83 Md. 83 | Md. | 1896
delivered the opinion of the Court.
The Order of the Iron Hall is a beneficial association and was incorporated under the laws of the State of Indiana. A bill was filed in the Superior Court of Marion County of that State by Albert R. Baker and others against said corporation for the appointment of receivers and for its dissolution and winding up. On the 23rd of August, 1892, the appellant, James F.’ Failey, was appointed receiver of the said corporation, with power to receive all its property of
■ It thus appears that the only question presented is as to the correctness of the allowance of the attachment claims, and this depends mainly upon the further question whether these claimants are to be considered as members of the Order, or, being holders of 'matured certificates, they are to be considered creditors. If they are members they must, as was decided by the Court below, go to Indiana and seek payment from the receivers appointed there. From this decision no appeal has been taken, and all of the funds which were in the hands of the Maryland receivers have been transmitted to Indiana, except the sum involved in this particular controversy, which, as we have seen, was ordered to be retained here to pay creditors, and not members, in this State.
The appellant bases his claim to the fund in question upon the following grounds: First, that the attachments were premature, the benefits claimed under the matured certificates not being payable at the time the attachments were issued. Second, that the holder of a matured certificate does not become such a creditor upon the maturity of his certificate as to enable him to attach the funds of the association when insolvent, nor such a creditor as is contemplated by the rule, that requires domestic creditors to be paid before sending the fund out of this jurisdiction; and, lastly, that the contract with the order relied on by the holders of matured certificates is not capable of performance, and will not, therefore, be recognized or enforced in a Court of Equity.
We will first consider the nature of the contract which is found in the policy or certificate issued by the Order to each of its members, and one of which is held by and is the basis of the claims of each of the appellees. Without setting forth the certificate in full, it is sufficient for the present purpose to .say in general terms that it provides that the holder shall be a member of the Order, entitled to all the rights
Cash on hand..........$ 715,577.33
Notes and other securities...... 33,148.68
Real estate........... 25,325.00
Money deposited in bank...... 7I3>333-7°
Reserve fund in various States and Canada . 1,238,643.18
making a total of nearly three millions of dollars. He says, however, that he believes he would not be able to
The case of Bordley et al. in the matter of the estate of the Order of Tonti, lately decided in the Supreme Court of Pennsylvania and not yet reported, adopts the report of the auditor made in the Court from which that case was appealed and supports the view so strongly urged by the appellants in regard to the nature of the contract. But it seems to us that there is a broad distinction between the contract itself and the mode which the parties may adopt to execute it. The contract may be perfectly valid and capable of execution, while the scheme adopted to execute it may be impracticable, but it does not necessarily follow that the fatal defects of the latter attach to and totally destroy the contractual rights secured by the former. The contract here, is not, as suggested by the appellants, to pay one thousand dollars at the end of the seven years upon the payment in the meantime by the member of certain assessments which could not upon any calculation produce five hundred dollars, but it was to pay a sum not exceeding a thousand dollars within seven years upon the payment during that time of all lawful assessments and-the
If, then, we are correct in supposing that the contract is still in existence, what are the rights of the appellees, the holders of matured cetificates of membership of the said Order. This brings us to the consideration of the second reason upon which the appellant rests his claim, namely, that the appellees as such holders of matured certificates do not become such creditors upon the maturity thereof as to attach the funds of the Order when insolvent, or to give them any standing to demand that they be paid before sending the fund to Indiana. But the weight of authority is against this view. In 2 Bacon on Benefit Societies and Life Insurance, sec. 478, it is said: “ In mutual companies, claims founded on policies matured before the receivership are to be preferred to claims on policies not matured, for the maturity of the policy changes the status of the policy-holder. He stands to the company in the same place that a creditor stands to the firm ; he is to be preferred to members of the firm.” The same principle is announced in the case of Vannatta v. The New Jersey Mut. Life Ins. Co., 31 N. J. Eq. Rep. 19. In the case just cited, it was urged that the holders of unmatured certificates and the holders of unpaid matured certificates should stand upon the same plane, but this contention was thus disposed of: “The difference,” said the
Some question has been made as to the effect of the insolvency of the Order on the claims of the appellees, but it does not appear to'us that the validity or status of the claims can be affected by an insolvency which did not exist until after the maturity of the certificates. Being creditors the insolvency of the order would have no more effect upon their claims than upon those of any other creditors. When the certificates matured the holders thereupon became creditors, and they remain so notwithstanding the subsequent insolvency of the Order.
But again, it was urged that the attachments cannot stand because they were issued on claims of uncertain amounts, the certificates held by the attaching creditors not providing for the payment of any definite sum of money, but for a sum not greater than one thousand dollars. It appears, however, by the agreed statement of facts found in the record, ‘J that at the time when the receivers were appointed there was an amount of money in the hands of the Order sufficient to pay all the matured certificates at the time when the same
Finally it was urged that the attachments were prematurely issued, because the benefits were not payable at the time those proceedings were instituted. This view is based upon the theory that the time for payment specified in the certificate is controlled by the provisions of a by-law regulating the time of payment, which it is conceded was adopted subsequent to the issuing of the certificates. The latter provides that upon certain conditions which have been complied with, benefits shall be paid at the end of seven years, while the by-law provides that such benefits shall, when found correct, be adjusted within ninety days from the expiration of the certificate. While it is true the certificate is accepted subject to all laws which might, after its date, be enacted by. the Order, yet inasmuch as by the third section of the charter it is provided that benefits shall be paid as may be provided either by the by-laws or in the certificate of membership, the provision as to time of payment when found in the latter should govern. In the recent case of Cohen v. Order of Iron Hall, 63 N. W. Rep. 304, in construing a similar certificate, it was said: ‘ ‘ The reference to the laws of the association in the present case cannot be said to relate to the time of payment, but rather to the affirmative obligations assumed by the holder of the certificate; especially is this so, in view of the fact that the articles of association expressly provide that the amount shall be paid as may be, provided in the by-laws or in the certificate. The fundamental law, therefore, recognized the time of payment as fixed by the certificate, and the by-laws subsequently passed applied only to such certificates as by their terms made the
It follows that the order appealed from must be affirmed.
Order affirmed toith costs.