THE INSURANCE LAW JOURNAL. VOLUME XXVIII. 1899. [NEW SERIES, VOLUME 8.] REPORTS OF DECISIONS RENDERED IN INSURANCE CASES IN THE FEDERAL COURTS, AND IN THE STATE SUPREME COURTS. From certified transcripts in our possession. COURT OF APPEALS OF NEW YORK. PEOPLE v8. GRAND LODGE OF EMPIRE ORDER OF MUTUAL AID OF STATE OF NEW YORK ET AL.* In an action to wind up a benevolent society, the rights of the members to preference in the division of the assets are to be determined by the constitution and by-laws and contracts of the order and by the rights as they existed at the beginning of the action. Where the losses were to be paid from a fund, raised and kept up by assessments whenever a loss was paid, and when needed directly from such assessments, and each claim was for a definite amount, and each assessment notice stated the names of the deceased members entitled to share in the fund, the proceeds do not inure to the special benefit of the beneficiaries of such deceased members so as to make them preferred claimants. Where such assessments had already been paid to previous claimants the beneficiaries could not claim a preference in other funds in the hands of the receiver. Statement of facts by MARTIN, J. The defendant was incorporated by chapter 189 of the Laws of 1879. One of the purposes of its incorporation, as stated in the act, was to aid, assist, and support members or their families in case of want, sickness, or death. It was authorized to create, manage, and disburse a beneficiary fund for the relief of its members, under and in pursuance of such rules and by-laws as it might adopt, Decision rendered, Oct. 4, 1898. not in conflict with the laws of the State, and to employ such fund in paying death losses in the manner provided by its constitution and by-laws, and to such person as the deceased member might, while living, direct. Under this authority it adopted a constitution and by-laws for the regulation and government of its affairs. The powers conferred upon it by statute were exercised by a grand lodge, which was composed of representatives of subordinate lodges and the officers of the former. Under its rules and regulations, the sole power of making other rules and regulations for its government rested in the grand lodge. It had no stock, but its funds were derived from fees, charges, and assessments upon its members. The funds thus obtained were of two classes: One known as the "mutual aid fund," which was obtained solely by assessments upon members of the order, to be used only for the payment of approved and allowed death claims; the other was known as the "general fund," which was derived from a tax upon the members, membership fees, and incidental charges, and was used to defray ordinary expenses. Upon joining the order a member was required to pay into the treasury the sum of one dollar for a full-rate membership, which entitled his beneficiary to $2,000 in case of death, or 50 cents for a half-rate membership, which would, upon his death, entitle him to receive only one-half of the sum named. The money thus paid was to meet the first assessment to which the person paying it should become liable. His liability to assessment and tax ran from the date of his initiation. There was issued to each member a certificate which provided that a member should participate in the mutual aid fund in case of his death to the extent of $2,000 if a fullrate member, or $1,000 if a half-rate member, to be paid to the beneficiary mentioned in the certificate, upon due notice of the member's death, and the surrender of the certificate properly receipted, provided he was in good standing at the time of his death. The constitution and by-laws made it the duty of the officers of the grand lodge to make the assessments, and receive the money paid or collected thereon, which were to constitute the mutual aid fund for the payment of death claims; and it was also their duty to pay such claims from the treasury of that body. Each subordinate lodge was required to keep in its treasury, subject to the order of the officers of the grand lodge, the amount of one assessment. There were two notices of assessment provided for: One to the subordinate lodge, requiring it to forward the advance assessment in its hands, and to assess its members for the amount necessary to pay all death losses mentioned in the notice, and leave one assessment in its treasury; and the other was to the members of the order per sonally. These notices were issued by one of the general officers of the grand lodge. On the first of January, 1892, there was in the treasury of the defendant, to the credit of the mutual aid fund, the sum of $3,708.29, and there were at the time outstanding and unpaid approved death claims to the amount of $26,000, which were paid before the commencement of this action. This action was commenced by the Attorney-General for the dissolution of the defendant, for the forfeiture of its rights and franchises, and to obtain a just and fair distribution of its property among its creditors. A temporary receiver was duly appointed on May 26, 1892; and subsequently, and on Nov. 28, 1892, George W. Maxon was made permanent receiver of the defendant and its property, who thereupon duly qualified, entered upon his duties, and has since acted as such receiver. The funds now in his hands for distribution among the claimants amount to the sum of about $17,000, while the claims established before the referee appointed to take proof and report as to the distribution of the assets of this corporation amount to about $100,000. Upon the trial before the referee, the appellant presented a claim upon a certificate issued to Richard H. Draper, and payable to her, which was passed upon and allowed to be paid pro rata with the other claims which were established before him. Draper died at Buffalo Dec. 10, 1891. At that time he was a member of the defendant company in good standing. Subsequently, due proofs of his death were filed with the proper officers, and the death claim was duly approved and allowed. Thereupon an assessment was made, and notice thereof issued by the grand lodge, which contained a statement of his death and of the resulting loss. The appellant insists that she was entitled to the proceeds of that particular assessment, so far as it was based upon the death of her husband, and, it not having been paid, that, upon the dissolution of the corporation, the sum of $2,000 due upon her certificate became and is a lien upon the funds now in the hands of the receiver, and that she is to that extent entitled to a preference, and to have her claim paid in full out of the assets in his hands. EDWARD L. JELLINEK, for Appellant. MARTIN, J. (after stating the facts). The rights of the parties to this controversy are to be regarded as fixed as of the date of the commencement of this action. In re Equitable R. F. L. Ass'n, 131 N. Y., 354, 369; People vs. Life & Reserve Ass'n, 150 N. Y., 108; People vs. Commercial Alliance Life |