(195 N.Y.S.) is permitted. In Levey v. Levey, 88 Misc. Rep. 315, 318, 150 N. Y. Supp. 610, Justice Benedict intimates that the court may refuse to sanction a discontinuance "in exceptional cases, where substantial rights of others have accrued, and injustice will be done to them by permitting the discontinuance," citing a note to Beadleston v. Alley, 4 Silvernail, 595, 602, where the case of Dryer v. Shevalier, 59 Hun, 620, 15 N. Y. Supp. 157, is cited to the effect that "the court will set aside a settlement and discontinuance of an action, to prevent the perpetration of a manifest fraud upon one not a party of record." The order of reference merely directs that I take such testimony as may be offered by the parties on the question whether the consent to discontinuance was given by the plaintiff and accepted by the defendant in fraud of the rights of the plaintiff's lawyer, J. Noble Hayes, and of others claiming an interest in the plaintiff's cause of action. Many other matters have been argued by respective counsel in the voluminous briefs submitted to me and have been covered in proposed findings submitted by Mr. Hayes. I deemed my power under the order of reference, however, limited to the precise terms of the order of reference, and have accordingly submitted my report herewith, only passing upon the submitted question, and only finding that the said consent was given by the plaintiff and accepted by the defendant in fraud of the rights of plaintiff's attorney, and of the assignees of part of plaintiff's cause of action, and will operate detrimentally to the collection of plaintiff's wife's judgment for alimony. The effect of such findings, if sustained by the court, as well as the other questions argued by counsel, are for determination of the Special Term exclusively. See Woodward v. Musgrave, 14 App. Div. 291, 43 N. Y. Supp. 830. Argued before BLACKMAR, P. J., and RICH, KELLY, JAYCOX, and YOUNG, JJ. Andrew F. Van Thun, Jr., of Brooklyn (Robert H. Elder, of New York City, of counsel), for appellant. Frederick W. Girdner, of New York City, for respondent. J. Noble Hayes, of New York City, for Weatherby and Frear. PER CURIAM. Order affirmed, with $10 costs and disbursements, upon the opinion of Hon. M. H. Hirschberg, official referee. (201 App. Div. 652) In re NATIONAL TEMPERANCE LIFE INS. SOC. (Supreme Court, Appellate Division, Second Department. June 9, 1922.) Insurance 708-Claims for examining applicants for benefit Insurance cannot be paid from mortuary fund. The insurance reserves of a beneficial society had been impaired by using the benefit funds for expenses. The shortage was made good by the officers and directors, and the assets of the society were taken over by another society, under a contract providing for continuation of the life insurance benefits of the certificates, and providing that the other society would pay from the assets received the net contributions of members of the first society who did not accept the contract. Held that, in view of Insurance Law, § 233, subd. 4, providing that the laws of a society for payment by members should state the proportion thereof which might be used for expenses, and no part of the money collected for mortuary or disability purposes should be used for expenses, a claim against the first society for examining applicants for insurance therein, being an item of expense, could not be paid from the depleted mortuary fund, and therefore the other society was not chargeable therewith. For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes Appeal from Special Term, Kings County. In the matter of the application of the People of the State of New York, by Jesse S. Phillips, as Superintendent of Insurance, for an order to take possession of the property, etc., of the National Temperance Life Insurance Society. From an order of the Special Term, resettling a former order of the court, dated March 8, 1921, the American Life Society of New York appeals. Reversed, and motion denied. Argued before BLACKMAR, P. J., and RICH, KELLY, JAYCOX, and YOUNG, JJ. Miles M. Dawson, of New York City, for appellant. JAYCOX, J. The National Temperance Life Insurance Society is a fraternal benefit society, organized and authorized to do business under article 7 of the Insurance Law of the state of New York (Consol. Laws, c. 28). It commenced business on September 11, 1914. The society was examined by the insurance department as of December 31, 1917. It was found that the insurance reserves of the society had been impaired by using the benefit funds for expenses. This shortage was made good by the officers and directors. On December 31, 1919, the National Temperance Life Insurance Society, pursuant to a contract providing for the continuation of the life insurance benefits of the certificates, turned over to the American Life Society all its assets. The contract provided that the American Life Society would pay the net contributions of members from the assets received, who did not accept the contract. The contract was approved by the superintendent of insurance on January 23, 1921. An order was duly made dissolving the National Temperance Life Insurance Society, and directing the superintendent of insurance to forthwith take possession of the property and liquidate the business of said insurance society pursuant to the provisions of section 63 of the Insurance Law of this state. See Insurance Law, § 63, added by Laws 1909, c. 300, as amended by Laws 1912, c. 217; Laws 1913, c. 29 and Laws 1918, c. 19. A liquidator was appointed, who immediately took possession of the company. He published the necessary notices for the presentation of claims. No assets of the National Temperance Life Insurance Society came into the hands of the liquidator. All the assets of that company were taken by the American Life Society under and pursuant to its contract with the National Temperance Life Insurance Society. The total assets thus transferred amounted to $12.415.64. The expenses of the liquidation have been paid by the American Life Society. The only claim presented to the liquidator, except those of the nonconsenting policy holders, is the claim in controversy here. This claim. was presented by Horace S. Warner, M. D., for $234.50, balance of fees for examining 764 applicants for life insurance. It is claimed that all of the assets of the National Temperance Life Insurance Society turned over to the American Life Society were a part of what is known as the "mortuary fund," and that said fund was already impaired by paying the expenses of the company therefrom; that on the 31st day of December, 1919, said mortuary fund was impaired to at least the amount of $15,000. The report of the examiner further says: (195 N.Y.S.) "The funds of the society have never been separated. but all moneys have been thrown into a common fund, out of which all claims have been paid, regardless of whether they were death benefits or bills covering expenses of management." The reserve on the outstanding certificates should be $24,008.64, in accordance with the computation made by the consulting actuary: Insurance Law, art. 7, § 233, subd. 4, as added by Laws 1911, c. 198, provides: "Every provision of the laws of a society for payment by its members, in whatever form made, shall distinctly state the purpose of the same and the proportion thereof which may be used for expenses, and no part of the money collected for mortuary or disability purposes, or the net accretions of either or any of said funds, shall be used for expenses." The terms, and conditions of the certificates issued to members required a division of the funds of the society in accordance with the law above quoted, and, as stated above, all of the moneys applicable to the payment of expenses had been used up, and also approximately $15,000 of the funds which had been collected for mortuary purposes. The claim of Dr. Warner was duly presented to the liquidator of the National Temperance Life Insurance Society, who reported that "One claim other than the claims of members for their distributive shares of assets has been filed with me. This is the claim of Horace S. Warner, M. D., for $234.50, fees for examining 764 applicants for insurance. The American Life Society, having taken all the assets of the National Temperance Life Insurance Society, and having made no provision for the payment of any claims other than death claims arising on benefit certificates issued by the National Temperance Life Insurance Society, is liable for this claim and any other valid and unpaid debts of the National Temperance Life Insurance Society." A motion was made to confirm this report. This resulted in an order which confirmed the report and directed the American Life Society to pay to the superintendent of insurance the amount due to the nonconsenting certificate holders, but made no direction for the payment of the claim of Dr. Warner. Thereafter, upon due notice, the order was so resettled as to direct that the claim of Horace S. Warner, M. D., for $234.50, be paid by the American Life Society to said Horace S. Warner. It is from this direction that the American Life Society ap peals. Its contention is that, under subdivision 4 of section 233 of the Insurance Law, quoted above, all the assets of the National Temperance Life Insurance Society constituted a part of its mortuary fund, and under that law and under the certificates issued to the members no part of the mortuary fund could be used to pay expenses. No case has been cited by either side directly in point. The appellant claims that these funds constituted a trust fund in the hands of the society, which could not be diverted to any purpose other than that for which it was created. In Corpus Juris, volume 7, at page 1086, it is said: "Application of Funds.-The application of the funds of a beneficial society is controlled by its charter of incorporation or its articles of association and its constitution and by-laws, as well as by statute, and the association, its subordinate branches, or the members thereof, have no power to divert the funds from the purposes to which, under the laws of the order, they have be dedicated." See, also, Niblack on Benefit Societies and Accident Insurance, p. 247; In re Protection Life Insurance Co., Fed. Cas. No. 11,444, 9 Biss. (C. C.) 188, 198. In Parish v. New York Produce Exchange, 169 N. Y. 34, 61 N. E. 977, 56 L. R. A. 149, the question involved was the power of the trustees of the New York Produce Exchange gratuity fund to divert the fund from the purpose for which it was raised. Organized under a special statute, the system was similar to mutual benefit life insurance, and after a fund had been accumulated it was attempted, by means of an amendment to the by-laws, to distribute the accumulated fund among the subscribing members "as the class may be constituted on February 1, 1900." The Court of Appeals, speaking by Chief Judge Parker, said (169 N. Y. 52, 61 N. E. 982, 56 L. R. A. 149): "The by-laws provided the working plans for this scheme, while the contract of the subscribing members with the association was made under the charter and these by-laws which expressed no other or different disposition for the fund to be accumulated in the manner provided therein than that it should be paid to the 'widow, children, next of kin of, or other persons dependent upon, said deceased member.' For that purpose it was paid over to the trustees of the gratuity fund, and with that obj ct in view they accepted it, and every dollar thus contributed and paid over for that purpose was impressed with that trust, and the trustees held it thus impressed." It was held that the amended by-law which attempted to divert this fund was illegal and void. The Court of Appeals in Matter of the Equitable Reserve Fund Life Association, of New York, 131 N. Y. 354, 30 N. E. 114, held that a special fund created as a reserve for the benefit of a certain class of policy holders, could not be diverted to other purposes. The respondent herein relies almost entirely upon National Park Bank of New York v. Clark, 92 App. Div. 262, 87 N. Y. Supp. 185. The question involved in that case was as to the rights of an attachment creditor and the receiver of the corporation. The Supreme Council of the Order of Chosen Friends Relief Fund had on deposit in the National Park Bank, of New York, $7,067.32. The appellant Lizzie G. Brown was the beneficiary in a policy of insurance upon the life of her mother, Mary C. Vandervoort. Upon the death of Mrs. Vandervoort, the appellant's claim was allowed for the full amount of the policy, $2,000, and $200 was paid on account thereof. The balance of $1,800 not having been paid and the fraternal insurance order above named being a foreign corporation, an attachment against the fund in the national bank was obtained. At about the same time a receiver was appointed. The court at Special Term decided against the attaching creditor and held that the receiver was entitled to the fund. An appeal was taken to the Appellate Division, and that court held that the attaching creditor had first claim upon this fund. No question was there involved as to the dedication of the fund to any special purpose. The fund in the National Park Bank was used for the payment of death claims generally, and the attaching creditor's claim was a death claim. Therefore if the receiver's right to the fund did not mature before the attachment was served, the attaching creditor was entitled to the fund. This was the only question involved. (195 N.Y.S.) The court, however, in discussing the question involved, used expressions which the respondent claims indicate that his claim should be paid out of this fund, no matter what the purpose for which it was collected. This, however, I think is clearly shown to be erroneous by this portion of the opinion of Justice Hatch, who gave expression to the court's views (92 App. Div. 269, 87 N. Y. Supp. 190): "The appointment of the receiver preserved the fund for those entitled thereto, and it may be that in the equitable distribution of the assets of the corporation which come to the hands of the receivers particular creditors will be entitled to payment from particular funds held by the corporation, and that those entitled to share in the relief fund may be entitled to preference therein superior to the rights of general creditors of the corporation; but such fact does not divest the lien of an attachment which has been regularly levied upon the property of the corporation prior to the appointment of the receiver within the jurisdiction where the attachment is levied." I recommend that the order appealed from, in so far as the same directs the American Life Society to pay the claim of Dr. Horace S. Warner, be reversed on the law, with $10 costs and disbursements, and that the motion to resettle the prior order in that respect be denied, with $10 costs. BLACKMAR, P. J., and RICH, KELLY, and YOUNG, JJ., con cur. (202 App. Div. 613) LYNOTT v. GREAT LAKES TRANSIT CORPORATION. (Supreme Court, Appellate Division, Fourth Department. June 30, 1922.) 1. Admiralty 2-No exclusive jurisdiction in federal court of action for death of seaman from injury in course of employment; "court of the district." While action for death of a seaman from falling from the defective gangplank of his vessel must rest on Jones Merchant Marine Act, § 33, amending La Follette Merchant Seamen's Act, § 20, by giving right of action for damages at law for death of a seaman from injury in the course of his employment, the legislative power of the Congress relating to maritime matters, whenever exercised, being under Const. U. S. art. 3, § 2, and article 1, § 8, subd. 18, exclusive, the provision that jurisdiction in such actions shall be under the "court of the district" in which defendant employer resides or has his principal office does not exclude jurisdiction of state courts, but simply designates the particular United States court which shall have jurisdiction, where jurisdiction of the United States courts is invoked. 2. Seamen 29 (4)-Assumption of risk not defense to action for death. An action under Jones Merchant Marine Act, § 33, amending La Follette Merchant Seamen's Act, § 20, by giving right of action for damages at law for death of a seaman from injury in the course of his employment, being under the maritime law, and not under the common law, the doctrine of assumption of obvious risks does not obtain. 3. Death 92-Interest on damages for death of seaman not allowable. Action for death of a seaman from injury in the course of his employment resting entirely on the federal statute (Jones Merchant Marine Act, § 33, amending La Follette Merchant Seamen's Act, § 20), interest on the verdict from the time of death to the date of rendition of the verdict is not allowable. For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes |