Case ID: nys_45/html/0384-01.html
Source: Caselaw Access Project
Author: {"author": "HATCH, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

(18 App. Div. 88.)
    GERKEN v. ROYAL BEN. SOC.
    (Supreme Court, Appellate Division, Second Department.
    May 11, 1897.)
    Insurance—Right to Benefits.
    A provision in a benefit certificate that the insured should, after a certain time, be entitled to a certain sum, is not affected by a by-law which gives the insurer the right, after such time, to call in and cancel the policy on certain conditions, but provides that “until such power be exercised the certificate shall remain in force.”
    
      Appeal from trial term, Kings county.
    Action by John D. Gerken against the Royal Benefit Society to recover money alleged to be due on a relief-fund certificate issued by defendant. The complaint was dismissed on the merits at a trial by the court without a jury, and plaintiff appeals.
    Reversed.
    Argued before CULLEN, BARTLETT, HATCH, and BRADLEY, JJ.
    C. L. Lyon, for appellant.
    Charles F. Kelley and James C. De La Hare, for respondent.
   HATCH, J.

The plaintiff became a member of the Royal Oak Benefit League, a corporation existing under and by virtue of the laws of the state, formed for the purpose of mutual benefit to the members thereof, and also giving thereto material aid. On the 13th day of November, 1888, this corporation issued to the plaintiff a certificate, entitled “Relief-Fund Certificate,” which constituted a" contract between the said corporation and the plaintiff. In substance, this certificate recited that the plaintiff was a member of the corporation, and had made application for first-class membership in Brooklyn Council, No. 4, Royal Oak Benefit League; that he had passed the requisite medical examination, and was duly initiated into said council; and that the certificate was issued as a statement of the contract existing between the plaintiff and the Supreme Council Royal Oak Benefit League. It then provided that in consideration of compliance with all the by-laws, rules, and regulations of the said supreme council now existing or hereafter adopted, and the condition herein contained, “the Supreme Council Royal Oak Benefit League hereby ágrees to pay said companion [plaintiff] one thousand dollars upon satisfactory proof of having held a continuous membership in good standing for seven years, and surrender of this certificate, and a full receipt; subject, however, to the conditions, restrictions, and limitations following.” These conditions are that the answers to questions made by plaintiff 'in his application for membership and upon his medical examination are true; that he shall have paid all assessments called to the “Relief Fund” within the time and manner required by the láws of the supreme council; that all moneys advanced against the certificate for sick or disability benefits may be deducted, with accrued interest; that in case of any false or fraudulent statement or misrepresentation or violation of the covenants in the certificate the same should be void. It was admitted that the plaintiff had complied with all of the terms and conditions of the certificate up to and including the full term of seven years; that he had been paid on account thereof, in accordance with the laws of the league, the sum of $200, and no more. By an agreement executed by and between the Royal Oak Benefit League and the defendant before the commencement of this action, the latter accepted the risks and liabilities of the league, and the league transferred to it all its assets, and the defendant has since said time taken upon itself the management of the business formerly carried on and transacted by the league. It was held in Milborne v. Benefit Soc., 14 App. Div. 406, 43 N. Y. Supp. 1026, that by virtue of this contract and the acts of the defendant thereunder the latter became liable to the certificate holder in accordance with the terms of the certificate and the laws of the association. By the terms of the certificate the defendant has become liable to pay to the plaintiff the amount secured to be paid, less the sum of $200 and whatever interest is chargeable thereon, unless there be some law of the corporation which exempts it from payment. It is claimed, and the decision below proceeded upon that ground, that in fact such law exists, and that plaintiff is debarred by its terms from insisting upon payment in accordance with the terms of his certificate. The by-law invoked is as follows:

“At any time after the expiration of seven years from the issue of a certificate, the league shall have, and may, in its discretion exercise, the power of calling in and canceling the certificate or contract by paying to the one to whom and in whose name it was issued its face amount, less what may have been paid thereon as disability benefits, with interest on the same, in consideration of a general release by such member and holder of all claim or claims thereunder, past, present, future, or contingent. Until such power be exercised, the certificate shall remain in force.”

The defendant has never exercised any authority under this bylaw upon the plaintiff’s certificate. We do not think that this bylaw in any wise affects the question of defendant’s liability under the certificate. Its only effect is to authorize the defendant to call in, pay, and cancel outstanding certificates. But it nowhere, in terms or by necessary implication, places any legal obstacle in the way of the certificate holder demanding pay upon his certificate in accordance with its terms. If such was the intent of the by-law, it has not expressed it. On the contrary, its final expression is: “Until such power be exercised, the certificate shall remain in force.” But be in force how? As an existing liability against the defendant only? The by-law does not say so. If it remains in force, as it certainly does, without power of the defendant to destroy it, then it remains in force according to its terms, has legal force without limitation, for there are no words of limitation in the by-law. If in force, then its force is in accordance with the legal liability which its terms create. This liability entitles the plaintiff to have and receive from the defendant the sum of $1,000, less the payment, and its legal force is to compel payment of that claim. Under the by-law the defendant might have called it in and canceled it. It has not done so, but left it in force to be enforced according to its terms. These terms entitle the plaintiff to have and receive the amount due thereunder, and enable him to maintain an action to enforce it according to its terms.

The judgment should be reversed, and a new trial granted; costs to abide the event. All concur.