
    Samuel Green, Respondent, v. Supreme Council of the Royal Arcanum and Val M. Schmits, Regent of De Witt Clinton Council, No. 419, of the Royal Arcanum, Appellants.
    Second Department,
    May 19, 1911.
    Insurance — fraternal benefit insurance — when association may increase assessment under reserved power to do so.
    Where a contract between a member and a fraternal benefit insurance association provides for the payment of a fixed sum upon the death of the member and that assessments shall be at a specified rate, neither the conditions upon which the same shall become payable can be altered, nor can the sum to be paid be reduced, nor the amount of the specified assessment increased without the consent of the member, which rule is not altered by the fact that the contract may reserve a power to amend the by-laws in purely general terms.
    But if there be reserved in such contract a power to amend the laws governing the association reasonably designating the subjects thereof, so that a person when applying for membership is fairly advised that the terms of the contract he is about to make may be altered in the respects referred to, subsequent changes in the by-laws may be made, if reasonable, and the change must be deemed to have been assented to ■ by the member. 1 ■'
    Thus, where the laws of the State where such fraternal corporation is organized empower it to change the rate of assessment upon members having insurance; and where at the time the member joined the constitution provided that the laws governing the benefit fund could be altered and amended by a three-fourths vote of the supreme council, and the member’s application stated that, having become acquainted with the objects of the order, he agreed to conform to its laws then in force “ or which may thereafter be adopted ” and the benefit certificate contained a similar clause that the member should comply with the laws that might thereafter be enacted to govern the relief fund, the member is bound by a subsequent resolution increasing the amount of his assessment, if it appear that the increase was reasonable.
    
      There is a vital difference between a mere general reservation' of a power of amendment which cannot affect vested rights and the specific reservation of power to alter rights arising under the contract at the time it was made and to which the other party assents.
    Hirschberg, J., dissented.
    Appeal by the defendants, Supreme Council of the Boyal Arcanum and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Kings on the 23d day of July, 1910, upon the decision of the court rendered after a trial at the Kings Comity Special Term. -
    ' Howard C. Wiggins \_Curtis H. Waterman with him on the brief], for the appellants.
    
      F. J. Moissen, for the respondent.
   Burr, J.:

This action involves the validity of an amendment to defendant’s by-laws made in 1905. . In the case of Mock v. Supreme Council (121 App. Div. 474) the validity of this amendment was considered by this court and sustained. We are controlled by such decision unless, as is claimed by plaintiff, subsequent decisions of the Court, of Appeals in similar cases are in conflict therewith.

The cases so relied upon are Wright v. Knights of Maccabees (196 N. Y. 391) and Dowdall v. Catholic Mutual Benefit Assn. (Id. 405). The Dowdall case may be dismissed without further consideration as wholly ' inapplicable to the questions . here involved. There was in that case no suggestion of even a general reservation of power to amend by-laws,, rules or' requirements. Whatever the rule may be in other jurisdictions we think it must now' be deemed to be the settled law of this State that when the contract entered into between a member of a fraternal beneficiary organization and such organization provides for the payment of a fixed sum upon the happening of some event, such as the death of the member, and that assessments shall be at a fixed and specified rate, neither the conditions upon which* the sum shall become. payable can be altered, nor the sum to .be paid be reduced, nor the amount of the specified assessment increased, without the consent of such member, and this rule is not altered by the fact that there may be reserved in such contract a power of amendment of the laws of the association in purely general terms. (Wright v. Knights of Maccabees, supra; Parish v. New York Produce Exchange, 169 N. Y. 34; Pangan v. Supreme Council Am. L. of H., 174 id. 266; Shipman v. Protected Home Circle, Id. 398; Weber v. Supreme Tent of K. of M., 172 id. 490; Ayers v. Order of United Workmen, 188 id. 280.)

On the other hand, if there is reserved in the contract a power of amendment of the laws governing such association, reasonably designating the subjects thereof, so that a person when he makes application for membership is fairly advised that the terms of the contract in which he is about to enter may be altered in the respects thus referred to, subsequent changes in such laws when reasonably made by the proper authorities of the organization are within their power and must be deemed assented to by him. (Beach v. Supreme Tent K. of M., 177 N. Y. 100.) In that case the court said: “If the certificate had provided that the payments therein specified should be subject to such modification as to amount, terms and conditions of payment and contingencies in which the same were payable as the endowment laws of the order. from time to time might provide, the amendments would be applicable to existing members.”

Although the court there used the word “certificate,” we think that it was not intended necessarily to limit the effect of a reservation to the words contained in the certificate alone. In Sabin v. Phinney (134 N. Y. 423, 428) the court says: “ The statute under which the corporation was organized, its by-laws, together with the application for, and the certificate of membership constituted the contract which existed between the member and the society, which instruments construed together measure the rights of these litigants.” ■ In other wolds, the question is one of construction of the contract, whether such contract is expressed in the statutes under which the corporation is organized, the constitution and laws existing when application for membership was made, the application for membership, the certificate thereof, or one or more of these combined. The test is, was the reservation of a power to subsequently alter the terms of the contract so clearly and definitely expressed that , the member party to the contract must be deemed to have understood and assented to-the same.

With this guiding principle let us now consider the contract between plaintiff and the defendant organization of which he is a member.

Defendant is a Massachusetts corporation. The court at Special Term has found as a fact “that by the statutory law or public acts of the Commonwealth of Massachusetts fraternal beneficiary organizations, of. which the defendant Supreme Couneii of the Royal Arcanum is one, have power to change and amend their rates of assessment.” The Supreme Court of Massachusetts has so construed these statutes. (Reynolds v. Royal Arcanum, 192 Mass. 150.) Existence of such a power, however, is insufficient if it is not exercised. ' But in determining the meaning of the contract entered into by plaintiff when he voluntarily became a member of this Massachusetts corporation, the existence of this statutory authority for change and amendment is one fact to be considered. At the time plaintiff applied for membership in defendant corporation its constitution specified the objects- of the order. Among others was one described as follows : “5th. To establish a Widows and Orphans’ Benefit Fund, from which, on the satisfactory evidence of the death of a member of the order, who has- complied with all its lawful requirements, a sum not exceeding three thousand dollars shall be paid to his family or those dependent on him, as he may direct.” The member'when making application determined whether he should be classed as a full-rate member and entitled to receive the sum above specified, or a half-rate member and entitled to a lesser amount... The amount of the assessments varied accordingly. Defendant’s constitution also contained a provision that the constitutions of subordinate councils and the laws of the supreme council, “ except those relating to the Widows and Orphans’ Benefit Fund,” may be altered or amended at any regular meeting of the supreme' council, but that the constitution of the supreme council and the laws governing the widows and orphans’ benefit fund should not be altered or amended except by a three-fourths vote of the entire membership of the supreme council, at a regular meeting, or at a special meeting called for the purpose. Here was a declaration of a purpose to reserve some power of amendment of the laws governing the widows and orphans’ benefit fund under the conditions specified. From the time when plaintiff became a member of defendant organization until the present, the moneys contributed to the widows and orphans’ benefit fund have been used to pay the beneficiaries of deceased members, and for no other purpose whatsoever. Under the constitution and laws of defendant it could be devoted to no other purpose. This fund was created and maintained by assessments imposed upon defendant’s members. At the time that plaintiff joined the organization in 1883 the constitution and laws then provided that every person admitted a member of defendant, and being at the time of such admission of the age of thirty-seven years (as plaintiff then was), should pay to the collector of his council the sum of one dollar and eighty cents upon each and every assessment which should or would be made by said supreme-council while he was a member of the order,' for the purposes and under the provisions of its constitution and laws, and that each and every member so paying such assessment should not only be entitled to all the benefits recited in the constitution and laws, but the person designated by him as his beneficiary should receive upon his decease a sum not exceeding three thousand dollars. Between 1883 and 1898 the number of assessments necessary to maintain said widows and-orphans’ benefit fund varied from ten to seventeen in different years. This method of maintaining the fund proved unsatisfactory, and in 1898 the constitution and laws of defendant were amended, with plaintiff’s consent, so that it was provided that each member of the order should pay to the collector of his council, without notice, twelve regular assessments in each calendar year, and in addition to said regular assessments such extra assessments as may from time to time be required and paid as provided in title 6. It was at that time also provided that every applicant upon presenting himself to receive the degree, and every member who has received the degree, should “pay to the Collector the following named amounts for the Widows and Orphans’ Benefit Fund, according to the age attained at the time of receiving the Degree, for full-rate membership; * * * and the same amount on each assessment thereafter, whilst he is a member of the order. ” Then followed a specification of the amounts to be paid, rated according to1 age between twenty-one and fifty-five. The amount to be paid by plaintiff under this provision of defendant’s law for each assessment was three dollars and four cents. The laws contained a further provision that whenever in the opinion of the supreme regent, supreme secretary and supreme treasurer, the condition of the supreme treasury shall make it necessary to levy extra assessments for the widows and orphans’ benefit fund, to meet any requirement thereof exceeding such twelve regular assessments, they should “make written declaration of such opinion * "x' "x' which shall be filed with the Supreme Secretary, who shall make record of such filing.” The supreme.secretary was then required at once to notify every council to collect immediately the amount of one assessment from every member upon whom the "degree was' conferred before the date fixed in such notice,.and the collector of such council was required immediately to notify each member to pay the extra assessment according to the terms of the notice from the supreme secretary. Plaintiff’s application, for membership contained these words among others: “Application for Membership in the Royal Arcanum. * * * Having become acquainted with the objects of your Order, I hereby make application for full rate membership in your Council, ■ and do declare, upon my honor as a man, that the statement's by me subscribed herein are each and every one of them true, to the best of my knowledge and belief. * * * I direct that) in case of my decease, all benefit to which I may be entitled from the Royal Arcanum be paid to Louisa Green related to me as my wife, subject to such future disposal of the benefit, among my dependents, as I may hereafter direct, in compliance with the Laws of the Order. * * * I agree to make punctual payment of all dues and assessments for which I may become liable, and to conform in all respects to the Laws, Rules and Usages of the Order now in force, or which may hereafter be adopted, by the same.” The benefit certificate received by plaintiff, so far as its contents are here material, was in the following form: “ This Certificate is issued to Samuel Green, a member of De Witt Clinton Council ISTo. 419, Boyal Arcanum, located at Brooklyn, N. Y., upon evidence received from said Council that he is a contributor to the Widows and Orphans’ Benefit Fund of this Order; and upon condition that the statements made by him, in his application for membership in said Council, * * * be made a part of this contract, and upon'condition that the said member complies, in the future, with the laws, rules and regulations now governing the said Council and Fund, ór that may hereafter be enacted by the Supreme Council to govern said Council and Fund. These conditions being complied with, the Supreme Council of the Boyal Arcanum hereby promises and binds itself to pay out of its Widows and Orphans’ Benefit Fund, to Louisa Green (wife) a sum not exceeding Three Thousand Dollars, in accordance with and under the provisions of the laws governing said Fund, upon satisfactory evidence of the death of said member, and upon the surrender of this Certificate; provided that said member is in good standing in this Order at the time of his death.” In 1905 another change was made in the methods of assessment for the maintenance of the widows and orphans’ benefit fund. In consequence of this the monthly assessment rate of plaintiff was changed from three dollars and sixteen cents a month to six dollars and eighty-seven cents a month, which amount is subject to be still further increased' if he shall attain the age of sixty-five •years and still be a member of the order. This change "was made after careful deliberation, and the court has found upon abundant evidence that these rates-so adopted actually represent the actual cost to the order for the benefits promised to members of each age and equitably apportion among the defendant’s members their contributions to the widows and orphans’ benefit fund, taking into consideration age and risk. It is the validity of this last attempted change which is here challenged.

Construing, then, the provision in the certificate requiring plaintiff to comply “with the laws, rules and regulations * * * that may hereafter be enacted by the Supreme Council to govern said * * * fund ” in connection with the provisions of the Massachusetts statute and the constitution and laws of the defendant which were in force when plaintiff became a member of the Organization in 1883, as modified with his consent in 1898, can it be said that it was'part of the contract between the parties that the payments at that timé specified to be made “ should be subject to such modification as to amount,, terms and conditions of payment * * * as the endowment laws of the order from time, to time might provide?” We think that it was. The certificate expressly reserved the right to make laws, rules and regulations relating to the widows and orphans’ benefit fund, and plaintiff ■ assented to such reservation. Aside from mere matters of administration, the rules and regulations' respecting this fund related to just two things, first, the amount to be paid to the • beneficiary out of. said fund/ and, second, the amount' to be contributed to and paid into such fund by the- members of the organization in order to make such payments possible. Unless this specific reservation of .power to change the laws governing said fund related to possible changes, either in the sums to be paid to the beneficiary or the amount -of the assessment necessary to'make such payment possible, it is difficult to understand to what it was intended to refer. (Supreme Ruler, etc., v. Ericksen, [Tex. Civ. App.] 131 S. W. Rep. 101.) That it must refer to these- essential provisions relative to the widows and orphans’ benefit . fund -seems a necessary conclusion. from the fact that there was a specific reservation of power to amend. Mere details of the administration of the affairs of defendant, including details respecting the administration of- this fund, could have been changed Under a general reservation of power. (Ayers v. Order of United Workmen, 188 N. Y. 280; Parish v. New York Produce Exchange, 169 id. 51.) By this specific reservation of power something more must have been intended. In this respect the case'at bar differs from and we think is distinguishable from Wright v. Knights of Maccabees (196 N. Y. 390), relied upon in. the court below and hereinbefore referred to. In that case, the application for membership contained these words: “ I hereby agree that * * * ' the laws Of the Supreme Tent of the Knights of the Maccabees of the World, now in forcé or that "may -hereafter be - adopted, - shall. form, the basis of. this, contract for beneficial membership * •* This application and the laws of the Supreme Tent now in force, or that may hereafter be adopted, are made a part of the contract between myself and the Supreme Tent; and I, for myself, and my beneficiary or beneficiaries, agree to conform to and be g'ovemed thereby.” The certificate of membership contained these words:' “At his [Wright’s] death one assessment on the membership, not exceeding in amount the sum of $1,000, will be paid as a benefit to Mary Wright * * * provided he shall have in every particular complied with the laws of the order in force or that may hereafter be adopted.” When Wright was admitted to membership the laws of the association provided that he should pay a monthly assessment of one dollar and forty-one cents, and the court found that it was agreed that he should “pay the same rate of assessment thereafter so long as he remains continually in good standing in the order.” There was also provision for additional assessments from time to time in case one assessment per month should not be sufficient to pay death and disability claims as they should accrue. Subsequently the by-laws were amended so as to provide that “ On and after January 1, 1905, all present fife benefit members of the association who are then fifty-five years of age, or over * * * shall pay three dollars per month for each $1,000 of life benefits carried.” The court held that such amended law was inoperative so far as Wright is concerned. In that case, however, there was only a general as distinguished from a specific consent to future changes in the laws. There was no express reservation of power in the certificate to alter the laws relating to the fund out of which the beneficiary was to be paid, no express provision in the constitution and laws authorizing such change and no assent in express words in the application for membership to such change. In this case, as we have indicated, there was. In this case, when the application is read in connection with the then existing constitution and by-laws, we find express reference to possible subsequent changes in the laws relating to the widows and orphans’ benefit fund, and express provisions as to the methods by which such changes should be effected.- The difference between the cases is the vital one between a mere general reservation of power which cannot affect vested rights and a specific reservation of power to interfere with arid alter the rights arising under the contract ■ at the time that, it was made, to which the member party of the contract has assented. We have examined every case cited by the respondent which has been decided in this State, and several which were not cited by him. Except the case of Mock v. Supreme Council (supra) we find no case where the provisions of the contract are precisely' similar to the case at bar. A very similar case sustaining the power of amendment was decided by the Supreme Court of Illinois. (Fullenwider v. Supreme Council Royal League, 180 III. 621, affg. 73 III. App. 321.) The case of Beach v. Supreme Tent K. of M. (supra) in some of its features resembles this- case. At the time that the plaintiff in that case joined the order there was a provision in the constitution thereof which reserved the right to amend the laws governing the endowment fund, but no reference thereto was made in the certificate, and the court said: “ The contract expressed in the certificate is absolute. * *■'*' We think that the obligations assumed by the defendant in its certificate of membership should not be impaired by provisions of the constitution and laws of the order to which the attention of the member might never be called, .or at least they should not be cut down under the reservation of the power to amend.” But in. the case at bar the contract expressed in the certificate was not absolute, and the attention of the member was called to the provisions of the constitution and laws, and he expressly declares in his application for membership that he has become acquainted with the objects- of the order. It may be urged that, while it is within the power of defendant not only to increase the number of assessments but the amount thereof, if necessary to maintain the benefit fund in a condition where ■ it can respond to the demands made upon it, the increased rate should be fixed according to the age of a member at the date when he joined the organization, and that after a fnember has for a long period of years paid the. assessments due, he should riot be Grilled upon as he approaches an advanced period of life to. pay a greatly increased sum by way of assessments. But given the power to alter the rate, and the question then becomes only one of reasonableness; and, as we have before pointed out, the court has found in this case upon abundant evidence in favor of the reasonableness of the regulation. The validity of this amended by-law has been sustained in several other jurisdictions. (Reynolds v. Royal Arcanum, 192 Mass. 150; Gaines v. Supreme Council R. A., 140 Fed. Rep. 978; Bartram v. Sup. Council Royal Arcanum, 6 Ont. Wkly. Rep. 404.) It may be that some of these decisions are based upon reasoning not entirely in harmony with the. decisions in this State, hut if the validity of this, amendment can be- sustained within the principle of decisions within this jurisdiction, it is certainly for the interests of the order, and also of the individual members thereof, that a tmiform rule of construction of its contracts should be adopted.

The judgment should be reversed and a new trial granted, costs to abide the final award of costs. Among the so-called findings of fact are some which are possibly more strictly conclusions of law than findings-of fact, as for instance the finding that the change made in 1905 was without the consent of plaintiff and without notice to him, and in violation of his rights. In order that the Court of Appeals may be free to review all of the findings aiM conclusions in this case, whether of fact or laW,. the order of reversal should recite that it is upon questions of fact as well- as of law.

jENKSj P. J., Carr and Woodward, JJ., concurred; Hjrschberg, J., dissented.

■ Judgment reversed and new trial granted, costs to abide the final award of costs.  