In re Educational Endowment Ass'n

Gilfillan, C. J. Under 1878 G. S. eh. 34, §§ 415, 417, this corporation was dissolved, and a receiver appointed. No appeal was taken from the decree or order of dissolution, and therefore the reasons for making it are not to be considered. Pursuant to an order of the court fixing the time and manner of presenting and proving claims, such claims were presented and proved, and the court rendered judgment distributing the funds of the corporation, and, from that judgment, Gray, one of the claimants, appeals. The association was organized in 1883, and in November, 1885, was reorganized pursuant to Laws 1885,. ch. 184. Its purpose, as expressed in the articles, being to transact “endowment insurance upon the co-operative and assessment plan, to promote the culture and education of children,” as follows: “Fourth. The corporate powers of this association shall be exercised as follows: By issuing to any person of legal age a certificate of membership covering one, (1,) two, (2,) or three (3) shares, whereby the child named in any such certificate as beneficiary shall become entitled to receive at a certain age, if living, upon each share by him or her held, seventy-five per cent, of the sum actually collected by one assessment on each share in force at the maturity of such certificate: provided, that the sum so collected and paid shall not exceed, in the aggregate, twenty-five (25) cents per day for the whole number of days covered by such certificate, and that the member shall have paid all fees, assessments, and dues, and shall have fully complied with the rules, regulations, and by-laws of said association. No more than three (3) shares shall be placed upon any one child. “The amounts of the endowments to be received by the beneficiaries, and the amounts of the fees and quarterly assessments to be paid by the members, shall be graded according to the ages of the respective beneficiaries at the time of the issuance of their certificates. “No person over sixteen years of age shall become a beneficiary in said association, and no beneficiary shall be in for a shorter period than four years. AH moneys paid into the endowment fund shaH be used solely for the payment of endowments, subject, however, ü> such reimbursements to the members as the by-laws may prescribe.” [175] And in May, 1890, to the original articles the following articles were added: “Classes. Sixth. On and after the first day of June, 1890, this association shall he deemed divided into three distinct classes, which shall he known as 'A,’ ‘B,’ and 'C,’ respectively. “Class A shall he composed of those members whose shares were written prior to the first day of June, 1887. “Class B shall remain as now established. “Class 0 shall be composed of all those members not included in either of said classes A or B, and shall also include all new members received on the present table of rates. “Second. By adding thereto a further article, which shall read as follows: 'Endowment Fund. Seventh. On and after the first day of June, 1890, the endowment fund shall be divided between said classes, as follows: (a) Place to the separate credit of class A the amount in said fund derived from shares written prior to June 1st, 1887. (b) Place to the credit of class B, in said fund, the amount paid in by the members thereof, as shown by the records of the association. (c) Place to the credit of class C the amount in said fund received from shares written since the first day of June, 1887. “ ‘Should the endowment fund belonging to either class A or class C become reduced to ten thousand dollars ($10,000) in the payment of maturing endowments, the trustees may, in their discretion, order and levy a special assessment (not exceeding original) upon all shares in force in such class, which assessment shall be due and payable within one month from date of notice: provided, however, that neither of said classes shall hereafter be liable to be assessed to pay endowments maturing in any other class. '"The above provision for special assessment is our construction of a like provision in the fourth article of said articles of reincorporation, and is intended to harmonize/ ” Gray had taken a policy or certificate in behalf of his daughter Julia, at that time six years of age, for the payment to her, at the age of fourteen out of the endowment fund, of $1,617.61. At the time of the dissolution he had paid on this policy all dues and assessments required, or which could ever be required, but the daughter did not reach the age of fourteen till about a month after that time. This policy belonged to class O. ' [176] The judgment, in distributing the endowment fund belonging to class C, directed payment in full of certain policies, which, as we understand, had before the dissolution become mature and payable by the beneficiaries arriving at the specified ages, and directed the remainder of that fund, less expenses, to be divided among the policy holders in that class, including Gray, pro rata, according to the amounts contributed by them respectively. When, by taking a policy, one becomes a member of a corporation such as this was, he does so subject to its liability to be dissolved as this was. When dissolved, it ceases to be a corporation for the purpose of continuing the business for which it was established,— for the original purpose of the policies. It retains only power to gradually settle and close its concerns, and, upon the appointment of a receiver, that power passes to him, and its property and assets are in custodia legis. After the dissolution it has no power to perform its contracts, even those made with third parties. Bowe v. Minnesota Milk Co., 44 Minn. 460, (47 N. W. 151.) As the dissolution, under 1878 G. S. ch. 34, § 415, is regarded to be voluntary, there occurs at once an entire breach of its contracts, the performance of which requires it to do the business for which it was organized, and the rights of the parties are fixed at that time. This corporation ceased to be an endowment insurance company, not only with respect to taking new policies, but with respect to the old ones. Those were no longer active, continuing policies. It could no longer meet those as they might, by their terms, mature, by assessments. The rights of the parties to them were fixed as of the date of the dissolution. If they were then mature, and neither lapse of time, nor anything else, was required to fix the company’s liability on them, they stood as debts against its assets, and were to be paid before the assets could be distributed among the members. With respect to those whose maturing was arrested by the dissolution, the rights of the holders were those of members of the association, entitled to share in its assets after its debts were discharged. The right to payment in the case of matured policies, and to share in the assets in the case of those not matured, was modified by the fact that they were divided into classes, and that, by assessments upon the holders in each class, a fund was raised to secure the policies in that class as they might mature. That fund was for the benefit of all policies [177] of the class, and no one, until it matured, had any right to be paid out' of it. Although all assessments bad been paid on Gray’s policy, yet it bad not matured, so as to be a debt payable in tbe future. Tbe liability was not fixed, but depended on a contingency, to wit, tbe survival of tbe beneficiary until tbe age of fourteen. At tbe time of tbe dissolution, no one could foretell that tbe corporation ever would be liable to pay it. In this particular it differed from an ordinary endowment policy, payable absolutely at a fixed time, and on which all premiums have been paid. That is a present debt, though its payment is postponed to a future time. Tbe court’s appropriation of tbe fund wTas correct. Judgment affirmed. (Opinion published 57 N. W. Eep. 463.)