124 Iowa 643 | Iowa | 1904
The Equitable Mutual Life Association of Waterloo, Iowa, was organized in conformity with the provisions of chapter 65 of the Acts of the Twenty-Eirst General Assembly, now incorporated in the Code as chapters 7 and 8 of title 9. Hnder section 4 of that chapter (now section 1787 of the Code) the president, George W. Harbin, executed a bond with a penalty of $5,000, March 4, 1896, covering the year following, and another on March 2, 1897, covering a like period, with H. B. Allen and W. L. Illingworth as sureties. The condition fixed by the statute was for the faithful performance of his duties. That of each bond reads: “Now, if the said Geo. W. .Harbin as president shall render a true account of his office and of his doings therein to the proper authority when required thereby or by law, and shall promptly pay over to the person or officer entitled thereto all money which may come into his hands by virtue of his office, and shall promptly account for all balances of money which may come into his hands by virtue of his office, and shall promptly account for all balances of money remaining in his hands at
In the exigencies of actual experience, however, it was found that nothing ever remained, and in keeping the books the officers ignored the divisions of the moneys as above indicated, and treated all contributed for these purposes as a part of the beneficiary fund. These sections indicate very plainly, however, that the net proceeds of an assessment and the equitable portion of stipulated premiums collected were intended to' be paid the beneficiary. This is confirmed by the seventeenth by-law: “ At the death of a member the beneficiary shall be entitled to receive the sum insured from an equitable proportion of the net proceeds of assessment upon all members liable therefor, at the schedule rates named in the by-laws for the payment of a eMm of said amount, and an equitable proportion- from the funds named in article 11.” The funds mentioned in article 11 are the same as those covered by the sections quoted. It was amended by adding another section to the effect “ that all mortuary claims shall be paid from the mortuary fund as promptly as practicable without awaiting the collection of any particular assessment therefor.” This necessarily presupposes that something was in the mortuary fund to be paid in advance of an assessment. This was not true during any period of time involved in this investigation. There was never enough on hand to pay the losses for which assessments had been made, to say nothing about paying a loss in advance of an assessment. The sources from which means were procurable for the payment of indemnity were the assessment of members
Turning now to the policies, it will be found that many of them stipulated for payment to the beneficiary of the net proceeds of “ one assessment on all members,” or a percentage thereof clearly indicated; that it was proposed to give such beneficiary the advantage of a specific assessment for his benefit. The different kinds of policies will be referred to hereafter. The assessments were made so as to lead the members to believe that in paying the same they were contributing. to the death losses enumerated in the notices. Prior to June 10, 1895, these notices, after naming the assured for whose death assessment was made, added: “ The net proceeds of assessments are to be used to pay .claims for which issued, the balance to be placed in endowment or reserve fund.” This was eliminated at that time, and in all notices thereafter * issued these words substituted: “ The net proceeds of assessments are to be used to pay death claims, balance to be placed in endowment fund.” As already indicated, there was never anything for either the endowment or reserve fund, and no such accounts were kept. A sample of notices sent out may be of interest:
*651 Certificate No. - Assessment No. 63.
Office of EQUITABLE MUTUAL LIFE ASSOCIATION.
Waterloo, Iowa, Jan. 1st, 1896.
M-
Proofs of death of the following members of the Association have been received, and, by orde’ of the Board of Directors, an assessment at schedule rates for each is levied upon all members in good standing at date of death, payable one-half on or before Feb. 1st, and balance March 1st, 1896.
The amount of your assessment for the above deaths is $- .
No Other Deaths Reported at Date of Printing Notice, December 15» 1895.
The net proceeds of assessments are to be used first to pay death claims» balance to be placed in the endowment and reserve funds.
For what death claims were these assessments made? Would anyone suppose any other than these mentioned were intended? If so, why mention these? Any person of ordinary prudence, upon reading this notice, would have .con-eluded that assessments at the rate per member provided in the articles was demanded to pay the particular losses mentioned. At one time the State Auditor appears to have suggested that it was the duty of the association to pay losses promptly, aiid in full, from its mortuary fund, thereby avoiding the possibility of expense from litigation. Undoubtedly,, this was on the theory that it had a reserve fund from which to pay. Such a fund is contemplated by the statute quoted,, but Harbin well knew at the time that this association had
VI. During the period of the first bond there was paid from the beneficiary fund, on orders signed by Harbin, for attorney’s fees, for expenses of litigation, and the investigation of claims $519.20, and during period covered by the second bond $1,586.85. Recovery is asked for these amounts on the ground that neither the association nor its officers had the right to use the money from that fund for any purpose other than the payment of indemnities. This may be conceded. But, if so taken, these sums were from moneys belonging to beneficiaries under policies by virtué of which the assessments were made and stipulated premiums paid, and no recovery may be had save for their benefit. As all of such claims but three have been satisfied, and liability for these is adjudged under another division of this opinion, no further attention need be given this matter. The contention that the receiver’is estopped from recovering overpayments is disposed of by what is said in Sherman v. U. S. Fidelity & Guaranty Co., (decided at the present term).
It follows that the judgment must be reversed unless