112 Iowa 236 | Iowa | 1900
I. Plaintiff states as his cause of action, in substance, as follows: That he is the assignee for the benefit of its creditors of the Citizens’ Mutual Insurance Company of Waterloo, Iowa, a company incorporated for the purpose of carrying on the business of mutual insurance upon the property of its members; that defendants made application to become'members, and delivered to the company their premium note or pledge for $240, and that said application and pledge, were duly approved and accepted by the company, and a policy issued thereon, all of which was in full force at the time of the general assignment to plaintiff; that by reason thereof, and by virtue of the articles of incorporation and by-laws of said company, the defendants became members of said company; that the district court made an assessment of 44.9 per cent, on said pledge, amounting to $107.76, which, after due notice, the defendant refused to pay, wherefore the plaintiff asked judgment for that’ amount, with interest. The defendants answered, in effect denying generally, and, as affirmative defense, alleging fraud in procuring said application and pledge, substantially as follows: That said company caused and authorized its general agent to represent to defendants that it was a sound, solvent, and reliable company; that its members would receive complete indemnity for losses; that its officers and organizers were honorable citizens of Iowa, of superior ability and qualifications to manage the company; and that it would furnish complete indemnity for losses to its members at a much lower rate than other companies. That said general agent represented, by> a printed circular issued by the company to defendants, that the company was possessed of a fully paid up guaranty fund of $50,-000, paid in by the parties organizing it for the purpose of paying the losses that might cause assessments that would: raise the rate above that of other companies for like insurance, and that said $50,000 was the absolute property of the company. That said representations were false, and.
II. It is conceded to be the law that members of the Citizens’ Mutual Insurance Company of Waterloo, Iowa, are held to know the provisions of its articles of incorporation and by-laws. Applying this rule to the appellants, the matters alleged as. affirmative defense are not available to them. Appellants contend that fraud vitiates every contract, and therefore, because of the fraud alleged, they never became .members,'and are therefore not, subject to said rule. Appellee insists that by the execution and ac