of association and by-laws.

A consideration of the

effect of these upon the remedies for alleged breaches of collateral contracts is a sufficient justification for considering the subject here; because the validity, reasonableness and effect of such by-laws are determined by the same principles as in the case of by-laws made and asserted in ordinary corporations.

§ 672. Actions to prevent wrongful forfeiture and suspension of contract.-Closely connected with the right of expulsion from membership previously considered,1 and liable to the same abuses, but differing from it in some important respects to be now considered, is that generally possessed by mutual benefit societies, and perhaps a few societies otherwise designated, to deprive their members of the right to benefits and indemnity temporarily or absolutely on account of violation of conditions, upon the due observance of which such indemnity and benefits have been promised. interference of the courts to prevent expulsions which amount to forfeitures of property rights is a wellknown branch of remedial justice."

The

1 Supra, Chapter XX.

2 Otto v. Journeyman Tailors' P. & Ben. Union, 75 Cal. 308; Bauer v. Samson Lodge, 102 Ind. 262; White v. Brownell, 2 Daly (N. Y.) 329; Thompson v. Tammany Soc., 17 Hun (N. Y.), 305; Olery v. Brown, 51 How. Pr. (N. Y.) 92; Schmidt v. Abe Lincoln Lodge, 84 Ky. 490; Mulroy v. Knights of Honor, 28 Mo. App. 463; Austin v. Searing, 16 N. Y. 112; s. c. 69 Am. Dec. 665; Supreme Council of the Order of Chosen Friends v. Garrigus, 104 Ind. 133; s. c. 54 Am. Rep. 298; Pulford v. Fire Department, 31 Mich. 458. In an action to recover upon a certificate of membership in a life insurance society, where the assured had made default in payment of his assessments, which under the constitution of the society worked a forfeiture of his rights, and where the findings of the court that such article was valid do not state its terms, and there is nothing in the record from which its character can be determined, a judgment denying the relief demanded cannot be reviewed. Englert v. Roman Catholic Mut. Protection Soc. (Iowa), 48 N. W. 810. In an action by a benevolent society against a member for money loaned, the defence was that the defendant had been wrongfully deprived of membership in the lodge, and money privileges thereto apper

§ 673. Mutual benefit certificates.-The most usual form of the contracts now being considered, is that of insurance contracts, to be tested and enforced as where made between other parties except so far as they are modified and governed by the relation of membership. These certificates differ greatly in form, but the fundamental principles of practice and pleading which govern actions upon other insurance policies are applicable.1

The federal courts have jurisdiction of actions upon contracts between benefit societies and their members, as in other cases, and the same circumstances of residence, etc., will warrant the parties in removing a case brought in a state court to the federal courts.2

§ 674. Limitations upon right to sue and recover -Where the policy issued by a mutual insurance company provides that the only action maintainable on the policy shall be to compel the association to levy the assessments agreed upon, and where its conditions are such that if a levy were ordered by the court the association will only be liable for the sum collected, and the only mode of enforcing the policy in the first instance is by a suit in equity, such a provision in the policy is valid.3

taining, exceeding plaintiff's claim, and that, upon defendant's appeal from such expulsion to the grand lodge, his reinstatement was ordered, which order the local lodge refused to obey. Held, that equity would refuse to aid plaintiff until the reinstatement order was obeyed, according to the society's rules, although the grand lodge itself had no mandatory powers to enforce its authority. Id.; Schmidt v. Abraham Lincoln Lodge, 84 Ky. 490; 2 S. W. 156.

1 Elkhart Mut. Aid, etc., Ass'n v. Houghton, 98 Ind. 149; s. c. 53 Am. Rep. 514.

2 Home Ins. Co. v. Morse, 20 Wall. (U. S.) 445.

3 Eggleston v. Centennial Mut. L. Ass'n of Iowa, 19 F. 201. The policy sued on contained the following clause: "The only action maintainable on this policy shall be to compel the association to levy the assessments herein agreed upon, and if a levy is ordered by the court, the association shall be liable under this policy only for the sum collected under an assessment so made." The court said: "It is not for the court to comment on the wisdom or folly of such contracts. If parties choose to enter into them they are bound by their terms in the absence of fraud, unlsss they are contra bonos mores. There is nothing to

In many states a different rule prevails; and although a suit in equity may be maintained to compel the company to levy an assessment and pay the proceeds to the beneficiary, still it is not necessary for the policy holder to resort to it, for, when the insurance company refuses to make an assessment, it violates its contract, and becomes liable to the beneficiary for damages caused by such violation. Such damages, like all damages for breaches of contracts, can be recovered by an action at law.1

void the agreement the parties voluntarily entered into, and hence this court adheres to the decision heretofore made in this case, viz., that redress must be sought in equity alone."

An action at law upon a certificate of mutual insurance cannot reach questions outside of such certificate, so as to enable the plaintiff to recover benefits otherwise than as specified in the certificate. Bailey v. Mut. Ben. Ass'n (Ia.). 27 N. W. Rep. 770; Tobin v. Western Mut. Aid Soc., 72 Ia. 261; Rainsbarger v. Union Mut. Aid Ass'n, 72 Ia. 191. If the recovery desired is outside the contract contained in the certificate, in an action at law, only nominal damages can be recovered. Newman v. Covenant Mut. Ben. Ass'n (Ia.), 33 N. W. 662.

In Nershin v. Northwestern Endowment Ass'n of Minn., 30 Minn. 406, the court said: "In view of the well-known character of the contracts of many of these so-called mutual protection associations, it is possible that if the articles of association and by-laws of defendant were set out, it might appear that this was the extent of the benefits of membership. But these articles and by-laws are neither set out in the pleadings nor introduced in evidence. Hence, we are left to construe this language of the certificate of membership by itself. There is nothing in it suggestive of the idea that defendant's liability is dependent upon collections received from an assessment. Upon its face we think it amounts to an absolute undertaking to pay a sum of money, the amount of which is to be determined by the number of contributing members. Hence, we think the complaint states a cause of action, although it neither alleges the actual receipt of money upon an assessment to meet the loss nor a neglect to make such assessment." See also Harl v. Pottawatomie Co. Mut. Fire Ins. Co., 74 Iowa, 39.

1 O'Brien v. Home Ben. Soc., 117 N. Y. 318; s. c. 4 N. Y. Supp. 275; Fuller v. Fitzgerald Equitable Acc. Ass'n, 5 N. Y. Supp. 837; Jackson v. Northwestern Mut. Relief Soc., 73 Wis. 507; Freeman v. National Ben. Soc., 42 Hun (N. Y.), 252; Kansas L. Ass'n v. Lemke, 40 Kan. 142; Taylor v. National Temperance Relief Union, 94 Mo. 35; Peck v. Equitable Acc. Ass'n, 5 N. Y. Supp. 215; Cummings v. Mayor of Brooklyn, 11 Paige, N. Y. 596, 602; Leuder v. Insurance Co., 12 F. 465; Excelsior Mut. Aid Ass'n. v. Riddle, 91 Ind. 84; Kansas Protective Union v. Whitt, 36 Kan. 760; s. c. 59 Am. Rep. 607; Earnshaw v. Sun Mut. Aid Soc., 68 Md. 465; Burland v. Northwestern Mut. Ben. Ass'n, 47 Mich. 424; Kankinson v. Paige, 12 Civ. Proc. Rep. (N. Y.) 279, 288; Union Mut. Acc. Ass'n v. Frohard (Ill.), 25 N. E. 642.

An omission of the officers of the company to make an assessment which, if made, would produce a fund equal to, or greater than, the claim, would create an obligation against the society the same as if it had funds on hand from which to make the payment. The company cannot lie by and omit to put in operation the means possessed by it to obtain the fund and omit payment because of its own neglected duty. This would be to take advantage of its own wrong, and it would operate as a fraud on the beneficiary under the certificate.1

§ 675. Against voluntary association. Where the bylaws of an unincorporated association provide for the payment of death losses out of the treasury, or, if the funds therein be insufficient, by special assessment against the members, the beneficiaries of any member who dies have no claims as such against the surviving members, but are only entitled to enforce the means of payment provided for by the by-laws."

Freeman v. Soc., 42 Hun (N. Y.), 252. In Earnshaw v. Sun Mutual Aid Society, 68 Md. 465, the court said: "In fact, we have neither found nor been referred to any case in which it has been expressly decided that no action at law will lie against the corporation before an assessment had been made. In Essender v. Mut. Endowment Assessment Associations, 59 Md. 463, and Yoe v. B. C. Howard Masonic Mut. Ben. Soc., 63 Md. 86, the certificates were of the same character as in this case and the actions were at law, but no objection was made to them on that gronnd. In Eggleson v. Centennial Mut. L. Ass'n, 18 F. 17; 19 F. 201, the iustrument contained a clause that the only action maintainable upon this policy shall be to compel the association to levy the assessments herein agreed upon, and the decisions were based exclusively on that clause. And in Smith v. Covenant Mut. Ben. Ass'n, 24 F. 685, the opinion, as we read it, concedes that an action at law would lie if it was grounded upon a refusal by the company to make the assessment." The court has made a mistake as to the effect of Smith's case, cited supra. That case holds that "to maintain this action (at law) it must appear that the association has in its hands the money collected by assessment, which it ought to pay to the plaintiffs as the benefi ciaries entitled to the same. If the association has failed to make the required assessment, or, having made an assessment, has failed to collect the same, the plaintiffs' remedy is in some other form of action or proceeding."

2 Hammerstein v. Parsons, 38 Mo. App. 332. Much material for the suc

§ 676. Amount of recovery.-The recovery should be for the maximum amount insured, unless the defendant shows by pleadings and proof that such sum should be reduced. Where a by-law provides that on the death of a member, when there is not enough money in the treasury to pay the claim, there shall be an assessment on the members, from which, if it is sufficient, the claim shall be paid in full, and it appears that on the death of a member the corporation wrongfully refused to make such assessment, and that, if made at the proper time, the assessment would have paid the claim in full, it is proper, when afterwards decreeing that such an assessment should be made, to direct that, if the assessment prove insufficient to pay the claim in full, the association shall make up the deficiency.

Plaintiff

ceeding sections and notes of this chapter was afterwards used by the author in the preparation of an article for the Am. & Eng. Encycl. of Law.

1 Lawler v. Murphy, 58 Conn. 294; 20 Atl. 457; Elkhart Mut. Aid & Relief Ass'n v. Houghton, 103 Ind. 286; Bailey v. Mut. Ben. Ass'n, 71 Iowa, 689; s. c. 53 Am. Rep. 514; Kaw Life Assn. v. Lemke, 40 Kan. 142; Excelsior Mut. Aid Ass'n v. Riddle, 91 Ind. 84; Leuder v. Hartford L. & A. Ins. Co., 4 McCrary (U. S.), 149; S. C. 12 F. 465. See also, Ball v. Granite State Mut. Aid Ass'n, 64 N. H. 291; 9 A. 103; Newman v. Covenant Mut. Ben. Ass'n, 72 Iowa, 242; 33 N. W. 662; Metropolitan Safety Fund Accident Ass'n v. Windover (Ill.), 27 N. E. 538.

2 Union Mut. Acc. Ass'n v. Froward (Ill.), 25 N. E. 642. A declaration containing no allegation of neglect to make the assessment provided for, and assigning no breach, except of a promise to pay the face value of the policy, is fatally defective, and is not cured by the verdict. Curtis v. Mutual Ben. Life Co., 48 *Conn. 98. But where a mutual company, organized upon the assessment plan, issues certificates in which it is agreed, in case of the death of the insured, to make an assessment on policy-holders in good standing within 90 days from proof of death, and to pay the sum collected thereon, less 10 per cent. on said death loss, provided, however, that in no case shall the payment exceed $5,000; and where it is shown that at the date of the death of the insured there were certificates in force on which, had the assessments been made and collected, the full amount named could have been realized, and that no assessments were made within the time provided for, the beneficiary is entitled to a judgment against the company for the maximum amount named, and a petition alleging such facts states a cause of action. Kaw Valley Life Ass'n v. Lemke, 40 Kan. 142; 19 P. 337.