| NY | Mar 5, 1863
Lead Opinion
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *241
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *242 The action being upon a premium note of the defendant, an assessment was a necessary condition to its maintenance. In February, 1855, and after the company in which the defendant was insured became insolvent, Eames, the then receiver of such company, assessed the note in action to the amount of $64.57 for losses which accrued while the defendant's policy and note were in full force and effect, and the expenses for which the note was chargeable. The collection of this assessment was stayed by injunction in a suit brought against the company and the receiver, and such injunction was not vacated or set aside until June, 1860. On the 23d June, 1860, the plaintiff (who before that time had been appointed receiver in the place of Eames) assessed the defendant's note to its full amount for losses and for expenses and liabilities accrued while the note and policy were in force, and also for expenses and liabilities incurred in executing the plaintiff's trust, as receiver, and which expenses were chargeable upon the note. If either of these assessments were regular and valid, the plaintiff was improperly nonsuited.
The only ground for claiming the assessment made by Eames to be illegal, is that notice thereof was published in two newspapers only, printed in the county of Oneida. I do not think this was such an irregularity as to invalidate the assessment, and constitute a defence to the action. There was no provision in the charter of the Ætna Insurance Company for giving notice of assessments on the premium notes; but *243 one of its by-laws, adopted in 1851, prescribed the mode, viz., "by publication in three newspapers printed in Oneida county three weeks successively, the last publication of which shall not be less than thirty days prior to the time fixed for payment, and in such other newspapers as the directors or the executive committee may deem necessary or expedient." It is not important now to inquire what would have been the effect of omitting to publish the notice in three newspapers printed in such county, of an assessment made by the directors or a receiver of the company, prior to 1853. In 1853, in remodeling the general law for the incorporation of fire insurance companies, the directors of any mutual insurance company were authorized, after ascertaining the loss or damage by fire sustained by any member, or after the rendition of any judgment against the company for loss or damage, "to settle and determine the sums to be paid by the several members thereof as their respective portions of such loss, andpublish the same in such manner as they shall see fit, or as the by-laws shall have prescribed." (Laws of 1853, chap. 466, § 13.) The statute thus left the manner of the publication of notice of the assessment to the discretion of the directors. They might pursue the mode prescribed by the by-laws of the company, or any other mode of publication deemed advisable and proper. Another provision of the statute would seem to strengthen this construction. Assessments are to be paid within thirty days next after publication of the notice; but a neglect or refusal to do so within such time, would not put the assessed member in default, so that an action could be sustained against him by the directors. Before he is in default, and a right of action upon his note is given to the directors, he must not only have neglected or refused to pay within the time prescribed, but there must have been a personal demand for payment of the assessment made upon him. (Laws of 1853, chap. 466, § 13.) The only object of the publication is to notify the members of the assessment and the amount they are required to pay, and afford them an opportunity to make payment. All this is effected by the personal demand for payment *244 required to be made, and hence no injustice could be done by lodging with the directors a discretion as to the manner of publication. It is enough, however, for the purposes of this case, that since the statute of 1853, the directors of a mutual insurance company are not required to publish an assessment for losses in such manner as "the by-laws shall have prescribed," unless they choose to do so. Having authority to publish it "as they shall see fit," they may adopt a mode of publication other than that prescribed by the by-laws, without invalidating the assessment. It may be conceded that it is a prerequisite to a recovery upon a premium note, that there should be a publication of the assessment. But the statute has not restricted the mode of publication, but left it optional with the directors to pursue that prescribed by the by-laws of the company, or such other "as they shall see fit."
The receiver of an insolvent mutual insurance company is clothed with all the powers possessed by the directors for making and collecting assessments. (Laws of 1852, chap. 71, § 2.) The referee has found that the receiver, Eames, in this case, published the notice of the assessment made by him in but two papers printed in the county of Oneida. The by-laws of the company provided that the publication should be in three papers. Eames was, no more than the directors would have been, at the time the assessment was made, restricted to the manner of publication prescribed by such by-laws. It is conceded that he published the assessment in two newspapers printed in the county of Oneida, and it was proved and found as a fact by the referee, that the defendant was personally notified of it, before the action was brought. Having a discretionary power or authority as to the manner of publication, the assessment was not invalid, nor was there a failure to put the defendant in default for not paying, for the reason that the latter was not notified of the assessment through the medium of three instead of two newspapers printed in the county of Oneida.
The assessment of the plaintiff, Sands, was not objectionable for the reason assigned by the referee. An assessment in *245 form need not specify the name of the party bound to contribute, nor the amount of the note. A general assessment is good by which a receiver declares that each premium note is assessed to the full amount thereof. There is no indefiniteness or uncertainty about it, and the maker of each note is distinctly informed of the sum he is required to pay thereon. It was no objection to the assessment, in this case, that the premium notes in all classes and of all dates were assessed. All the assets of the company that came to the hands of the plaintiff as receiver, were the capital stock notes, amounting to about $100,000, and premium notes of all classes and dates to the amount of $67,000, and these assets were insufficient to pay the losses and expenses due from the company. The company had divided its applications for insurance into two classes, one of which was known as the hazardous department, and the premium note of the defendant was in that department. The amount of losses in the hazardous department, due and unpaid, which accrued during the year the defendant's note and policy were in force, was more than could be collected on the notes of that department which were in force and were liable for the losses and expenses of that year. In addition, the ascertained losses and expenses of the company were more than the stock and premium notes of all classes and dates would pay. When it appears to a receiver, from the liabilities of the company and the times the liabilities occurred, and from an examination of all the classes and notes of the company, that there is no note that is not chargeable to its entire amount for liabilities which justly attached during the existence of the policy accompanying such note, a general assessment upon all the notes, without regard to classes, and to their full amount, is unobjectionable. All the notes of the company constitute its capital, whether they be in one department or another, and if the necessity exists, resort must be had to the entire fund. An assessment to-day, of one class, to pay all the losses of that class, and an assessment to the residue of the same class at a future day to pay the losses of another class, the assets of which are exhausted, would be idle and attended with unnecessary *246 expense and delay, when the same could all be effected by one assessment. The defendant was liable to be assessed for losses occuring in both classes of this company during the existence of this policy. If it required an assessment to the full amount of his note to pay such losses, the receiver could make it. It is true, that as his note was in the hazardous department, and his policy ran but for one year, he was first liable to contribute for losses in that department, but if these losses did not exhaust his note, what was left was applicable to payment of losses in the other department accruing during the year that his policy ran. And this was the precise condition of all the other premium note makers. The defendant, however, in this case, cannot complain that the assessment was of the full amount of his note. It was proved, and the fact was distinctly found by the referee, that the ascertained losses accruing during the year that the defendant's policy was in force, were more than could be collected on the notes of the hazardous department which were in force and liable for the losses of that year. The receiver was consequently justified in assessing the defendant's note to the full amount, and it was not for him to object that the notes in other classes and of other dates than his own were assessed.
I am of the opinion that both assessments were valid, and that the plaintiff was improperly nonsuited.
The judgment of the Supreme Court should be reversed, and a new trial ordered.
BALCOM, J., referred and adhered to his dissenting opinion in the court below, in which he held that the publication by the first receiver, Eames, was sufficient, on grounds similar to those stated by WRIGHT, J., and also because the direction in the act of 1852, in respect to a publication by a receiver of notice of assessment, was that it should be in the manner prescribed by the charter of the company. The charter, in this case, was silent on the subject. The act of 1854 authorized the directors to publish the notice "in such manner as they shall see fit, or as the by-laws shall have prescribed." He *247 thought that Eames stood in place of the directors, and that, although the by-laws prescribed the mode of publication, it was in the discretion of the directors, or of the receiver, to adopt another mode. Upon this point, DAVIES and ROSEKRANS, Js., agreed with him, and the three concurred otherwise in the opinion of WRIGHT, J., except that ROSEKRANS, J., attributed no effect to the requisition of personal demand for payment in respect to the construction of the law as to the publication of the notice. All the judges concurred as to the validity of the assessment by the second receiver, Sands, upon the grounds stated in the preceding and following opinions.
Concurrence Opinion
This action is brought by a receiver of the Ætna Insurance Company of Utica, alleging two assessments made upon a premium note given by the defendant. One Eames was originally appointed the receiver of the company, and on the 19th day of February, 1855, he made an assessment of its premium notes. The amount of this assessment upon the defendant's note was $64.57, and this is one ground of the present suit. The validity of this assessment is disputed on three grounds:
First. It is said that it is not made by any regular rule, and that it is unjust and unequal. This is a question of fact, which is not before us upon this appeal. The referee, before whom the cause was tried, finds that Eames, as receiver of this company, made this assessment for losses and expenses for which the maker of this note was liable. He held the assessment invalid, on account of an objection arising as matter of law upon the undisputed facts, which will be presently adverted to, and did not consider how far the objection, that the assessment was unequal, was well founded in fact, nor whether such inequality, if it were shown, would constitute a valid objection in law. It is not our province to examine the evidence and decide the question of fact upon which this question turns, and which has not been passed upon by the court below in any of the stages of this case. Until the question of fact is decided, however, the question of law discussed in the argument *248 on this branch of the case does not call for any expression of opinion by this court.
The next objection made to the assessment of the receiver, Eames, is, that it includes the expenses of collection. The finding of the referee upon this point is, that the assessment was for expenses for which the note of the defendant was chargeable. There is nothing more in the case upon the point, and I am unable to see how the objection can avail the defendant in that state of the case. But I know of no reason why the legitimate and proper expenses of its collection should not be included in an assessment. There is no other means of providing for such expenses, which are, nevertheless, unavoidable. I am not aware that the power to include such expenses in assessments has ever been denied by the courts, and in Bangs v. Gray (2 Kern., 477), it was impliedly, if not expressly, sanctioned by this court.
The last objection to this assessment, and that upon which the Supreme Court held it invalid, was, that notice of it was not published in accordance with the by-laws of the company in regard to assessments by the directors. The receiver of such a corporation is authorized by statute (Laws of 1852, ch. 71, § 2), to make such assessments as, by the charter thereof, the directors are authorized to make; and notice of any such assessment "may be given in the same manner as is provided in the charter of said company for the directors of said company to give." The charter of this company contains no special provisions in respect to such notice, but authorizes the directors generally to call for payment of the premium notes at such times as the directors may deem requisite. The legislature, however, in 1853, regulated, by general law, the mode of assessing premium notes by the directors of mutual insurance companies. (Laws of 1853, ch. 466.) This statute, as amended in 1854 (Laws of 1854, ch. 369), prescribes the manner and the extent of assessments by such companies upon their premium notes. Its provisions have been considered by the courts in various cases, and have always been held to be controlling, not only as to the amount of the assessment, but *249 the manner of making it. They are in effect amendments or alterations of the charter or organic law of these companies respectively, and become incorporated in and a part of such organic law. The power of directors, and, therefore, of a receiver, upon the point now under consideration, is to be measured and determined by any such provisions which may effect it, in the same manner as if they had formed a part of the articles of association or charter of this company. This act provides that notice of assessment shall be published in such manner as the directors shall see fit, or as the by-laws shall prescribe. No action can be brought upon such an assessment until after the expiration of thirty days from such publication, nor until personal demand has been made for payment. The Ætna Insurance Company had adopted by-laws which, among other things, regulated the publication of notice of assessments. They directed that notice of assessments should be published in three newspapers printed in Oneida county three weeks successively, the last publication to be thirty days before the time fixed for payment of the assessment. The notice by the receiver, Eames, of his assessment, was published only in two papers, and, therefore, not according to the by-laws of the company. I think such an assessment cannot be sustained. All the requisites of the statute must be complied with before the makers of premium notes can be compelled to pay assessments upon them, and this applies as well to the provisions which relate to the manner, as to those which concern the substance, of the assessment. It is said that the meaning of the statute is, that publication should be made as the by-laws direct, unless the directors order otherwise, and in that case as they see fit; and that the receiver who succeeds them enjoys the same unlimited discretion. This is not, in my judgment, a fair construction. It gives too little force to the by-laws which were thus expressly referred to in the act, which we must suppose were intended by the legislature to be controlling when such by-laws existed and affected the question. The fair import of the act is, that such publication of the assessment must be made as the by-laws *250 direct, if they contain any direction on the subject; or if they do not, then such as the directors see fit.
The defect in the publication of the assessment made by Eames is not aided by the personal notice which was proved, for two reasons: First, because a personal demand is required by the statute in addition to the notice by publication; and second, because the publication must be made and completed according to the statute and the notice thereby contemplated, thus giving thirty days before the assessment is payable. If a personal notice were claimed as a substitute for or equivalent to notice by publication, it should have been given thirty days before the time of payment and before suit, as the notice by the publication would have been. The personal notice in this case was a demand of payment, which was made on the same day on which the suit was brought.
I am, therefore, of opinion that the assessment made by Eames was invalid, and that upon it this action would not lie. But the conclusion at which I have arrived upon the other questions in the case render this opinion of less importance.
After this assessment had been made, Eames was removed from the receivership, and the present plaintiff appointed in his place. On the 23d of June, 1860, the plaintiff made another assessment. This assessment was general, and it required payment of and assessed every premium note belonging to the corporation to the entire amount due and unpaid thereon, declaring that the same was necessary to pay the debts of the corporation.
It appeared on the trial that the policies and business of the Ætna Insurance Company were distributed into classes. In one of these, designated as farm policies, there had been no losses. In the other divisions, however, described as hazardous risks, the losses had been so large as to require not only the premium notes given for policies of that class, but all the premium notes, and also the stock notes, and the whole assets of the company, to meet them. It is objected to this assessment that it is general, not discriminating between the notes *251 given for these two classes of policies. The answer to this, so far as the defendant is concerned, is, that his policy was issued and his note given upon the insurance of what is known as a hazardous risk. All the notes of that class would be assessed to their full amount, if the assessment had been made by classes, and the notes of this class charged primarily with the losses on policies of a similar description. As the losses in this one branch of the business of the company were sufficient to absorb all that could be collected from all its notes, it was certainly not material to the defendant that the notes given for farm policies should be separately assessed; nor is it necessary to discuss the rule in ordinary cases. The referee finds as facts that the assessment made by the plaintiff was for losses and for expenses and liabilities accrued while the defendant's note and policy were in force. He also finds that the amount due for losses which accrued in the hazardous department, and which are due and not paid, for the time that the defendant's note and policy were in force, is more than can be collected on the notes of that department which were in force, and were liable for the losses and expenses which accrued during the same period. These facts seem to me to dispose of the theoretical objection to the general assessment made by the plaintiff on the ground of the injustice which might result from such an assessment in cases which could be supposed.
The Supreme Court seem also to have held that the assessment was defective and insufficient, because it did not state the particulars of the assets and debts of the company upon which it was based. I confess that this idea seems to me to be founded upon a misconception of the nature and purpose of what is called an assessment under these laws. The act of the receiver in assessing premium notes is precisely the same as that of the directors in case of losses, which the company has not the ready means to pay, while it is yet solvent. The statutes upon which their action is based (Laws of 1853, ch. 466, § 13; Laws of 1854, ch. 339, § 3) authorize and require the directors, if they find it necessary after ascertaining the amount of a loss *252
sustained by any member of the company, to "settle and determine the sums to be paid by the several members thereof as their respective portion of such loss, and publish the same;" that is, to publish their determination of the sum to be paid by each member. This is what is meant by an assessment, whether made by directors of a company or by the receiver who succeeds to their powers. It is the determination how much each member of the company shall pay to make good a loss or losses sustained by others. No particular form is requisite for this; nor is it needful, as was held in Bangs v. Duckenfield (
The other points taken by the respondent's counsel have been disposed of by previous decisions of this court.
I, therefore, have reached the result that the assessment made by the present plaintiff is valid and sufficient to sustain this action against the defendant, and that this judgment should be reversed and a new trial ordered.
DENIO, Ch. J., SELDEN and MARVIN, Js., concurred in this opinion, and ROSEKRANS, J., in so much as relates to the effect of personal notice and demand.
Judgment reversed, and new trial ordered.