(76 Hun, 534.)

#### McGOWAN v. SUPREME COUNCIL OF CATHOLIC MUT. BEN. ASS'N.

(Supreme Court, General Term, Fifth Department.

April 12, 1894.)

1. Mutual Benefit Insurance—Assessments—Validity.

The validity of an assessment is not affected by the fact that the benefit had already been paid, where the payment was made out of the reserve fund created by initiation fees under authority of the charter, and the assessment was levied to reimburse such fund.

2. Same—Nonpayment of Assessment—Waiver of Default.

After a member of a mutual benefit association had made default in the payment of an assessment, the amount thereof was handed to the treasurer of the association. He gave no receipt, but said that he would take the money to the next meeting of the association, and ask to have the member reinstated, and that if it were done he would mail a receipt. The member died before the next meeting, and the money was returned. *'Held,*that there was no waiver of the forfeiture of membership incurred by such nonpayment

3. Same—Custom of Association.

Forfeiture of a certificate of membership by nonpayment of assessments cannot be avoided by showing that the assessment was after-wards tendered, and that the association had been accustomed "to receive assessments after default, unless it is also shown that the member knew of such custom, or had been indulged in that respect.

Action by Eliza B. McGowan against the Supreme Council of the Catholic Mutual Benefit Association to recover $2,000 on a beneficiary certificate issued by defendant to Richard B. McGowan, plaintiff’s son, and payable to plaintiff. A verdict was directed in favor of defendant, and plaintiff moves for a new trial on exceptions taken at circuit, and ordered to be heard at general term in the first instance. Denied.

Argued before DWIGHT, P. J., and LEWIS, HAIGHT, and BRADLEY, JJ.

Adolph Rebadow, for plaintiff.

Frank C. Loughlin, for defendant.

BRADLEY, J.

The plaintiff’s son, Richard B. McGowan, became a member of the Holy Angels Branch, No. 7, of the defendant, and certificate of membership was issued to him May 7, 1888. It was to the effect that he was entitled to all the rights and privileges of membership in the defendant, and to participate in the beneficiary fund of the association to the amount of $2,000, which should, at his death, be paid to his mother, the plaintiff. The certificate, by its terms, was issued upon the condition that Richard B. McGowan should, in every particular, while a member, comply with all the laws, rules, and requirements of the association. The defendant was incorporated by chapter 496, Laws 1879, in which it was provided that the corporation should have power to make such constitution, by-laws, rules, and regulations as it should judge proper for regulating and fixing the amount and time of payment of all fees, dues, and funds of the corporation, and for its grand council and branches, and that they, respectively, as well as the defendant, should have the power of suspending any of its members (section 3); *178that it should be lawful for the association to create, hold, and disburse a beneficiary fund sufficient to pay all losses and expenses incident to the corporation, and for the relief of members, and their families, of the branches and grand councils (section 6); and that such beneficiary fund as may be deemed suitable may be set apart, and provided to be paid over to the families, heirs, or representatives of deceased members, or to such person as they may, while living, have directed; and that the collecting, managing, and disbursements, as well as the term and manner of payments on the death of a member, shall be regulated by the constitution, by-laws, rules, and regulations of the corporation (section 7).

The alleged defense is that Richard B. McGowan was in default in payment of assessment known as “Number 18,” made in January, 1892, and, as the consequence, was suspended from the rights of membership, and remained so at the time of his death. It appears that such an assessment was made, and that he became in default. The main question is whether, as against him, the assessment was legally made. This is matter of defense. It appears that it was the custom to keep the amount of an assessment in advance, so far as it was practicable to do it, so that, when a call from the grand lodge to pay beneficiaries on the death of members should be made, the branches could, without the delay attending the taking of the assessments made on account of such deaths, remit the amount, through the proper channel, to the depository of the defendant, for distribution among the beneficiaries. In practical effect, therefore, the payment of the assessments was a reimbursement of the respective branches preparatory to another call from the defendant for a like purpose. This method was permitted by the fact that, on initiation, each member was required to pay the branch in which he was received one beneficiary assessment. This initiation fee was paid by McGowan, and it may be assumed that he had paid all assessments made upon him prior to No. 18. The plaintiff challenges that one for the reason that he, by the payment of them, including that paid at the time of initiation, had already contributed an assessment to the payment of the beneficiaries on account of whom the call was made, and that he could not be legally assessed to contribute to a beneficiary fund which might be required by future deaths of members, because such an assessment was not within the provisions of his contract of membership. „ While it is true that be could not properly be assessed to pay the beneficiaries of members resulting from death which had not occurred, such in fact was not the assessment which the plaintiff seeks to repudiate. The constitution of the defendant provides that:

“The supreme recorder shall at the first of each month, or as soon thereafter as possible, issue one or two assessments, as may be required, to pay beneficiaries of deceased members then on record in his office, and shall notify the grand secretary of each grand council, and the recording secretary of each branch in his immediate jurisdiction, of the same. Said notice shall contain the name of the deceased members, the number and location of the branch, date of death, cause of death, date of initiation, amount of certificate, and shall also state the death, if any, upon said notice, that will be paid with surplus.” Section 7.

*179It then provides for assessments and notice, to contain the statements mentioned in section 7 (section 9), and, further, that all moneys so paid by members shall be retained by the treasurer of the branch until call is made, and that the money so collected shall be remitted, etc. (section 1). The assessment No. 18 conformed to the requirements before mentioned, was dated January 6, 1892, the notice annexed to it was dated January 11, 1892, and it was served upon McGowan by mail, on the day of the date of the nbtice. It may be observed that monthly assessments are provided for, and they are made to pay the beneficiaries of deceased members mentioned in it. Such was the assessment in question. It thus necessarily appears „tliat the beneficiary fund produced by the payment of the initiation fees of members is held as a reserve, except so far as it may be reduced by payments required to be made by surplus. This, evidently, is the policy of the corporation, as it is required to make an assessment early in each month to meet the demands of beneficiaries, arising from deaths of members reported since that of preceding month. The purpose for which assessment is made, rather than the fund from which it is paid, is the important fact bearing upon its legitimacy; and inasmuch as the branch is permitted to have a reserve beneficiary fund, originating from the payment of the initiation fee, it is quite unimportant, for the purpose of the question here, whether compliance with the call upon it is delayed until the assessments are paid in, or, in anticipation of the receipt of them, the amount is paid from that fund, and remitted without such delay.

The proposition made by the plaintiff’s counsel, that inasmuch as the defendant, or the branch of which McGowan was a member, had sufficient funds to pay the assessment, he could not be chargeable with default prejudicial to his relation to the defendant, is not supported by the case of Knight v. Supreme Council (Sup.) 6 N. Y. Supp. 427, and Evarts v. Accident Ass’n (Sup.) 16 N. Y. Supp. 27. There the assured had paid assessments illegally made, and for which it was held they were entitled to credit, by way of relief from those for the nonpayment of which the defendant sought to charge them with default. In the present case, McGowan had paid such sums, only, as the contract represented by the constitution and by-laws required of him; and the assessment, in its purpose and effect, was legitimately made. The consequence, upon his relation as member, of default in payment of an assessment, is declared, and by the contract, as so represented, which provides that within 20 days after the date of the notice, which shall be mailed not later than 5 days after its date, each member must pay into the beneficiary fund of his branch the amount of the beneficiary assessment, as stated in the notice, and that, if the assessment is not paid before the time of the next meeting of the branch “after the expiration of said twenty days, he is hereby declared to be suspended from all the rights of the association, and, if a member die while suspended, he is not entitled to participate in the beneficiary fund.” Section 10. McGowan did not pay his assessment within the time prescribed, nor was it paid *180at the meeting of the branch which was held February 1, 1892. He was there reported as in default, and by force of the provisions of the constitution, before mentioned, he was suspended. Afterwards, on February 23d, the sister of McGowan handed to the person who was the financial secretary of the branch before mentioned money sufficient to pay his assessment, and it was handed to him for that purpose. He gave no receipt for it, and he testified that he informed her that he could not, as he had no authority to do so, but would take it to the branch the following Monday, and ask that the member be reinstated, and if that was done he would mail a receipt for the money. The sister says he gave no reason for not giving her a receipt. This fact, however, may not be important. McGowan died before the next Monday, and the money was returned, and left at the residence of plaintiff. The money was not received by the defendant, nor was the payment of it to the person who was such officer effectual to support or restore his relation of membership. Upon that subject the constitution for the government of branches of the defendant provides that the financial secretary “shall not receive any beneficiary money from any suspended member unless the same is tendered in open branch meeting.” Article 6, § 5. This was one of the conditions upon which McGowan became a member. "While an unconditional receipt by the association of an assessment after the time has expired might constitute a waiver of the default, and operate to reinstate the member, the receipt of it by an officer with qualified power will not, in the face of the provision before mentioned, have that effect, unless its payment to him is in some manner ratified by the association. There was in the case at bar no waiver nor any estoppel by recognition of him as a member after his default in payment of the assessment. Ronald v. Association, 132 N. Y. 378, 30 N. E. 739; Id. (Sup.) 7 N. Y. Supp. 152; Insurance Co. v. Laury, 84 Pa. St. 43; Rice v. Society, 146 Mass. 248, 15 N. E. 624. It is seen that the payment of assessments within the time prescribed was, by the contract, made a condition of the continuance of membership, and when that condition is not observed the default operates to suspend the relation which the member had assumed to the association; and without some act on its part effectual as a waiver, or having the effect to reinstate him, his death gives no right of recovery to his beneficiary, upon the certificate. Lyon v. Society, 153 Mass. 83, 26 N. E. 236; Harvey v. Grand Lodge, 50 Mo. App. 472.

The plaintiff offered to prove that it had been the custom of this branch of the defendant to receive assessments and dues after the expiration of the time designated in the constitution for payment; that such payments were made to the financial secretary after members had been suspended, and received outside the lodge, and wrere adopted and ratified by it; and that such members were not afterwards disfranchised of their rights in the lodge. And, to the exclusion of the evidence, exception was taken. The constitution provides for reinstatement of a suspended member, and how it may be done. The. evidence offered would not tend to *181prove that McGowan had any knowledge of any such custom, or that he had ever been indulged in that manner. The mere fact that it had been granted to others does not enable the plaintiff to effectually assert a waiver of the default on the part of the assured, of whom she was beneficiary. The waiver asserted by the plaintiff is in the nature of estoppel, and, to support it, the plaintiff must be able to say that he was induced by the course of dealing of the defendant to rely upon it for the protection of his membership. The evidence offered would not support any claim of the plaintiff to waiver or estoppel... Appleton v. Insurance Co., 59 N. H. 541; Crossman v. Association, 143 Mass. 435, 9 N. E. 753. There was no error in the ruling, and the verdict was properly directed for the defendant. The plaintiff’s motion for a new trial should be denied, and judgment directed for the defendant on the verdict. All concur.