Case ID: ad_61/html/0190-01.html
Source: Caselaw Access Project
Author: {"author": "Hatch, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Catherine J. Fanning, Respondent, v. Supreme Council of the Catholic Mutual Benefit Association, Respondent. Honora Dalton, Appellant.
    
      Inte/rpleader—a mutual benefit association which has issued several certificates allowed to bi’ing in, but not to substitute, in its place, another claimant.
    
    A mutual benefit association issued to a member thereof a certificate for §2,000, in which his daughter, Honora Dalton, was named as sole beneficiary. Subsequently the member, as alleged, represented to the secretary of the local branch that the Honora Dalton certificate was lost. A new certificate was thereupon issued, pm-porting to be a duplicate thereof and naming Nora Dalton as the beneficiary. Upon the surrender Of the duplicate a new certificate was issued, ■naming as beneficiaries Catherine J. Fanning in the sum of §1,200, John Brophy in the sum of §300, and Honora Dalton in the sum of §500. Honora Dalton had no notice of the issuing of the duplicate certificate, and she then had in her possession the certificate represented to have been lost. Upon the death of the member, Catherine J. Fanning brought an action against the association upon the certificate in which she was named as a beneficiary, and the association thereupon made a motion asking that Honora Dalton, who claimed to be entitled to the full amount of the benefit under the certificate in which she was named as sole beneficiary, be substituted as defendant in its place and stead upon paying into court to the credit of the action the sum of §2,000, less counsel fee, costs and disbursements.
    
      Held, that, under the circumstances, the association should not be released from. ■ liability upon payment of the sum of §2,000, but that its rights would be amply-protected by bringing in Honora Dalton as an additional party defendant.
    
      Appeal by Honora Dalton from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 1st day of March, 1901, granting the motion of the defendant, the Supreme Council of the Catholic Mutual Benefit Association, for permission to pay into court the sum of $2,000, and be relieved of all liability, and bringing in Honora Dalton as a party defendant in the action.
    
      Julius M. Mayer, for the appellant.
    
      J. Arthur Corbin, for the defendant, respondent.
    
      James Kearney, for the plaintiff, respondent.
   Hatch, J.:

The defendant, the mutual benefit association, is a corporation duly constituted and created under chapter 496 of the Laws of 1879, having its principal place of business at Niagara Falls, and having certain branch and grand councils in this State, among others Branch No. 106, located in the city of New York. This action was brought to recover upon a benefit certificate issued by the association to one John Brophy, a member of said branch.

It appears that said John Brophy obtained originally a benefit certificate in the sum of $2,000, payable to his wife. She died and thereafter he obtained a new certificate in which his daughter, Honora Dalton, was named as sole beneficiary. This certificate is dated June 19, 1894, and is signed by the supreme recorder, the supreme president, and countersigned by the president and recording secretary; it was delivered to Honora Dalton and was in her possession from July or August, 1894, until about August, 1900, when she forwarded the same to Mr. Joseph Cameron, supreme recorder, at Hornellsville, N. Y., at his request, for inspection.

After the second certificate had been issued it is claimed that John Brophy represented to the secretary of the branch of which he was a member that the Honora Dalton certificate was lost, and that upon such representation a new certificate was issued, intended to be a duplicate of the lost document and only for the purpose of replacing it, naming Nora Dalton as the beneficiary. Mrs. Dalton had no notice of the issuing of the duplicate certificate and she then had in her possession the certificate so represented to have been lost. Upon the surrender of the duplicate a new certificate was issued, naming as beneficiaries the plaintiff herein in the sum of $1,200; John Brophy, a son of the member, in the sum of $300; and Honora Dalton, the appellant, in the sum of $500. John Brophy having died, this action was brought by the plaintiff on her alleged claim for $1,200 as beneficiary and also' on the claim of the son, he having made an assignment of the same to her. Plaintiff is thus pressing her alleged claim against the' defendant association by action at law, and Honora Dalton is insisting upon her claim under the second certificate for the full amount, thus exposing the defendant to the danger of two actions. In this situation the benefit association made a motion asking that an order be made substituting Honora Dalton as defendant in this action in the place and stead of the Supreme Council of the Catholic Mutual Benefit Association and discharging the said association from liability either to Catherine J. Fanning, the plaintiff, or to Honora Dalton, on paying into court to the credit of the action the sum of $2,000, less counsel fee, costs and disbursements. This motion was granted, with leave to the plaintiff to serve a supplemental summons and complaint upon the new defendant, and from the order so made this appeal is taken.

We have reached the conclusion that the order releasing the original defendant from liability should not have been granted, under the circumstances of this case, as made to appear by the moving and opposing affidavits. A serious question is raised as to the validity of the certificate issued by the defendant association in which . the plaintiff, her brother and sister are named as beneficiaries, owing to the alleged irregularity of the proceeding by which the Honora Dalton certificate was surrendered and the “Norá” Dalton certificate was issued and as to the form of the last certificate issued upon the surrender of the “Nora” Dalton certificate. It is not claimed but that Honora and Nora Dalton are the same person, but the appellant contends that the acts of the parties subsequent to the issuing of her original certificate were irregular and void, and that by reason of the fraud or bad faith of the officers of the defendant association charged with the duty of issuing benefit certificates under the rules and regulations of the association, or their gross loches, or both, her original certificate remains in full force and virtue, and that if the defendant has by such acts become liable upon the certificate sued upon, it ought not to he permitted to escape its liability to her without a trial of the issues thus raisedy The constitution of the association provides that the supreme council shall have the right, in case of adverse claimants of a benefit fund, to pay such fund into court, in proceedings in the nature of an interpleader, and such right is made a condition to the right of persons entitled to participate in such fund. , But such right is not absolute, and if it were the case before us is not within the terms of the provision. The constitution, like the statutory provisions in such cases, clearly relates to cases of controversy between claimants for the fund alone and not to a case in which different parties claim a liability on the part of the association arising out of its wrongful or negligent acts, as is the present case, and. where its presence as a party is necessary to a proper determination of the controversy. It is not the province of the court to determine this issue upon affidavits, nor do we express any opinion as to the merits of the controversy further than to say that the record discloses that the mutual benefit association may have made itself liable to the claim of Honora Dalton for the full amount of her certificate. The opposing affidavits present a serious question of fact upon that issue, and for the purpose of determining such question the defendant association is a proper and necessary party. It may be true that no number of outstanding certificates can give any person or persons the right to recover in the aggregate more than the sum of $2,000, as contended by the defendant, but that fact does not justify the discharge of the defendant from liability in these circumstances. The case of McCormick v. Supreme Council (6 App. Div. 175), cited by respondent, does not support its contention in this respect. In the McCormick case the defendants, who were interpleaded, assented to the application and the court said: The substituted claimants might have complained of the order of substitution, so far as it discharged the present defendant from liability to them ” (p. 177), thus indicating that had the persons sought to be substituted objected the discharge might not have been granted. Another important distinction between that case and the one at bar is that, in the McCormick case, there was no claim of any kind that the defendant association had been guilty of any fraud, omission or neglect.

Other considerations add to the reasons constraining us to the result, we have reached. Under the provisions of the Code of Civil Procedure (§ 521) the defendants, the supreme council, if. retained as a defendant, and Honora Dalton, may have their ultimate rights determined, as between themselves, by cross-service of their answers, and thus all the issues between the parties may be presented for the determination of the court in an orderly and satisfactory manner.

It is apparent that, in any event, the appellant will require for the presentation of the issues raised by her the record books and other documentary evidence in the hands of the defendant association, and if the order as made and entered is affirmed, she will be obliged to bring them into court by subpoena, at a great inconvenience and expense. It appears that the office- of the supreme council is at Niagara Falls, and at the time of the transactions involved the supreme recorder lived and had his office at Hornellsville, N. Y., in the county of Steuben. It is absolutely necessary that the defendant Dalton should have all the records and documents relating to the transactions- involved, and we think it would be unjust to permit the supreme council to subject her to such inconvenience and expense, in view of the plain fact that the complications have arisen, in part, at least, by reason of its defective records and the failure of its officers to obey the letter and spirit of its rules and regulations as to the issuing, surrender and reissuing of benefit certificates, whatever the outcome may be.

These considerations lead- us to the conclusion that the order should be modified by striking ■ out the provision by which the Supreme Council of the Catholic Mutual Benefit Association is discharged from liability to the plaintiff or Honora Dalton on payment of the sum of $2,000 to the chamberlain of the city of .New York, and substituting Honora Dalton as defendant in the action in place of the said association, and inserting a provision bringing in Honora Dalton as an additional party defendant, and as so modified that 'it be affirmed, with ten dollars costs and disbursements to appellant.

Van Brunt, P. J., Patterson, Ingraham and McLaughlin, JJ"., concurred.

Order modified as directed in opinion, and as modified affirmed, with ten dollars costs and disbursements to appellant.