#### WEILER v. EQUITABLE AID UNION.

(Supreme Court, General Term, Fourth Department.

December 26, 1895.)

Mutual Benefit Insurance—Changing Terms of Policy.

Where a life insurance company issued a policy payable in 11 years, if assured should live that time, it cannot, by afterwards adopting a bylaw that all persons holding such policies who should live the period of expectation, and become totally disabled, should be entitled to receive yearly one-tenth Of the amount of their policies, affect the right of as-' sured to collect the amount of his policy as provided therein, though, in his application, assured agreed to accept the policy subject to such regu- ■ lations of the company as then existed, or might thereafter be adopted.

Appeal from circuit court, Chenango county.

*735Action by Frederick Weiler against the Equitable Aid Union on a life insurance policy. Judgment for plaintiff, and defendant appeals.

Affirmed.

Argued before HARDIN, P. J., and MERWIN and PARKER, JJ.

Butler S. Farrington and John W. Church, for appellant.

W. B. Leach and George W. Ray, for respondent.

MERWIN, J.

This action is based on a certificate, called a “benefit certificate,” or “endowment life insurance policy,” dated July 10, 1882, executed and delivered by the defendant to the plaintiff, in and by which the defendant, among other things, in effect, agreed that, in case the plaintiff was living and in good standing 11 years from the date thereof, it would pay to the legal payee of the certificate (conceded to be the plaintiff) the sum of $400. The plaintiff has at all times paid his dues and assessments to the defendant, as they were made and levied, and has paid to the defendant the sum of $221 in assessments or premiums upon his certificate, and has in all things complied with the terms of the union, and is a member in good standing. After the 10th July, 1893, the plaintiff furnished the defendant with proper proofs, and demanded the money, which was refused. It is found that the reason for not paying it was that at the annual session of the supreme union of the defendant, in March, 1893, a by-law was passed, taking effect May 1, 1893, which provided that:

> “All persons holding valid benefit certificates, that have been or may be hereafter issued to them, who shall live to the period of expectation of life, as designated in section 2 of this article, ‘Synopsis,’ and becoming totally physically disabled, shall be entitled to receive yearly a one-tenth part of the amount specified in their benefit certificate.”

Provision was also made for determining the fact of total physical disability. In substance, the claim was that the certificate of the plaintiff was by the by-law changed so that no part thereof was payable unless the plaintiff became totally disabled, physically, and then only a tenth part thereof yearly. The appellant now claims that it had no power to issue the endowment policy or certificate, and that, if it had, the plaintiff is bound by the new by-law, and cannot, therefore, recover, as he does not claim to be entitled under that.

The charter of the defendant, as it now is, appears in the findings. It seems to have been amended since the issuing of the certificate to the plaintiff, and the charter, as it was then, is not in the case. It is, however, found, as matter of fact, that:

> “The defendant is a foreign corporation duly organized under the laws of the state of Pennsylvania, doing business at Columbus, in said state; duly authorized to do business in the state of New York, and capable of suing and being sued therein. That the object and purpose of said corporation was, among other things, to do a life insurance business upon the assessment plan; establish a benefit fund, from and with which to pay fellow members, upon their arriving to a certain age, called ‘expectancy,’ in accordance with certain tables adopted, one-half the amount named in the benefit certificate held by the member, and in the event of death the sum specified in such certificate, not exceeding three thousand dollars.”

*736In the constitution of the defendant, which appears in the case, it is stated that the defendant was incorporated March 22, 1879, in compliance with a statute of the commonwealth of Pennsylvania under date of April 29, 1874. It has been held that, where a corporation has received the benefit of a contract which has been fully executed by the party with whom it has dealt, it cannot, in an action against it for performance upon its part, raise the question of its power to make it. Arms Co. v. Barlow, 63 N. Y. 70; 27 Am. & Eng. Enc. Law, 360, and cases cited. This ground of defense is not, we think, available to the defendant here. Nor did defendant refuse to pay on that ground.

The main question relates to the effect to be given to the by-law passed in March, 1893. This was passed as a substitute for the bylaw under which the policy to plaintiff was issued, and it operated to change the definite and absolute contract of defendant to pay in case the plaintiff was alive and in good standing at the end of 11 years, into a contract to pay only in case plaintiff was totally disabled physically, and then only one-tenth thereof annually. It was essentially a new contract, and one upon which the plaintiff might never receive anything.. The defendant claims that this change, though radical, is binding on the plaintiff, because in his application he agreed to accept the certificate “subject to such laws, rules, and regulations as now exist or may hereafter be adopted by and governing said corporation.” There is no finding that plaintiff assented to the change, other than as force may be given to the above clause of the application. A power reserved to make by-laws means a power to make reasonable by-laws. Kent v. Mining Co., 78 N. Y. 159, 183; Ang. & A. Corp. § 347. This principle applies to associations like the defendant. Bac. Ben. Soc. (2d Ed.) § 85. What are to be deemed reasonable, depends on the objects and purposes of the society. In People v. Society, 24 Barb. 570, 575, it is said the by-law must be reasonable, and adapted to the purposes of the corporation. It must be consistent with its charter. Bac. Ben. Soc. § 83. Here the object and purpose of the corporation, as appears from the finding of fact, were, among other things, to do a life insurance business upon the assessment plan, and give certifi: cates payable in manner and form as that given to plaintiff. The by-law in question strikes down these certificates, and to that extent changes the objects and purposes of the corporation. The right of plaintiff to payment upon the contingency named in the certificate was in the nature of a vested right. Goodman v. Lodge, 67 Md. 117, 127, 9 Atl. 13, and 13 Atl. 627; 1 Bac. Ben. Soc. § 289; 1 Mor. Priv. Corp. § 496. The plaintiff had the right to believe that the defendant would not, by by-law, assume to change, as to him, the objects and purposes of the corporation, upon the basis of which he had made his contract, and for 10 years and upwards had performed upon his part. As to the plaintiff, the new by-law was simply a repudiation of a positive contract. We are referred by the appellant to the case of Hutchinson v. Supreme Tent, etc., 68 Hun, 355, 22 N. Y. Supp. 801. In that case the question of the reasonableness of the by-law was not considered and was not in*737volved, as, without it, the plaintiff was held not to be entitled to recover at all. In the present case the court below held that the by-law in question, "so far as the contract between the parties to this action is concerned, is an unreasonable by-law, as its effect is to infringe upon and impair the plaintiff’s contract already given, and rights already secured, and, as to this plaintiff and his contract with defendant, is illegal and void.” We are of the opinion that the trial court did not err in so holding. There is no other question that need be considered.

Judgment affirmed, with costs. All concur.