Faurot v. Swan , 155 Mich. 284 ( 1908 )

Ostrander, J.

(after stating the facts). Whether the members of the lodge are personally liable to pay assessments, or whether the contract between the members and the organization is unilateral, is the broad question presented. That the obligation to pay assessments, if it exists, rests in contract relations, express or implied, or is imposed by the statute, is not disputed, and is indeed well settled. See Calkins v. Angell, 123 Mich. 77; Ellerbe v. Barney, 119 Mo. 632 (23 L. R. A. 435); Provident Mutual Relief Ass’n v. Pelissier, 69 N. H. 606; Fulton v. Stevens, 99 Wis. 307; New Era Life Ass’n v. Rossiter, 132 Pa. 314; Gibson v. Megrew, 154 Ind. 273 (48 L. R. A. 362); Lehman v. Clark, 174 Ill. 279 (43 L. R. A. 648); L’Union St. Jean Baptiste de Pawtucket v. Ostiguy, 25 R. I. 478 (64 L. R. A. 158).

The generally accepted rule with respect to ordinary life-insurance contracts is that the payment of the premium or assessment is only a condition precedent of the liability of the company, and that the insured may pay or not as he pleases. The assessment or premium is a debt only when there is an absolute promise to pay. 2 Bacon on Benefit Societies and Life Insurance (3d Ed.), § 357. The statute does not in terms impose an obligation to pay assessments. Prior to the year 1897 no one joining the order as a beneficiary member did expressly promise to pay them. Whether they made use of one or the other form of application, the rights of all beneficiary members were alike forfeited from and after the 28th day of the month in which an assessment was payable without any action upon the part of the lodge or of any officer thereof, if such assessment remained unpaid. Undoubtedly the founders of the order were of opinion that a monthly assessment upon members at the rates fixed in the laws of the order would produce a fund sufficient to pay losses accruing with the death of members. However this may be, the plan adopted does not make the organization the mere collector and distributer of an assessment to be made after, and because of, the death of a member. Each certificate contains a promise to pay a stipulated sum. A fund is created out of which such sums are to be paid. This fund is replenished by regular, perhaps upon occasion by special or extra, assessments. There is apparent in this plan no notion of an obligation, express or implied, to pay an assessment on, and because of the death of, each member occurring during the membership of the assured. There is apparent the idea that they are payments made in advance, in consideration of a risk assumed or continued by the organization, each payment operating to keep the certificate of a member in force until the next assessment is due and payable. This consideration is not controlling in a case where the promise of the member to pay assessments is made out. But in a case where the promise of the member to pay assessments, if it exists at all, must be made out by fair interpretation of the statute, the constitution and laws of the organization, it supports an argument opposed to the idea that such a promise ought to be found to exist. It is consistent with the idea that, having paid for all benefits received, it is optional with the member to relinquish the right to further benefits by declining to pay the assessment immediately levied, consistent with the idea that payment of an assessment was a condition merely to any liability of the organization.

It will be assumed that each member of this order understood that one of its objects was to pledge its membership to the payment of a stipulated sum to beneficiaries of other members under conditions set out, and that each understood that the money necessary for the purpose must be contributed by the members. Each knew that a member might at any time sever his connection with the order by paying all assessments, dues, and fines charged against him. These and other considerations, it is said, warrant, •and, indeed, require, the conclusion that the relations of each member to the organization and to other members were those of an insurer as well as those of one insured. This might be admitted if an agreement could be reached concerning the nature and extent of the relation which each member, viewed as an insurer, bore to the organization and to other members. But it is evident that, when we have determined what this relation is, we have also determined the point in issue. The business carried on by the lodge, so far as we are concerned with it, was the business of life insurance. In the exercise of the general statute power to provide for the relief of families and heirs of deceased members, it had a wide choice of methods to b,e employed. An essential element in any plan which it could adopt is the one of mutual interest and mutual responsibility of members. But the conditions under which this mutual interest and responsibility should begin and cease were also necessarily determinable by the organization, and, when made, such determination was evidenced by the terms of the contract employed. There is nothing in the general nature of the object to be accomplished which requires courts to read into the contracts actually made a promise of the member to pay an assessment made upon him when the Contract expressly provides a penalty, enforced without action of the organization, for a default in the payment. When the penalty was incurred, all relations between the member and the organization, whether those of insurer or insured, were ended. The right of the organization to so terminate them is not disputed. We are not able, by fair construction of the statute, constitution, and laws of the order, the application and the certificate, as they existed previous to 1897, to find an undertaking on the part of a member to pay assessments made upon him. In this we are not in agreement with, the conclusion reached by a majority of the judges in Ellerbe v. Barney, 119 Mo. 632 (23 L. R. A. 435), and by the court in Provident Mutual Relief Ass’n v. Pelissier, 69 N. H. 606. We are not satisfied with the reasoning employed in either case in support of the prop-, osition that an agreement to pay assessments existed. We are in accord with the decisions in Lehman v. Clark, 174 Ill. 279 (43 L. R. A. 648), and Gibson v. Megrew, 154 Ind. 273 (48 L. R. A. 362).

Much has been said herein which need not have been said if we admitted the contention that, whether there was or was not an express agreement to pay assessments, the only means for enforcing payment is forfeiture of rights. The agreement of those members who entered the order after, the form of application employed in 1897 and thereafter was adopted and who used the form is to pay all assessments made. An assessment was made by the laws of the order, due and payable each month before the 28th day thereof. The form of notice used in connection with the levy of a special assessment, if any such was made, does not appear. But an assessment being called, regularly by the law or specially by notice, was an assessment made on the member, and his liability to pay it became fixed. The fact that they were not paid, and that forfeiture of rights resulted, does not affect the contract obligation to pay assessments made before forfeiture of the member’s rights. Fulton v. Stevens, 99 Wis. 307. It follows that the association, and therefore its receivers, had the right to collect such assessments by suit, and had not the right to collect assessments made after membership had expired. It does not follow, however, that the prayer of intervening petitioners should be granted. The amount of a single assessment from each member who is liable under the rule announced is the limit of recovery in an action at law. According to the record, assessment rates run all the way from 62 cents to $19.30, depending upon the amount of the certificate and the attained age of the member. Whether funds on hand and the services of the receivers and of counsel can be profitably employed in attempts to collect these assessments is a question which upon this record cannot be answered.

A decree will be entered in this court reversing the decree below, and in accordance with this opinion, but reserving for the determination of the court below the question whether the prayer of interveners should be granted. Neither party will recover costs,'of this appeal.

Grant, C. J., and Blair, Montgomery, and Brooke, JJ., concurred.