Opinion
04-06-1894
WARE v. SUPREME SITTING OF ORDER of IRON HALL.
Howard Carrow, for petitioner. Wm. J. Lewis, for respondent.
Petition by Charles F. Ware against the Supreme Sitting of the Order of the Iron Hall to have local receivers pay over the money to the general receiver. Petition granted.
Law 2. § 1, of the Order of the Iron Hall, upon which the decree is based, provides that the reserve fund of local branches shall be the property of, and under the control of, the Supreme Sitting, at all times.
Howard Carrow, for petitioner.
Wm. J. Lewis, for respondent.
BIRD, V. C. The mutual benefit association known as the Supreme Sitting of the Order of the Iron Hall became organized by the adoption of the constitution and by-laws. The constitution provided for the creation of certain officers and a place of meeting for the transaction of the principal business of the association. Provision was also made for the creation of separate districts and local branches throught the entire country. Many of these were created in most, if not all, of the states of the Union. The payments to be made by the different individuals who became members, and other conditions of membership, were also very explicitly laid down. The place of meeting of the Supreme Sitting of the Order of the Iron Hall was decided upon in the constitution, or fundamental charter, to be at indianapolis, in the state of indiana. After this association had been organized, and had been doing business for a number of years, a receiver was appointed to wind up its affairs, upon the allegation that it had become insolvent. At the time of the appointment of this receiver, there were a large number of the "local branches," as they are termed, in New Jersey, having a membership of about 4,000. Soon after the appointment of the receiver in indiana, application was made to the court of chancery of New Jersey for the appointment of a receiver. A receiver was appointed, and ordered to collect and receive all the funds pertaining to such associations in the hands of the various local branches in this state. He has collected about $72,000, and will probably be in receipt of several hundred dollars more. A petition has been filed by one of the members of the association living in New Jersey, asking for an order upon the receiver to pay the moneys now in his hands, and which shall come to his hands, to the receiver in indiana. An order was made, directing the receiver to show cause why he should not be required to make payment accordingly. As many of the members of the local branches as could be reached within a reasonable time were notified of the time and place when the hearing would be had. Certain members have employed counsel on their own behalf to resist such order. They claim that it will be greatly to the benefit of the members in New Jersey for the court to order the receiver here to make distribution of the funds which he has, and which he shall receive, among the members of the various branches in this state. A very large number of other members, who are represented by counsel, urge the court to make the order prayed for.
Not only to judges, but to all ordinary businessmen, and especially to most of those of the class which usually become members of such associations, the question here involved is exceedingly plain, and easy of solution. None are more susceptible of what is fair and just between men in their transactions than those last referred to. They are actuated, in the very inception of the undertaking, from an innate or heartfelt desire, not only to be benefited, but to benefit others. They realize as much satisfaction from the latter as from the former. The great majority of them engage in such enterprises without the thought of deception or intrigue; and, having entered into the enterprise from the highest motives, all they ask is to be saved from the intrigues and machinations of others, in whom they have confided. What, therefore, is the duty of the court, under the circumstances? I have said that the solution of the question presented is exceedingly simple and easy. So it is. It is simply such a question as arises almost daily in the execution of contracts: Nothing more, nothing less. What, therefore, was the contract? The object of the association was to create what is called a "benefit fund." Every person becoming a member, and complying with the conditions prescribed, was entitled to the benefits enumerated. One of the conditions was that all of the moneys paid in, except 20 per cent., should be forwarded by all the local branches in the different states to the Supreme Sitting of the Order of the Iron Hall, at indianapolis; and, on certain conditions, the entire balance of such reserved fund was to be forwarded accordingly. These statements show precisely what the contract was. The members of the various branches throughout the entire country pledged themselves, each to the other, that they would perform or carry out this contract. They also pledged themselves, each to the other, that, in case any member failed to comply with the conditions of the contract, he would, upon certain terms, expressly provided for, forfeit all claim to any future benefits. The court, therefore, being called upon to exercise its authority in the premises, what can it possibly do, otherwise than to observe the terms of the contract, and make a decree accordingly? The court cannot establish a different rule in this case from what has always heretofore governed it. There is nothing to justify it in making a new contract for the parties, and in saying to the different members of the branches in New Jersey, if they have, peradventure, twice the amount of money that they would be entitled to under the contract, that they may retain it. There seems to be no principle which would justify a court of equity in encouraging such a breach of good faith; and I do not believe, for one moment, that any considerable number of the class who honestly enter into these associations would justify the court in participating in such manifest moral and legal wrong. I give them much greater and higher credit for just principles of action than is involved in such a supposition. The insolvency of the company does not alter the nature, or limit the extent, of the liability. Every individual member, notwithstanding his local habitation, is entitled to the enforcement of such contract, to the extent of the entire corpus or assets. It is impossible to conceive of a legal principle that would sustain any other proposition. The force of this doctrine is not diminished by what is insisted upon in some quarters,—that the members of the local branches are creditors of the association; for they are also members of the association, and part and parcel of it. They are contractors, as well as contractees; and, before they can claim the benefits which the latter are entitled to, they must perform the obligations resting upon the former. The receiver in indiana not only represents the creditors of the Supreme Sitting of the Order of the Iron Hall itself, but he stands in its stead. Before he can pay, he must receive; and he has a right to say, "Give, and you shall be given unto." But it is said that, the money being assets of this association within the state of New Jersey, the courts will not direct its transfer to an officer in another state for distribution, but will rather provide for, or take care of, the just claims of its own citizens, in preference to those of any other state or territory. The general doctrine implied in this statement is unquestioned, and of frequent application. But in every such case it will be found that the basis of action lies in the nature of the contract, rather than the mere distribution of the assets. In other words, in such cases it is a contest or a race between different creditors of the same debtor, which creditors are under no obligation to each other, and have entered into no mutual compact. This cannot be said of the case we are now dealing with. Here there is but a single contract and all the persons interested in these assets are bound, each to the other, by the terms of that contract. This contract provides for an equal distribution of the funds among all those who comply with its terms. This the court is called upon to enforce. For a court of equity to countenance any other rule of distribution than that of perfect equality would subject it to the severest criticism. Besides these principles, taking the statements of the amount of assets in the hands of the receiver in indiana, and the amount which has come, or will come, to the hands of the receiver in New Jersey, the members in this state will be considerably benefited in case the receiver in this state is directed to pay such funds to the receiver in indiana. Their share of the distribution of the whole amount of the assets through the indiana receiver will be very much larger than they will receive if they are only permitted to share in the distribution of the funds in the hands of the receiver in this state. It is plain enough that if they do notcomply with the conditions of the association, and pay their shares of the funds contributed to the receiver in indiana, he will be fully justified in refusing to acknowledge their claim to any distribution of the funds which he otherwise has control of. It should be borne in mind that this application is not made by the receiver in indiana, but by a member of one of the branches in this state, and that he is supported by a very large proportion, and, so far as appears, by a large majority, of the members of the order in this state. The receiver in this state shoidd be regarded as auxiliary to the receiver in indiana. I think the views thus expressed are within the decisions of the courts pronounced in the cases of Taylor v. Association, 13 Fed. 495; Relfe v. Rundle, 103 U. S. 222; and Parsons v. Insurance Co., 31 Fed. 305, 307. I will advise an order directing the receiver in this state to account to the receiver in indiana for all the moneys which are now in, or which shall hereafter come to, his hands, less the costs, fees, and expenses which shall be allowed by this court, including the costs of this application.