Robinson v. Mutual Reserve Life Ins.

189 F. 347, 111 C.C.A. 79, 1911 U.S. App. LEXIS 4404

• Court: Court of Appeals for the Second Circuit
• Decided: July 17, 1911
• Docket: Nos. 289, 290, 292
• Status: Published

Opinions

LACOMBE, Circuit Judge.

[1] The special master’s report has marshaled the facts exhaustively; his report and the two opinions of Judge Ward contain all that it is necessary to say, since we concur fully in the conclusions expressed in the decree. Upon the argument our first impression was rather adverse to the proposition that the reserve fund created by the members of the old association could be made immune as against the claims of general creditors. But an examination of the various New York authorities which have been cited satisfies us that associations such as this may, if they choose, create just such a trust which shall be devoted to the payment of “assessments,” thus benefiting living members, or to the payment of “death losses,” thus benefiting beneficiaries. All persons giving credit to such a corporation are chargeable with knowledge that a certain part of its income from assessments may be thus set aside. These authorities further indicate that the question whether or not such a trust has been created is oqe to be determined in each case from an examination of the Constitutions, by-laws, certificates, etc., of the particular company under consideration. The analysis of these documents in the special master’s report fully supports the conclusion that the funds, identifiable as part of the old reserve fund, which have come into the possession of the receiver, are pledged first to pay death claimants under assessment policies. We are not persuaded that by misapplication of funds received from the members who came in after reorganization under the level premium plan, the latter or their beneficiaries have by subrogation acquired any rights against that specific fund; the evidence fails satisfactorily to show such diversions.

As to the claims against the general funds, presented by the death claimants in both classes, the living policy holders, the general creditors, and the state of New York for franchise tax and certain disbursements, we fully concur with the circuit court.

As to the claim for allowances for legal services and disbursements of counsel who represented Christina S. Dogge, we understand the Circuit Court to have refused to make any such allowance solely on the ground of lack of power. Mrs. Dogge was a beneficiary under an assessment policy and was allowed to intervene “on her own behalf and on behalf of any and all other persons similarly situated.” No one else intervened in support of this class of claimants, who have secured an advantageous disposition of their claims. It is no doubt' true that the services did not increase the assets in the hands of receivers, and it is equally true that, under the authorities, the court cannot require the other claimants of the same class who did not join with Mrs. Dogge and contribute to the expense, to give up part of their claim in order to create a fund to pay for the services, but it does not follow that the court is powerless to compensate, if in its sound judgment compensation is due.

[2] Where a complicated controversy involving many different interests in a fund is before the court, and some particular interest is not so represented that the facts supporting its claim are likely to be fully brought out and properly presented, we know no reason why the court may not assign some competent person to do such work and compensate him, as receivers’ counsel are compensated, viz., out of the funds in the hands of receivers. We think it would be unfortunate if the courts did not possess such power, because the receivers necessarily represent so many different interests that they must generally stand neutral, and there will be many occasions where correct conclusions can be reached only after all sides of the controversy have been vigorously presented.

Whether this be such a case or not is a question to be left to the sound discretion of the circuit judge; the affirmance of this decree is not to be taken as foreclosing him from allowing Mrs. Dogge’s claim to be again presented him, if he thinks it a proper one to be reconsidered.