Clark, C. J.
Tbe defendant’s counsel, in bis argument, admitted that this same question bad been decided against it in
Williams v. Heptasophs
(this defendant), 172 N. C., 787, and be asked this Court to review and reverse what was held in that case. Indeed, this case is even stronger in some respects for the plaintiff than in the
Williams case,
and we think that case was rightly decided. In that case it was said that by virtue of the resolutions adopted 29 October, 1915, which put all the members who joined prior to 1 January, 1914, in a separate class and required them to pay all death losses occurring in their class, the result would be that the assessments upon the plaintiff would become, of course, much higher than if the entire membership bad continued to share in the burden of all the deaths; and consequently, if the plaintiff should be “the longest liver in that class, be would have to pay bis own death loss, and in the meantime would, as a member of a constantly dwindling class, be required to pay higher and higher assessments on the death of each of bis fellow-members.”
In tbat case we further considered tbe options set before tbe plaintiff, and pointed out tbat if be elected to accept any one of them be would be in tbe same condition of a new member coming into tbe order who bad never held tbe policy of insurance, for tbe value of bis policy would be completely destroyed. Tbe plaintiff, it appears, bad already paid in nearly $3,200, which, with tbe compound interest thereon, and deducting the cost of operating tbe company, should already be more than enough to pay tbe $5,000 policy. To require tbe plaintiff to throw all this away and start anew, relying upon assessments at bis present attained age for payment of bis policy out of a class receiving no new accessions, is simply to put him into a
cul de sac,
from which there is no exit but with loss.
Tbe earnest counsel for tbe defendant insisted tbat tbe company was in straits; tbat it owed $90,000,000 of liabilities and bad only $25,000 casb in its treasury. This is a bad result, and wbetber due to a faulty plan of operation inherent in tbe method adopted, or to mismanagement, or to unforeseen losses, we do not know. But it does not affect tbe fact tbat tbe new plan proposed is in entire derogation of the contract rights of plaintiff. No regulation or amendment to tbe charter was valid which would have tbis result, and no statute of Maryland or of any other State could empower tbe defendant to violate its obligation to tbe plaintiff.
Though a member of a beneficial society may be bound by after-adopted by-laws or changes in its constitution, tbis is subject to the proviso tbat the society cannot thereby impair the contract rights of the member as the owner of the policy, which is a certificate of indebtedness issued by the company to the member.
In this case, as in
Bragaw v. Supreme Lodge,
128 N. C., 357, it is not shown that the plaintiff bad any notice of or assented to this amendment; on the contrary, be avowed bis dissent when informed of its passage. In
Bragaw’s case
we said: “A provision tbat one should become a member, subject to the power of the corporation to change its by-laws, cannot be construed into liberty to change at its will the contract of insurance it has made with each insurer. Tbe company and the insured occupy jrwo entirely different relations. In one it is a company, and the other party one of its members. In tbat relation the by-laws or constitution can be amended at will of the majority, if done in the legal and prescribed mode. Tbe other relation is tbat of insurer and insured, and this contract relation cannot be altered save by the consent of both parties, and the party alleging tbat the consent was given must show it.”
“A mere general consent tbat tbe constitution and by-laws may be amended applies only to such reasonable regulation as may be within tbe scope of its original design.”
Strauss v. Life Assn.,
126 N. C., 971.
We are of opinion tbat tbe statute of Maryland did not authorize tbe classification adopted, and that if it bad, it would be invalid because in violation of tbe contract rights of tbe plaintiff.
We further think tbat tbis was a North Carolina contract and is governed by tbe statutes of tbis State
(Knights of Pythias v. Meyer,
198 U. S., 507;
Equitable Soc. v. Pettus,
140 U. S., 226;
Ins. Co. v. McCue,
223 U. S., 234), and there is no statute of tbis State which authorized tbis radical change of tbe status of tbe plaintiff.
It has been often held tbat insurance is not interstate commerce
(Ins. Co. v. Craven,
178 U. S., 389), and tbe presumption is tbat tbe law of tbe place at which a contract is made shall govern tbe rights of the parties.
Ins. Co. v. Cohen,
179 U. S., 262. The plaintiff’s contract of insurance was written in 1896, and the passage of chapter 54, Laws 1899,
could not change the tenor of the contract made with the plaintiff prior to its passage; nor could it authorize the application to it of a Maryland statute. His contract is to be construed entirely in the light of the statutes in force in this State in 1896. The condition that the society is to be governed by the by-laws enacted by the Supreme Conclave from time to time has reference to the future regulations of the order which are reasonable in their terms and which do not impair vested rights.
Strauss v. Life Assn.,
126 N. C., 971;
S. c.,
128 N. C., 465.
This Court has already held that this particular classification by this defendant is unlawful and invalid.
Williams v. Heptasophs,
172 N. C., 987. This case is stronger for the plaintiff than that, because:
(1) In the
Williams case
the record did not show, as in this, that the defendant was in default in filing certified copies of its proposed amendments to its constitution and by-laws with the Insurance Commissioner of -Maryland and of North Carolina.
(2) The plaintiff in this case was suspended by the defendant during the time that the defendant was in default in complying with the statutory regulations in regard to filing such amendments.
(3) The plaintiff in the
Williams case
tendered no payment under protest, or otherwise, after the proposed classification, while the plaintiff in this action tendered his January, 1916, dues under the terms and conditions specified in the written tender that it should be accepted “in accordance with the rate fixed by the by-laws prior to 28 October, 1915,” and the payment was accepted, which was an acknowledgement that the classification was null and void as against this plaintiff, or at least a waiver of said classification as to him.
The defendant in raising the rate in 1901, in which the plaintiff acquiesced, furnished the plaintiff in July, 1901, a written statement as follows: “It makes no difference how long you have been a member, you need pay only the rate for the age you were when joining the order. You now have an order second to.none, based upon sound business principles, appealing to all seeking good, safe protection at a minimum cost.
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Clark, C. J.
Tbe defendant’s counsel, in bis argument, admitted that this same question bad been decided against it in
Williams v. Heptasophs
(this defendant), 172 N. C., 787, and be asked this Court to review and reverse what was held in that case. Indeed, this case is even stronger in some respects for the plaintiff than in the
Williams case,
and we think that case was rightly decided. In that case it was said that by virtue of the resolutions adopted 29 October, 1915, which put all the members who joined prior to 1 January, 1914, in a separate class and required them to pay all death losses occurring in their class, the result would be that the assessments upon the plaintiff would become, of course, much higher than if the entire membership bad continued to share in the burden of all the deaths; and consequently, if the plaintiff should be “the longest liver in that class, be would have to pay bis own death loss, and in the meantime would, as a member of a constantly dwindling class, be required to pay higher and higher assessments on the death of each of bis fellow-members.”
In tbat case we further considered tbe options set before tbe plaintiff, and pointed out tbat if be elected to accept any one of them be would be in tbe same condition of a new member coming into tbe order who bad never held tbe policy of insurance, for tbe value of bis policy would be completely destroyed. Tbe plaintiff, it appears, bad already paid in nearly $3,200, which, with tbe compound interest thereon, and deducting the cost of operating tbe company, should already be more than enough to pay tbe $5,000 policy. To require tbe plaintiff to throw all this away and start anew, relying upon assessments at bis present attained age for payment of bis policy out of a class receiving no new accessions, is simply to put him into a
cul de sac,
from which there is no exit but with loss.
Tbe earnest counsel for tbe defendant insisted tbat tbe company was in straits; tbat it owed $90,000,000 of liabilities and bad only $25,000 casb in its treasury. This is a bad result, and wbetber due to a faulty plan of operation inherent in tbe method adopted, or to mismanagement, or to unforeseen losses, we do not know. But it does not affect tbe fact tbat tbe new plan proposed is in entire derogation of the contract rights of plaintiff. No regulation or amendment to tbe charter was valid which would have tbis result, and no statute of Maryland or of any other State could empower tbe defendant to violate its obligation to tbe plaintiff.
Though a member of a beneficial society may be bound by after-adopted by-laws or changes in its constitution, tbis is subject to the proviso tbat the society cannot thereby impair the contract rights of the member as the owner of the policy, which is a certificate of indebtedness issued by the company to the member.
In this case, as in
Bragaw v. Supreme Lodge,
128 N. C., 357, it is not shown that the plaintiff bad any notice of or assented to this amendment; on the contrary, be avowed bis dissent when informed of its passage. In
Bragaw’s case
we said: “A provision tbat one should become a member, subject to the power of the corporation to change its by-laws, cannot be construed into liberty to change at its will the contract of insurance it has made with each insurer. Tbe company and the insured occupy jrwo entirely different relations. In one it is a company, and the other party one of its members. In tbat relation the by-laws or constitution can be amended at will of the majority, if done in the legal and prescribed mode. Tbe other relation is tbat of insurer and insured, and this contract relation cannot be altered save by the consent of both parties, and the party alleging tbat the consent was given must show it.”
“A mere general consent tbat tbe constitution and by-laws may be amended applies only to such reasonable regulation as may be within tbe scope of its original design.”
Strauss v. Life Assn.,
126 N. C., 971.
We are of opinion tbat tbe statute of Maryland did not authorize tbe classification adopted, and that if it bad, it would be invalid because in violation of tbe contract rights of tbe plaintiff.
We further think tbat tbis was a North Carolina contract and is governed by tbe statutes of tbis State
(Knights of Pythias v. Meyer,
198 U. S., 507;
Equitable Soc. v. Pettus,
140 U. S., 226;
Ins. Co. v. McCue,
223 U. S., 234), and there is no statute of tbis State which authorized tbis radical change of tbe status of tbe plaintiff.
It has been often held tbat insurance is not interstate commerce
(Ins. Co. v. Craven,
178 U. S., 389), and tbe presumption is tbat tbe law of tbe place at which a contract is made shall govern tbe rights of the parties.
Ins. Co. v. Cohen,
179 U. S., 262. The plaintiff’s contract of insurance was written in 1896, and the passage of chapter 54, Laws 1899,
could not change the tenor of the contract made with the plaintiff prior to its passage; nor could it authorize the application to it of a Maryland statute. His contract is to be construed entirely in the light of the statutes in force in this State in 1896. The condition that the society is to be governed by the by-laws enacted by the Supreme Conclave from time to time has reference to the future regulations of the order which are reasonable in their terms and which do not impair vested rights.
Strauss v. Life Assn.,
126 N. C., 971;
S. c.,
128 N. C., 465.
This Court has already held that this particular classification by this defendant is unlawful and invalid.
Williams v. Heptasophs,
172 N. C., 987. This case is stronger for the plaintiff than that, because:
(1) In the
Williams case
the record did not show, as in this, that the defendant was in default in filing certified copies of its proposed amendments to its constitution and by-laws with the Insurance Commissioner of -Maryland and of North Carolina.
(2) The plaintiff in this case was suspended by the defendant during the time that the defendant was in default in complying with the statutory regulations in regard to filing such amendments.
(3) The plaintiff in the
Williams case
tendered no payment under protest, or otherwise, after the proposed classification, while the plaintiff in this action tendered his January, 1916, dues under the terms and conditions specified in the written tender that it should be accepted “in accordance with the rate fixed by the by-laws prior to 28 October, 1915,” and the payment was accepted, which was an acknowledgement that the classification was null and void as against this plaintiff, or at least a waiver of said classification as to him.
The defendant in raising the rate in 1901, in which the plaintiff acquiesced, furnished the plaintiff in July, 1901, a written statement as follows: “It makes no difference how long you have been a member, you need pay only the rate for the age you were when joining the order. You now have an order second to.none, based upon sound business principles, appealing to all seeking good, safe protection at a minimum cost. You can now tell your friends what it will cost them each month, and thus benefit them and aid the order.”
The defendant had the right to increase its rates, if necessary, laying them, ás they did, at the increase in 1901 and again in 1910, upon all the members upon the basis of the age at which they became members; but it had no right to practically divide the' membership into two, putting the plaintiff in Class B, into which no new members would be admitted from time to time. It is true there is an opportunity for the members of Class B to pass into Class A, but upon the condition that they shall be assessed at the attained age (which of plaintiff is now 75 years), for this is in direct violation of the terms upon which he entered the association.
An insurance company is like a river. the loss in volume by the outflow is constantly made good by accessions along the route,
i. e.,
by the interest accruing, and by the waters coming from above,
i. e.,
the payments by new members. While time depletes the current by death, it is adding to it from new sources; but when, as in tbis case, the company .seeks to divide its members into classes, the older of wbicb will receive no accessions, the current will soon run dry. It is true tbat tbis figure is more 'applicable to the standard companies than to a benefit association where the losses are paid by assessments upon death, but it is none the less true tbat when there is a class in wbicb there are no new members to assess, that class must become smaller and smaller and the assessments larger and larger till they become unbearable. Certainly such division into classes is not within the contract made by tbis plaintiff, and upon breach of tbat contract be is entitled to recover back the principal money wbicb be has paid in, with simple interest thereon.
Braswell v. Ins. Co., 75
N. C., 8, and citations in Anno. Ed.
It appears that the plaintiff has paid in principal money in the twenty years from 1896 to’ 1916 $3,149.31. He is now over
75
years of age and unable to obtain other insurance. the classification attempted to be enforced upon him is unlawful, arbitrary and discriminatory, as we have already held in Williams against this defendant, 172 N. C.,
787. We
bold that the contract under which the plaintiff claims is founded upon and governed solely by the laws of North Carolina, and that even if it were governed by the laws of Maryland, the classification complained of is not warranted by the laws of that State; and if it were they could not impair the obligation of the contract which the defendant entered into with tbis plaintiff, and the judgment is in all respects affirmed.
No error.
Allen, J., not sitting.