for such emergency fund shall also be for the purpose of paying death losses, etc." The by-laws adopted by the association gave to the executive committee power to levy all premiums and assessments. They provided that all policy holders, and none others, should be members of the association, and at all meetings each member should be entitled to one vote. The aim of the association was to furnish life indemnity, at cost, on the plan hereinafter set forth. They provided that a mortuary call, payable quarterly or annually, to provide a mortuary fund for the payment of death claims, should be according to the following rates at entry: (giving a table of increasing quarterly and annual rates.) They further provided that an emergency reserve fund, to meet death claims in excess of the mortuary fund, should be raised in the same way and time by the payment of 25 per cent. of such mortuary call; and this, together with $3 for annual expenses, should constitute the premium rates for each $1,000, of insurance. Should the emergency fund, or any part thereof, be used as aforesaid, its impairment shall be made good by an assessment in addition to the regular mortuary call. Article 6, § 1, required regular assessment notices to be served. In case of the impairment of the emergency reserve fund from any cause, the same shall be made good by an assessment against each member of the association according to the rates of the mortuary call. Section 2 declared that "if any policy holder shall fail to pay the amount of his or her premium or assessment, the policy shall lapse."

On November 22, 1892, David J. Hayden, a resident of St. Louis, Mo., made application for insurance in said Merchants' Life Association, and a certificate in the sum of $5,000 was issued to him. The policy expressed to be issued "in consideration of all premiums and assessments, as stated in the Insurance Plan endorsed hereon"; and provided that, "if any premium or any assessment called in accordance with said Insurance Plan, shall not be paid on or before the day named in the notice for the payment thereof," the policy should become null and void. The policy also contained this provision: "The Mortuary Call payable quarterly or annually to provide a Mortuary Fund for the payment of death claims shall be according to the following rates at entry." This is followed by a table of entry rates, both quarterly and annually, increasing annually from the ages of 20 to 55; which table is then followed by this provision:

"An Emergency Reserve Fund to meet death-claims in excess of the Mortuary Fund, shall be provided in the same way and at the same time by the payment of 25 per cent of said Mortuary Call; and these, together with three dollars for Annual Expenses, shall constitute the premium rates for each one thousand dollars insurance.

"Should the Emergency Reserve Fund, or any part thereof, be used as aforesaid, its impairment shall be made good by an assessment in addition to the regular Mortuary Call."

The assured made the payment required of him by the policy up to June, 1899, when the defendant in error, the Franklin Life Insurance Company, a corporation of Illinois, reinsured the Merchants' Life Association, being authorized thereto by section 7904, Rev. St. Mo. 1899, which provides that: "No corporation of this state, organized or doing business under the provisions of this article, shall transfer its risks to or re-insure them in any other corporation, unless the contract of transfer or re-insurance is first submitted to and approved by a two-thirds vote of a meeting of the insured, called to consider the same, of which meeting a written or printed notice shall be mailed to each policy or certificate holder, at least ten days before the day fixed for said meeting; and in case said transfer or re-insurance shall be approved, every policy or certificate-holder of said corporation who shall file with the secretary thereof, within five days after said meeting, written notice of his preference to be transferred to some other corporation than that named in the contract, shall be accorded all the rights and privileges in aid of such transfer as would have been accorded under the terms of said contract had he been transferred to the corporation named therein; but no such transfer shall be valid until the terms and conditions shall have been fully submitted to the superintendent of the insurance department, and have been approved by him." This contract of reinsurance was approved by the

State Superintendent of Insurance. The contract of insurance between the two insurance companies was evidenced as follows: On the 18th day of May. 1899, the Franklin Life Insurance Company submitted a written proposition to the Merchants' Life Association, so much of which as is material to this controversy is as follows:

"May 18th, 1899.

"To the Merchants' Life Association-Gentlemen: We make you the following proposition of reinsurance:

"In consideration of the transfer to us of all your money securities, assets, and property of every kind, together with all your books and records, the value of said assets being shown by Exhibits of Assets hereto attached, and of the transfer to us of all your outstanding policies, with all premiums due or to become due thereon, and with your recommendation that the policy holders continue their insurance with us and on the complete substitution (so far as lies in your power) of this company in place and stead of the Merchants' Life Association we will:

"First. Assume outstanding policy contracts, as shown by the two exhibits of policies in force, of date May 13, 1899, hereto attached and all obligations to policy and beneficiaries, thereunder," etc.

On the 19th day of May, 1899, the said Franklin Life Insurance Company sent to the Merchants' Life Association an explanatory note stating: "Referring to the proposition made by us to your association under date of May 18th, 1899, and especially in reference to the clause of the first paragraph relating to 'the transfer to us of all your outstanding policies,' we desire to say that we mean thereby that your officers and directors shall use their best efforts and influence to induce your policy holders to transfer their insurance to our company." It was stipulated between the two companies that a period of 20 days from May 20, 1899, be extended to the policy holders for the expression of a desire to be reinsured in some other company than said Franklin Life Insurance Company, as provided they may do by law. On the 12th day of June, 1899, the Franklin Life Insurance Company, in writing. assumed, "under and according to the terms and conditions thereof, policy or certificate No. 1140, issued by the Merchants' Life Association of the United States Nov. 22nd, 1892, to David J. Hayden of Saint Louis, Mo., for $5,000 payable to Mary F. Hayden and Annie E. Hayden, or the survivor of them, sisters of the insured." Thereafter, on June 15, 1899, the insured paid to the said Franklin Life Insurance Company the payment due on that day, and also on September 15, 1899. The insured thereafter failed and refused to make any further payments, though duly notified, up to the time of his death, which occurred on the 28th day of June, 1901.

This suit was brought by the plaintiff in error, as the beneficiary under the policy, to recover thereon the sum of $5,000 against defendant in error, on the theory that the policy in question was of the nature of an ordinary life insurance policy on the level premium plan, fixed at the date of entry, and that what is known as the "Nonforfeiture Law" of Missouri applies to the policy, which provides that: "No policies of insurance on life hereafter issued by any life insurance company shall, after the payment upon it of three annual premiums, be forfeited or become void by reason of non-payment of premiums thereof, but it shall be subject to the following rules of computation, to-wit: The net value of the policy, when the premium becomes due and is not paid, shall be computed upon the American Experience Table of Mortality, with four and one-half per cent interest, and threefourths of such net value shall be taken as a net single premium for temporary insurance for the full amount written in the policy, and the term for which said temporary insurance shall be in force shall be determined by the age of the person whose life is insured at the time of default of premium and the assumption of mortality and interest aforesaid"-the claim being that the policy possessed a net value at the time of the death of the assured to extend it beyond that period. The answer, inter alia, alleged that the policy lapsed on the 26th day of November, 1899, and denied that it had any net value sufficient to carry it for the period of 5 years and 184 days, as claimed in the petition. It alleged that the Merchants' Life Association

was a mutual association, organized under the statutes of the state of Missouri on the assessment plan, and that only members of said association should be policy holders. It then pleaded the constitution and by-laws, as hereinbefore set out. It alleged that the policy was indorsed as an insurance plan, and set out the provisions respecting the rates specified for mortuary calls, the rates at the age of entry, and alleged that the rates were increased each year after entry; that in October, 1899, the emergency reserve fund became impaired by reason of its use for the purpose of meeting death claims in excess of the mortuary fund; that on the 26th day of October of that year the defendant made a special assessment to cover said impairment, amounting to $55.20 against said assured; that due notice thereof was given to him, said assessment becoming due on the 26th of November, 1899; that his failure and refusal to pay said assessment caused said policy to lapse; that the regular quarterly assessment thereon of $25.30 became payable December 15, 1899, of which due notice was given to the assured November 13, 1899; that his failure to pay said assessment on or before December 15, 1899, forfeited said policy; that the net single premium for temporary insurance for the full amount of said policy from the date of lapse to the date of death was in excess of the net value of the policy, and that said assured was asked to restore said policy by making payment of said assessment, which he refused to do. The plaintiff tendered the general issue in the reply. The testimony of actuaries, as insurance experts, was introduced on the question as to whether or not said policy had any net value at the time of the death of the assured. The parties submitted a written stipulation as to certain facts involved, which concludes as follows: "It is agreed between the parties that the primary question for determination is whether upon the foregoing facts the non-forfeiture law of Missouri is applicable to this case; that if not applicable defendant is entitled to judgment; that if said statute is applicable then the further question is to be determined whether the policy in suit has any net value under such statute and what that value is, and whether threefourths of such net value was sufficient to carry said policy under the provisions of said non-forfeiture statute from the date when said policy lapsed to the date of the death of said David J. Hayden. If said non-forfeiture law is applicable and said policy had such net value, that three-fourths thereof would under the statute continue said policy in force from the date of lapse until the date of death, then the plaintiff is entitled to judgment, unless the court finds for defendant on the second defense pleaded in the amended answer. If the policy had no net value, or if three-fourths thereof was insufficient to carry said policy from date of lapse to date of death, then defendant is entitled to judgment, and on the question of the character of the policy and its value, either party is entitled to introduce evidence." At the conclusion of the evidence, under direction of the court, the jury returned a verdict for the defendant. To reverse the judgment entered thereon, the plaintiff below prosecutes this writ of error.

F. H. Sullivan (P. T. Barrett, George M. Block, and Charles Erd, on the brief), for plaintiff in error.

James C. Jones (Jones, Jones & Hocker, on the brief), for defendant in error.

Before SANBORN and VAN DEVANTER, Circuit Judges, and PHILIPS, District Judge.

PHILIPS, District Judge, after stating the case as above, delivered the opinion of the court.

The first error assigned by the plaintiff is predicated on the action of the trial court in admitting in evidence the articles of association and by-laws of the Merchants' Life Association. The objections to the former are that they are not parts of the contract of insurance, and the defendant's liability is to be determined by the terms of the original

136 F.-19

policy, which does not refer to the charter. A like objection was interposed to the admission in evidence of the by-laws.

The principal cases cited in support of these objections are McDonald v. Life Ass'n, 154 Mo. 628, 55 S. W. 999, Elliott v. Life Ass'n, 76 Mo. App. 566, and Taylor v. Etna Insurance Company, 13 Gray (Mass.)

438.

In the McDonald Case the insurance company, an Iowa corporation, being authorized to do business on the "assessment plan" in the state of Missouri, in order to show that the policy in suit was issued on the assessment plan, offered in evidence its articles of incorporation and bylaws. Of this the court said:

"The policy did not refer in any manner to the articles of incorporation or to the by-laws, and hence they constitute no part of the contract. Elliott v. Ins. Co., 76 Mo. App. 566. Nor were they pleaded in any manner, and therefore they were inadmissible."

The case of Elliott v. Insurance Company, cited by the Supreme Court, does not set out in detail the policy in question. It is inferable, however, from the recitations in the opinion, that there was nothing on the face of the policy or the reverse side thereof to indicate that it was other than an ordinary life insurance policy. The articles of association and by-laws were excluded on the ground that the contract of insurance did not make them a part of the contract, and they were not referred to therein.

This ruling, evidently, was based upon what was said by Metcalf, J., in Taylor v. Etna Life Insurance Company, 13 Gray, 434, 438. The policy in question in that case was an ordinary life insurance contract. On the question of proofs of loss, in order to show that the contract of insurance had not been complied with, the defendant put in evidence a pamphlet issued by the insurance company, usually delivered to its policy holders, which required that a certificate of death should be furnished from the attending physician. This was excluded, on the ground that the policy did not embody or refer to any by-law, requisition, or understanding of the defendant's as to the character of proof required of the death of the assured. "He is bound only by the policy itself; that is, to furnish 'due proof' of the death. If the defendants would have bound the plaintiff by their by-laws, etc., they should have made the policy, in terms, subject to those by-laws, or in some way have made them a part of the contract contained in the policy." Citing Kingsley v. New England Mutual Fire Insurance Company, 8 Cush. 393, 403.

The policy under review here, after referring on the reverse side. to the mortuary call, payable quarterly or annually, to provide a mortuary fund for the payment of death claims, etc., expressly provides that "should the Emergency Reserve Fund, or any part thereof, be used as aforesaid, its impairment shall be made good by an assessment in addition to the regular Mortuary Call." This of itself was sufficient to advise the policy holder that he was amenable to an assessment in addition to the regular mortuary call, which characterized its policy as being on the "assessment plan." As the manner of making such assessments was not pointed out on the face of the policy, and such assessments in their very nature being mutual among the associated menibers,

the law refers the policy holder to the articles of association and bylaws as incident to such policy contracts. It is the generally recognized rule of law in respect of all mutual insurance companies that the charter and by-laws are a part of the insurance contract, and as binding upon the assured as the conditions of the policy itself. To them the constituent members must measurably look to discover their duties and obligations. 3 Am. & Eng. Enc. of Law (2d Ed.) 1081; 16 Am. & Eng. Enc. of Law, 867. Hence it has come to be regarded as the general American rule that the provisions of the stipulated articles and by-laws of such associations are elements of the contract of insurance. As said by the Supreme Court of Indiana, in Supreme Lodge v. Knight, 117 Ind. 489, 20 N. E. 479, 3 L. R. A. 409:

"They are factors that cannot be disregarded. That they have this effect, all who become members of the association must know. A person who enters an association must acquaint himself with its laws, for they contribute to the admeasurement of his rights, his duties, and his liabilities. It is not one by-law or some by-laws of which the member must take notice, for he must take notice of all which affect his rights or interests."

In Simeral v. Dubuque Mutual, etc., 18 Iowa, 319-322, the court said:

"This policy was issued by a 'mutual insurance company,' and the assured, becoming a member by virtue of his insurance, was bound to know the articles of association and by-laws thereof."

The Supreme Court of Georgia, in Barbot v. Mutual Reserve Fund Life Association (Ga.) 28 S. E. 498, 503, said:

"This being a mutual association controlled by its members, and each bearing his share of the burdens for the benefit of the whole membership, the contract of a member is different from an ordinary life insurance policy. The latter is held to be the contract which determines the rights of the company and the insured, and to be the whole of the contract; but inasmuch as both the benefits and the burdens in a mutual society are to be equal and bearing on all its members alike, it is well settled that the certificate of membership is only a part of the written evidence of the contract, and that in such a society the charter or constitution and by-laws in force at the time of the admission of a member are terms of an executory contract, and that by entering the society the member assents to all such terms, and that they each become a part of the contract of insurance, whether they are incorporated in or referred to by the certificate of membership or not."

See, also, May on Insurance, § 552; Supreme Commandery v. Ainsworth, 71 Ala. 436, 443, 46 Am. Rep. 332; Bliss on Life Insurance, § 426, et seq.; May v. New York Safety Reserve Fund Soc., 13 N. Y. St. Rep. 66; In re Equitable Reserve Fund Life Association, 131 N. Y. 354, 368, 30 N. E. 114; Sulz v. Mutual Reserve Fund Life Association, 145 N. Y. 563-568, 40 N. E. 242, 28 L. R. A. 379; Woodfin v. Insurance Company, 51 N. C. 558.

Counsel for plaintiff in error in their brief say:

"The original contract of insurance, while providing for fixed and level premiums, also provided for future assessments at uncertain times and in uncertain amounts."

This of itself is a concession, in contemplation of law, that the insurance company was a mutual association on the "assessment plan." The next contention on behalf of plaintiff in error is that the stipulat