Frank v. Interstate Business Men's Accident Ass'n , 151 Iowa 684 ( 1911 )

Ladd, J.

The appeal is from an order overruling a motion that the cause be transferred from the law to the equity side of the calendar and there heard. If the obligation of the association was no more than to levy an assessment on its members and pay the benefit or indemnity stipulated from the proceeds derived therefrom, then the remedy was in equity and the ruling erroneous. Rambousek v. Supreme Council of Mystic Toilers, 119 Iowa, 263; Collins v. Bankers' Accident Assn., 96 Iowa, 216; Bailey v. Mutual Benefit Assn., 71 Iowa, 689; Rainsbarger v. Union Mutual Masonic Aid Assn., 72 Iowa, 191.

On the other hand if the contract, whether contained in the certificate of membership, the articles of incorporation, or by-laws was for the payment of defined or fixed sums of money upon the happening of specific contingencies, then the remedy was at law, and the court rightly denied the application that it be transferred to the equity side and heard as an equitable action. Van Norman v. Modern Brotherhood of America, 134 Iowa, 575; Hart v. National Accident Assn., 105 Iowa, 717; Fort v. Iowa Legion of Honor, 146 Iowa, 183.

Whether the ruling was correct, then, depends on the nature of defendant’s obligation, and this, as the certificate of membership recites that the holder is “entitled to such benefits as may be provided in and by the articles of incorporation and by-laws,” must be ascertained from an examination of such of these as relate thereto. The matter is covered by portions of article 5, as follows:

Every member of this association shall pay annual dues of $1, which shall be collected at the time and in the manner • fixed by the by-laws adopted by the members of the association.

The income derived from membership fees and dues may be used in so far as necessary for the payment of the ordinary expenses of the association, but if the funds derived from these sources are more than sufficient to pay the reasonable ordinary running expenses of the association, the board of directors may set aside the surplus to constitute a reserve fund to be used for the payment of benefits and indemnity whenever four assessments of $2 on each member in good standing in any one year fails to provide sufficient income to take care of the benefit and indemnity claims allowed against the association, and the proceedings from dues and membership fees shall be used for no other purposes than those above specified.

The association shall pay to every member who shall while in good standing receive bodily injuries affected solely by external, violent, and accidental means, so much of tlie proceeds of one assesssment of $2 on each member of -the association in good standing as may be required to furnish such member weekly benefits of $25 during the period of total disability, not exceeding two hundred consecutive weeks.

If the disability produced as limited in the preceding paragraph shall be less than total the association shall pay so much of the proceeds of one assessment of two dollars on each member of the association in good standing as may be required to furnish such member such proportion of the benefits allowed for total disability as the disability suffered bears to total disability.

The association shall pay to every member thereof who -shall, while in good' standing, suffer the complete severance of one hand, one foot, or the loss of sight in one eye within six xnonths from the happening, of the accident, one-fourth of the proceeds of an assessment of two dollars on each member of the association in good standing to an amount not exceeding twelve hundred and fifty dollars, subject only to the provisions, conditions, and limitations of the by-laws.

For the purpose of carrying out the object of the -association and in conformity with its plan as an assessment accident association assessments of not to exceed two dollars at any one time shall be made on each member of the association in good standing at quarterly periods in the manner and form provided in the by-laws adopted by the members of this association; but the board of directors shall have power to reduce or pass any quarterly assessment when funds are not needed for the payment of benefit or indemnity claims. Extraordinary assessments may be made whenever required under the provisions of law.

The proceeds of assessment shall never be used for any other purposes than to pay legal claims for benefits and indemnity under the provision of the articles and bylaws.

When the board of directors is fully satisfied that nothing but final recovery and proof of injury and disability is wanting to fix the liability of the association for the payment of benefits or indemnity, and that the member is in need of financial aid by reason of the loss of income from his ordinary avocation, occupation or employment resulting from the disability it may order advance payments of benefits or indemnity to be made in such amount as may be deemed wise, not exceeding the amount that would be due were final proofs filed at the time of the allowance.

It will be observed that two funds are to be established out of which to pay the claim of benefit and indemnity, that derived from the surplus of annual dues after meeting the expenses of the association therefrom and that derived from the quarterly assessment of $2 per member. In this respect the plan is to be distinguished from that of associations stipulating the payment of the net proceeds not exceeding a specified sum of an assessment on all members as in the cases first cited. Moreover, the benefits to be paid differ according to the nature and extent of the injury suffered, and it would be impractical to pledge the proceeds of an assessment,'for these might prove sufficient to pay many benefits. If an assessment is to be made for each benefit and such assessment exceeds the limit, what is to be done with the surplus ? Plainly enough the design was to levy assessments quarterly and out of the funds derived therefrom meet the ■ obligations of the association as these arise. Its sources of revenue are the annual dues and the quarterly assessments, and what is promised in event of bodily injuries is “so much of the proceeds of one assessment of $2 on each member of the association in good standing as may be required to furnish such member weekly benefits of $25 during the period of total disability, not to exceed two hundred consecutive weeks.” This merely measures the benefit. It can not exceed the assessment of $2 per member in good standing at the time of the injury, and payment may not continue longer than two hundred weeks, but there is no pledge of the proceeds of an assessment nor would such a pledge be in harmony with the plan of insurance adopted by the association.

This thought is further emphasized by the provision for the' payment of an indemnity in event of the loss of a hand, foot, or eye of “one-fourth of the proceeds of an assessment of two dollars of each member” not exceeding $1,250. If this is to be made from an assessment levied for the purpose, what is to be done with the remaining three-fourths of the proceeds ? The plan exacts that assessments be collected quarterly, and not upon the happening of each accident, and manifestly the reference to the proceeds of an assessment is intended as a limitation on the amount to be paid by way of benefits or indemnity. Such limitation is definite; for the record of the quarterly assessment will indicate precisely the proceeds of an assessment therefrom at the time of the accident, and the association promises to pay the amount of these not exceeding $25 per week for two hundred consecutive weeks in event of total disability, and one-fourth of such amount not exceeding $1,250 in event of the loss of sight of an eye. If, as is argued, there were then but 725 members who paid their quarterly assessments, the first of these amounts might not exceed $1,150, and the last would be one-fourth of that sum. As all payments are from assessments, this conclusion is consistent with section 1787 of the Code. The plaintiff alleged in an amendment to the petition that enough had always been realized from the annual dues and quarterly assessments to pay all benefit and indemnity claims against the association, and that there was then on hand a sufficient amount derived from these sources to 'more than satisfy all existing claims against the association including that of plaintiff.

The court rightly held that the petition as so amended stated a cause of action at law, and therefore did not err in overruling the motion to transfer to the equity side of the calendar. — Affirmed.