidence shows it was not expected that the assessments of members in the five-year class would be raised at any time during the life of their policies, and that the level rate of the ten-year class only held good for ten years and at the expiration of each period of ten years another rate, based on attained age, would be assessed. These level rates, according to the evidence are based on the experience of the association and the standard mortuary tables, and cover tbe cost of the insurance to the association. The evidence also shows that Call No. 96 was calculated on the same basis. In other words, the evidence shows that under the readjustment all members of the three different classes were — 514 — required to pay assessments equal to the cost of carrying their insurance, according to the experience of the association, so there is no apparent inequality in the assessments upon the members of the three classes, nor does the contract with the ten and five-year classes to pay a level rate, with the right reserved in the association to increase these assessments, have the effect to designate the association an ordinary life insurance company. [Hayden v. Franklin Life Ins. Co., 136 Fed. 285.] The right of the association to make Call No. 96 has been before other courts and adjudicated in favor of the association'. [Crosby v. Mutual Reserve Fund Life Association, 78 N. Y. Supp. 327; Haydel v. Id., 104 Fed. 718; Barbot v. Id., 100 Ga. 681; Mutual Reserve Fund Assn. v. Taylor, 99 Va. 208; Gaut v. Mutual Reserve Fund Life Assn., 121 Fed. 403.] The calls or mortuary assessments are periodically adjusted on the estimated cost of insurance according to the experience of the association, and is equalized among the members by taking into account the attained age of each member. It seems to us that this is equity and it certainly is authorized by the by-laws and constitution of the association, and expressly provided for in the contract of insurance itself. As opposed to this view, plaintiff cites the case of Strauss v. Mutual Reserve Fund Life Assn., 54 L. R. A. (N. C.) 605, where it was held that call No. 96 resulted in discrimination against- members in the fifteen-year class, and was injurious. Strauss became a member in 1883. The terms of his contract of insurance are not stated in the opinion, nor are any of the facts upon which the court based its opinion. What is stated in the opinion is, that it clearly appears from the sixteenth, eighteenth, twenty-first and twenty-second findings of the facts there was discrimination and that plaintiff was injured thereby. There is no direct evidence in the record before us — 515 — that Call No. 96 resulted in 'discrimination by which Schmidt was injured, nor can the inference, that the call resulted in such discrimination, be drawn from the evidence contained in the record; on the contrary, the evidence of the actuary, the only evidence on the subject, is to the effect that call No. 96 was the result of a readjustment of assessments, by which each member was required to pay his equitable part of the death fund; and the Strauss case is repudiated in Mutual Reserve Fund Life Assn. v. Ferrenbach, 144 Fed. 342. Plaintiff also cites the case of Mutual Reserve Fund Life Insurance Co. v. Foster, 20 Times Law Reports 715 (decided by the House of Lords, July 29, 1904). A letter had been written Foster and documents put into his hands by a solicitor of the association, and a table of bi-monthly rates, showing a minimum and maximum rate for each one hundred pounds of insurance, according to the age of each member, and a similar table was also indorsed on the back of his policy. Under call No. 96, Foster was required to pay an assessment considerably in excess of the maximum rate as shown by the table indorsed on the back of his policy. Under protest, he continued for sometime to pay the bi-monthly assessments under this call, and then sued the association to recover the excess he had paid above the maximum rate indorsed on the back of his policy. . The Lord Chancellor said, there had been “great ingenuity in. concealing the real effect of the contract, of insurance,” and denominated the nature of the document tendered Foster as “tricky,” and stated it was clear Foster did not understand the contract. No letters were written to Schmidt, nor were any documents put into his hands by any agent or representative of the association before he made his application for insurance, and there was no indorsement on the back of his policy of the table of minimum and maximum rates. The following only in respect to rates was indorsed on his policy: — 516 — “Assessment Rate Table. “No assessments will be made while there remains in the death fund a sum sufficient to pay the existing claims in full. “The basis of the assessment rate for each member, according to age, taken at the nearest birthday, on each $1000 is as follows: “(Here follows table — the rates increasing with age.) The rate opposite age 59 is $1.25.” There are, therefore, no facts to warrant us to denounce the transaction of the association with Schmidt as “tricky,” unless it can be said that the policy, constitution and by-laws of the association are calculated to deceive. We do not find them more complicated, more involved or more difficult to understand than are policies, constitutions and by-laAvs of most other associations of the same character. The truth is, most life insurance policies are so written as to be incomprehensible to the ordinary man, and by such are taken upon trust, and if defendant’s form of policy should be condemned as “tricky,” to be consistent, we would have to condemn about every life insurance policy brought before us. There is no evidence to satisfy us that call No. 96 violated the terms of Schmidt’s policy, impaired its value or resulted in a discrimination to his injury, and for these reasons Smith v. Supreme Lodge K. of P., 83 Mo. App. 512, and other cases along the same line, cited by plaintiff, have no application to the facts in this case. We agree with the following paragraph from the opinion of Judge Hough, before whom the case was tried: “I further find that under the contract there was no limit upon the amount that could be assessed against the plaintiff’s certificate, so long as the assessment was made to meet existing claims by death, and that the provision of said contract that assessments shall be made 'according to the age of each member’ means the — 517 — age of the member when the assessment is levied. All of the evidence in the ca.se indicates that at the time this assessment was levied the death fund of the defendant association was depleted and an assessment was necessary, in the judgment of the board of directors, and the assessment on plaintiff was made for such a sum as in their judgment was believed to be necessary to meet existing claims by death. Under these circumstances, although the assessment was larger than those theretofore levied against the plaintiff, yet as the amount of assessments to be levied was by the contract left to the discretion of the board of directors, and there is no proof that this discretion was abused, the assessment was a valid assessment and the non-payment of it on or before March 3, 1898, worked a forfeiture of the certificate.” The judgment is affirmed. All concur.