Darrow v. Family Fund Soc.

• Decision Date: 26 November 1889
• Parties: DARROW v. FAMILY FUND SOC.
• Court: New York Court of Appeals Court of Appeals

116 N.Y. 537

22 N.E. 1093

DARROW

v.FAMILY FUND SOC.¹

Court of Appeals of New York,

Second Division.

Nov. 26, 1889.

Appeal from supreme court, general term, third department.

Action by Mary J. Darrow against the Family Fund Society on a policy of insurance. Defendant appeals from a judgment affirming the judgment of the circuit court of Saratoga county entered on a verdict for plaintiff.

Geo.

Wilcox, for appellant.

edgar T. Brackett, for respondent.

BRADLEY, J.

The defendant is an insurance association, organized pursuant to chapter 175, Laws 1883. On January 14, 1885, James H. Darrow was admitted as a member of the association by a certificate and policy or undertaking, whereby, upon the terms and conditions mentioned in it, the defendant bound itself to pay to the plaintiff, within 60 days after the requisite proof of death of such member, $5,000 ‘from the death fund of the society at the time of said death,’ as in the policy ‘mentioned and provided.’ This member died in December, 1885. The defendant denies its liability to the plaintiff; and one of its alleged defenses is that the money in its death fund at the time of the death of Darrow was not sufficient to pay the claim. By the contract it is provided that, whenever the death fund is insufficient to meet the existing claims by death ‘a call shall be made upon this entire class of membership in force,’ in the manner provided, ‘for a mortuary payment as per mortuary rates,’ referred to, ‘but not more than one call shall be made to meet one death;’ and that 80 per cent. of the net amount received from the call shall be deposited in a bank, and be used for payment of death claims only, and the remaining 20 per cent. shall be set apart as a reserve fund, to meet any contingency that may arise by reason of extra montality; and that such reserve fund, so accumulated, shall, at the time and in the manner mentioned, be apportioned, and the surviving members credited with it. The members pay an admission fee and annual dues, which produce a fund for expensess but the death fund is supplied by assessment calls upon the members, and they are required to pay within 30 days from the date of the notice or call for payment. Thus the association is enabled to make collection, after the death of a member, in time to meet the engagement assumed by the contract, by which it may take 60 days to pay the beneficiary.

It is contended by the counsel for the defendant that its liability in an action at law upon its contract is dependent upon money being in the death fund, applicable to the payment of the claim; and that the extent of such liability, within the stipulated sum, is measured by the amount in that fund so applicable at the time of the death of the member on account of whose death the beneficiary seeks to recover. It is further argued that if the association fail to make the call, by way of assessment of the members, to supply the death fund to meet the demand upon it, the remedy of the beneficiary is, in equity, to require the defendant to proceed to make the assessment. While the promise to pay was to do so from the death fund at the time of the death of the member, the defendant, also, by the same contract, undertook to make the call upon the members, if that fund then was insufficient to meet the claim. The reasonable construction of these provisions, in view of the apparent purpose of the contract, is that the association should pay the amount to which the beneficiary might be entitled, and that it be paid from the death fund, if that is sufficient at the time of death, and, if not, the amount should be produced through the means provided for assessment of the members for the purpose. This is the duty of the defendant when the beneficiary is entitled to payment, and it arises upon the proper information of the death of the member. This duty is the contract undertaking of the defendant, supported by the power, without any order or direction of the court, to enable it to perform its promise to pay. Its purpose is to supply the means to do so; and there is no well-founded reason to support the claim that the sole remedy of a beneficiary entitled to payment is, in a court of equity, to compel the society to make the call upon the members. The only method by which the defendant can supply itself with the means of performing its engagements to pay death claims is by assessment. And it is within the contemplation of the parties, as represented by the provisions of the contract, that the instrumentalities furnished will be employed by the association to enable it to do so; and it cannot rely upon its failure to perform its plain duty in that respect to defeat a recovery. In this case, for reasons which will be referred to, the defendant did not intend to pay the claim in question, or any portion of it, and therefore, as is evident, purposely omitted to exercise the means provided to raise the money to pay the plaintiff. What has already been said tends, to some extent, to meet the contention that a death claim is payable out of a particular fund, designated as the ‘death fund,’ and that upon it depends the amount of recovery. The principle sought to be applied in support of that proposition is not applicable to the extent essential to its availability as a defense. The plaintiff in the complaint alleges that ‘the defendant has a sum sufficient in its death fund to pay the said sum so due to the plaintiff, or, if it has not, has members enough liable to call for assessment to pay the same to the plaintiff in full.’ And it clearly appeared by the evidence that a single assessment of the members liable to call at the time of the death of Darrow, on account of this claim, at the mortuary rates prescribed, would have produced a sum in excess of the amount which the defendant undertook by the policy to pay the plaintiff. And it must be assumed in this case, as nothing appears to the contrary, that the collection, through the means provided, of the requisite amount was dependent on no contingency, and, therefore, the funds were and are at the command of the defendant to make the payment. The assertion of the defendant that it has not sufficient funds applicable to that purpose in hand to do so is founded upon its failure to perform the duty imposed upon it by the contract, and which it undertook to perform, provided the plaintiff's...