Bowie v. Grand Lodge of the Legion of West

California Supreme Court Aug 30, 1893 No. No. 15149Published

Before: Haven

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Holding. The court held that a mutual benefit association may amend its laws to adjust benefit payouts if the member's original contract expressly provided that the laws governing the fund were subject to change.

Issues

Whether a mutual benefit association may amend its laws to limit benefit payments to a proportionate share of assessments collected.
Whether such an amendment impairs the obligation of a member's contract when the contract expressly incorporates the association's power to amend its laws.

Disposition. reversed

Quotations verified verbatim against the opinion

“The plaintiff, when he became a member of the defendant corporation, became also bound by its constitution and laws, and such constitution and laws became a part of his contract of membership”

Synopsis

Mutual Benefit Association—Benefit Certificate—Coupons — Change of Bylaws. — Where a benefit certificate in a mutual benefit association, with coupons attached, provided that the member should be “entitled to participate in the special benefit fund of the order in an amount to be computed according to tile laws of the order, not exceeding the amount named in said coupons respectively,” and the constitution of the order contained a provision that the constitution and laws relating to and governing the beneficiary fund might he amended by a three-fourths vote of the grand lodge, a change of the laws regularly made by the grand lodge limiting the amount to be paid upon a maturing coupon to a proportionate share of one assessment for the payment of all coupons then maturing does not impair the obligation of the contract, though a different rule of computing the amount to be paid existed at the date of the certificate.

Id.—Laws Entering into Contract—Provision fob Future Change.—The constitution and laws of the Mutual Benefit Association entered into and became part of its contract with its members, including the provision therein for future change of the laws regulating the beneficiary fund, and such change is not an amendment of the certificate of incorporation or articles of association within the meaning of section 362 of the Civil Code.

De Haven, J. The defendant is a corporation existing under the laws of this state, and belongs to the class known as mutual benefit associations. Uuder its constitution and laws it agrees to pay a stipulated sum of money to a designated nominee upon the death of the beneficiary member, and also issues to members known as “special benefit members” a certificate entitling them to receive an endowment, payable in installments during the life of such members. The defendant is without capital stock, and, like all associations of a similar character, [394]depends upon the collection from its members of certain fixed assessments in order to provide a fund for the payment of the certificates issued by it.

Upon February 15,1888, the defendant issued to the plaintiff a special benefit certificate of the sixth class, with ten coupons attached thereto, each providing for the payment of a sum not exceeding six hundred dollars, the first one maturing in June, 1891, and the tenth in the month of February, 1921; and by the terms of this certificate, the defendant agreed with plaintiff in effect that, should he live to the period of time set forth in each of the ten coupons attached thereto, he would be entitled “to participate in the special benefit fund of the order, in an amount to be computed according to the laws of the order, not exceeding the amount named in the coupons, respectively.”

At the time of the issuance of this certificate, the constitution and laws of the defendant contemplated that the defendant would make and collect a sufficient number of assessments to enable it to pay each maturing coupon in full, unless one assessment on each special benefit member would not amount to six hundred dollars, in which event there should be but one assessment. The constitution, however, contained a provision that “the constitution .... relating to the beneficiary fund and the laws governing the same” might be amended by a three-fourths vote of all the members present at a regular meeting of the grand lodge.

This action is brought by the plaintiff to recover the sum of six hundred dollars, alleged to be due upon a coupon maturing in June, 1891, and attached to the special benefit certificate held by him. The coupon is in these words: “This first coupon issued by authority of the grand lodge, Legion of the West, shall not exceed six hundred dollars, and shall not mature before the month of June in the year 1891.”

The defendant in its answer alleged that the law of defendant in relation to its beneficiary funds was amended in March, 1891, so as to provide that, if the amount of an assessment called and received in the second calendar month next preceding the maturity of a coupon “shall be insufficient to pay the full face value of each and every certificate or coupon, payable in the same calendar month, .... then the sum to be paid on any coupon

Bowie v. Grand Lodge of the Legion of West

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