« 이전계속 »
of the order; such stipulation having reference only to reasonable amendments relating to the economic administration of the society's affairs, and not authorizing amendments interfering with or destroying vested contract rights.
[Ed. Note.-For other cases, see Insurance, Cent. Dig. 1855; Dec.
Dig. Om719.) 4. INSURANCE Ow719 - FOREIGN INSURANCE ASSOCIATION - VIOLATION
VESTED RIGHTS-RIGHT OF ACTION.
Where the Supreme Court of a fraternal association, organized in Canada and authorized to do business in New York, in violation of vested contract rights, makes an extraordinary assessment which it declares a lien on the certificate of a member residing in New York, the member may sue in New York to set aside the assessment and remove the lien, though the assessment was authorized by the Parliament of the Dominion of Canada. [Ed. Note.-For other cases, see Insurance, Cent. Dig. § 1855; Dec. Dig.
719.] 5. COURTS 512—COMITY-ENFORCEMENT OF FOREIGN LAWS.
Comity will not be exercised, where foreign laws sought to be enforced are contrary to the laws of the state, or would work injustice to citizens of the state. [Ed. Note.--For other cases, see Courts, Cent. Dig. § 1432; Dec. Dig.
512.) 6. INSURANCE 17-FOREIGN INSURANCE COMPANY-SUBMISSION TO STATE
Where a foreign fraternal insurance association obtains permission to do an insurance business in New York, it submits to the laws of this state, and agrees to obey same, and conform to the public policy of the state, (Fd. Note.-For other cases, see Insurance, Cent. Dig. $ 12; Dec. Dig.
Action by Henry McClement against the Supreme Court of the Independent Order of Foresters, to set aside an extraordinary assessment charged by defendant on plaintiff's certificate of insurance, and to remove the lien thereof from such certificate. Judgment for plaintiff.
Wm. H. Gilman and John Conboy, both of Watertown, for plaintiff.
Kellas, Genaway & Kellas, of Malone, Thos. G. Long and Elliott G. Stevenson, both of Detroit, Mich., and Geo. H. Cobb, of Watertown, for defendant.
EMERSON, J. The defendant is a fraternal insurance association, duly incorporated under the laws of the Dominion of Canada, having its head office in the city of Toronto. It was originally incorporated in the province of Ontario, but was reincorporated by the Dominion Parliament in the year 1889. The Supreme Court is the governing body, and it has a constitution and by-laws adopted by that court for conducting the business of the association. Its system of insurance is conducted upon the assessment plan, and is carried on by means of subordinate courts established by it pursuant to the terms of its charter.
For other cases see same topic & KEY-NUMBER in all Key-Numbered Digosts & Indexes
In the year 1892 the defendant applied for and obtained permission to do business as an insurance company in the state of New York, which permission still continues. Having obtained such permission, it organized a subordinate court in the city of Watertown, known as Court Watertown No. 465, and thereafter, and on December 29, 1892, the plaintiff, who then resided in the city of Watertown, became a member of that court. On the 7th day of January, 1893, the defendant issued, and on January 16, 1893, delivered to the plaintiff, its certificate or policy of insurance, which stated in substance that, in consideration of the statements and representations contained in the application for membership, the statements and answers containe 1 in the medical examination papers, the provisions of the constitution and by-laws prescribed from time to time by the Supreme Court of the Independent Order of Foresters, all of which were assented to by plaintiff and were made part of said contract, and also in consideration of the statements and declarations contained in the obligations of subordinate courts, upon the faith of all of which said certificate was issued, said Supreme Court of the Independent Order of Foresters agreed to pay to the plaintiff on his reaching his seventieth birthday and on each subsequent birthday an annuity benefit of $200 until the full sum of $2,000 was paid, less any sum paid on account of total and permanent disability. It further agreed to pay, on satisfactory proof of total and permanent disability, as provided in the constitution and laws prescribed from time to time by said Supreme Court, a benefit of $1,000, and it further agreed to pay to the widow or other beneficiary therein designated, or to the personal representatives of the plaintiff, on due and satisfactory proof of his death, an endowment benefit of $2,000, less any sum previously paid on account of total and permanent disability or on account of the annuity benefit.
The plaintiff, at the time said certificate was issued, was nearing his thirty-sixth birthday, and he thereby became a member of the ordinary class and was required to pay the monthly assessment fixed by said by-laws to be paid by members of the age of 36 in said ordinary class.
The by-laws of said defendant in force at the time the plaintiff joined the order and said certificate or policy of insurance was executed and delivered provided that the monthly rate of assessment which every member in the ordinary class should pay who was of the age of 36 at the time of his registration should be 80 cents on each $1,000, or the sum of $1.60 on a policy for $2,000, and that he should pay the same rate of assessment thereafter as long as he remained continuously in good standing in the order and in the same class. Said by-laws further provided tiiat, whenever there were no available funds to pay the endowment or other benefits of the order, the executive council should order a special assessment, which should be paid by each member into his subordinate court within 30 days from the date of the call, and the subordinate courts should forthwith transmit the same to the Supreme Secretary, and when such special assessment should be ordered and paid by the members it should be refunded to
them as soon as the funds of the society would permit, by the executive council remitting their monthly assessments till the extra sums paid by the members were fully repaid to them.
On joining the defendant the plaintiff was required to pay an initiation fee of $6.50 and the first assessment of $1.60 upon his policy, and he was required by said by-laws and did pay the annual dues of said local court, which were fixed at the sum of 45 cents per month. He thereafter complied with all the rules of defendant society, and at all times remained a member in good standing, and paid all dues, assessments, and charges against him which were levied by the defendant down to October 1, 1913, and the same were received and accepted by defendant.
In the year 1898 the defendant amended its by-laws by providing for an increased rate of monthly assessments as to those who should thereafter join the order, those who were of the age of plaintiff when he joined being required to pay $1.44 per month on each $1,000 insurance, or a total monthly assessment on a certificate for $2,000 of $2.88; but such amendment provided that it should not apply to members who joined before December 31, 1898, and who are therefore termed pre-99 members, all of whom, so long as they remained in good standing, should pay the rates which existed before such amendment.
In the year 1908 the defendant caused a valuation to be made of its assets and liabilities, and it was found that the present value of the certificates of insurance then outstanding exceeded the surplus mortuary fund on hand, together with the present value of future monthly assessments by the sum of $55,000,000, which sum represented a valuation deficiency according to standard mortality tables and the actuarial methods which were adopted. The defendant thereupon amended its by-laws by raising the monthly assessment rates of all pre-99 members, or those who joined before December 31, 1898, by which amendment the plaintiff was required to pay a monthly assessment of $1.72 on each $1,000 insurance, or a total monthly assessment on a certificate for $2,000 of $3.44. The rates of monthly assesst ments to be paid by members joining subsequently to December 31, 1898, was left as fixed by the amendment of 1898. The plaintiff, however, seems to have acquiesced in this increase of his monthly assessment, and has paid the same ever since.
In the year 1912 the defendant caused a further valuation of its assets and liabilities to be made, and it was found that the present value of the policies then outstanding was the sum of $91,288,417, or, including death claims then unsettled, $92,355,091. This left, after deducting the present value of future monthly assessments and the surplus mortuary fund on hand, a valuation deficiency of $23,830,402, thus showing that the valuation deficiency of $55,000,000 which existed in 1908 had, because of the increase of assessments made in that year, been reduced about 60 per cent. during the preceding four years. It was, however, found by the actuarial methods used that the valuation deficiency for the pre-99 members was $25,555,448, thus leaving a valuation surplus to members who joined after December
31, 1898, of $1,725,046. The same valuation showed that on December 31, 1912, the defendant had a surplus fund of $20,559,911, of which sum $6,245,661 arose from payments made by pre-99 members.
In the year 1913, upon the initiative and at the request of some of the chief officers of the defendant, the Dominion Parliament enacted a statute which took effect on May 16, 1913, and which permitted the defendant to classify all of its membership, those who joined prior to December 31, 1898, to constitute one class, those who joined between January 1, 1899, and July 1, 1911, to constitute another class, and those who joined subsequently to July 1, 1911, to constitute a third class. The defendant was authorized to require its members to pay such premiums or assessments as would provide, with the accumulated funds of the society applicable to mortuary benefits, for the payment of all obligations matured or to thereafter mature under such mortuary benefit certificates, whether theretofore or thereafter issued, without deduction or abatement, and to that end the defendant was authorized to determine the amount of the accumulated funds which arose from the payments made by members in each class, and such amount, together with future assessments to be received from the members in each class, was to be deemed applicable only to mortuary benefit certificates of members in such classes respectively. The defendant was further authorized to ascertain as of October 1, 1913, the valuation deficiency in respect to all outstanding mortuary benefit certificates of members who joined prior to January 1, 1899, and to apportion such valuation deficiency among said members in proportion to the amount of their mortuary benefit certificates. Said act further provided that, if it should be accepted by the Supreme Court of said society by a two-thirds vote, it should then take effect, in which event the defendant was authorized by resolution to charge against each mortuary benefit certificate issued prior to January 1, 1899, as an assessment, a sum not exceeding its proportion of the valuation deficiency aforesaid, which should become due and payable on October 1, 1913, and if not so paid to be a lien against said mortuary benefit certificate, bearing interest until paid at the rate of 4 per cent. per annum, compounded annually the same, together with such interest, to be deducted by the defendant from the moneys to be paid on such mortuary certificate.
The Supreme Court of said defendant thereafter accepted said act by a two-thirds vote, and proceeded to have another actuarial examination of its affairs made as of October 1, 1913, and it was found that on said date there was a valuation deficiency as to pre-99 meinbers of liabilities over assets according to standard mortality tables of $24,500,000 which sum was about $1,000,000 less than the valuation deficiency charged to said members upon the actuarial examination made December 31, 1912, and which sum, less a surplus of $725,046, placed to credit of members joining after December 31, 1898 represented the total valuation deficiency of the defendant. The same examination showed that on October 1, 1913, out of the surplus funds then on hand, amounting to about $21,000,000, the sum of $6,000,000 had been accumulated from payments made by pre-99 members, and it also appeared that, after paying all claims which arose during the
year 1913, there was an accumulated surplus which was paid in by the whole membership during that year of over $300,000. Thereupon, acting under the authority of said act of Parliament, the Supreme Court proceeded by resolution to charge said valuation deficiency of $24,500,000 upon the pre-99 members and to apportion the same among said membership according to the amount of their respective certificates; the shares so charged to the plaintiff being the sum of $520. This amount the plaintiff was required to pay on or before October 1, 1913, and in default of said payment it was declared to be a lien upon his certificate of insurance, with interest at the rate of 4 per cent., compounded annually, the whole amount thereof to be deducted from any sum which should thereafter become payable on said certificate. The plaintiff protested against said charge and lien, and refused to pay the same, and subsequently to October 1, 1913, brought this action to set aside said lien and charge, and to have his policy restored to its original amount, and he asserts that the imposition of the same was a violation of his contract rights, and therefore invalid.
There was considerable evidence given upon the trial bearing upon the necessity and fairness of the sum thus charged against the pre-99 membership, and, if that inquiry was necessarily involved, much could be said on either side of the question. It seems to me, however, that it is more a question of power in the defendant to make the charge and create the lien in question, for if it possessed such power it is hardly the province of the court to control the discretionary exercise of the same.
In determining this question of power, we must first ascertain whether the contract made between the parties is to be construed, and the rights of the parties determined, according to the laws of the state of New York, or those of the Dominion of Canada. The method pursued in joining the defendant and in the issuance of plaintiff's certificate of insurance was as follows:
The plaintiff, who resided in the city of Watertown, presented his petition for membership to Court Watertown No. 465, which was referred to a committee, who having reported favorably upon the application, he was balloted for and elected. He was then examined by the subordinate court physician, and the medical examination forwarded to the home office in Toronto, and the same having been approved by the chief medical examiner of the Supreme Court and returned with such approval to the subordinate court, it proceeded to initiate him as a member. At the time of his initiation he paid the initiation fee and his first assessment, and the recording secretary of the court thereupon completed his application for membership by filling in the date of his initiation, and such application, with the certificate of such secretary, was by him then forwarded to the home office, where he was registered and enrolled as a member in the department of the Supreme Secretary. In a few days the certificate or policy of insurance was made out and forwarded to the subordinate court for delivery. Before delivery, however, the by-laws provided that it must be signed by the member thus insured, and such signatire duly witnessed by the chief ranger of his court, and countersigned by the recording secretary, with the seal of the court attached (By
I said event each
exam found niem tables calua nina 523
1833 saniu funds 10.000
, and & the