Gray v. Daly

The United States Mutual Accident Association of the City of New York was an assessment accident insurance company, organized under chapter 175 of the Laws of 1883 of this state, and transacting business under chapter 690 of the Laws of 1892. On the 26th day of June, 1895, the corporation was dissolved by judgment of the supreme court, and the plaintiff appointed permanent receiver thereof. The defendant, Daly, was a member of the association continuously from the 22d day of May, 1894, to and including the 22d day of February, 1895. During said period valid claims accrued against the association, of which there remains unpaid the sum of $193,461.53. Daly’s share of such liability, in proportion to the whole amount of insurance remaining unpaid on the dissolution of the association, would be $4.68. On June 10, 1896, an order was made by the supreme court authorizing the plaintiff, as receiver, to levy an assessment upon Daly for said last-named amount, and ratably upon the other members of the association. The controversy submitted is as to the right of the plaintiff to recover of Daly the amount of the assessment imposed on him under the facts above stated, and the insurance certificate and by-laws of the corporation, and the application of the member, which are made part 'of the submitted case.

Whether an action will lie against members of a benefit association to recover the amount of assessments levied upon them, in the absence of an express agreement to that effect, is in doubt. The weight of authority outside of this state is that payment by the members is optional, the sole penalty for a failure to pay being forfeiture of the-membership. In re Protection Life Ins. Co., 9 Biss. 188 , Fed. Cas. No. 11,444; Association v. Hunt, 127 Ill. 257 , 20 N. E. 55 ; Farmer v.. State, 69 Tex. 561 , 7 S. W. 220 . In the supreme court of this state i the weight of authority is the other way (McDonald v. Ross-Lewin, 29 Hun, 87 ; In re Globe Mut. Ben. Ass’n, 63 Hun, 263 , 17 N. Y. Supp. 852 ; Smith v. Bown, 75 Hun, 231 , 27 N. Y. Supp. 11 ), though the-

“Members of this association may at any time resign, thereby relinquishing all claims upon, or privileges under, said association: provided, however, that all dues and assessments shall have been paid to the date of the resignation.’”

The agreed statement of facts does not show how the membership, of the defendant was terminated on the 22d day of February, 1895,— whether by resignation or otherwise. We do not deem the omission) material, as we think the rights and liabilities of a member whose membership is terminated in any manner must be the same as if that termination were by resignation. If the manner in which the defendant ceased to be a member has any bearing on the question of his-liability, we must make the assumption most favorable to the defendant. By the by-law referred to, it is seen that the member had the-absolute right to resign his membership, provided he paid all dues; and assessments levied up to that time. There is no claim here that the assessment for which a recovery is sought was imposed before-the defendant ceased to be a member. Therefore, so far as we can-see, he has discharged all of his liability to the association. The learned counsel for the plaintiff insists that the liability for which» the assessments were made accrued while the defendant was still a> member. This is true; but the condition on which the defendant-had the right to resign was not the discharge of any share of the liabilities of the association, but the payment of any assessment that" might be levied by the directors. It is contended that this is an unreasonable construction of the by-law, because it is said that the only method of discharging the liabilities of the association was by assessment upon its members. This is not the fact, or, if true, is true only-in a qualified sense. Under the terms of the certificate issued to' theffefendant, he was required to pay the sum of six dollars quarterly in-advance as a condition for the continuance of his membership.- The-association saw fit to adopt a nomenclature of its own by which “assessments” and “premium calls” are made interchangeable terms, arafflthe regular advance payment is at times called an “assessment”-; amf the special assessments which the directors were empowered ta levy-

In Re Equitable Reserve Fund Life Ass’n, 131 N. Y. 354 , 30 N. E. 114 , it was held that an assessment made by a receiver of a mutual ¡.¡assessment association was invalid, and that no obligation rested on ufche members of the association to pay it. That case can be distin- ; guis’hed, in its facts, from the one before us; but the principle of the --decision seems to us closely approximate, at least, to that involved an the present one. There the question was as to the right of members who have not paid the assessment levied by the receiver to share an the -reserve fund. While the dispute was over the reserve fund, fit appeared by the case that the assets of the association were insufficient to pay the death claims. We think a decision that the nonpayling-members were, not in default as to the reserve fund necessarily ¡involved the proposition that they were not in default as to the creditors of the association. There is another distinction between the twe cases: In the case cited the amount of the assessment the directors were .authorized to impose in any two months was limited to ¡a ¡qpeeMed sum, and, until the time of the proceedings against the ¿association, .assessments had been imposed up to the. full limit. In

There should be judgment for the defendant on the submitted case, with costs. All concur.