Kentucky Mutual Security Fund Co. v. Turner , 93 Ky. 461 ( 1892 )

JUDGE BENNETT

delivered the opinion oe the court.

The representatives of Turner, and Logan’s representatives, having obtained judgments on life policies issued to said deceased by the appellant, the Kentucky Mutual Fund Company, and the same not having been paid in full by said company, the said appellees, or their beneficiaries, instituted this action to subject a fund, known as the security fund, belonging to the said appellant, to the payment of said claim. The provisions of the appellant’s charter and by-laws provide for funds for the benefit of its policy-holders, as follows: A mortuary fund, a security fund, and an expense fund. The mortuary fund is intended to pay the policies of such deceased members as may be entitled to the same. That fund is created by certain assessments for the payment of the policies of the deceased members; but the power to assess for such purpose is limited to a certain number of assessments upon the surviving members of the class to which the deceased member belonged, and if such assessments were not sufficient to pay the same in full, it could not be paid out of any other fund. The Security Fund was intended to be created by separate contributions from the members upon joining the appellant, and other sources.

The provision germane to the question at issue is as follows : “ Said company further agrees that, if at any time after said fund shall have amounted to two hundred and fifty thousand dollars, or after five years, after February 4th, 1884, if that amount shall not have attained before that date, it shall fail by reason of insufficient membership, or shall neglect, if justly and legally due, to pay the maximum indemnity by the terms of the certificate issued, and such certificate shall be presented for payment to said trustees by the legal holders thereof, accompanied by •satisfactory evidence as hereinafter provided, its failure to pay after demand upon it within the time herein stipulated for the limitation of action, then it shall be the duty of said trustees to at once convert said security fund into money and distribute the same- (less the reasonable •charges for management and control of the said fund) ■among the holders of certificates then in force, or their legal representatives, in the proportion which the amount •of each of their certificates shall bear to the amount of the whole number of certificates in force.”

The evidence of such indebtedness, its correctness, demand and refusal to pay, shall be “ a copy of a final Judgment obtained thereon, and the refusal to pay the same.”

Final judgment was obtained on the policies mentioned, •and presented to the appellant for payment and refusal. Thereupon (the five years having elapsed) this action was instituted against the appellants, the Kentucky Mutual Fund Co. and the Fidelity Safety Yault Co., the latter being trustee of said fund, to subject it to the payment of -said policies. All of the policy-holders were made parties. The contention on behalf of the representatives of the policies whose principals are dead, is, that their policies should be first satisfied out of the security fund, because the living members of said company constituted a partnership for the benefit of the representatives of those members that were dead, and as the representatives of the ■dead members were creditors of the firm, they were, upon .the well known principles of partnership, entitled to .priority out of the partnership fund, and the members-were not entitled to any of it until their claims were satisfied in full. On the other hand, the company and the living members contend that said fund is exclusively for the benefit of the living members in good standing. But .it seems to us that either contention does violence to the language quoted. Eor it is plainly expressed that upon the failure of • the company “ to pay the maximum ” indemnity due on the policies of dead members, said fund shall be prorated among the living members and the representatives of such as are dead in proportion to the amount of their respective certificates. This language places all upon equal terms in the distribution of .said fund in proportion to their respective certificates. None is entitled to a preference over the other. And said provision is not modified by any other provision of appellant’s charter or by-laws.

The judgment is affirmed.