People v. Grand Lodge of the Empire Order of Mutual Aid

Martin, J. The rights of the parties to this controversy are to be regarded as fixed as of the date of the commencement of this action. (Matter of E. R. F. L. Assn., 131 N. Y. 354, 369; People ex rel. v. Life & R. Assn., 150 N. Y. 108; People v. Commercial Alliance L. Ins. Co., 154 N. Y. 95.) It is practically admitted that their rights are tó be governed by the constitution and by-laws of the defendant and its certificate of membership. This court has several times held in similar cases that the constitution, by-laws and certificate, when authorized by law, form the contract upon which the rights of the parties rest. (Matter of E. R. F. L. Assn., 131 N. Y. 354, 369; Wadsworth v. Jewelers and Tradesmen's Co., 132 N. Y. 540; People ex rel. v. Life & Reserve Assn., 150 N. Y. 94.) *538 Therefore, the rights of the parties to this litigation are not controlled by the general rules of equity which regulate the distribution of the funds of an insolvent estate, but the con-, tract of the parties is the measure of their rights and liabilities. The particular question involved upon this appeal is whether, under the contract, the appellant is entitled to the lien or preference claimed. Upon an examination of the constitution and by-laws it is found that a fund was to be created by the defendant, known as the mutual aid fund, out of which all death losses which were allowed and approved were to be paid. This fund was derived from assessments upon members of the order. To the amount of one assessment, it was to be collected before any death claim arose, so that to that extent it was a fund collected in advance and retained for the purpose of paying death losses. If there was one death claim, it was' paid from the existing fund, if sufficient, and an assessment ivas made to replenish it. If there was more than one loss, the officers of the defendant were required to make as many assessments as there were death claims. In this manner the defendant was to create and maintain the mutual aid fund, and when thus accumulated it was to be employed in the payment of all unpaid approved death claims. Thus we see that no particular part of this fund was dedicated to the payment of any special claim. The fund, as a whole, was the source from which all death claims were to be paid in their proper order. If the proceeds obtained from one assessment, with the unexpended portion of the fund - on hand, should prove insufficient to pay all approved death claims existing at the time, the excess o £ the unpaid claims could not be paid until another assessment was made. That the amount to be paid upon each death claim was definite, while the amount to be received from" assessments was uncertain and varying, depending upon the membership for its sufficiency, renders it quite obvious that no particular assessment could be regarded as dedicated to the payment of any particular claim. If the amount received upon one assessment was insufficient to pay the claim of a beneficiary, he would not be required to *539 accept the amount collected in satisfaction of his claim. On the other hand, if the amount of the assessment exceeded the amount of the claim, it is evident that the excess would not belong to the claimant, although the notice might have mentioned the death of the deceased member as the occasion for the assessment. Under this contract the beneficiary of a member upon the death of the latter was to be paid, not the amount realized upon any particular assessment, but he was entitled to participate in the mutual aid fund, and a sum certain was to be paid him therefrom. These provisions clearly negative the idea that the proceeds of an assessment were to inure to the special benefit of the member named in the notice. That deceased members were named in a notice imports nothing except the death of members who were entitled to participate in the fund, and merely discloses a reason for making the assessment. It is true that, upon the death of a member, the by-laws required his name to be placed upon the next assessment' notice if he was in good standing at the time. Obviously, .that was for the purpose of enabling the members of the association and its officers to protect the company against fraud by making improper assessments. The by-laws expressly provided that the funds collected by assessment should be immediately deposited to the credit of the mutual aid fund and drawn upon solely for the payment of approved and allowed death claims, thus plainly indicating that they were to become a part of the fund out. of which all-death losses were to be paid.- The whole scheme and plan provided by the constitution and by-laws was that a fund should be created by assessments which, after it came into the possession of the defendant, was to be appropriated generally to the payment of death losses, and not that any member should become entitled to receive his claim from the money which arose from any particular assessment. In other words, the defendant became indebted to the beneficiary of a deceased member, which debt, with similar debts of others, was to be discharged from the fund' thus created. Thus it becomes *540 obvious that the appellant’s claim that she had a preference or lien upon the funds in the hands of the receiver, cannot be maintained. Moreover, there is no evidence in the record to show that any part of the assessment collected in pursuance of the notice which contained information of the death of the appellant’s husband ever reached the hands of the receiver. On the contrary, it tends to show that the money thus collected had been paid out, before a receiver was appointed, to the beneficiaries of other members whose deaths had previously occurred. In the case of People ex rel. v. Life & Reserve Assn. (150 N. Y. 94, 116) a similar question was involved. In that case it was claimed that an assessment had been made in pursuance of a notice which included the name of the decedent under whom the appellant claimed, and she insisted that under those-circumstances a fund was established which was expressly dedicated to the payment of the certificate held by her; that a trust was created, and the funds collected were impressed therewith to an extent which entitled her to payment out of the funds in the hands of the receiver. Thus, the claim in that case was practically identical with the claim which is made by the appellant in this But in that case this court held that as no portion of the money collected by that assessment reached the hands of the receiver, no such trust or preference existed in favor of the claimant. We think the principle of that case is decisive of the question under consideration, and that the courts below have properly decided that the appellant had no such preference or lien as is claimed, but that the fund in the hands of the receiver should be divided pro rata among all the creditors, whose claims have been established. We think the order appealed from was right and should be affirmed, with costs payable out of the funds in the hands of the receiver. All concur. Order affirmed.