96 N.W. 327 | N.D. | 1903
The Red River Valley Mutual Hail Insurance Company of North Dakota was. organized as a mutual insurance company under the provisions of chapter 14 of the Civil Code, and received its certificate of authority to do an insurance business on the 23d day of April, 1898. Defendant signed a written application for insurance and membership in this company on April 14, 1898, and his policy of insurance was executed and delivered to him on the same day. By his application defendant stipulated to pay all just assessments, not to exceed 5 per cent of the face-of his policy, or $60, to be governed by the articles of incorporation, and bylaws of the company, his insurance to run for five years, beginning on April 14, 1898, and' describing the land upon which the-crops were to be grown. As a part of the transaction, and to-cover his membership fee, all premiums and assessments, he executed and delivered to the party taking his application a note-in the following terms: “$60. Courtenay, N. D., April 14, 1898. On or before the first day of October, for value received, I promise-to pay to the order of the Red River Valley Mutual Hail Insurance Company of North Dakota the sum of sixty dollars, or such portion thereof as may be assessed on my policy by the officers of said company for payment of expenses and losses by hail according to the bylaws, rules and regulations of said company, with interest at the rate of eight per cent per annum from the maturity hereof, payable at the office of the company at Wahpeton, N. D. There-is included in this note a membership fee of-. Section 20, Twp. 142, range 62; P. O. Courtenay, N. D. Andrew Whitbeck. Policy Number 1302. Non-negotiable.” His certificate of indemnity and membership delivered to him in exchange for his note and application was in the following language:
“The Red River Valley Mutual Hail Insurance Company of' North Dakota, by this certificate, insures Andrew Whitbeck, of' Courtenay P. O., County of Stutsmán, State of North Dakota, his heirs and assigns, against loss or damage to growing crops by hail, commencing at noon on the 14th day of April, 1898, and ending January 1st, 1903,' in accordance with the articles of incorporation and bylaws of this company, on the following described premises:
. “Loss, if any, payable to Andrew Whitbeck as his interest may appear. This insurance is based* upon the written application of the assured, and upon the approval whereof the Red River Valley Mutual Hail Insurance Company of North Dakota has caused these presents to be signed by its president and attested by its secretary at its office in the city of Wahpeton.
G. W. Pease, President.
“Attest: B. J. Howland, Secretary.”
The articles of incorporation and by-laws were printed upon the back of this policy; also a notice as follows: “The assured is hereby notified that by virtue of this policy he is a member of the Red River Valley Mutual Hail Insurance Company of North Dakota, and that the annual meetings of such company are held at its. home office in the city of Wahpeton, Richland county, North Dakota, on the second Wednesday of November of each year, at 10 o’clock, a. m.’?
Plaintiff was appointed receiver of this company December 39, 1899. Its assets consisted entirely of notes in the form of the one hereinbefore set forth. The action was to recover an assessment attempted by the directors in September, 1899, to meet 'losses for that year. The same form of notes and policies were issued to all members of the association. The certificate of insurance and membership proven in this case bears the signature of the president and secretary, and has indorsed upon its back what purports to be the by-laws of the corporation, and it was delivered to the defendant nine days before the corporation received its certificate from the commissioner of insurance authorizing it to do business or to issue policies. Section 3090, Rev. Codes.
The promoters of mutual insurance societies are authorized, and required, as a preliminary to organization, to take applications for $300,000 of insurance in not less than 100 separate risks before a policy can be issued. Section 3104, Rev. Codes. The purpose of this is, doubtless, to secure at the start a fund from the cash premiums sufficient for current expenses and early losses.
Appellant did not receive*or retain any property of the corporation for which he was either morally or legally obligated to pay. He has nothing to restore. A contract of insurance entered into contrary to law or public policy is simply void, and neither party to it is estopped from showing the fact; otherwise the public law and policy would be at the mercy of individual interest and caprice. Bacon on Mut. Benefit Societies, section 424; Spare v. Home Mut. Ins. Co. (C. C.) 15 Fed. 707; in re Comstock, 6 Fed. Cas. 244 (No. 3,078) 3 Sawy. 218; Keen v. Coleman, 39 Pa. 299, 80 Am. Dec. 524; Wheeler v. Russell, 17 Mass. 258. Every member of this corporation was a party to these contracts, individually as the assured and collectively as the corporation. As parties to the contract with the corporation, they were severally in pari delicto. No estoppel operates either in favor of or against any of them, because there is nothing upon which it can be built. “An estoppel can never arise by implication alone, except from some conduct which induces action in reliance upon it to an extent that renders it a fraud to recede from what the party has been induced to expect. It is only enforced to prevent fraud.” Security Ins. Co. v. Fay, 22 Mich. 468, 7 Am. Rep. 670. There cannot be any estoppel to show a violation of a statute, even to the prejudice of an innocent party. How much less can a corporation claim to bind a member to the payment of a void assessment on the theory of estoppel ? To build up an estoppel against one situated as appellant is in this case and in favor of the corporation, would be to make the courts an instrument of oppression. In Bank of the United States v. Owens, 2 Pet. 538, 7 L. Ed. 512, the court held that a contract contrary to a clause in the act incorporating the bank which forbid it to take a greater interest than 6 per cent, but did not declare such contract void, was nevertheless illegal and void. In answer to the question whether such contracts are void in law upon general principles, the court says: “The answer would seem to be plain and obvious
Respondent relies upon section 2852, Rev. Codes. This statute is the expression of a rule long established to the effect that a defendant who has contracted with a corporation cannot collaterally question its powers in an action to recover on an obligation entered into with it; but the legality of the corporation or its powers to do a legal business is not here questioned. The objection here is to the want of power in the corporation, and not a defect in its organization. Uninfluenced by statute, the rule established by law as well as reason is that parties recognizing the existence of a corporation by dealing with it have no right to object to any irregularity in its organization, or any subsequent abuse of its powers not connected with such dealing. As long as 'these are overlooked or tolerated by the state, it is not for individuals to call them in question. Methodist Epis. Church v. Pickett, 19 N. Y. 485; Washburn Mill Co. v. Bartlett, 3 N. D. 138, 54 N. W. 544; McFarlan v. Triton Ins. Co., 4 Denio. 397; Swartwout v. Ry. Co., 24 Mich. 394. But where the objection is a want of power in the corporation, and not a defect in its organization, the case is different. In re Comstock, 6 Fed. Cas. 247 (No. 3,078), 3 Sawy. 218; Wheeler v. Russell, 17 Mass. 258; Russell v. De Grand, 15 Mass. 35. “The doctrine of estoppel in pais has never been carried so far as to prevent a party from showing that' a corporation, even if it be one de jure, had not the power to do a particular thing, or that it was done in violation of statute. * * * For instance, if a corporation was forbidden by statute to carry Indians on its boats it could not make or enforce a contract for that purpose, and no one would be estopped from alleging the fact in bar of an action by the corporation for the passage money. In Russell v. De Grand, 15 Mass. 37, it was held that a promissory note given for the premium on a policy of insurance on a vessel bound on a voyage prohibited by the laws of the United States was void, and the defendant, though a party to the agreement, was permitted to show its illegality to defeat a recovery upon it. * * * The reason of the rule is apparent and satisfactory. The maintenance of the public policy of a state, as manifested by its legislation, is of much more
This disposes of the respondent’s contentions that defendant isestopped by his 'contract; that none but the state can question its validity, and that in a direct proceeding; and that the contract is not void as in conflict with the policy of the law, because not in express words in the statute so declared.
Our conclusion is that the judgment appealed from should be reversed. It is so ordered. Appellant will recover costs of justice and district courts and of this court.