Kittredge v. Osgood

Beneficiary Association — Attachment — Appointment of Receiver. An attachment of the property of a corporation, if valid when made, is not discharged by the subsequent filing of a bill and the appointment of a receiver of the corporation ; and if the funds attached have been paid over to the receiver by the order of the court without prejudice to the rights of the attaching parties, the receiver takes the property subject to all valid -attachments. The appointment of a receiver is not a bar to suits brought against a corporation before the bill is filed, nor do such suits abate in consequence of such appointment, but the receiver may appear in and defend the suits if the interests which he represents render it proper or necessary.

Application, filed October 17, 1893, by the receiver of the Supreme Lodge Knights and Ladies of Protection, alleging that on February 24, 1892, when he was appointed receiver on a bill filed by John S. Page and another, certain actions at law brought by Marie L. Osgood and others against the corporation were pending ; that the plaintiffs in those actions, the defendants in this application, declined to present their claims to him for settlement, or to present them for the determination of the court, but proposed to proceed to judgment on the actions, and claimed the right to satisfy such judgments in full out of funds attached by them, and asking for an order of notice on the defendants to show cause why they should not be enjoined from proceeding to judgment on the actions, and why the funds in the hands of the receiver should not be distributed free of the attachments made by them. At the hearing in the Superior Court, before Hammond, J., it appeared that the defendants became members of the Supreme Lodge Knights and Ladies of Protection, a corporation organized under the provisions of St. 1888, c. 429, received certificates of membership therein, and paid their assessments; that while such members they each became sick and disabled, and having complied with all the requirements of the Order as to notification, proof, etc. of such sickness, they became entitled to receive sick benefits; that their claims were allowed by the subordinate lodges, and forwarded to the Supreme Lodge for payment : that the Supreme Lodge, though having funds in its possession for that purpose, refused and neglected to pay the claims; that thereupon the defendants refused to pay assessments, or to continue as members of the Order, and brought actions against it, and attached by the trustee process its funds in the hands of a bank in which they were deposited ; that since the appointment of the receiver the case of Marie L. Osgood against the Order had been tried as a test case, the receiver appearing therein for the Order, and a verdict was ordered for the plaintiff Osgood for the amount claimed. The receiver filed his application asking the judge to determine : 1st, whether the plaintiffs, these defendants, can of right maintain the actions and secure judgment thereon ; 2d, whether the attachments are valid liens, and judgment shall be satisfied out of funds held under such trustee attachment. On December 26, 1893, a decree was entered reciting that the bank which had been summoned as trustee in the actions in which these defendants were plaintiffs had subsequently been ordered by the court to pay to the receiver the money held for the Order at the time of the service of the writs upon it, such payment being without prejudice to the rights of the defendants, with which order the trustee had fully complied, adjudged and ordered that, for the purpose of settling the liability of the Order, the defendants might proceed with their several actions if they saw fit; that the judgments, if in such actions any should be obtained, should be enforced against the funds in the hands of the receiver to the following extent, and not otherwise, viz. the costs accrued therein up to the time of filing the decree to be allowed as a preferred claim, and the judgment for damages to be enforced against the fund to an amount equal to the assessments theretofore paid by the judgment creditor, less sick benefits already paid to him, this amount not to be a preferred claim, but to be paid pro rata, so that the judgment creditor should share with the members of the Order and on the same basis; and that the defendants should be perpetually enjoined from enforcing a judgment against the fund in any other manner, but not restraining them from holding the Order otherwise liable to the full amount of the judgment, and permitting proof of claim if the actions were not prosecuted to judgment. From this decree the defendants ■ appealed, and the judge reported the case for the determination of this court.