188 Mo. 1 | Mo. | 1905
The petition is in the usual form. Among the defenses set up in the answer is that the policy sued upon was ultra vires of the defendant company. The court made a special finding of facts as follows:
“In this cause the court doth find, from the evidence and admissions, the facts to be as follows:
“That defendant is a mutual fire insurance company organized under the laws of Missouri, Laws 1895, p. —; that the State Town Mutual Eire Insurance Company of Nevada, Missouri, is a similar company, organized and doing business by authority of the same legislative act; that on October 28, 1898, said last-mentioned company by its policy No. 4451, insured a certain brick store house for one William Dolan, in the town of Freeman, Cass county, Missouri, in the amount of $3,000, said policy running the period of one year; that prior thereto William Dolan and wife had executed to Cass county, one of the plaintiffs herein, a mortgage on said store building and lots to secure the payment of a note of $2,000 bearing interest at the rate of seven per cent per annum, which mortgage was duly recorded; that to this policy of insurance was a mortgage clause attached, making loss, if any, payable to said Cass county as its interest might appear; that on December 29,1898,
‘ ‘ The court further finds that the defendant herein on November 8, 1898, issued to said Nevada company its policy No. 4981 covering a period from November 8, 1898, to December 28, 1899, insuring said Nevada company against all direct loss by fire under its policy No. 4451 to an amount of $1,500, which policy No. 4981 is filed in this cause; that said policy No. 4981 was on the 14th day of October, 1899, duly assigned to the plaintiffs herein by the Nevada company; that after the burning of the store building of the said William Dolan on January 10, 1899, the general manager and adjuster of defendant met the agent and adjuster of the Nevada company at Freeman for the purpose of adjusting the loss, but after investigation the said manager and adjuster of this defendant advised the Nevada company to resist payment of said policy No. 4451, which was done with the result aforesaid; on January 28th this defendant received from the Nevada com
‘ ‘ The court further finds that after the trial of the cause first above mentioned in the Bates Circuit Court, the Nevada company notified defendant of the result, and requested defendant to notify it if an appeal was desired upon its part, but got no further response or word from defendant; that in said trial between the plaintiffs herein and the Nevada company as aforesaid, all of the issues, matters and things pleaded in the answer of the defendant herein, so far as liability of said Nevada company upon its policy No. 4451 is concerned, were fully .pleaded in said former cause and were fully and finally adjudicated therein, and if said adjudication is binding upon this defendant, all such matters and things as herein pleaded by defendant herein, as defense to the claim of 'William Dolan under said policy No. 4451, have been fully and finally adjudicated.
“The court further finds that in the charter of defendant are found the following articles:
“1. The name assumed by this company and by which it shall be known is ‘Mercantile Town Mutual Insurance Company, of Jackson, Missouri.’
“2. The principal office of this company shall be located in the city of Jackson, county of Cape Girardeau and State of Missouri.
“3. The specified kind of business this company proposes to transact is to make insurance on the mutual plan, against loss or damage by fire, lightning and windstorm on houses, buildings, merchandise, furniture and
“5. The corporate powers of this company shall be exercised by the board of directors and snch other officers and agents as shall be elected or appointed in the manner provided by the constitution and by-laws of this company.
“6. All and every person or persons applying for and receiving a policy of insurance in 'this company shall be deemed and taken as members of this company for and during the life of their respective policies and no longer, shall be bound by all provisions, stipulations, conditions, statements and agreements contained in the articles of association, by-laws and the application for and policy of insurance of this company, all legal acts of the company and its officers and for the payment of their respective proportionate shares of all losses and expenses of this company. It is expressly provided, however, that no member or members of this company shall be personally or individually liable for losses or expenses, or any other indebtedness of this company to any amount exceeding the cash premium paid in and the amount of the premium note or notes executed by them respectively.
“10. The board of directors of this company shall have the power to make an assessment as often as they may deem it necessary, upon the premium notes given by persons who are members of this company in order to settle the losses insured against and the expenses and other liabilities of the company without regard to what may have accumulated by reason of the cash payments. Such assessment shall be made on each and every note held by the company prior to the date of the assessment, and shall be for a sum upon each note which bears the same ratio to the whole amount to be raised by the assessment as the full amount for which all the notes assessed were given. The amount so assessed upon each note shall be due and payable
The judgment is as follows:
“Now at this day come the parties aforesaid by their respective attorneys and this case having heretofore been submitted to the court, both parties waiving-a jury on the pleadings and evidence of the parties and taken under advisement by the court, and at the time of said submission.
‘ ‘ Said plaintiff asked the court to make and state in writing a finding of facts, and after hearing the arguments of the attorneys and being fully advised in the premises, the court heretofore having filed in this court its finding of facts and all and singular the matters being seen and fully understood by the court, the court finds from the facts aforesaid the issues in favor of plaintiff and assesses the damages at the sum of $1,601.25. It is therefore considered, adjudged and decreed, by this court that the plaintiffs have and recover of said defendant said sum of $1,601.25 aforesaid, and that they have execution therefor, as well as for all costs in this behalf laid out and expended, and defendant at the time excepted.”
The defendant appeals.
Said insurance company was organized under the act of the Legislature, approved March 21,1895. [Laws 1895, p. 200.]
Section 1 of said act is as follows:
“That hereafter all town mutual fire and lightning and tornado, windstorm or cyclone insurance companies, organized for the sole purpose of mutually insuring the property of the members, and for the purpose of paying any loss incurred by any member thereof by assessment, as provided by their constitution and bylaws, are hereby exempt from the provisions of the insurance laws, as mentioned in chapter 89, of the Revised Statutes of Missouri, and nothing therein shall be so construed as to impair or in any way interfere, with any of the rights of any such companies doing a mutual insurance business in the towns and cities of this State, as herein provided: Provided, that such companies shall do business only in the congressional districts in which they are organized, until they shall have $400,000 worth of property or more insured; then any such company may do business in any of the towns and cities of this State; and provided further, that any member of any such company may sue such company the same as if he was not a member thereof.”
It is admitted that the State Town Mutual Insurance Company of Nevada, Missouri, and the defendant were organized under the same act, and it is contended by defendant that neither company could issue a policy to the other or receive or accept such a policy or one company become a member of the other-; that both companies were organized for the sole purpose of mutually insuring the property of their members, for the pur
The argument is that to enable one to become a member of the company, such personmust be the owner of property capable of being insured, and must be such a person as upon whom an assessment can be levied for the purpose of paying losses of other members. There is no pretense that defendant was a member of the State Town Mutual Company of Nevada, or that it owned the insured property, nor do we think that either was necessary in order to authorize the defendant to re-insure the Dolan property. If it could have insured the property in the first instance we can see no good reason why it could not reinsure it, if in the line of its business, and if not prohibited by the act under which the companies were organized, or some other statute. Defendant contends that by the terms of the first section of the act the defendant company was organized for the ‘ ‘ sole purpose of insuring the property of its members,” but this language should not be so rigidly construed as to prohibit defendant from making reinsurance upon property insured by a company organized under the same law and doing business upon the same plan. It is true that the word “sole” as therein used is a restrictive word, a word of limitation. [State ex rel. v. Perkins, 139 Mo. 115.] Yet it is not to be understood in this case as prohibiting the Nevada Company from taking out and the defendant from issuing to it a policy on the same property covering one-half the risk, and thus share the burden which the Nevada Company had assumed. The premium paid by the Nevada Company answered the same purpose as if it had been paid by Dolan. How was the company to protect itself against too large a risk other than by reinsurance? It could not do so in any other way.
It was justified in this case upon the plainest business principles and was not in violation of .any law.
The evidence showed that it was the custom of these companies to issue policies of insurance for each other, each company paying for its reinsurance. It was shown by a former secretary of the Nevada company that while he was secretary of the company the Mercantile Insurance Company paid losses on policies of reinsurance to said State Town Mutual Insurance Company, one of which he mentioned, and that the Nevada company raised money to pay this loss by collecting fifty per cent of the premiums on policies in cash and by talcing a note from the insured for the other fifty per cent; that losses were paid by order of the board, and from money collected upon premium notes executed by persons holding policies in said company. The evidence also showed that the defendant’s adjuster, one Daugherty, was present, representing the defendant, to inspect loss of Dolan & Co. about January 10, 1899.
So that there seems to have been no difficulty in the way of raising money by these companies to pay losses on property which had been reinsured.
Defendant, however, claims that the contract of reinsurance is ultra vires, for the reason that defendant had no power to make it, and that the State Town Mutual had no power to enter into such contract, because it is expressly prohibited from transacting such business. But we are unable to agree to this contention for the reason, as we have said, there is no express provision in the statute prohibiting such companies from reinsuring property which has already been insured by the other. At most the prohibition is only by implication,, and as the contract between the
In Lysaght v. Association, 55 Mo. App. l. c. 547, it is said: ‘ ‘ The law is that, for acts merely in excess of charter authority, corporations can not set up the defense of ultra vires, when the consideration has been received and the transaction executed by the other party. ’ ’
In the case of the City of Goodland v. Bank, supra, there is quoted with approval the following from Insurance Co. v. McClelland, 9 Colo. 11:
“ ‘The plea of ultra vires is not to be understood as an absolute and peremptory defense in all cases of excess of power without regard to other circumstances and conditions. . . . Where a certain act is prohibited by statute, its performance is to be held void because such is the legislative will. So where the consideration of a contract is by law illegal, as where the cause of action arises ex turpeBut where the act is not wrong per se, where the contract is for a lawful purpose in itself, as in the present case, and has been entered into with good faith, and fairly executed by the party who seeks to enforce it, we must assent to the doctrine of those authorities which hold that the excess of the corporate powers of the contracting party which has received the benefit of the contract is an unconscion
Further on in the same opinion it is said:
“And it has been repeatedly decided by the appellate courts of this State that a violation of a charter can not be taken advantage of collaterally, or incidentally, but only on a direct proceeding instituted for that purpose. [Bank v. Bank, 10 Mo. 123; Ragan v. McElroy; 98 Mo. 349; Bank v. Porter, 52 Mo. App. 244; Society v. Branch, 120 Mo. 226; Bank v. Hunt, 7 Mo. App. 42.] It has been further declared by the same courts that in a collateral proceeding to declare the ultra vires acts of a trading corporation void it must be shown to be the intention of the charter, as gathered from its terms, not only to restrict the business of the corporation to certain things, but in addition to declare that when it exceeds these restrictions the act should be void. If such intention does not exist in the charter, the State alone can question such acts as ultra vires, except when the contract is against public policy or good morals. [Drug Co. v. Robinson, 81 Mo. 18; Ins. Co. v. Smith, 117 Mo. 261; Welsh v. Brewing Co., 47 Mo. App. 608; Glass v. Brewing Co., 47 Mo. App. 639.] The contract under which the defendant became the owner of the stock in the defunct bank was in no sense malum in se or malum prohibitum, but it was unauthorized by its statutory charter. Now, since it was fully executed by the defunct bank, there'is no rule of public policy to which our attention has been called that forbids the plaintiff, a creditor of the latter bank, from enforcing the statutory additional liability of the former by an action of this kind. It is made clear by the author
In passing upon ultra vires as a defense, the Supreme Court of Wisconsin said:
“It is well settled that a corporation can not avail itself of the defense of ultra vires when the contract in question has been in good faith fully performed by the other party, and the corporation has had the full benefit of the performance of the contract..... And, in general, the plea of ultra vires will not be allowed to prevail, whether interposed for or against a corporation, when it will not advance justice, but, on the contrary, will accomplish a legal wrong.” Citing authorities. [Lewis v. American S. & L. Ass’n, 98 Wis. l. c. 224.]
In speaking of life insurance certificates claimed to be invalid as ultra vires, the Supreme Court of IoWa said: “ These certificates are not to be treated as valid for the purposes of collecting assessments, afid invalid for the purpose of escaping liability.” [Matt v. Roman Catholic Mut. Protective Soc., 70 Iowa 455, 30 N. W. 799.]
The Supreme Court of Illinois said of an insurance contract: “Where the contract has been fully performed by the party contracting with the corporation, and the corporation has received the benefit's from such contract, it can not invoke the doctrine of ultra vires to defeat an action brought against it on such contract.” [Benefit Association v. Blue, 120 Ill. l. c. 128.]
In the recent case of First National Bank of Kansas City v. Guardian Trust Company, 187 Mo. 494, it was said that the defense of ultra vires is never sustained out of regard for a defendant, but only where an imperative rule of public policy requires it. The question
There is no question of public policy invoked in this case, and it would operate as a fraud upon plaintiff not to compel defendant to pay the amount of the policy in question, and it should not be allowed to keep the premium paid, and escape liability upon the policy on the plea of ultra vires.
The point is made by defendant that it is only liable, in any event, for its pro-rata share of the $350' paid by the Nevada company. But the extent of the liability of defendant is not in any way contingent upon the amount paid by the Nevada company. The performance of their contracts did not depend upon each othér, for the contracts were independent, and when a loss occurred which was covered by both policies, suits could be instituted at once upon both policies by the holder thereof, unless otherwise provided by the policies. [Gantt v. American Central Ins. Co., 68 Mo. 503, and authorities cited.]
It is alleged in the petition and not denied in the answer that on the 14th day of October, 1899, said State Town Mutual Fire Insurance Company of Nevada assigned in due form, by order of the board of directors of said company, the said policy number 4981, giving all rights of action thereon, for a sufficient and valuable consideration, to the plaintiff, yet defendant contends that no power was shown in the board to make the assignment. We are inolined to hold under the pleadings that the authority should be presumed in the absence of any evidence to the contrary.
Moreover, the judgment is for the right party, there is no error or defect in the proceedings which affects the substantial rights of-the defendant, and we
Tbe judgment is affirmed,
