Case ID: ad_14/html/0406-01.html
Source: Caselaw Access Project
Author: {"author": "Patterson, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

T. Jefferson Milborne, Respondent, v. The Royal Benefit Society, Appellant.
    
      Benefit corporation — contract to assume the risks of another corporation — ultra vires — estoppel.
    
    Where an incorporated benefit society assumes the risks and liabilities of a simi-" lar society, and receives from a certificate holder of the latter alb subsequent assessments necessary to keep his risk in force, it becomes liable to the certificate holder and is estopped from insisting that the contract by which it assumed the risks of the other society was ultra vires, and that the certificate holder did not acquire any right, as against it, to enforce the obligation it had assumed. , "
    Appeal by the defendant, The Royal Benefit Society, from an . interlocutory judgment of the Supreme Court in favor of the' plaintiff, entered in the office of the clerk of the county of New York on the 5th day of August, 1896, upon, the decision of the court rendered after a trial at the New York Special Term overruling its demurrer to the complaint.
    
      Ghwrles F. Kelley, for the appellant.
    
      R. B. Duychinck, for the respondent.
   Patterson, J.:

The defendant appeals from an interlocutory judgment overruling a demurrer to the complaint in this action. It appears by that complaint that a certain benefit society named the Royal Oak Benefit League, incorporated under chapter 368 óf the Laws of 1865, issued a certificate of insurance to the plaintiff, dated the 20th of. April, 1888, by' the terms of which the plaintiff was entitled, at the expiration of seven years from that date, to a sum of $1,000, and in the meantime to certain benefits and privileges in case he became sick or disabled. In J une, 1894, the Royal Oak Benefit League entered into an agreément with the defendant, a corporation of the State of New York, incorporated under chapter 690 of the Laws of 1892, whereby the defendant assumed the liabilities and risks of the Royal Oak Benefit League, and agreed to pay such' liabilities and risks, together with the- benefits accruing thereunder, to the legal certificate holders thereof. Pursuant to that agreement the Royal Oak Benefit League transferred to the defendant all its assets and risks. It is alleged in the complaint that after that was done, and the defendant became substituted as insurer in place of the Royal Oak Benefit League, the plaintiff at all times complied with the conditions of his certificate of membership, duly paying all his assessments to the Royal Benefit Society after the agreement between the two companies became effectual, and that on the 20th of April, 1895, by virtue of the agreement between the plaintiff and the Royal Oak Benefit League, the obligations of which were assumed by the defendant,, there became due a sum of $1,000, less the amount which the plaintiff had received for sick benefits during the currency of the certificate. The ground upon which the' demurrer was interposed is that the complaint does not state facts sufficient to constitute a cause of action, and the specification of the ground is that it appears upon the face of the complaint, and from provisions of statutes referred to in the complaint, that the contract between the Royal Oak Benefit League and the defendant was. an invalid and inoperative one, because it was beyond the power of either of the corporations to make it. . What may be the legal effect of the contract of June, 1894, between the two corporations it is unnecessary for us to consider. The defendant, by the terms of that contract, became substituted as a contracting party with the plaintiff. By taking-over the risk the Royal Oak Benefit League had assumed with relation to the plaintiff, it put itself in the position of a contractor with him, and by receiving and accepting from him the premiums or assessments due upon or chargeable against him under the certificate he held, it permitted him to perform all the terms of the contract - incumbent upon him, and it received the full benefit of that performance. Under such circumstances, the defendant will not be heard to contend that its contract with the other corporation was ultra vires, nor that the plaintiff did not acquire any right, as against the defendant, to enforce the obligation it assumed. (Whitney Arms Co. v. Barlow, 63 N. Y. 62; Linkhauf v. Lombard, 137 id. 423.)

The interlocutory judgment appealed from is affirmed, with.costs.

Yan Brunt, P. J., Barrett, Rumsey and Williams, JJ., concurred.

Judgment affirmed, with costs.