Earnshaw v. Sun Mutual Aid Society

Miller, J., delivered the opinion of the Court. The instrument sued on in this case is a certificate of membership in a duly incorporated Mutual Aid Society, which was issued to John Earnshaw on the 15th of May, 1882. It contains many conditions, only two of which have any hearing upon the questions presented' by this appeal. By the second condition, (read as applicable to the' circumstances of the present case,) the corporation stipulated that the beneficiary designated in this certificate by the member to whom it is issued, “ shall be entitled” to “ mortuary benefits to be assessed on the membership according to the table of rates and by-laws of the society, and the amount so collected to be paid at the office of the' said society within ninety days after the proof of death shall have been satisfactorily established,” provided the member shall have promptly paid all dues and assessments, and “ provided however that in no case shall any benefit-for this certificate exceed the sum of ten thousand dollars.” And by the twelfth condition it was “expressly agreed and understood by and between the parties hereto, that all suits at law or in equity for the recovery of any claims — 471 — arising under this certificate must be commenced within six months from the date of such loss,” (which in this case was the death of the assured) “and the failure to commence such suit within the time specified shall bo a waiver of all rights and claims under this certificate.” When this suit was brought no assessment under the certificate had been made, and it is contended that until this was done, and they had the money in hand realized from the assessment no action at law will lie against the society. But in our opinion under a declaration properly framed for that purpose a suit at law can be maintained against the corporation for a refusal or neglect to make the assessment. It was their duty to make it under the contract, and if by breach of this duty injury has resulted to the plaintiffs, a Court of law is the most appropriate tribunal to afford them redress. There may be some difficulty as to the measure of damages in such an action, and in enforcing the judgment after it is recovered. In some cases such contracts have been declared on in assumpsit as simple contracts of insurance for the maximum amount stated in them; and it has been held that the recovery may be such amount unless the defendant shows by pleadings and proof that such sum should be reduced. Lueder’s Ex’r vs. Hartford Life & Annuity Ins. Co., 12 Fed. Reporter, 465 ; The Elkhart Mutual Aid Benevolent & Relief Association vs. Houghton, 103 Ind., 286. But in Curtis vs. Mutual Benefit Life Co., 48 Conn., 98, the action was in assumpsit and. the declaration assigned only the breach of a promise to pay the maximum amount and the plaintiff recovered judgment. The case came before the Supreme Court by motion in error bringing up for review' a judgment of the trial Court overruling a motion in arrest founded upon the insufficiency of the declaration. The Court held the declaration to be fatally defective, because, among other things, it contained no allegation of any neglect to lay the assessment, and said, “ the thousand dollars — 472 — is not promised to be paid by the terms of the contract, but is mentioned merely as the limit of liability.” The judgment below was accordingly reversed, but the case was remanded in order, as we assume, that it might be retried upon an amended declaration. This case is certainly an authority for the position that an action at law, if brought in proper form, can be maintained against the company and to the extent above noted, takes, as we think, the more correct view of the law as to what the declaration should contain, and the extent of the recovery. We, however, entirely concur in the remarks made by the Judge in 12 Fed. Reporter, 472, to the effect that when a loss occurs under such a contract and satisfactory proof thereof is made to the president and secretary, their duty to make the required assessment ensues according to the express terms of the contract, and if they fail to perform such duty the other party is not to be left remediless ; that there must be some one answerable at law for the contracts the corporation makes, and judgments on such contracts must be against the corporation, for otherwise, a policy like this would he of little worth and such a scheme of'insurance be a mere delusion and snare. We think then that if there had been a declaration in this case, which, after other appropriate averments, had charged a failure or refusal to make the .assessment, and then averred that if such assessment had been duly made,' it would have resulted in the collection of $10,000, and claimed that sum as damages for such failure or refusal, as substantially set forth in the amended declaration, (which was exhibited to us in argument) in the case of Mrs. Osborne against this same society on another like certificate, in the Court of Common Pleas, it would have enabled the plaintiffs to recover what upon proof they could show-such assessment would have yielded if it had been duly made. There might be some difficulty in obtaining the requisite proof, but the officers of the society — 473 — could be called as witnesses, and made to disclose how many members there were at the time the assessment should have been made, and what was their ability to pay. But we do not propose to decide in advance what may be legal and.competent evidence on this subject, nor to say how judgment, if it should be recovered, could he enforced apart from the property which the corporation may own. All that we mean to say is, that an action at law upon a declaration of this character may be maintained. In fact we have neither found, nor been referred to, any case in which it has been expre.ssly decided, that no action at law will lie against the corporation before an assessment has been made. In the cases of Mutual Endowment Assess. Asso. vs. Essender, 59 Md., 463, and Yoe vs. The Benjamin C. Howard Mutual Benevolent Association, 63 Md., 86, the certificates were of the same character and the actions were at law, but no objection was made to them on that ground. In Eggleston vs. Centennial Mutual Life Asso., 18 Fed. Rep., 17, and 19 Fed. Rep., 201, the instrument contained a .clause that “the only action maintainable upon this policy, shall be to compel the association to levy the assessments herein agreed on,” and the decisions were based exclusively on that clause. And in Smith vs. Covenant Mut. Ben. Asso., 24 Fed. Rep., 685, the opinion, as we read it, concedes that an action at law would lie if it was grounded upon a refusal by the company to make the assessment. Another defence is that the suit was not brought within six months as provided in the twelfth clause of the certificate. This defence the Court below sustained by ruling out the record of the equity suit in Prince George’s County, which was offered in evidence by the plaintiffs, and in this we think there was error. The certificate is for the benefit of John Earnshaw as to one-half, and of his son William as to the other half, and the plaintiffs in this action, which was brought on the 7th of August, 1886, are the — 474 — four sons of the said John Earnshaw, who died on the 31st of July, 1883. Now by reference to the ’record referred to, it appears that on the 23rd of June, 1883, shortly before his death, John Earnshaw assigned his interest in the certificate to his four sons in'equal shares, and the society assented thereto, so that the entire beneficial interest therein became vested in these plaintiffs. It also appears that John Earnshaw died insolvent leaving a will by which he appointed his son Basil his executor, and that on the 30th of November, 1883, a creditors’ bill was filed to which all his sons, as well as this society, were made parties. This bill, among other things, assailed the validity of this assignment upon the ground that it was made in fraud of the creditors of the deceased, and prayed for an injunction to restrain the sons from receiving from the society any portion of this certificate, and the society from paying over any portion thereof to them. The Court on the same day the bill was filed, granted the injunction as prayed, and it was duly served shortly thereafter. In their answer to this bill, which was filed on the 14th of February, 1884, the society say that the executor of John Earnshaw had never made any demand on them for payment, submit themselves to the jurisdiction of the Court, and declare “their willingness to abide its decision as to which of the claimants may be entitled to the benefit of an assessment for said certificate, none having yet been made.” In regard to this answer it may be observed, that their manifest willingness at that time to make an assessment whenever the parties entitled thereto should be ascertained, is in strange contrast to their refusal to do so now, when there is no doubt as to the plaintiffs’ right to it. TJhe case resulted in a decree passed on the 7th of March,1885,which,among other things, vacated the assignment, appointed a receiver to collect the money from the society, and directed the latter to make the assessment, and pay the same over to him. But — 475 — on appeal that part of the decree was reversed by this Court, (64 Md., 513,) on the 5th of February, 1886, and on the remand of the case the Court below, on the 24th of April, 1886, passed an order discharging the receiver. In our opinion this injunction so long as it remained in force prohibited the plaintiffs from bringing an action on this certificate. Such an action and the recovery of a judgment therein, where the complaining creditor would have no right to intervene and protect his interest as to the amount to be recovered, might, and probably would, have been injurious to him, and, as it seems to us, would have been such a violation of the spirit, if not the strict letter, of the injunction, such a breach of the mandate of the Court, as would have rendered the plaintiffs liable to an attachment for contempt. 2 High on Injunc., sec. 1446. The clause in question declares in effect that suit “ must be commenced within six months from the date of the loss,” otherwise all rights and claims under the certificate shall be forfeited. This gave the plaintiffs six months from the date of the death of John Earnshaw within which to bring suit, and before that period had elapsed the injunction came in and prevented them from suing. It is said, however, that counting the time from the death to the injunction and adding to it the time after the injunction was dissolved to the date of the action, makes a much longer period than six months during which the plaintiffs were under no disability, and indeed that two days more than six months had elapsed after the date of the reversing order of this Court, and the commencement of the action. All this is quite true, but what effect have these facts on the question under consideration ? This period of six months is not a limitation prescribed by statute, but fixed by contract, and the distinction between these two classes of cases is very clearly drawn by the Supreme Court in Semmes vs. Hartford Ins. Co., 13 Wal., 158. In that case — 476 — there was a similar clause in a fire policy issued by a Connecticut Company to a resident of Mississippi, providing that suit must be commenced “ within twelve months next after the loss shall occur,” and if commenced afterwards the lapse of time shall be conclusive against the validity of the claim. After the loss and before the expiration of the twelve months, the war intervened and prevented the plaintiff from suing, but after the war closed he brought his suit in the Circuit Court for the District of Connecticut, and this contract bar was set up as a defence. The Circuit Court found that there was an interval between the commencement of the war and the date of the loss, which added to the time' between the close of the war and the commencement of the action, amounted to more than the twelve months allowed by the contract, and sustained the defence. But the Supreme Court held that this contract period does not open and expand, like the period of limitations imposed by statute, so as to receive within it three or four years of legal disability created by the war, and then close together at each end of that period, as though the war had never occurred; that the contract period relates to the twelve months next after the loss, and the Court had no right, as in the case of a statute, to construe it into a number of days equal to twelve months made up of the days in a period of five years, in which the plaintiff could have lawfully commenced his suit; and that in such a case where a cause intervenes which prevents the plaintiff from suing before the specified contract period •expires, the contract bar. cannot be afterwards revived, but is absolutely removed, and the plaintiff is then only bound by the limitation prescribed by statute. Deeming this view of the law to be just and reasonable, we adopt it as applicable to the present case, and as this certificate is under seal, the only statutory bar is twelve years. We, therefore, hold that this action is not barred either by contract or statute. — 477 — (Decided 14th March, 1888.) The Court also excluded the certificate as evidence, upon the ground of variance between it and the contract declared on, and in this ruling we find no error. We have already expressed our views as to the form of declaration suitable to the case, and the one adopted by the pleader here is not only materially different, but is substantially like the one condemned in Curtis vs. Mutual Benefit Life Co., a case which we have approved. In Essender’s Caseno question was raised as to the sufficiency of the declaration there used, which counsel for appellants insist is substantially like the one they have adopted. Affirmance of this ruling would seem to require an affirmance of the judgment notwithstanding the error in the ruling on the other point, because if the contract sued on be out of the case the plaintiffs have nothing to stand upon, and the error in the other ruling did them no harm. But conceding this to be so, and that the judgment ought to be affirmed; still, we think it a clear case where a new trial ought to be had notwithstanding the affirmance, and to that end we should use the power vested in this Court by the Code, Art. 5, sec. 16. Kennerly's Exe’x vs. Wilson, 2 Md., 245. It is immaterial to the°parties therefore whether we affirm and remand, or reverse and remand, and we adopt the latter course. Judgment reversed, and new trial awarded.