82 Wis. 488 | Wis. | 1892
We are not aware that a case has before reached this court involving the consideration of the relative rights and duties of members of a mutual fire insurance company organized under that portion of ch. 89, R. S., included in secs. 1896-1901. Indeed, it was stated in the argument of the learned counsel for the receiver, and the accuracy of the statement was not challenged, that no other than the Oshkosh Mutual Fire Insurance Company has ever been organized under the provisions contained in
As already observed, the statutes contain but few specific provisions for the government of mutual companies organized under the above sections, but in the main leave them to pursue their business as they will, subject only to those general rules of law which prescribe the limits within which they must operate and the relative rights and liabilities of their members. The articles of association seem to comply with the requirements of the statute and to be in accord therewith. A point is made on the articles of association which may as well be here considered. It is argued on behalf of the receiver that the clause therein which permits the insurer to pay a fixed sum in cash in full for his insurance, instead of giving a premium note for a portion thereof, is a departure from the principle of mutual insurance, and makes the company, as to such policies, a moneyed or stock company. It is said that the opinion by Cole, C. J., in In re Oshkosh M. F. Ins. Co. 77 Wis. 866, supports that view. We do not agree with counsel. This is either a mutual or a stock corporation. Under our statutes it cannot be both, and there is nothing in the case above referred to which fairly admits of the construction claimed for it. No such question was involved in that case. It was simply there determined what were the rights and duties of the. attorney general in respect to the- litigation. Neither do we think that the clause in the articles of association which permits the insured to pay his whole insurance in money in the first instance, and relieves him from further liability as a member of the company, is contrary to the principle of mutual insurance. It is the equivalent of an assessment to the full amount of the premium note
We reach the conclusion, therefore, that the Oshkosh Mutual Eire Insurance Company was legally organized as a mutual company only; that all.policy holders therein are members thereof; and that its premium notes are valid obligations, assessable to pay losses and expenses, unless there is something in the by-laws of the company or the methods of its business management which has destroyed the validity of such notes. If such a result has been accomplished, it is because of the existence of one or more of the following conditions:
1. The amended by-laws provide for the payment of dividends to members who had given premium notes, ex-
2. It is further claimed that such premium notes are void, under sec. 1907, R. S., which provides that in no case shall the premium note be more than twice the whole amount of the cash premium. It is said that on a five-year policy the cash premium, under the by-laws of the company, is but one fifth, and the premium note four fifths, of the gross amount of the insurance. While this is apparently true, it is not really so. An insurance for five years, the premium on which is, say, $100, is made payable, under the by-laws and by the usage of the company, in annual payments of $20 each. The first payment is made in cash when the policy issues, and a premium note is given for the other $80. But there seems to have been a rule of the company by which $20 thereof became due and payable at the commencement of each insurance year. This was, in substance and effect, a permanent annual assessment of $20 on the premium note, and it amounted to a cash payment of the annual premium in advance at the
We conclude not only that the company has not lost its distinctive character as a mutual fire insurance company, but that none of its by-laws or irregularities in the conduct of its business have operated to affect the validity of its premium and deposit notes, or the liability of the makers of such of those notes as have come to the hands of- the receiver, to assessments for losses and expenses. We are further of the opinion that for the purposes of such assess-1 'ments there is no distinction between premium and deposit notes, that is to say, between assessable notes given for premiums pending the organization of the company and after it-was fully organized.
It remains to determine whether the assessment of forty per cent, upon all the premium notes which came to the hands of the receiver is a legal assessment. Its validity is attacked on several grounds, some of which will now be considered.
1. The court found that premium and deposit notes to a very large amount were surrendered by the company 'to the makers thereof, without first requiring them- to pay their proportionate share of losses properly chargeable to them, accruing while they were members of the company. It is maintained that an assessment which does not include these notes thus illegally surrendered is invalid. It may be conceded that such notes should not have been thus
2. We perceive no force in the objection that the assessment was made upon estimates of liabilities, without any reference having been made to determine definitely the amount thereof. Neither do we think that forty per cent, is necessarily an excessive assessment. The parties liable thereto, who have paid only twenty or forty per cent, of their premium notes, may congratulate themselves on their good fortune if the result shows that the assessment is sufficient to pay accrued losses and expenses.
3. The assessment is a horizontal one,— just forty per cent, of the face of each note, without regard to whether that is or is not the just proportion of the losses and expenses which occurred during the life of each policy, and hence properly chargeable to the maker of the note, and also without regard to the amount which had been paid on such note. It appears that this assessment requires some members of .the company to pay a proportionate share of losses which occurred before they became members. This violates a cardinal rule of mutual insurance, as well as the rule of the statute. Sec. 1907, E. S. It also appears that eighty per cent, of some of the notes had been paid, while only twenty per cent, had been paid of other notes. While
It follows from the above views that each of the judgments from which these appeals were taken must on the appeal of the defendant therein be reversed.
It remains to determine the appeal of the receiver in the action against the Paine Lumber Company, which appeal is predicated upon the claim that the assessment of forty per cent, upon the note of that company was valid, notwithstanding it had already paid eighty per cent, thereof. This claim seems to be based upon the ruling of this court in Rundle v. Kennan, 79 Wis. 492, and Kennan v. Rundle, 81 Wis. 212. It was held in those cases that by the law of the organization of the company which the court was there dealing with (the Manufacturers’ Mutual Fire Insurance Company of Milwaukee), the member paying his premium in cash was still liable to assessments on the property insured for losses. That company was organized under the
Hence, in any event, the court was right in restricting the assessment of the Paine Lumber Company to the face of its premium note, and on the appeal of the receiver the judgment must be affirmed.
On the appeal of the defendant in each case the judgment is reversed, and the cause will be remanded with directions to the circuit court to dismiss the complaint.
By the Court.— Ordered accordingly.