Smith v. Bown

The controversy here submitted is between the receiver of a dissolved co-operative assessment insurance company, organized under chapter 175 of the Laws of 1883, and one of its members, and presents the question whether, by becoming such member, the defendant contracted a liability to pay dues and assessments which can be enforced at law, or whether, on the other hand, Ms liability was limited to a forfeiture of his membership on his neglect or refusal to pay. The question, of course, is one of contract, and the inquiry is, what was the contract between the parties ?

The only reported case in this State in which the question of liability to pay was directly adjudicated was that of McDonald v. Ross-Lewin ( 29 Hun, 90 ), which was a case in our own department in 1883. In this case the court found a contract to pay and held the member liable to an action to recover the first of the assessments on which he made default, but held that his default at the same time worked a forfeiture or termination of his membership, and that he was not liable to pay any further assessments. The defendant’s application in that case contained the clause “ and in case a certificate is granted on the statements and good faith of the above declarations, I hereby agree to accept and pay for the same,

Tlie only other case in this State in which the question of the member’s enforcible liability to pay' assessments was considered, though not involved in the action, was that of The Matter of The Globe Mutual Benefit Association ( 63 Hun, 263 ). The question there presented was whether it ivas competent for associations of this character to insure infants. It was held not competent, and by a majority of the court, in an opinion by O’BexeN, J., for the reason that there was necessity for a mutual contract between the association and the member, of which the infant ivas incapable; and the case of Ross-Lewin (supra) was cited as authority for the proposition that there is a contract on the part of the member to pay his assessments upon which an action will lie. Van Brunt, P. J., dissented from the ground of the decision above stated and expressed an opinion that the member assumed no obligation to pay, but that the extent of his liability was to forfeit his membership for non-payment. In affirming the judgment of the Supreme Court, the Court of Appeals ( 135 N. Y. 284 ) in the language of Andrews, J., said: “ AVe place our assent to the judgment below on the ground that it appears from a consideration of the statute of 1883, and the nature and object of co-operative insurance companies, cmd the relation which members hold to the corporation, that adult persons only were contemplated as entitled to be members.” It is not made clear what the court consider to he the relation which members hold to the corporation, but the decision certainly does not condemn or disapprove the views held by the majority of the court below, nor the conclusion of the court in the case of Ross-Lewin (supra). The latter case, therefore, stands, so far, unquestioned as authority, and we feel ourselves bound to follow it so far as the facts of this case bring it within the reasoning and the rule there adojhed.

The only question here is, therefore, wras there in the contract between the association and the member in this case, a promise, either expressed or reasonably-to be implied, to pay the assessment, so called, which is in question in this action. And the first remarle we feel inclined to make is that the payment in question was not in any true or proper sense an assessment at all, but a regular bi-m'onthly due, the amount and time of payment of which were

The provision for it is found in article 20 of the by-laws, and is as follows : “ § 4. Assessments will be levied on the first working-day of February, April, June, August, October and December of each year; and will fall due on or before the first of the month following, and based on the following: ” and here follows a table of “ rates,” from which it appeared that the regular bi-monthly payment required of the defendant (determined by his age and the “ number of shares ” held by him) was five dollars and sixty cents. Here, it is apparent, was no “ assessment” to be “levied ” on the bi-monthly dates above mentioned, but that, by whatever process the amount was arrived at, it was done once for all when the by-law and the accompanying table were adopted.

Looking further for evidence of a contract to pay on the part of the member, we find that section 1 of article XY of the by-laws prescribes'the form and contents of the certificate of membership and, among other things, that it “ shall contain the specified terms of the agreement or contract between the association and the member to whom it is issued,” and turning to the certificate itself, issued to the defendant, we find its first clause to be as follows: “ For and in consideration of the representation made to it in the application for this certificate, and the sum of twenty-five dollars to it in hand paid, and the further sum of five dollars and sixty cents to be contributed bi-monthly * * * do hereby constitute George G. Down * * * a member of this association, in Class B.”

Here was, unquestionably, sufficient evidence of a contract obligation on the part of the defendant to pay the bi-monthly five dollars and sixty cents — whether it be called an assessment or a due — to bring the case within the doctrine of the case of Ross-Lewin.

The further question is raised by the submission — whether the