Case Name: Jonathan Kelshaw, Plaintiff, v. Bankers' Life Insurance Company, Defendant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1907-02-15
Citations: 117 A.D. 726
Docket Number: 
Parties: Jonathan Kelshaw, Plaintiff, v. Bankers’ Life Insurance Company, Defendant.
Judges: 
Reporter: Appellate Division Reports
Volume: 117
Pages: 726–729

Head Matter:
Jonathan Kelshaw, Plaintiff, v. Bankers’ Life Insurance Company, Defendant.
First Department,
February 15, 1907.
Insurance — reorganization of assessment company as st.ock company — when reserve under section 84 of the Insurance Law sufficient to cover former policies. '
An insurance company organized as- a .fraternal organization thereafter organized under the assessment plan and later as a st.ock company. On .organizing as an assessment company it was. provided that members of the former class A should be assessed one dollar for each death and that there- should be set. . aside a fund of one dollar per 1,000 on all" insurance issued on the new class B, -which fund should go to meet any deficit in assessments of class A when the membership dropped below 1,000; This mortuary fund of class B was continued until the corporation organized as a stock,company, when. it. - was discontinued as no longer required.. Upon the - last reorganization the company carried a reserve figured under section 84 of the Insurance Law, the reserve being applicable to all classes of policies. - ",
Held, that a. sufficient reserve was maintained on the policies of former class A, and that a holder of such policy was not entitled to have an additional reserve of one’dollar per 1,000 on new insurance.
Submission of a controversy -upon an agreed statement of facts pursuant to section 1279 of the Code of Civil Procedure.
The Bankers’ Life Insurance Company of the city of New. York is A corporation originally organized as a fraternal organization March. 24, 1869, under the name of “Bank Clerks’ Mutual Benefit Association of the City of New-York.” On the 15th day of August, 1884, it was formally incorporated under chapter 175 of the Laws of 1883, under the same name, and was thereafter, on June 28, 1893, reincorporated under-article 6 of chapter 690 of the Laws of 1892, known as the “ Insurance Law,” for the purpose of doing business outlie regular assessment or co-operative plan, under the same name.
By an order of the Supreme Court of the State of Hew York, made April 27, 1894, its name was changed to the Bankers’ Life Insurance Company of the City of Hew York.
Pursuant to the provisions of chapter 693 of the Laws of 1893, entitled “ An act authorizing all insurance companies transacting . business on the co-operative or assessment plan to re-incorporate as a stock corporation under its existing corporate name,” it reincorpo- - rated as a stock corporation. on the 2d of August, 1899, with a capital stock of $100,00.0, and has ever since been doing business as a stock company. .
In June, 1893, when the Bank Clerks’ Mutual Benefit Association of tüe City of Hew York reincorporated for the purpose of doing business on the assessment or co-operative plan, it was possessed of funds and securities amounting in value to some $112,000. The membership then consisted of 1,175 persons. The evidences of membership were a mere naked certificate entitling the person named therein to the benefits and privileges of membership without setting these facts forth.
As a matter of fact, pursuant to different resolutions of the membership and the directors, the membership was assessed one dollar a head on each death, and the beneficiaries named in the certificate of the deceased member received the proceeds. On the reincorporation as an assessment company it was agreed that the membership, amounting to 1,175, were to be known as Class A. It was agreed that as to them they should be assessed one dollar on each death, and the beneficiaries should be paid not less than $1,000.
The new' members who were expected to come .in under the assessment or co-operative plan should be called Class B. It was agreed that as to tliem.there should be set.aside a fund of one dollar per thousand on all the insurance written each year on Class B, and determined as of the thirty-first day of December. The purpose of this fund was as follows: When the membership of Class A got to' be below 1,000 there would be a deficit on each 'death which the mutual company would be bound to make up, and so this one dollar a thousand was meant to create a mortuary fund for the purpose of making up such a deficiency. This mortuary fund was kept in existence until 1899, when the corporation was reorganized as á .stock company, sinpe which time it was discontinued by the management for the reason that it was deemed to be no longer required. The company having become a stock corporation, it had to carry a reserve, figured by the Department of Insurance and by- the company on the basis of sectiop 84 of the Insurance Law, and it carried this reserve on all the different kinds of policies, to wit, on the fraternal policies of Class A; on the assessment policies of Class B,- and also on the new policies it issued as a stock company. No separate mortuary fund for the protection of Class A was thereafter ever kept by the company, Or reported in the annual reports filed each year by the company with the Superintendent of Insurance pursuant to sections 44 and 45' of the Insurance Law. It was deemed by the management sufficient that the reserve Called by section 84 should be kept on hand, and that they should add to this one dollar a thousand on all Class B insurance in force on the thirty-first day of December of each year, but that it was not necessary for them to increase this fund by one dollar a thousand on all the new business written as a stock company since 1899.
Plaintiff, being of full age, is a member Of. Class A in good standing, having paid all calls upon his. certificate' of membership* No. 296. . • ,
Plaintiff' demands judgment that the defendant be directed to ,create, maintain and keep a fund of one dollar a thousand on all its outstanding risks covering not only Class B business written between June 28,1893, and August 21,1899, but also upon all business written ■ since August.21* 1899, and all business to be Written thereafter.
Defendant prays for judgment that the submission of the plaintiff be dismissed and that the defendant upon keeping the reserve called for by section 84 of the Insurance Law Upon Class A policies and setting aside a mortuary fund of one dollar per thousand upon all Class B business written between the 20th day of June, 1893, and the 21sf day of August, 1899, be decreed to have fulfilled its obligations to Class A.
George W. Carr, for the plaintiff.
D. Cady Herrick, for the defendant.
Sic. Laws of 1893, chap. 690.— [Rep.
This section has been amended by Laws of 1898, chap. 147; Laws of 1901, chap. 346, and Laws of 1906, chap. 326.— [Rep.
These sections have been amended by Laws of 1897, chap. 493, and Laws of 1906, chap. 326.—[Rep.

Opinion:
Scott, J.:
If the provision for adding to the reserve for the protection of Class A policyholders of the sum of one dollar for each one thousand ' dollars of insurance written in Class B policies can be considered in any sense a contract between the company and the Class A policyholders, there was certainly no such contract respecting, insurance written under the present organization of the company. At present all outstanding policies, as well those known as Class A as the later ones, are protected by the reserve required and provided for by the Insurance Law, and this is to be presumed to be sufficient. We see no ground, therefore, for the contention that,, in addition to. this legal reserve, there should be set aside one dollar for each one thousand of new insurance written by the present, corporation.
There must be judgment, without costs, for the defendant, to the effect that it will have fulfilled' its obligations to plaintiff, as the holder of a Class A policy, by keeping for" the protection of his policy the reserve called for by section 84 of the Insurance Law, and setting aside a mortuary fund of one dollar-per thousand dollars upon all insurance written under Class B policies.
Patteesoe, P. J., Iegkaham, Laughlie and Clabke, JJ., concurred.
Judgment ordered for defendant, as stated in opinion.