Lloyd v. Supreme Lodge Knights of Pythias

SEAMAN, District Judge, after the foregoing statement, delivered the opinion of the court. This action is founded on a contract of insurance made by the defendant below, Supreme Lodge Knights of Pythias, June 15, 1889, on the life of Walter C. Lloyd, as a member of the order, for §3,000, and the controversy hinges upon the validity and effect of a by-law which purports-to have been adopted by the defendant on September 1, 1890, to become operative 60 days later. The by-law provides: “if the death of any member * * * heretofore admitted * ⅞ or hereafter admitted * * * shall be caused or superinduced by the use of intoxicating liquors,” a portion only of the amount insured should be paid, based on certain computations of life expectancy. The contract was entered into subject to the “laws, rules, and regulations of the order” then in force or thereafter “enacted by the supreme lodge”; but the liability of the defendant for the entire amount is undisputed, except for such operation as this bylaw may have under the testimony or conceded facts. Oral testimony appears to have been introduced on behalf of the defendant at the close of the case, purporting to show the adoption of a by-law by the supreme lodge “at a convention in August or September, 1891,” which declared a forfeiture of insurance upon the same conditions seated in the by-law of 1896. The objection raised of insufficiency of the proof was valid, as it was secondary in character, when certified copies of the record evidence were available under the provisions of the Illinois statute. Hurd’s Bev. St. c. 51, § 15; 2 Siarr & C. Ann. St. Ill. (2d Ed.) p. 1816. The record shows chat the trial below was conducted throughout, in the introduction of testimony and in the motions and discussion on the part of counsel, upon the theory that the validity of the by-law of 1896 was the sole test of liability for the amount of insurance, under the undisputed fact I hut the subsequent death of the assured was “caused or super-induced by the use of intoxicating liquors,” and that upholding the by-law operated per se to defeat recovery, regardless of the time when the disease so caused was in fact contracted. The testimony which tends to show that cirrhosis of the liver existed in the case [70] of the assured in its fatal stage before the by-law was adopted was apparently set aside without discussion by counsel, or consideration by the court in the final direction of the verdict for defendant. Such retroactive effect of the by-law is neither demanded by its terms nor admissible under the rules applicable to provisions so adopted, and in the argument at the bar of this court counsel for the defendant in error frankly conceded that a by-law thus adopted would not operate to destroy liability for a pre-existing cause of death which was otherwise within the terms of the insurance. The stipulation that the contract “shall be governed by all the laws, rules, and regulations of the order governing the rank now in force or that may hereafter be enacted,” and the condition requiring “full compliance with all the laws governing this rank now in force or that may hereafter be enacted,” are provisions which frequently appear in like contracts between mutual benefit associations and their members. The right so reserved in the association is well recognized as authorizing it to subject members to further requirements and conditions of future liability by reasonable enactments within the objects and for the general welfare of the association, and to apply the regulations to prior contracts, but to the extent only that the conditions thus imposed arise after the enactment. No authority rests in the association under this reservation to repudiate obligations as insurer which have become vested under th,e contract, and the by-law which imposes a new condition, or exempts from liability for a cause of death previously within the insurance, cannot be made retroactive to impair or destroy liability for a pre-existing cause which arose under the contract. Wist v. Grand Lodge, 22 Or. 271, 29 Pac. 610; Supreme Lodge v. Knight, 117 Ind. 497, 20 N. E. 479, 3 L. R. A. 409; Hale v. Union, 168 Pa. St. 377, 382, 31 Atl. 1066; Nibl. Ben. Soc. & Acc. Ins. (2d Ed.) p. 65⅛ The by-law in question is not, in terms, opposed to the rule thus stated. Although it relates to members “heretofore admitted,” its terms are prospective, only, in reference to the cause of death, namely, “if such death shall be caused or superinduced by the use of intoxicating liquors” (Wist v. Grand Lodge, supra); and such provision, in the absence of clear expression otherwise, must be construed as prospective only, “although its words are broad enough in their literal extent to comprehend existing cases” (Suth. St. Const. §§ 464, 465; Sedg. St. & Const. Law [2d Ed.] 161). The questions of fact presented on the introduction of the by-law of 1896 were: (1) Whether the disease which produced the death of the assured was caused or superinduced by the use of intoxicating liquors; and, if so caused, (2) whether the disease became seated in fatal and incurable form before or after the time from which the by-law is operative; or (3) whether the use of intoxicating liquors after the by-law became effective ca used or superinduced the death. The answer to the first question in the affirmative was conceded by counsel upon both sides on the undisputed testimony, but the other two inquiries were not covered by the admission, and were clearly for the jury to determine so far as there was room for difference of opinion under the testimony. The contention in support of the [71] judgment that all issues of fact were waived by the remarks made by counsel for plaintiff in error on the motion to direct a verdict are not sustainable to that extent. The discussion related to the erroneous construction of the by-law which was there assumed, and the remarks of counsel in that view — that “the cause of death was superinduced by alcohol,” that “'there is no question about it, under the proof,” and that “it is a question of law. I do not suppose there will be any necessity much for the jury except to return such verdict as the court may direct”-- cannot be treaied, in the face of cogent testimony of contrary effect, as an admission that the fatal disease was contracted after the by-law became effective. On the construction of the by-law adopted in this opinion the issues of fact above indicated remained for the jury to determine, and the direction thereupon in favor of the defendant was erroneous. If death resulted in this ease from cirrhosis of the liver, which had reached its fatal stage before the by-law became operative, and was not caused or superinduced by the use of intoxicating liquors subsequent to the adoption, the right of recovery upon the contract was not affected by the by-law. The question suggested in the briefs of counsel of the possible effect of a pre-existing by-law exempting the insurer from liability for the same causes of death specified in the by-law of 1890 cannot be considered on this record, for the reason that no competent evidence* is presented of such provision. If the proof upon another trial shows the adoption of a by-law upon the same subject in 1894, and that the cause of death in this instance arose during its existence, it wall devolve upon the trial court to determine whether the new enactment operated as a repeal of all the provisions of the earlier by-law, or as a mere modification. See U. S. v. Tynen, 11 Wall. 88, 92, 20 L. Ed. 153; Murdock v. City of Memphis, 20 Wall. 590, 617, 22 L. Ed. 429; U. S. v. Bowen, 100 U. S. 508, 512, 25 L. Ed. 631; King v. Cornell, 106 U. S. 395, 396, 1 Sup. Ct. 312, 27 L. Ed. (50; District of Columbia v. Hutton, 143 U. S. 18, 26, 12 Sup. Ct. 369, 36 L. Ed. 60. Also, Tracy v. Tuffly, 134 U. S. 266, 223, 10 Sup. Ct. 527, 33 L. Ed. 879; Steamship Co. v. Joliffe, 2 Wall. 450, 458, 17 L. Ed. 805. The assignments of error founded on objections to the validity of the by-law of 1896 fall within the recent decisions in Supreme Lodge v. Kutscher, 179 Ill. 340, 345, 53 N. E. 620, Same v. Trebbe, 179 Ill. 348, 852, 53 N. E. 730, and Dornes v. Supreme Lodge, 75 Miss. 466, 23 South. 191, and are therefore overruled. The judgment below is reversed, with direction to grant a new trial.