Court Opinion

ID: 6696311
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:52:16.378359+00
Date Added: 2024-06-11T16:01:15.417892
License: Public Domain

WalKEe, J.,
after stating the case: It appears that a great corporation, managing and controlling important financial interests for hundreds of thousands of families, was conducting its business upon un*624sound principles, which if followed without change would ultimately lead to financial ruin. The first question is, Was the change adopted in excess of defendant’s corporate powers, or in violation of the statute governing such corporations?
This case is not like any we have heretofore decided concerning fraternal orders or benefit societies. The law of this State was amended by Acts of 1899, ch. 54, so as to exempt such bodies from the operation of our general insurance law and to put them in a class by themselves, at least in many respects. The certificates in Williams v. Order of Heptasophs, 172 N. C., 787, was issued to the plaintiff 3 January, 1899, before the passage of the act of 1899, and that in Wilson v. Order of Heptasophs, 174 N. C., 628, was issued in the year 1896, while the certificates in this case were issued in the years 1901 and 1902, and is, therefore, governed by the act of 1899, so far as our law is applicable to the case at all.
The writer of this opinion concurred in those two cases for the reason that, in his opinion, this Court had previously decided the questions involved in a series of cases; and when the Williams and Wilson cases were before us, it had been well settled that the law of this State should control our decision under the statute as it then existed. But the changes in the statute applicable to this case, as evidenced by the act of 1899, present the question to us again in a very different light. The amendments of 1899 plainly reveal that the Legislature had come to the view that fraternal and assessment orders should be governed by their own laws, rules and regulations, as authorized by the State of their origin, except where inconsistent with our laws concerning such orders. We find nothing in those laws that prohibit raising the rates of assessment, as was done by the defendant in 1916.
This Court, in Brenizer v. Royal Arcanum, 141 N. C., 409, recognized this change in our law, and especially that such orders had been excepted from the provisions of our general insurance law, among which is found the section requiring that “all contracts of insurance” shall be subject to the laws of this State when the contract is made or the application for the- insurance is taken therein. This provision is, therefore, not applicable to benefit societies; and this appears more clearly when we consider Revisal, sec. 4791, which requires that certificates of fraternal orders shall be drawn in accordance with the charter and by-laws of the society or corporation.
The manifest object of these provisions was to make contracts of fraternal orders uniform, so as to preserve that equality and fraternity which is the basic principle of such orders. The Legislature saw clearly that it would be destructive of the life of the order unless members, for instance, were assessed according to one and the same rule, instead of *625the assessments being laid in each. State according to its own rule, which, moreover, would produce an undue and unjust proportion of the burden as between the members, there being as many different assessments as there are States. The affairs of the order could not be administered under any such scheme, as some members would not be willing, of course, to pay a greater assessment than others who derived the same benefit.
As we hold that there is no statute of this State which prohibited the increase of the assessment in 1916, the case is brought directly within the ruling of the Supreme Court of the United States when deciding a similar case in Supreme Council of the Royal Arcanum v. Green, 237 U. S., 531, where the question is exhaustively treated by Chief Justice White, the Court assuming jurisdiction of the case upon the ground that the Court of Appeals of New York, from which the case was brought by writ of error, had not given full faith .and credit, as required by the Constitution of the United States, Art. IV, sec. 1, to the acts, records, and judicial proceedings of Massachusetts, the validity of an assessment similar to the one made in 1916 being the question in that case. As the decision covers fully the points raised here, it will not be amiss to quote extensively from it, in order to show its broad scope, and how exactly and conclusively it decides every essential issue of law in this case, the facts of the two cases being substantially the same. Chief Justice White' said there:
“It is not disputable that the corporation was exclusively of a fraternal and beneficiary character, and that all the rights of the complainant concerning the assessment to be paid to provide for the Widows’ and Orphans’ Benefit Fund had their source in the constitution and bylaws, and, therefore, their validity could be alone ascertained by a consideration of the constitution and by-laws. This being true, it necessarily follows that resort to the constitution and by-laws was essential unless it can be said that the rights in controversy were .to be fixed by disregarding the source from which they arose and by putting out of view the only considerations by which their scope could be ascertained. Moreover, as the charter was a Massachusetts charter, and the constitution and by-laws were a part thereof, adopted in Massachusetts, having no other sanction than the laws of that State, it follows by the same token that those laws were integrally and necessarily the criterion to be resorted to for the purpose of ascertaining the significance of the constitution and by-laws. Indeed, the accuracy of this conclusion is irresistibly manifested by considering the intrinsic relation between each and all the members concerning their duty to pay assessments and the resulting indivisible unity between them in the fund from which their rights were to be enjoyed. The contradiction in terms is apparent which would rise from holding on the one hand that there was a collective and *626unified standard of duty and obligation on the part of tbe members themselves and the corporation, and saying on the other hand that the duty of the members was to be tested isolatedly and individually by resorting not to one source of authority applicable to all, but by applying many divergent, variable and conflicting criteria. .In fact, their destructive effect has long since been recognized. Gaines v. Supreme Council of the Royal Arcanum, 140 Fed., 948; Royal Arcanum v. Bradshears, 89 Md., 624. And from this it is certain that when reduced to their last analysis, the contentions relied upon, in effect, destroy the rights which they are advanced to support, since an assessment which was one thing in one State and another in another, and a fund which was distributed by one rule in one State and by a different rule somewhere else, would in practical effect amount to no assessment and no substantial sum to be distributed.
“It was doubtless not only a recognition of the inherent unsoundness of the proposition here relied upon, but the manifest impossibility of its enforcement which led courts of last resort of so many States in passing on questions involving the general authority of fraternal associations and their duties as to subjects of a general character concerning all their members to recognize the charter of the corporation, and the laws of the State under which it was granted, as the test and measure to be applied. Supreme Lodge, etc., v. Hines, 82 Conn., 315; Supreme Colony v. Towne, 87 Conn., 644; Palmer v. Welch, 132 Ill., 141; Grime v. Grime, 198 Ill., 265; American Legion of Honor v. Green, 71 Md., 263; Royal Arcanum v. Bradshears, 89 Md., 624; Golden Cross v. Merrick, 165 Mass., 421; Gibson v. United Friends, 168 Mass., 391; Larkin v. Knights of Columbus, 188 Mass., 22; Supreme Lodge v. Nairn, 60 Mich., 44; Tepper v. Royal Arcanum, 59 N. J. Eq., 321; S. c., 61 N. J. Eq., 638; Bockover v. Life Asso., 77 Va., 85.”
And, after referring to the principle and the cases cited to support it, the Chief Justice further says: “In fact, while dealing with various forms of controversy, in substance all these cases come at last to the principle so admirably stated by Chief Justice Marshall more than a hundred years ago (Head v. Providence Insurance Co., 2 Cranch, 127, 167) as follows: ‘Without ascribing to this body, which, in its corporate capacity, is the mere creature of the act to which it owes its existence, all the qualities and disabilities annexed by the common law to ancient institutions of this sort, it may correctly be said to be precisely what the incorporating act has made it, to derive all its powers from that act, and to be capable of exerting its faculties only in the manner which that act authorizes. To this source of its being, then, we must recur to ascertain its powers.’ ”
*627This same rule as to tbe destructive effect of assessments in different amounts is also stated in Royal Arcanum v. Brashears, 89 Md., 624, as follows: “In a purely mutual association like tbe Royal Arcanum all members must be treated alike, for it would be destructive of tbe mutuality itself of tbe association if in suits against it tbe benefit certificate issued to a citizen of one State should be entitled to a more favorable construction tban a similar certificate issued to a citizen of another State.”
But, as we have seen, tbe Supreme Court of tbe United States has regarded tbe question involved as a Federal one, as it calls for tbe construction and application of Article 4, sec. 1, of tbe Constitution, and its decision upon tbe question is authoritative, and therefore binding upon us, even if we differed from its conclusion, which we do not. This being tbe case, it concerns us now to ascertain what is tbe law of Massachusetts in regard to this question. Tbe defendant, in order to show what this law is, has introduced statutes of that State, a duly certified copy of tbe judgment roll of tbe highest court of that State, tbe Supreme Judicial Court, in Reynolds v. The Royal Arcanum, which is reported in 192 Mass., 150. It also introduced tbe testimony of two eminent and learned members of tbe bar of that State, and from all this evidence, it appears to have been held by tbe highest court of Massachusetts, which has continued as tbe law of that State to this day, as follows:
1. Tbe Royal Arcanum (and other fraternal beneficiary'societies as well) have tbe power to increase their rates.
2. They have not only tbe right and power to increase their rates, but to put tbe members upon a new and increased table of rates, which are fixed as of tbe ages attained by tbe members, at tbe time tbe new scale of rates was adopted.
It will be proper here to state substantially, and as briefly as possible, what was said by tbe Court in tbe Reynolds case, using for tbe most part its own language: “Tbe assessments to be paid for death benefits in.this case are provided for by tbe by-laws, while a promise in writing to pay a certain sum to a particular person is, as to that person, a matter outside of those corporate rules which may be expected to be changed by an amendment of tbe by-laws. This promise on one side is set over against tbe promise of tbe member on tbe other. Tbe promise of tbe member is to do what may be called for by tbe by-laws then existing or that may afterwards be adopted. Tbe promise of tbe corporation is stated expressly, without mention of tbe by-laws. Tbe member occupied a dual position, as an insurer and tbe insured. As one of tbe association agreeing to provide for tbe payments that may become due to members, be agrees to be subject to tbe by-laws. As tbe insured person to whom a particular sum of money is promised, be has a right to stand on tbe terms of *628tbe promise. Tbat tbe duties of members prescribed by tbe by-laws remain subject to modification wben a power of amendment is reserved bas often been decided,” citing Loeffler v. Modern Woodmen, 100 Wis., 79, and other cases.
“Most of tbe cases relied on. by tbe plaintiffs, wben rightly analyzed, turn on tbe distinction between an attempted amendment of tbe by-laws directly affecting tbe promise to tbe certificate bolder as an insured person and an amendment affecting bis duties as a member of tbe corporation bound to perform bis part in providing means or otherwise as one of tbe association of insurers,” citing Hale v. Equitable Aid Union, 168 Penn. St., 377, and many other cases.
“On principle and on tbe weight of authority, we are of opinion tbat there is nothing in this contract tbat prevents tbe corporation from amending its by-laws in a reasonable way, to accomplish tbe purposes for which it was organized, even though tbe change increases tbe payments to be made by certificate holders. Such changes necessarily involve some hardship to certain individual members, but tbe corporation, under tbe law, should do tbat which will bring tbe greatest good to tbe greatest number. Tbe members who complain of its action are those who have bad tbe benefit of insurance for themselves and their families for many years, at very much less than tbe cost of their insurance to tbe corporation. They have bad tbe good fortune to survive, and therefore their contracts have brought them no money, but all tbe time they have bad tbe stipulated security against risk of death. If now they are called upon to pay for future insurance, no more than its cost to tbe corporation, they ought not to think it unjust.”
Tbe Reynolds decision was made, it is true, upon tbe raise of tbe rates in 1905 by tbe Royal Arcanum, but, saving tbe date of tbe increase and tbe amounts, tbe question involved there as to tbe increase of tbe rates in 1905 is identical with tbat in this case, and, at least, in substance and in principle. There is no difference in law between tbe two, and a decision upon tbe one is directly applicable to a case arising upon tbe other. There is one difference between tbe Reynolds case and this one, which favors our present decision, and tbat is tbat while tbe laws of Massachusetts in 1905 permitted benefit societies to raise their rates above tbe existing level, in tbe same manner as was done in this case, tbe law in 1916 commanded tbat it should be done wben necessary to meet its financial obligations. One was permissive merely, while tbe other was mandatory, and tbe latter was passed because it was apparent tbat tbe order could not be kept afloat in any' other way.
It comes to this, therefore, tbat tbe highest Federal Court bas declared tbat, under Article 4, sec. 1, of tbe Constitution, tbe question must be determined by the law of Massachusetts to which courts in other *629States must give full faitb and credit, and we bave shown that the law of that State not only permits but requires that the rates shall be increased when the necessities of the order demand it. This is not unfair or unjust to any member. If it were not the law, the order could not long survive or remain a going concern, because it must soon perish for the want of sustenance, and if this should happen, the certificates, of course, would be of no value; and, instead of being what it was intended to be, a society for- the protection of its beneficiaries against loss in the ease of death of its members, under a cheap or inexpensive form of insurance, it would prove to be an expensive and uncertain form of insurance to them. The very nature of the enterprise shows the absolute necessity for having a fixed and uniform rate of assessment, with power to raise it to a higher level when the exigencies of the society require this to be done. The Green case was approvd in Supreme Lodge Knights of Pythias v. Mimms, 241 U. S., 514 (60 L. Ed., 1179), where the rate of assessment was increased from $7.35 to $34.80, and justified under similar laws to those existing in the order of the Royal Arcanum in 1905 and 1916. See, also, Knights of Pythias v. Smyth, 38 Sup. Ct., 210.
The Reynolds case has been approved by the Supreme Judicial Court of Massachusetts in the following eases: Hickey v. Baine, 195 Mass., 446, at p. 452; Proctor v. United Order Golden Star, 203 Mass., 587, at p. 590; Attorney General v. American Legion of Honor, 206 Mass., 158, at p. 164; Ulman v. Golden Cross, 220 Mass., 442, at p. 427. These eases were decided between 15 May, 1907, and 1 March, 1915, both dates inclusive, so that they continue the law of that State, as we have stated it, down to a day since the commencement of this action, and one of the Assistant Attorney-Generals of Massachusetts having special charge of the insurance department’s matter states that it was the law when he testified.
It may be well to state briefly the history of the case of Green v. Royal Arcanum, supra, in order to .show how identical are the contentions of plaintiff in that ease with those of the plaintiff in this case: Sometime after the raise in 1905, one Samuel Green brought an action against the Royal Arcanum in the Supreme Court of New York to enjoin the defendant from suspending him for failure to pay the new rates. In the lower court, the judge upheld Green’s contention and enjoined the defendant from suspending Green on account of his failure to pay the new "and increased rates adopted in 1905. In concluding the opinion (124 N. Y. Supp., 398), the Court said: “I also hold that although the defendant is a Massachusetts corporation, still, when it comes into the State of New York, conducting business here under the supervision and permission of the State insurance department, contracts made here with *630residents of this State in councils organized and existing in this State and to be performed here are to be interpreted under the laws of the State of New York.”
Upon appeal by defendant, the Appellate Division of the New York Supreme Court reversed the lower court, and held that the increase in rates in 1905 was valid (see 129 N. Y. Sup., 791). Thereupon Green appealed to the New York Court of Appeals and the Court of Appeals reversed the ruling of the Appellate Division and affirmed the ruling of the lower court, 206 N. Y., 591. In this opinion the New York Court of Appeals held three main propositions:
(1) That the reservation in the benefit certificate to the effect that the member should comply with all laws, etc., made in the future, did not authorize the Royal Arcanum to increase the rates of assessment in 1905.
(2) That plaintiff’s contract rights are not affected by the fact that defendant is a Massachusetts corporation, because the contract was made in New York, and is to be controlled by the laws of New York.
(3) That the statutes of Massachusetts did not authorize the change made in 1905, because the change impaired plaintiff’s vested rights, which the Massachusetts statute forbade.
After the adverse decision of the Court of Appeals of New York, the Royal Arcanum sued out a writ of error from the Supreme Court of the United States upon the ground that that decision was violative of section 1, article 4, of the United States Constitution, in that it failed to give full faith and credit to the public acts and judicial iiroceedings of the State of Massachusetts. It was therefore required of the United States Supreme Court to decide whether the highest court in New York erred in holding that the contract rights of the parties under the benefit certificate were to be determined by the laws of New York or by the laws of Massachusetts, where the Royal Arcanum was chartered; secondly, whether the Massachusetts law authorized the Royal Arcanum to raise the rates in the manner in which they were raised in 1905. The United States Supreme Court clearly and emphatically held:
(1) That the New York Court err.ed in determining the rights and powers of the defendant by the New York law, and that the question of the power to raise the rates as raised in 1905 must, under article 4, section 1, of the Federal Constitution, be determined by the laws of Massachusetts.
(2) That the statutes of Massachusetts, particularly in the light of tho Reynolds case construing those statutes, left no room for doubt that the Massachusetts law governing fraternal beneficiary societies, did authorize the raise in rates made in 1905.
In the Mims case, supra, it was claimed that the society had demanded monthly dues in excess of its rights, and that the amendments to the by*631laws increasing the rates- of assessment were ultra vires and void. The by-laws governing the certificate, and enacted in 1884, provided that “each member of the endowment rank should continue to pay the same amount each month thereafter so long as he remained a member’” In 1910, the by-laws were again amended so as to increase the plaintiff’s monthly payments from $7.35 to $34.80, and required each member to pay as of his age attained in that year.
Justice Holmes, writing for a unanimous Court in that case, said: “Persons who join institutions of this sort are not dealing at arm’s length with a stranger whose mode of providing for payment does not concern them, but only his promise to pay? They are joining a club the members of which have to pay any benefit that any member can receive. The corporation is simply the machine for collection and distribution. Its charter expressly provides by section 5 that it ‘shall not engage in any business for gain; the purpose of said corporation being fraternal and benevolent.’ It is manifest, therefore, that it would be a perversion of its purposes if, through some ambiguity of phrase, the necessary course of benefits were closed in favor of certain members, while their right to insist upon payment remained. The essence of the arrangement was that the members took the risk of events, and if the assessments levied at a certain time were insufficient to pay a benefit of a certain amount, whether from diminution of members or any other causes, either they must pay more or the beneficiary take less. The only language in the certificate bearing on the matter pointed to possible changes, one condition being the payment of all monthly payments ‘as required.’ It was obvious and understood that, to pay a benefit, an increase in the assessment might be necessary. In our opinion the present charter, like the first, must be construed to authorize such an increase, and the clause in the law of 1884, relied upon, that the payments should continue the same so long as the membership continued, was not a contract, but was a regulation subject to the possibility inherent in the ease. More than ambiguous words in an amendable law would be needed to establish a departure from the ground on which the relation of the parties obviously stood, and to create a privilege that attacked the corporation in its very life. . . . It is unnecessary to discuss the options that were offered in the alternative, but it is proper to remember that for many years the plaintiff had been insured, and although by what he is not likely to regard as bad fortune, his beneficiary has not' profited by it, she would have if he had died. As he happily has lived, he has to bear the burdens incident to the nature of the enterprise into which he went open-eyed.”
The same legislation was under consideration by the Supreme Court of the United States in the Smyth case, supra. In that case, at the time the member’s certificate was delivered to him, he was also provided with *632a copy of tbe constitution and laws, wbicb contained, among other things, in article 4, this provision: “Each member . . . shall pay . . . a monthly assessment, as provided in the following table, and shall continue to pay the same amount hereafter as long as he remains a member of the Endowment Rank.” Smyth originally paid a monthly assessment of $3 until 1894, when it was increased to $3.15, which he paid until 1901, when it was increased to $4.80, which he paid until 1910, when he received a notice of increase to $14.70. The decision of the case turned, as was said by the district judge (198 Fed., 963), on the power of the supreme lodge to increase the monthly payment of assessments from $4.80 to $14.W) per month. It appeared in the record that, at the time the increase of 1910 went into effect, a circular was delivered to the plaintiff, saying: “These payments do not increase (the words ‘do not increase’ italicized) with increasing age, but always remain the same during the good standing of the member,” 198 Fed., 990.
The United States Supreme Court called attention to article 4, above set forth, and said: “This provision, it is contended, became a part of the contract of insurance with .the plaintiff, which could not be changed without his consent, and made unlawful any increase in his assessment. The defense is that-power was given to the defendant by its charter to change its by-laws; that by provisions in his policy and his application for it, the plaintiff was notified and charged with knowledge of this fact; and that the increase of assessment complained of was duly authorized pursuant to the terms of this grant of power.” The Court held that the Smyth case was on all fours with the Mims case, and that the decision in that case must be accepted as controlling on the merits and decisive of the authority of the supreme lodge to increase the monthly assessment rates.
It should be noted, as important in the consideration of our case, what Justice Holmes says in the Mims case, supra, viz., that the clause providing for periodical payments of the same amount “so long as the membership continued, was not a contract, but was a regulation subject to the possibility inherent in the case, and that any other view of it would create a privilege which would attack the corporation in its very life.” This is the crux of the whole matter, and the vital principle of the case, crisply stated and sharply and lucidly defined. • The Chief Justice thus concludes the opinion of the Court in Boyal Arcanum v. Green, in regard to the effect of the Massachusetts law and its application to cases in other States :
“Coming, then, to give full faith and credit to the Massachusetts charter of the corporation and to the laws of that State to determine the powers of the corporation and the rights and duties of its members, there is no room for doubt that the amendment to the by-laws was valid *633If we accept, as we do, tbe significance of tbe charter and of tbe Massachusetts law applicable to it as announced by the Supreme Judicial Court of Massachusetts in the Reynolds case. And this conclusion does not require us to consider whether the judgment per se as between the parties was not conclusive in view of the fact that the corporation for the purposes of the controversy as to assessments was the representative of the members. (See Hartford Life Insurance Co. v. Ibs, this day decided.) Into that subject, however, we do not enter.”
There is another ground of distinction between the Strauss, Williams, and Wilson cases, and the other ■ cases cited in them, on the one hand, and our case, on the other. In the former, there was not only a raising to a higher figure of the rates, but there also was classification and discrimination. That is, the old members were put in one class and the new members in another, and the losses (death benefits) in the old class were paid from the funds collected from that class, while the losses in the new class were paid from the funds collected from that class; but in this ease it appears that all moneys collected from assessments are mingled or blended in one fund, and losses paid solely out of it. It is, therefore, a single or common fund for the payment of death benefits. In the one case there is classification and discrimination, while in the other, there is neither. This burden put upon the old class, of paying its own death benefits, while an advantage is given to the new class, which increases in number, caused the Chief Justice to say in Williams v. Heptasophs, supra: “This is not the case of an increase of assessments, but it is a discrimination between members,” resulting, of course, from unfair and unjust classification.
In Wilson v. Order of Heptasophs, 174 N. C., at p. 628, the Chief Justice, comparing this process of classification to the flow of a river, says: “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 this case, the company seeks to divide its members into classes, the older of which will receive no accessions, the current will soon run dry. It is true that this 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 that when there is a class in which there are no new members to assess, that class must become smaller and smaller and the assessments larger and larger until they become unbearable.”
And in the Williams case, 172 N. C., at p. 789, he demonstrates the baneful effect upon the older members in the application of this classification when he says: “Under this system the assessments upon the *634plaintiff became, of course, much bigber tban if tbe entire membership' bad. continued to share in tbe burden of all tbe deaths, with tbe result that if tbe plaintiff was tbe longest liver in that .class be would have to pay bis own death loss, and in tbe meantime would, as a member of a constantly dwindling class, have been required to pay bigber and. bigber. assessments on tbe death of each of bis fellow-members.”
We have no such case here, as tbe law wisely provides for a common fund, to which tbe Chief Justice favorably referred, in those cases, and from this one source all are paid alike. It was held in Supreme Council Royal Arcanum v. Bradshears, 73 Am. St. (Md.), 244, that in a purely mutual association like tbe Boyal Arcanum, all members must be treated alike, for it would be dstructive of tbe mutuality itself of the association if in suits against it tbe benefit certificate issued to a citizen of one State should be entitled to a more favorable construction tban a similar certificate issued to tbe citizen of another State. And also, in the same case, it is said to be well settled that tbe contract of membership in a mutual association is always made with reference to and includes the constitution and by-laws of tbe association, whether they are specially referred to in tbe contract or not, citing cases and 3 Am. & Eng. Enc. (2 Ed.), 1081; Yoe v. Howard Assn., 63 Md., 86; Fuller v. Baltimore Assn., 67 Md., 433.
The plaintiff cannot say that be has borne “tbe beat and burden of tbe day,” and therefore bis case should be favorably considered, for he-has not. He has been given insurance at less tban its normal cost and at a much cheaper rate tban it could have been secured by tbe ordinary life plan, and be will continue it, under tbe increased rate, at a stated sum which is not in excess of its cost to tbe order for a member of bis-age. He, therefore, has no reasons for complaint against tbe law, because if it seems to be harsh, it is in reality not so.
But plaintiff alleges that be was fraudulently induced to join the-order by its agent, who falsely represented that tbe rate would continue to be tbe same so long as be was a member. He tendered two issues, based upon this allegation which tbe judge rejected, as a false representation which induces another to act is not necessarily or even ordinarily fraudulent. The representation, though false, may have been honestly made in tbe belief that it was true, and it may have caused plaintiff to become a member without having been intended to deceive' him. When we consider tbe facts and tbe language of tbe certificate' and other documents to which plaintiff bad easy access, it was more tbe expression of an opinion or tbe legal construction of words-than a falsehood which was calculated and intended to willfully mislead; nor was-there any trick or artifice employed to prevent a full and free inquiry, and besides, and what is more conclusive against tbe charge of fraud is. *635tbe fact tbat language was used in tbe papers wbicb expressed, or at least implied, wbat was affirmed by tbe agent, tbat tbe assessment would remain tbe same so long as be remained a member of tbe order. Tbe language is: “Every applicant . . . shall pay . . . tbe following named amounts (set forth in tbe table) . . . according to tbe age attained . . . and the same amount on each assessment thereafter whilst be is a member of tbe order, unless be should have changed bis rate.”
Tbe plaintiff bad tbe necessary documents for informing himself and as much intelligence as tbe agent, so it apjiears, for understanding them. He soon became tbe regent or bead officer of bis local council and must be presumed to have ascertained wbat were tbe constitution, by-laws, rules and regulations of tbe order, if be properly performed bis duty, and be continued to be a member, to pay tbe amount of bis assessments, and to accept and enjoy tbe highest honor of tbe order for some years without complaint or protest.
There are other important facts wbicb relieve tbe agent of imputation of fraud, but it is unnecessary to recite them, as those already stated will suffice to show tbat tbe charge of fraud is without any real foundation. We will, therefore, content ourselves with a reference to a few of tbe precedents applicable to such cases. Tbe following, relied on by tbe plaintiff, are not in point: Caldwell v. Ins. Co., 140 N. C., 100; Sykes v. Ins. Co., 148 N. C., 13, and Whitehurst v. Ins. Co., 149 N. C., 273. In each of those cases tbe agent of the company took advantage of tbe ignorance and illiteracy of tbe applicant and deceived him as to tbe language and meaning of tbe policy when be well knew tbat tbe applicant could not read and could not understand. This case is like those of Cathcart v. Ins. Co., 144 N. C., 623; Clements v. Ins. Co., 155 N. C., 57, and Wilson v. Ins. Co., id., 173. Those cases are very much like this one and sufficiently so in principle to control it.
In Tarault v. Seip, 158 N. C., at p. 370, tbe Court said: “Nor can fraud exist where tbe intent to deceive does not exist, for it is emphatically an action of tbe mind tbat gives it existence. It is not sufficient tbat tbe representations are false in point of fact; tbe defendant must be guilty of a moral falsehood. Tbe party making tbe representation must know or believe it to be false, or, wbat is tbe same thing, have no reason to believe it to be true. Tbe action for fraud and deceit rests in tbe intention with wbicb tbe representation is made and not uj)on tbe representation alone,” citing Etheridge v. Palin, 72 N. C., 213; Tilghman v. West, 43 N. C., 183; Hamrick v. Hogg, 12 N. C., 350, to wbicb we add Cash Register v. Townsend, 137 N. C., 652; Unitype Co. v. Ashcraft, 155 N. C., 63.
It was said in Floars v. Ins. Co., 144 N. C., at p. 232: “While'these principles are very generally admitted, it is also accepted doctrine tbat *636when the parties have bargained together touching a contract of insurance, and reached an agreement, and in carrying out or in the effort to carry out the agreement a formal written policy is delivered and accepted, the written policy, while it remains unaltered, will constitute the contract between the parties, and all prior parol agreements will be merged in the written instruments; nor will evidence be received of prior parol inducements and assurances to contradict or vary the written policy while it so stands as embodying the contract between the parties.”
And in Bland v. Harvester Co., 169 N. C., 418, we said: “The plaintiff relies entirely upon certain alleged verbal representations made to him by a sales agent of the defendant. In a late case this Court said that parties to the contract are riot only held to the terms of the contract deliberately entered into, but are not permitted to contradict or vary its terms by parol evidence, as the 'written words abides’ and must be considered as the only standard by which to measure the obligation of the respective parties to the agreement in the absence of fraud or mistake.’ ” See, also, Guano Co. v. Live Stoch Co., 168 N. C., 447.
In Mowry v. Insurance Co., 96 U. S., 54, where plaintiff alleged that the agent of the company had allured him into accepting a policy by a tempting bait, the Court said: “The previous representation of the agent could in no respect operate as an estoppel against the company. Apart from the circumstances that the policy subsequently issued alone expressed its contract, an estoppel from the representations of a party can seldom arise, except where the representation relates to a matter of fact, to a present or past state of things. If the representation relate to something to be afterwards brought into existence, it will amount only to a declaration of intention or of opinion, liable to modification or abandonment upon a change of circumstances of which neither party can have any certain knowledge.”
And again, upon the same question, and answering the contention of the agent’s fraud, the Court said in the same case: “But to this position there is an obvious and complete answer. All previous verbal arrangements were emerged in the written agreement. The understanding of the parties as to the amount of the insurance, the conditions upon which it should be payable, and the premium to be paid, were there expressed for the very purpose of avoiding any controversy or question respecting them. The entire engagement of the parties, with all the conditions upon which its fulfillment could be .claimed, must be conclusively presumed to be there stated. If by inadvertence or mistake provisions other than those intended were inserted or stipulated provisions were omittéd, the parties could have had recourse fon a correction of the agreement to a court of equity, which is competent to give all needful *637relief in snob eases. But until tbus corrected, tbe policy must be taken as expressing tbe final understanding of tbe assured and of tbe insurance company.”
As to tbe duty of a member to read bis certificate, tbe Court said in Fraternities Acci. Order v. Armstrong, 106 Va., 746: “A person wbo becomes a member of sucb a society or order must acquaint bimself with its by-laws, for they, to tbe extent of tbeir provisions, measure bis duties, bis rights and bis liabilities. He is chargeable with knowledge of tbe general nature and character of tbe organization which be is joining, and of its rules and regulations. Tbe member of sucb a corporation being bound by tbe provisions of its by-laws, sucb by-laws enter into and form part of tbe contract as between tbe member and tbe company, whether formally incorporated in tbe contract or not. . . . Tbe law conclusively presumes that those wbo become members of sucb a society have acquainted themselves with its by-laws.”
And upon tbe same question it was said in Upton v. Tribiloch, 91 H. S., at p. 45: “That tbe defendant did not read tbe charter and bylaws, if such were tbe fact, was bis own fault. It will not do for a man to enter into a contract, and when called upon to respond to its obligations, to say that be did not read it when be signed it, or did not know what it contained. If this were permitted, contracts would not be worth tbe paper on which they were written. But sucb is not tbe law. A contractor must stand by tbe words of bis contract, and if be will not read what be signs be alone is responsible for bis omission,” citing Jackson v. Croy, 12 Johns., 427; Leis v. Stubbs, 6 Watts., 48; Farly v. Bryant, 32 Me., 474; Coffing v. Taylor, 16 Ill., 457; Slafyton v. Scott, 13 Ves., 427; Alvanly v. Kinnard, 2 Mac. & G., 7; 29 Beav., 490. Tbe case of Gwaltney v. Ins. Co., 132 N. C., 925, on which plaintiff relies is not at all applicable.
In tbe course of tbe opinion be wrote for tbe Court in Cathcart v. Ins. Co., 144 N. C., 623, which we have cited as ruling our case, Chief Justice Glarh says of the Gwaltney case: “This case (Cathcart v. Ins. Co.) is rather like Floars v. Ins. Co., 144 N. C., 232, where it was held that a failure to read tbe policy or examine it for three months is a waiver of any right to reform tbe policy on tbe ground of mistake,” and this applies, of course, to other equitable relief.
We close this branch of tbe case with what is said in Clements v. Ins. Co., 155 N. C., at p. 61 and 62: “Tbe loss of tbe plaintiff, if any be has sustained, is- directly' and wholly attributable to gross neglect of bis own interests and to bis supineness when be should have been active and vigilant. Equity will not assist one whose condition is traceable only to that want of diligence which may fairly be expected from a reasonable and prudent person, and even when be is watchful and discovers a *638wrong’ practiced upon him, a court of equity requires that be should be prompt in asserting bis claim to relief against it, for it will not aid those who sleep on their rights, but only those who are vigilant.”
Justice Holmes said in Supreme Lodge of Knights of Pythias v. Mims, 241 U. S., 571, already cited, that the provision as to the permanency of the rate charged at entrance of a member is but a rule or regulation, subject to change as the necessities of the order might require. If plaintiff had bestowed even slight care upon his interests and informed himself when he had ample opportunity to do so, he would have discovered what was the meaning of the clause as to rates. It is too late, after so many years have elapsed, even if there was any fraud or mistake, to ask for relief at the hands of a court of equity.
There are some objections to evidence, but they relate to the documentary and other proof showing the law of Massachusetts, and really go to its legal effect, rather than to its competency and relevancy.
We have shown why the issues tendered by the plaintiff should not have been submitted.'
We consider the Green case, supra, as decisive of this one on the two main and essential questions, that under the full faith and credit clause of the Constitution, the applicable law is that of the State of Massachusetts, and that, under that law, of itself, and certainly as construed by its highest court, the increase by the assessments was fully warranted.
There was no real dispute about the material facts, and upon them plaintiff has no cause of action, and therefore the judgment of the Court is correct.
No error.