224 Wis. 109 | Wis. | 1937
The following opinion was filed January 12, 1937 :
Mutual reinsurance would necessarily carry with it liability for an assessment, the payment of which may be enforced by an action at law. The complaint in this case sets forth all facts which must be proved to sustain a recovery, including the fact that the defendant was a member liable to assessment. The trial court was of the opinion that certain formalities required by statute had not been duly observed. A reference to the decision and the findings in the circuit court shows that the central issue is as to defendant’s membership in plaintiff and consequent liability for the assessment. All other objections on the part of the defendant may be readily disposed of once this question is settled. The evidence establishes that a policy of reinsuring defendant’s
“This matter of organization had been in air for eight years; efforts had been made in previous years for purpose of organizing some means of protecting associations from excess losses.”
The result hoped for by the organizers of plaintiff was the accomplishment of a reinsurance of town mutuals doing business in different localities which would tend to level off the losses and stabilize mutual insurance by protecting individual companies against excess loss. The plan was to pay member companies the amount, if any, that the reinsured company might be required to pay to its policyholders for losses in excess of an amount equal to one hundred twenty-five per cent of its average yearly losses during the preceding ten years. It is this liability of the plaintiff which forms the basis of the contract of reinsurance. The amount of the reinsurance risk is limited by the liability of the member company under the original policies, but the reinsurance risk is not for any specific risk of the insured company. Plaintiff refers to the contract between it and the defendant as a “stop loss contract.”
Action by the board of directors on January 11, 1927; the minute book shows:
“A circular was presented and read by the secretary pertaining to the matter of joining a reinsurance company to be organized by different large town mutual insurance companies doing business in the state of Wisconsin, this circular being sent out by the secretary of the State Association of Town Mutual Insurance Companies. It was decided as urged that the same be brought to the attention of the members of the company at their annual meeting.”
Action by the members of the defendant on January 12, 1927; the minutes of the annual meeting show:
“Proposed articles of incorporation and by-laws of the Wisconsin Town Mutual Reinsurance Company, as sent out by W. W. Gillies to organize if possible such a town reinsurance company was read by the clerk and discussed. On motion made and seconded that we appoint the president, secretary and vice-president as a committee and authorize them to communicate with similar committees to organize a state reinsurance company and if in their opinion .a large enough membership is obtained and the articles of incorporation and the by-laws are suitable to them authorize them to sign up with such company at the time it may be organized. (Motion prevailed by unanimous consent.)”
Action by the two active members of the committee late in 1931 or early in 1932; the following application for membership in the Wisconsin Town Mutual Reinsurance Company:
.“The undersigned hereby make application for membership in the Wisconsin Town Mutual Reinsurance Company, having been authorized so to do at a meeting of the policyholders of the Calumet County Mutual Fire Insurance Company, held at New Holstein, Wisconsin, January 12, 1927.
“The said policyholders having by a majority vote at said meeting adopted the following resolution:
“Resolved: That the board of directors of this company are hereby authorized and directed to apply for membership*115 and become a member of the Wisconsin Town Mutual Reinsurance Company.
“For the resolution — 43 votes.
“Against the resolution — 0 votes.
“Jas. G. Griem, President.
“Louis W. Hipke, Secretary.
“It is further agreed and understood that the said Calumet County Mutual Fire Insurance Company is participating in all the rights, powers and privileges conferred by the said Wisconsin Town Mutual Reinsurance Company and will pay any assessment or assessments duly made by it for the purpose of paying its losses and expenses incurred as such-company.
“Jas. G. Griem, President.
“Louis W. Hipke, Secretary.
“Calumet County Mutual Fire
Insurance Company.”
When the committee was first appointed in 1927, Mr. Breed was president of the defendant. He retired shortly after and his services ended because of illness. Flis incapacity evidently came to the attention of the membership of defendant, for at the annual meeting in January, 1929, he was not reelected to the board of directors and the directors subsequently named him an honorary member of their board. Mr. Griem and Mr. Hipke, the two remaining members of the committee, proceeded with the discharging of the commission, and, after a series of negotiations, a meeting of town mutuals was held February 7, 1931, at which defendant was represented by Mr. Hipke. On November 3, 1931, what may be termed the final meeting of the representatives of town mutual fire insurance companies proposing to form the plaintiff, as a reinsurance company, was held. The plaintiff was then organized, and defendant was one of the organizers, signing the articles of organization by Mr. Hipke, its secretary, and the application quoted above was submitted. The activity of the representatives of defendant in bringing about the organization of plaintiff and the participation in such organization is amply established by the testimony of
“Any town mutual fire insurance company may, at its annual meeting, or at a special meeting called for that purpose, vote to become a member of a reinsurance corporation to be organized under this chapter. The secretary, or in case of his inability, the president, of such town company shall thereupon be authorized to represent it in organizing a reinsurance corporation; and shall in all matters represent his company in said reinsurance corporation.”
See also secs. 202.15, 202.17, 202.18, Stats.
The learned trial judge was of the opinion that, after the organization of the reinsuring company, full membership could only be attained by a second vote of the members of the joining company, but a consideration of the statutes referred to compels the conclusion that a town mutual can become a charter member of a mutual reinsurance corporation. The membership of the company first to join becomes effec
We reach the conclusion that the trial court was in error in its construction of the statutes referred to, and that the so-called second vote was not required under tire circumstances of this case; that the original authorization was broad enough to warrant the secretary in doing what he did, and that the requirement that there be further proceedings of the nature contended for by defendant would result in the charter members of the reinsuring company, already reinsured, applying to themselves for reinsurance. The purpose of the defendant evidenced by the declarations of its members, its directors, and officials, was to become a part of the plaintiff organization. Does any technical failure exist of sufficient consequence to break the line between the purpose and the resulting membership? Only if it results from the circumstance of Mr. Breed’s illness and consequent inability to take part in the proceedings of the committee. The fact that Mr. Breed did not act is one of the bases of defendant’s claim that it never entered into the status described as that of a “constituent member.” It is urged that the evidence shows that this committee never took any action as a unit. There was some considerable measure of discretion as to the matter of organizing the plaintiff reposed in this committee, but it was a committee dealing with affairs concerning which a majority could act. And there is no doubt under this record that the
The facts showing ratification of the acts of its representatives appearing in the proceedings of the defendant at its meeting January 13, 1932, and subsequently, are as follows. There appears in the minutes :
“The matter of reinsurance of the company’s risks by having joined the Wisconsin Town Mutual Reinsurance Company and stabilizing mutual insurance was presented to the members, explained and discussed.”
As to the defendant’s contention raised by the amendment to the answer that secs. 202.15 to 202.18, inclusive, Stats., are unconstitutional and void as to the contracts of members of defendant company, we are of the opinion that there is no invasion of the rights of individual members or of the defendant, nor violation of any constitutional provision. There was no particular effort to show what policies of defendant company were in force before these statutes were passed, and
The contract into which defendant entered provided that in the event it failed to respond to any of its legal obligations due to plaintiff, and particularly assessment, it would pay the costs of collection. The contract governing this item appears to be a proper one and the item of attorney’s fees must be a part of the recovery. The judgment must necessarily provide for this item of costs which has been made necessary by the act of the defendant in refusing to pay the assessment which it was bound to pay. The terms of the contingent contract were shown in the trial below to be reasonable, and therefore in addition to the assessment and interest the plaintiff must recover thirty-five per cent of that amount as attorney’s fees.
By the Court. — Judgment reversed, and cause remanded with directions to grant judgment for plaintiff for the amount of the assessment and interest and the costs of collection according to the contract.
A motion for a rehearing was denied, with $25 costs, on March 9, 1937.