Burdon v. Massachusetts Safety Fund Ass'n

C. Allen, J. The principal questions arising in the present case relate to the disposition which shall be made of the safety fund, so called, which has been accumulated, and which now amounts to about $19,000. There is nothing in the statutes of the Commonwealth which aids in determining these questions, and the determination of them must depend wholly upon the — 366 — terms of the contracts which the association made with those who took its certificates. These certificates were in two forms; but no distinct question has been presented, or arises, under the second form of certificate. It does not appear that there were any claims for losses by death under the second form, and only seventy-five dollars went -into the safety fund from holders under it. The counsel for the certificate holders makes no special contention in regard to this amount, and the questions may be dealt with as if the whole of the safety fund came from holders of certificates under the first form. By the terms of the contract, the safety fund is not in any event directly liable for losses by death. It is rather a fund for the benefit of living certificate holders, than security for the payment of money to the representatives of deceased holders. The certificate is explicit upon this point. Upon the death of a member, all that the association undertakes to do is to make an assessment upon the holders of all the certificates in force at the date of the death, and to pay the sum collected thereon, not however in any case exceeding §1,000. The safety fund was to enure to the benefit of members of five years’ standing, by having the income from it, after five years, or after the accumulation should have amounted to §100,000, applied to the payment of their future dues and assessments. If the association should fail to pay the indemnity provided for in the certificate, then the safety fund was to be converted into money, and divided among all the holders of certificates then in force; it was not to be drawn upon to make good the indemnity for a loss by death. And there was a further express stipulation, that “ said fund shall be in no wise chargeable or liable for any use or purpose except as above mentioned.” Now it is true that the association failed at an earlier period than was expressly provided for ; that is to say, it failed before the safety fund amounted to $100,000, and before five years had elapsed. But, under the clause last copied above, no other use is to be made of the safety fund than to apply it as above mentioned. The persons who make claim for losses by death contend that this result will work an injustice, and that holders of certificates understood, and had reason to understand, that the safety fund — 367 — was to provide a security for the losses by death. This argument is founded on a statement on the back of the certificates, that this association will provide material and substantial protection for the families or other dependants of deceased members, by means of the safety fund, which combines an improved plan of co-operative protection with a safety fund deposit, thereby rendering all the members and their dependants perfectly secure, at the lowest possible rates. But this statement is uo part of the contract; it is only general language, not designed to supersede the necessity of reading the contract itself. There was another notice on the back of the certificate, directly calling upon the holder to “read carefully all the conditions of this certificate”; and adding, “ No person should be a party to a contract without knowing all its conditions.” However fallacious and visionary the hopes inspired by this form of life insurance might be, and however ill advised its provisions, we find nothing to vary the rights of the parties, ascertained from the terms of the contract into which they have allowed themselves to enter. The court cannot act as a special providence to protect one class in particular, where all are or may be losers. All we can do is to take the contract as we find it. It follows, that upon the death of a member no attachment could be made of the safety fund, nor any action at law be maintained against the association, unless upon a refusal to lay an assessment upon the holders of certificates in force. The actions which were brought appear to have been brought under the misconception that the association had bound itself to pay f>1,000. It had only bound itself to lay an assessment, and to pay over the amount collected thereon. For a refusal to lay such an assessment, it may be that an action at law would lie; but the more appropriate remedy would be by a proceeding in equity to compel the association to lay the assessment. One of the conditions and agi-eements expressed upon the face of the certificate is, that “the person to whom the certificate is issued agrees to pay to said association, upon each certificate that shall become a claim, an assessment in accordance with the table of graduated assessment rates, as printed hereon, within thirty days from day on which notice bears date.” For a failure to make such payment, the certificate would become null and void. — 368 — This was the security furnished for payment of losses by death, and the way in which the safety fund was expected indirectly to improve this security was by ultimately furnishing a fund to enable certificate holders to pay their assessments. Such is the plain language of the contract, and such is the construction which has been given to similar contracts in all the cases but one that have been brought to our attention. The single exception is in Lueders v. Hartford Ins. Co. 4 McCrary, 149; but the decision of the district judge in that case is overruled or overborne by other decisions. Smith v. Covenant Mutual Benefit Association, 24 Fed. Rep. 685, 688. Eggleston v. Centennial Mutual Life Association, 5 McCrary, 484. Bailey v. Mutual Benefit Association, 71 Iowa, 689. Newman v. Covenant Mutual Benefit Association, 72 Iowa, 242. Rainsbarger v. Union Mutual Aid Association, 72 Iowa, 191. In re Protection Ins. Co. 9 Bissell, 188. In re Solidarite Association, 68 Cal. 892. Curtis v. Mutual Benefit Co. 48 Conn. 98. The various attachments, therefore, must all be dissolved, and the claimants of losses by death will take nothing from the safety fund in consequence of the death of the holders of the certificates under which they claim; and the safety fund must be divided among all the holders of certificates in force, or their legal representatives, in the proportion which the amount of each of their certificates (that is, the certificates of each) bears to the amount of the whole number of said certificates in force. The date to be adopted in taking this account will be the date of the filing of the bill for the dissolution of the association, namely, November 3, 1885. The subsequent proceedings in the cause relate back to that date. Atlas Bank v. Nahant Bank, 23 Pick. 480, 489. Mayer v. Attorney General, 5 Stew. (N. J.) 815. It must therefore be ascertained by reference to a master, if necessary, what was the whole amount of certificates then in force, and the amount of certificates then held by each holder, so that each may receive his percentage of the net amount to be divided. Certain matters of detail may be mentioned, with a view to avoid future questions. The legal representatives of holders of certificates who died without having incurred any forfeiture, and who have not had any benefit from an assessment, though not — 369 — entitled to maintain any claim upon tlie safety fund in consequence of such death, will share in the division of the safety fund with other holders of certificates in force. By the third condition upon the certificates, the same are to be null and void if either the monthly dues, assessments, or the payment of ten dollars towards the safety fund, are not paid to the association on the day due. The monthly dues, by the second condition, are twenty-five cents on each certificate for expenses, payable on the first day of each month, so long as the certificate remains in force. This payment for expenses means the expenses of carrying on the business of the association, and would cease to be due when the association ceased to car.ry on business. If, then, the association stopped business on May 20, 1885, — as we infer from the averments of the bill, though the fact is not distinctly stated and nowhere clearly appears in the papers before us, — a certificate would not be forfeited by the failure to pay the monthly dues after that date. In respect to the payment of ten dollars towards the safety fund, it might happeu that the year from the date of the certificate had not expired on November 3, 1885, so that the holder was not in default on that date. In such case, in order that his certificate may be treated as then in force, so as to entitle him to share in the division of the safety fund, it must be made to appear that the payment of the ten dollars was made within the year, though after that date; as it would be manifestly contrary to the true intent of the contract to allow holders to share in the division of the safety fund who had contributed nothing towards it. Non-payment of any assessment duly made prior to November 5, 1885, within thirty days from the day on which the notice of such assessment bore date, would invalidate a certificate. This implies, however, that due notice of such assessment was given, as provided in condition No. 4. By the terms of the certificates, the association, upon a division of the safety fund, was to be entitled to the reasonable charges and expenses for the management and control of the same, and this must be ascertained by the master, as directed hy the single justice. It is to be observed, that only so much is to be retained for this purpose as will pay the reasonable charges and expenses for the management and control of said fund, which was all — 370 — deposited with the Boston Safe Deposit and Trust Company; and under this head general expenses of the association are not to he included, or at any rate no more than would be a proper proportion for the management and control of said fund. It has been suggested by the receiver, that assessments for losses by death may now be made under an order of the court. In answer to this, it is sufficient to say that none of the holders of claims for such losses have made any application, either to the association or to the court, for such an assessment; and besides, it is expressly found by the justice before whom the cause was heard, that it would be futile to attempt to obtain any moneys with which to pay death claims by means of general assessments. This relieves us from the necessity of entering upon the consideration of the question, whether under other circumstances the court could or would order such assessment to be laid, in the course of winding up an association of this peculiar character, and how far such a method of proceeding should be carried, ■— a question clearly of some difficulty. See In re Protection Ins. Co. 9 Bissell, 188. A decree will be entered directing the Boston Safe Deposit and Trust Company to transfer the safety fund to the receiver, to be divided in pursuance of the foregoing opinion; and the reasonable costs and expenses incident to this litigation may be allowed by a single justice out of the fund. Decree accordingly.