Grand Lodge Knights of Pythias v. Harris , 124 Fla. 1 ( 1936 )

This case, stripped of all the unnecessary wordiness with which the point of law involved is enshrouded in technical mystery, is whether the agreement of the insured member of the fraternal society that he would be bound by by-laws in force at the time he applied for insurance in the society as well as those that might thereafter be adopted, which both by his express agreement and the terms of the statute became part of his contract of insurance binding alike upon him and his beneficiary, should be construed as empowering the society during the lifetime of the insured not to reduce the amount of the death benefit agreed to be paid, but to spread the payment of the same over a reasonable period of time deemed to be essential to the best interests of all the insured members of the fraternity.

I do not agree that the authorities cited in the majority opinion sustain the negative of that proposition.

On the question whether an agreement by the member that he will abide by the constitution and by-laws of the society as they were at the time he became connected therewith or as subsequently enacted authorizes the society to decrease the benefits for which the member enters into the contract, the authorities are, as I read them, about evenly divided, the negative of the proposition being made to turn in some cases as in Knights Templars' Masons' Life Indemnity Co. v. Jarman, 104 Fed. Rep. 638; 187 U.S. 197, 23 Sup. Ct. Rep. 108, 47 L. Ed. 139, on whether the subsequently adopted by-law was intended to have a prospective or retrospective effect. If the former, as was true in the above cited case, the insured was not bound.

If the agreement was not embodied in the contract, nor read into it by any statute, as was true in the case of Neff v. Sovereign Camp, W.O.W., 226 Mo. App. 899, 48 S.W. Rep. 2d 564, the society had no power to decrease the benefits. Both cases are cited in the majority opinion.

The language of Section 6406 C.G.L. (Sec. 4442 R.G.S. 1920) which is part of Chapter 6970, Acts 1915, which provides that any change in the laws of the society duly enacted subsequent to the issuance of the "benefit certificate shall bind the member and his beneficiaries, and shall govern and control the agreement in all respects the same as though such changes, additions or amendments had been made prior to and were in force at the time of the application for membership" has relation definitely to the benefit certificate and becomes a part of the agreement.

There is nothing reprehensible about such an agreement, and nothing inconsistent about it. The fraternal society is not writing "life" insurance in the sense of that term as applied to the "old line" companies. Fraternal societies which issue life and sick benefit certificates to their members do so for a much less premium charge than other insurance companies charge for life insurance. The activity of the fraternal society in this regard is inspired by its doctrine of fraternal relations. The method adopted for maintaining its benevolent activities of this character is one of co-operation and assessment by which its funds are replenished so that a member who acquires a certificate of insurance becomes both insurer and insured. Whenever a by-law is amended to benefit the society and strengthen its powers to continue its benevolent work the member certificate holder is correspondingly benefited in that it increases the assurance of benefits to his wife, child or other dependent, in whose interest the members of the society, of which the assured is one, labor.

It was in recognition of that feature of such societies that the statute was enacted, thus approving the prudence, wisdom and oftimes necessity for such amendments.

Modifications in the amount of premiums charged or assessments made or method of payment of benefits may at times become essential to preserve the financial responsibility of the fraternity and secure the general welfare of its membership.

To measure the terms of a benefit certificate issued by a fraternal order to one of its members by the "trading-at-arms-length doctrine" of usual contracts of insurance, is to disparage the activities of fraternal societies, discount the good that they all do in every community in which they are established and impute to them the smart, tricky, selfishness of a certain type of traders.

The authorities are seemingly in hopeless conflict upon the question whether the reserved power of the society may be exercised to decrease benefits contracted for or increase premiums required to be paid; but to say that the overwhelming weight of authority is one way is obvious oversimplification. There are so many elements that enter into the question of what is authority, not the least of which is the individual viewpoint of the proponent, that it would require Justinian labor to decide how and in what direction the decisions preponderate.

Upon the affirmative side of the proposition may be cited the authorities collected in footnote No. 85 on page 36 of 45 Corpus Juris, also Reynolds v. Supreme Council of the Royal Arcanum,192 Mass. 150, 78 N.E. Rep. 129, 7 L.R.A. (N.S.) 1154.

I perceive no necessity for placing the extremely narrow and inflexible construction upon the language of the Act which is placed upon it by the majority opinion.

I think the question should turn upon the reasonableness of the amended by-law, and that question should be determined by a jury. So I think the judgment should be reversed.