Supreme Sitting of the Order of Iron Hall v. Baker

• Decision Date: 26 April 1893
• Citation: 134 Ind. 293,33 N.E. 1128
• Parties: SUPREME SITTING OF THE ORDER OF IRON HALL v. BAKER et al.
• Court: Indiana Supreme Court

134 Ind. 293

33 N.E. 1128

SUPREME SITTING OF THE ORDER OF IRON HALL

v.BAKER et al.

Supreme Court of Indiana.

April 26, 1893.

Appeal from superior court, Marion county; N. B. Taylor, Judge.

Action by Albert R. Baker and others, policy holders, against the Supreme Sitting of the Order of the Iron Hall, to secure an accounting by its officers, the application of the funds to the proper object of the proceedings, and for the appointment of a receiver. From an interlocutory judgment appointing a receiver, defendant appeals. Affirmed.

Morris, Newberger & Curtis, Daniel Wait Howe, and Duncan & Smith, for appellant. R. O. Hawkins, Horace E. Smith, Albert Baker, Edward Daniels, and A. C. Harris, for appellees.

OLDS, J.

The appellees, Albert R. Baker, Homer A. Sampsell, and Dan W. Kneffler, brought this suit in the Marion superior court against the appellant, the Supreme Sitting of the Order of the Iron Hall. A receiver was appointed, and from the interlocutory judgment appointing a receiver this appeal is prosecuted.

The complaint alleges that the appellant was incorporated in December, 1881, under the laws of this state authorizing the organization of voluntary associations. That one object of the corporation is to establish a benefit fund, from which members of the said order, who have complied with all its rules and regulations, or the heirs of such members, may receive a benefit, in a sum not exceeding $1,000, to be paid in such sums and at such times as may be provided by the laws governing such payment, or in the certificate of membership; to establish a life fund, by which, upon the death of a member who has been admitted to membership in said fund, a sum not exceeding $3,000 shall be paid to such beneficiary as the member may direct, as provided by and subject to the laws of the order. That under the provisions of said articles of association its business is conducted, and its property controlled, under such laws and regulations as have been or may be hereafter legally adopted by the following officers of the association, viz.: A supreme justice, a supreme vice justice, a supreme accountant, a supreme cashier, a supreme medical director, a supreme adjuster, a supreme instructor, a supreme prelate, a supreme herald, a supreme watchman, a supreme vedetti, and five supreme trustees, who severally acquire and hold office in the manner and for the terms provided for in the constitution, and until their successors are elected and installed. That the articles further provide that said association shall have power to levy such assessment or taxes upon local branches at any regular session, upon the subordinate membership, as may seem to be necessary, in addition to the charter fees and other revenues, to meet the estimated expenses of the ensuing year, or other specified time; and the proper officers have power to make the proper and specified assessment to pay any liability on account of the sickness or disability or maturity of membership. That under the provisions of its articles of association it adopted a constitution, known as the “Constitution of Supreme Sitting,” and also certain laws, known as “Laws of the Supreme Sitting,” under which constitution, laws, and articles of association it transacted its business, a copy of all of which are filed with the complaint. That under the provisions of its articles, constitution, and laws it has established a large number of local sisterhood branches, composed of members; such branches being subject to the authority and control of the defendant corporation and its officers, articles, constitution, and laws, and under the articles, constitution, and laws thus is established what is known as a “benefit fund,” in which members thereof participate upon passing a medical examination, and upon payment by each of a certain assessment made therefor; such benefit being either in the sum of $1,000, $800, $600, $400, or $200, as the member may elect; it being provided that upon payment of the assessments the beneficiary, in case of sickness, shall receive a certain stipulated sum weekly, and, in case of injury or disability by accident, certain stipulated sums are to be paid, and at the expiration of seven years from the date of becoming a member he shall receive the full amount specified in his certificate of membership, less the amount already received by him for sick or disability benefits theretofore paid him on his certificate. Eighty per cent. of each assessment levied by defendant goes to and makes up this said benefit fund. Twenty per cent. of the amount received is required to be set aside and retained as a reserve fund, which said fund is the property of the corporation, and may be left under the control of the local branch paying the assessment upon payment of 6 per cent. interest thereon by such local branch, or the same may be paid to the corporation, to be by it invested as provided by its articles, constitution, and laws. After a period of six years and six months after the organization of the corporation, one-seventh of the amount of the reserve fund is subject to withdrawal therefrom, to be applied upon the payment of maturing benefits. A general fund is also provided for, consisting of an annual per capita tax of one dollar on each member, revenues derived from supplies, and charter fees received from local branches; and from the general fund are paid the expenses of maintaining and carrying on the business of the corporation. That thus has been established throughout the different states of the Union 1,200 local branches, the membership of which exceeds 60,000, who are participating members in the benefit fund, and have been and are paying assessments made by the appellant in pursuance of its constitution and laws. That the supreme power of the corporation is vested in what is known as the “Supreme Sitting,” a body composed of its officers and past officers, and representatives elected by the local branches, and it holds its meeting quadrennially. That in the interim between the meetings of the Supreme Sitting the power and authority of the corporation, and the entire supervision of its business and affairs are vested in the supreme justice and the executive committee, which said committee is composed of the junior past supreme justice, the supreme justice, the supreme vice justice, the supreme accountant, cashier, medical director, adjuster, instructor, and one representative from the board of trustees, a majority of whom constitute a quorum. There is not, and for several years last past has not been, any junior past supreme justice. That it is the duty of the executive committee to hold regular sessions on the first Tuesday of February and August of each year. That Freeman D. Somerby is, and has been for five years last past, the supreme justice. That the appellees, and each of them are members of the appellant corporation in the benefit fund, in good standing in the order, and have been members of said order for more than four years last past, and have complied with all the rules, laws, and regulations of the corporation, and have paid all assessments, taxes, and amounts due from them on account of such membership, and will at the expiration of seven years from the time of their becoming members of said order be entitled to receive out of said benefit fund the sum of $1,000 each; and some of said appellees are also members of the life division, and have fully paid all assessments and dues thereunder, and complied with all the rules and regulations of the corporation in relation thereto, and their beneficiaries, at their death, will be entitled to the amounts due on account of their said membership in such life division.

It is alleged that appellees are informed and believe, and therefore charge the fact to be, that the appellant corporation is now insolvent. It is further alleged that the corporation is indebted, for maturing benefits for the remainder of the year 1892, over $1,000,000; and, for sick and disability benefits, over $325,000. It further charges that millions of dollars will become due during each of the succeeding three years. It is next alleged that the reserve fund in the hands of the branches amounts to only about $1,200,000, only one-seventh of which is available each year for the payment of liabilities. That the real estate and other assets of the corporation amount to about $1,000,000. That such assets are composed largely of cash, more than one-half of which is deposited in one bank, located outside of the state of Indiana, of which Somerby, chief justice of the corporation, is vice president, and J. Henry Hays, one of the supreme trustees, is cashier; the bank being one of limited capital. It is further averred, by an amendment to the complaint, that neither the corporation, nor any officer thereof, nor any person in its behalf, has given any sufficient bond or bonds, nor is there any existing bond or bonds, or good or valid security, held by the corporation for its use and benefit, for the security, safe-keeping, and protection of the moneys aforesaid now held by or under the control of the corporation, as collected from its membership throughout the country, aggregating $1,050,000, nor is said money invested in bonds or other securities or loans, but the same is kept and held under and subject to the control of some of the officers of the defendant. That some of the officers have used and are now using the said moneys for their own personal use and purposes. Among other acts of maladministration, the said Somerby and Hays, and other persons acting in conjunction with them, but whose names are unknown to appellees, in some way, unknown, and concealed from the appellees and the general membership of the corporation, got control of a bank in Philadelphia, Pa., which bank was created by special charter of said state, naming the corporation the “People's Savings Fund, Insurance, Trust & Safe-Deposit Company,” but now...