Akers v. Hite

94 Pa. 394 | Pa. | 1880

Mr. Justice Trunkey

delivered the opinion of the court,

The business of an insurance company, whether conducted on the mutual or stock plan, is managed by its officers and agents, and the corporators are bound by the acts of such agents in all matters properly done within the .scope of the powers committed to them. A policy of insurance and the premium note given therefor, constitute a contract between the company and the insured, and the parties .usually have the same power to rescind it by mutual agree^ ment as they had to make it. Such a power on the part of the company seems essentially necessary to the safe and proper transaction of its business: Roland v. Whitman, Receiver, 33 Ind. 64; Woodwarth v. Davis, Receiver, 13 Ohio St. 123. Most mutual companies insert stipulations in their policies that they shall become void, either ipso facto, or at the option of the company, for certain acts of omission or commission by the insured, and when avoided, the rights and liabilities of the member are ended, except his liability for debts already incurred: Columbia Ins. Co. v. Masonheimer, 26 P. F. Smith 138; Wilson v. Trumbull Ins. Co., 7 Harris 372. The right of the company to cancel policies and thus terminate the contract, for various acts of the insured, though such right be not expressly reserved, has constantly been recognised, and it would be strange if it could not agree with the insured to abrogate the contract when deemed expedient or advantageous.

It is contended by plaintiff that it is not competent for the directors of a mutual insurance company to surrender the premium notes and relieve the insured from the obligations of his contract, unless the latter has paid -his full proportion of all debts existing at the time of the surrender : citing Maine Mutual Ins. Co. v. Pickering, 66 Me. 130. In that case the note was given in pursuance of a section of the charter of the company, for security of those, concerned, and is not like the case of a note given in the contract of insurance. In one sense the latter is a security, but.it may be given up for good consideration. Thus, when the assured surrendered his policy and received from the secretary of the company bis deposit note, there being contested claims which were subsequently established and on which he paid nothing, and after-wards a receiver was appointed who made an assessment on the said assured for payment of said losses, it was held that the matter had been adjusted between the company and the assured, and the receiver could not impeach or disaffirm the lawful acts of the corporation : Hyde, Receiver of the Chenango Mutual Ins. Co., v. Snyder, 4 N. Y. 387. After the filing of a petition by a mutual insurance company, but before publication of the appointment of a receiver, the maker of a premium note paid an assessment thereon and surrendered his policy, under an agreement with an authorized agent of the company that such payment and surrender should be in full of said note, which was agreed to be given up, but was not; the note was extinguished and the receiver could not maintain an action thereon: Sands, Receiver of the Columbia Ins. Co., v. Hill, 55 N. Y. 18. A good faith agreement, between the parties in a contract of insurance, to annul it, is valid.

Every person insured in the Union Horse Insurance Company of Blair county became a member of the corporation, entitled to the rights and subject to the liabilities of a stockholder. The value of the property insured was the amount of his capital stock, and he was liable to assessment for payment of losses' occurring during the time of his membership. When, for any cause, he ceased to be a member, he would not be liable for future debts, but-could afterwards be assessed for payment of debts made while he was a member, unless he had duly settled with the company. Section 8 of the charter provides, that all affairs of the company shall be managed and controlled by a board of directors. The verdict shows that in pursuance of resolutions of the board, the defendants paid all their just dues, as assessed against them, and handed their policies to one of the directors to return to the company to be cancelled; that they were so returned, and said board promised to cancel them and return the stock notes as soon as the secretary had time; that the assessment laid by the directors, being the. just dues so paid by defendants, was insufficient to pay the liabilities then existing; that said policies were not in fact cancelled, and said notes came into the hands of the receiver who laid the assessments in suit; and that under said resolutions the directors cancelled the principal part of the capital stock.

It is plain that the parties agreed to rescind the contract of insurance, and, according^, the defendants paid their money and surrendered their policies. They were bound by this agreement as if the policies had been marked cancelled and the notes given up. From thence the defendants had no insurance, they were not members, nor were they liable on the notes. The plaintiff has no more right to collect assessments on these notes than on those which had been actually returned on like terms. This case must be disposed of on the facts in the verdict, not outside. Whether there are facts which would make all, who were once members, liable to assessment for indebtedness created before the cancellation of their contracts, does not appear — they are not in the verdict. For aught that is found the directors acted in good faith, and did what they deemed for the interest of the company. It would be as just to assess the large number who got back their notes, as the few to whom the secretary neglected to return their notes, as the directors promised he should do.

Judgment affirmed.