119 N.W. 1048 | N.D. | 1908
Lead Opinion
This is an appeal from a judgment in favor of the plaintiff in an action on a fire insurance policy issued by appellant on a stock of merchandise and from an order denying a motion for a new trial.
It is not necessary to quote the pleadings. The principal issue was as to certain acts of appellant’s secretary constituting a waiver or estoppel in favor of respondent, who had not paid any part of the premium due on the policy. The facts referred to consisted in sending respondent the renewal policy in suit without an application, giving it notice that $13.60 was due it on a policy for the same amount on the same property, which was about to expire, with a notice that $20.40 more would pay the premium on the new policy, and about four months later sending it notes to execute for the premium which remained unpaid and about five weeks after the fire which destroyed the property insured answering letters from respondent and not expressly denying liability, and sending it a blank proof of loss. Appellant is a domestic fire insurance company organized under the laws of this state providing for the organization of such companies. It has no capital stock. P'olicies are issued to members, and each holder is a member and entitled to vote at the annual and other meetings of the corporation. It conducts its business under by-laws adopted by the members in accordance with the provisions of section 4201, Rev. Codes 1905. Section 2 of article 8 of -the by-laws of appellant reads as follows: “If the premium of any policy issued by this company shall remain unpaid for thirty days after such policy takes effect, such policy shall be and remain suspended until the payment of the policy holder and the receipt and acceptance by the company of such premium. During the period of such suspension aforesaid, such policy shall be unenforceable against the company and the company shall not be liable thereon under the terms thereof or otherwise. If such policy remains suspended for sixty days it shall be cancelled without notice to the insured and the premiums on the same charged at the short rate for the thirty days during which such policy was in
In the case at bar the provision quoted was not only a by-law of the company, with which as we have seen the respondent was charged with notice, but it was printed upon the policy, and attached to the policy was a notice calling respondent’s attention to the bylaws and another notice informing it that it was a member of the corporation, and giving the date of its annual meeting, and notify
We find this principle most fully set forth in the reports of the Supreme Judicial Court of Massachusetts, a state which has long been recognized as not only far in the lead on the subject of equitable and just insurance laws, but the decisions of whose courts are unusually harmonious on the subject of insurance. Brewer v. Chelsea Mutual Fire Insurance Co., 14 Gray (Mass.) 203; Evans v. Tri Mountain Mutual Fire Ins. Co., 9 Allen (Mass.) 329; Mulrey v. Shawmut Mutual Fire Ins. Co., 4 Allen (Mass.) 116, 81 Am. Dec. 689; McCoy v. R. C. Mut. Ins. Co., 162 Mass. 272, 25 N. E. 289. See, also, Stark County Mutual Fire Ins. Co. v. Hurd, 19 Ohio, 149; Leonard v. American Insurance Co., supra; Bosworth v. Western Mut. Aid Soc., 75 Iowa, 582, 39 N. W. 903; M. W. A. v. Tevis et al, 117 Fed. 369, 54 C. C. A. 293. In Brewer v. Ins. Co., supra, Mr. Justice Bigelow, in delivering the opinion of the court, says: “By the twentieth article of the by-laws of the corporation by which the rights of parties under the contract are regulated, it is provided that before the policy shall be delivered the assured shall pay such premium, and give such deposit note as the president and directors shall determine. The effect of this stipuation was that the contract of insurance should not be completed nor the policy take effect until such premium was paid and such note given. It is admitted in the present case that the assured had not complied with this by-law. The plaintiff, however, seeks to avoid the effect of such noncompliance, and to maintain the policy as a valid contract, on the ground that this stipulation in the by-laws for payment of the premium had been waived by the officers of the company. On looking into the evidence, which is fully reported in the exceptions, it does not appear that there was any proof of waiver by the corporation. The case, therefore, comes directly within the recent decision of this court in Hale v. Mechanic’s Mutual Fire Insurance Co., 6 Gray,
Some contention is made by the respondent that inasmuch as there was due it from the company $13.60 as its share of the net receipts for the preceding year on the policy it then carried, and because the company sent it a statement showing this amount due and the balance necessary to pay the premium on the policy in suit, this share of the net earnings should be applied on the premium due to carry the policy as far as it would pay for it at a.pro rata rate. We cannot agree with this contention. The notice sent respondent was simply for the purpose of informing it that the old policy had earned $13.60, and that, on its remitting $20.40 in addition, the new policy would be carried for one year. Respondent never offered to pay the balance, and on one occasion refused to retain the policy. This identical question was considered in Hollister v. Mutual Fire Ins. Co., 118 Mass. 478, where it is held that, if a by-law of a mutual fire insurance company provides that any risk insured shall be suspended unless an assessment is paid within a certain time, it is not a valid excuse on the part of a member for a neglect to pay the assessment that the company owes him a less sum if he does not offer to pay the balance. This, however, is immaterial in the case at bar, for the reason that the trial court found that the surplus mentioned should be applied at short rates in payment of the policy, and because, if so applied, it would not carry the policy to the date of the fire. We must hold that the secretary had no power to waive the by-law quoted under the facts disclosed by the evidence in this case. We have arrived at this conclusion without reference
It might be contended with considerable force that an affirmance of the judgment in this case would be sustaining a direct violation of such statute. Indeed, some remarks contained in Montgomery v. Harker, 9 N. D. 521, 48 N. W. 369 referring to this identical section and others, appear pertinent. They read: “The language of the section just quoted is unambiguous, and plainly requires a corporation to charge and collect a fixed premium from each of its members. This may be cash in advance or a note payable absolutely. But it is an absolute and unconditional payment; a premium in fact, and is to be written in the policy. The funds derived from such premium constitute a cash fund subject to be used for the payment of losses and expenses.” And in Montgomery v. Whitbeck, supra: “The law, a part of this contract, required that the amount of the cash premium accepted should be written in the policy; that the company should charge and collect upon the policies the full mutual premium in cash or in notes absolutely payable. None of these requirements made prerequisite to a valid insurance contract was observed in this case. The note given was payable only upon the contingency of a loss and assessment.* * * These requirements were ignored." No cash fund could be obtained for the payment of expenses or losses under the form of contracts admitted until assessments could be made and collected. No valid consideration was given for the insurance contract. The policy of the law would be frustrated if this invasion of its mandate could be tolerated. This policy was and is voi'd.” It may be inquired whether, if giving a note with the amount payable left in uncertainty avoided the policy by reason of a conflict with the statute providing for a fund out of which to pay losses and expenses, instead of a note absolutely payable, why the failure to pay cash or to give any note whatever should not equally avoid the policy. Quoting further from the
The judgment is reversed.
Rehearing
On Rehearing.
Counsel for respondent submit a petition asking a rehearing. They insist that the original opinion of this court indicates that certain controlling facts and authorities were overlooked. The petition is not framed in the spirit that we would expect to see exhibited by counsel of the high reputation for fairness which those signing it possess or should exhibit toward the court, and is not altogether entitled to the consideration which we give it. It seems also to rest upon a misconstruction of what we held to be .the law applicable in the premises. We did not attempt to decide that the acts of appellant might not in some cases, or if done by officers -of a stock company, constitute a waiver, although there is a vast number of authorities, we think,, a very large preponderance of them, holding similar acts no waiver. Counsel assume that the delivery of the policy to respondent was unconditional. This is not the fact. The conditions on which it was delivered were plainly stated on the policy, and were a part of the by-laws of which respondent had notice as a member of the company, and by which it was bound. Farmers’ Mutual Insurance Company v. Kinney, 64 Neb. 808, 90 N. W. 926; Corey v. Sherman, 96 Iowa, 114, 64 N. W. 828, 32 L. R. A. 514; Brown v. Stoerkel, 74 Mich, 269, 41 N. W. 921, 3 L. R. A. 430; 74 Mich, 269, 41 N. W. 921, 3 L. R. A. 430; 7 Current Law, 1784. This by-law gave credit for 30 days. Afterwards, if the premium was still unpaid, the policy was suspended and in 60 days cancelled. The cancellation took place before the loss occurred and the premium was never paid. The policy and by-laws were actual notice of these conditions, and, as stated in the original opinion, were self-executing. 7. Cur.
While we rested our decision upon the broad ground that the secretary -cannot, under the laws which govern him, waive the conditions prescribed by such laws, respondent still argues that the waiver did take place. It must be borne in mind, as before stated, that this is a purely mutual company. It has no capital stock, and must depend solely upon the payment of premiums and the additional liability imposed upon its members by statute -to enable it to pay losses. If its secretary can extend ambiguous or unlimited credit to one member, contrary to the terms -of the agreement entered into through its by-laws by its members, of which respondent was -one, he -can do so with all members, and it would be wholly devoid of power to -meet losses as they might occur. The same effect would follow, and the same law apply, as though it was an assessment company. It is said in National Masonic Accident Association v. Burr, 44 Neb. 256, 62 N. W. 466: “A member who fails to pay his assessment when due, -though he may afterwards pay it, and his rights as a member be reinstated from the time -of making such payment, has no cause to complain because his rights as a member and his claims against the association are not made to date back so as to cover any injury he may have received during the time of his default, for this is his express -contract, and it is a reasonable one.” The law of this state provides that mutual companies shall make collections in the shape of premiums, payable in advance, to enable them to meet losses-. The premiums are fixed at figures which it is supposed will admit of all losses being paid therefrom, but, in case of a miscalculation or an emergency, an additional liability is placed upon members. Upon the other hand, if, at the end of the year, it is found that the members have overpaid, they are entitled to a return of the surplus. If losses are paid outside of reasonable limits, necessary to permit the -transaction of business, without the payment of any premiums, it -could only be by taking money with which to do so from the surplus in the hands of the company belonging to other members, or from the
It is insisted that we assume the constitutionality of the standard policy law, and that the terms of the standard policy are in conflict with the by-law quoted. If the standard policy law is unconstitutional, the by-law is certainly effective. If valid, the standard form of policy expressly makes the by-laws of mutual companies a part of their policies. Section 5951, Rev. Codes 1905, only applies where a note or obligation is given for the whole or a part of the premium, and has no bearing on this case. Neither have the provisions of section 4446. It is urged that the principle which this court holds controlling was not insisted upon in the lower court, and was but faintly touched upon in appellant’s brief. On the contrary, its discussion occupies a very considerable part of the brief submitted by appellant,' and respondent answers it in his brief, and states that all matters were more or less fully argued and.considered in the
The petition is denied: