People v. Grand Lodge of Empire Order of Mutual Aid

The defendant was incorporated under chapter 189 of Laws of 1879, with power to make insurance and also to institute subordinate lodges subject to its direction and supervision. In September, 1886, Chas. S. Nickelson became a member of the respondent'corporation and received its certificate, which provided that in the event of his death the sum of $2,000, provided in § 25 of the by-laws of the defendant, $1,000 of wliich, by the terms of the certificate or policy, was made payable to his wife, Mary A. Nickelson, two-thirds of the residue to his daughter, Lucy M., and one-third of such residue to his son, George H. Nickelson.

The assured survived his wife, and on the 18th of January, 1892, died, leaving him surviving George H. Nickleson, Lucy M. Nickelson and Cora E. Moses, his heirs and next of kin, who duly notified the grand lodge of the death of the assured and filed with the grand secretary at the proper office proof of such death, and thereafter the grand lodge assessed the members of the order in accordance with the by-laws upon the death of Charles T. Nickelson and that of John F. Baade, a full rate member of the order, who died previous to such assessment, and on that assessment

After the appointment of such temporary receiver and the receipt by him of such money on this assessment, an order of the court was granted allowing an action to be commenced against the receiver upon the claim of the heirs and next of kin of Charles T. Nickelson, deceased, for the amount of the policy issued to him, and an action was accordingly commenced against the defendant and such receiver, about the 13tli of October, 1892, in which the defendant appeared and obtained an extension of the time to answer, but did not serve an answer.

On the 1st day of November, 1892, an action was commenced in the name of the People by the attorney-general, on the complaint of the superintendent of the insurance department, and his report to the attorney'-general that the liabilities of the defendant were $92,500, while its assets amounted to only about $15,000, as appears by the verified complaint of the attorney-general in this action.

The defendant appeared by an attorney but failed to answer, and on the 26th of November, 1892, application was made for judgment at the special term and judgment was on the 29th of November, 1892, entered in Saratoga county, dissolving such corporation and appointing a receiver of the property of the defendant.

After the entry of judgment the petitioners on this motion served a notice of motion for the 10th of January for an order that they be relieved from all restraint imposed by this judgment, and that they be entitled to take proceedings to enforce payment to them of the sum mentioned in the certificate issued by the defendant to Charles S. Nickelson, deceased, and that the receiver be directed to pay the same to them, or that they be permitted to intervene.

This motion was granted, and the People, by the attorney general, appealed. It will be seen from an examination of above facts and other facts in the case, that this corporation at the time of the commencement and prosecution of this action by the attorney general was an insolvent corporation, with liabilities far in excess of its assets, a fact conceded by the trustees and managers of the corporation by the attempted voluntary dissolution, and that the action prosecuted by the attorney general was but the usual and legal method of dissolving an insolvent corporation and thus accomplishing the result sought in vain to be accomplished by the respondents.

In that action through the receiver all the assets of the corporation can be marshalled and all valid claims against the fund ascertained and determined by and before the referee who was appointed to take proof of claims against such corporation.

But it is insisted by the petitioners that this fund in the hands of the receiver is in the nature of a special deposit, or trust fund, and to the extent of $2,000 belongs to them, and to protect their interest in it, and secure its payment to them, it is necessary that they intervene in and become parties to this action.

The judgment in this action was entered on the 26th day of November, 1892, and by its terms seems to have provided for the closing up of the affairs of this corporation through the agency of the receiver with the aid of the court. The order from which this appeal was taken was entered on the 10th day of January, 1893, and if carried into effect would necessarily greatly hinder the expeditious and economical winding up of the affairs of the corporation. While it is true that the court has the power in the exercise of a sound discretion to allow a party to intervene, the rule seems well settled that in the exercise of that discretion a clear and sufficient reason should appear before such intervention should be permitted, and the exercise of that discretion has frequently been reviewed on appeal.

In the People v. The Globe Mutual Ins. Co., 27 Hun, 539 , the order of the special term allowing two claimants of funds in the hands of the receiver to intervene was reversed by general term of this department, and Learned, J., in delivering the opinion of the court, said: “It is not necessary that these parties should in-

tervene in order to establish their claim against the assets in the hands of the receiver. To secure such assets and to protect and apply the same to their legitimate use is the duty of the attorney general and the receiver. Since the case of Attorney General v. The North American Life Ins. Co., 77 N. Y., 297 , the desire to intervene for all causes and for no cause has become common, and the discretion of the court has been exercised in favor of such applications to the great prejudice of the due and proper administration of the law. Each interven or has a right to appeal, and thereby may greatly delay the proceedings.”

In view of that fact we think the danger of absorption of the fund, against which the learned judge at special term, perhaps justly, objects, would be greatly aggravated rather than mitigated. In the case of the Attorney General v. Continental Life Ins. Co., 90 N.Y., 45 , policy-holders were allowed to intervene, and upon an application for allowance to attorneys, which came before the court of appeals, Finch, J., said: “ These were busy themselves and kept the court busy, their positions changing during the exigencies of the struggle, sometimes fighting each other, now assailing the receiver, and then defending him, until the controversy became greatly involved and the fund seriously imperilled by the alleged effort to defend and increase it”

If can hardly be maintained that intervention in this case was

Nor do we think intervention necessary on the part of the petitioners to guard their interest against any act of the receiver:

He is an officer of the court, and acts under its direction and is answerable to its summary action to prevent any abuse or perversion of his power or authority.

As has been seen, an order was made in this action appointing a referee before whom claims against this corporation can be proved and it also appears from the case that another referee was appointed on this motion to take proof of the claim of the petitioners to the fund in the liánds of the receiver.

We see no necessity for this while the' reference and the judgment to take proof .of claims stands.

All the facts which could be proved before the referee appointed by this order can be proved before the referee appointed under the judgment, and while we believe that either of the gentlemen appointed as referee to take proof of claims is worthy of the fullest confidence, we can see no good reason for suspending the former by the appointment of the latter; nor do we see any necessity for two referees for the performance of substantially the same duty.

On the whole, we think the order appealed from should be reversed.

Order reversed, with ten dollars costs and printing disbursements.

Putnam and Herrick, JJ., concur.