THE MUTUAL ASSURANCE SOCIETY
v.
KORN AND WISEMILLER
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The Mutual Assurance Society sought to impose an additional premium on existing policyholders based on changed risk rates, and the defendants argued that the insurance contract was complete and could not be modified. The Supreme Court held that members of a mutual insurance society are bound by the society's bylaws regarding premium adjustments when circumstances change, even after the initial contract is formed, and therefore the additional premium was properly demanded. The Court established that the ordinary rule preventing modification of completed contracts yields to the particular nature of mutual insurance associations where bylaws may require premium adjustments to equalize risk.
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Johnson, J.
delivered the .opinion of the Court as follows:
In the case decided between. Atkinson and these Plaintiffs, February term, 1810, the question arose on the construction of the 7th section of the act of 1805, and the additional premium in that case was imposed upon a re-valuation without relation to a change in the rates of premium, but resulting from the increased valuation.
In this case the sum demanded arises from the changes made in the rates .of premium, arising from a variation of risk $ to equalize which the 8th article of the present rules of the society requires an additional per centage to be paid by the present members of the company, in conformity to what is to be imposed upon su,bsequent applicants for insurance. And it is contended that the contract being complete between the parties, the insurers cannot add to the consideration to be for insurance. In general this doctrine is unquestionably correct, but peculiar circumstances except this from ordinary cases. This subject was considered in the quoted case decided between these same parties in February, 1810. It is there laid down, and on reflection we are confirmed in the opinion, that in the capacity of an individual of the body corporate the Defendants are bound by the bylaws of the society as far as is consistent with the nature of its institution.
This case is within the 4th section of the 8th article of those by-laws, and therefore the judgment below ought to have b.een for the Plaintiffs.
Judgment reversed.