Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1916-10-30
COURT RULES THERE ARE NO
PREFERRED CREDITORS IN
LEGION OF HONOR.
ALL CLAIMANTS TO
SECURE SOMETHING
Few Not to Absorb Assets Of Defunct
Fraternal Organization - Decision
Important and Establishes Principle
For Beneficiary societies-state's
Contention Upheld.
Special to Times Republican.

ance office and the attorney generals
department here have received the rul-
ing of Judge Milo P. Smith, of Ce-
dar Rapids, as to the settlement Of the
claims against the Legion of Honor,
which was forced into receivership by
the state officials last spring. 1t is to
the effect that the claims against the
iefunct beneficiary organization be not
paid in rotation. that those who
have death claims and have been wait
ing for their money be not paid in the
order of priority claim, but that the as
sets of the company or its funds rather
each will get a little instead of a few
getting it all.
A review Of the case. written brief
ly by the attorney generals department,
is as follows:
in the spring of 1916 the Iowa Lee
gion of Honor was placed in the hands
of receiver upon the application Of the
attorney general of Iowa. Fred w.
Ham, of Gedar Rapids, was appointed
receiver. In view of the fact that the
membership was divided into two
classes-Class A, or the inadequate
class, and Glass BIC, or the adequate
class, and because of the further fact
that there were insufficient funds to
pay all of the outstanding death claims
of this association, became matter of
concern to many Of the members and
into rather complicated sit
uation. This situation was further com 3
plicated blythe fact that there was in
sufficient revenue in the general fund
to pay expenses of administration and
the outstanding general accounts, and
also because of the fact that it had
been a custom of the association to pay
claims in their order of filing as fast
as available funds accrued. Y
1T was urged by counsel for some
of the claimants that all of the funds
of the association, including Glass
and Class BIC funds, should be put to-
gether and used for the purpose Of pay
ing all unpaid death claims whether OF
Class A members or of Glass BIC mem
bers. 1t was also urged by some that
the custom OF paying outstanding death
claims In rotation and In the order OF;
their fling should be continued by the
receiver.
"A hearing upon this matter OF dis
tributing the funds of this association
was had in September before Judge Milo
2. Smith, of Cedar Rapids at which
hearing Henry E. Sampson. assistant
attorney general. appeared in behalf OF
the state and urged upon the court that
the Glass A beneficiary fund should be
kept separate and distinct from the
class BIC beneficiary fund and that the
Glass A beneficiary fund should be used
exclusively for the payment of Class
A claimants, while Glass BIC ben
efciary fund should be used exclusive
" for paying Glass BIC members. He
also urged that, since the association
was in the hands of a receiver, the
claims should be prorated rather than
paid in rotation.
There were about 1s5 unpaid claim
ants in Glass A with some $4,000 avail
able for the payment of claims aggre-
eating some $125,000. while there were
some $40, 900 available in the Glass BIC
beneficiary fund for the purpose Of pay
ing some $4,000 unpaid claims in this
class.
.The court held in favor Of the posi-
ton held by the attorney generals Of
fee and entered an order on Oct Is.
holding, among other things, that the
classes should be kept,separate and dis
tinct: that the claims of each class
should be prorated instead of rotated;
that the general expenses Of admins
tration should be borne by each of the
two classes in proportion to the amount
Of available funds in each, and that all
of the members of each class should be
treated exactly alike.
This Is an important decision and
establishes an important principle for
fraternal beneficiary societies Of this
character"