Schaffer v. Mutual Fire Ins.

Mr. Justice Stemustt delivered the opinion of the court, May 5th 1879. The company defendant in error was incorporated under the Act of 1856, “for the purpose of insuring all kinds of buildings, merchandise and other property against loss by fire on the mutual principle exclusively.” Mutuality of obligation is of course the very essence of the principle. While the company, on the one hand, undertakes to pay or make good the losses, the insured, on the other, agrees to contribute his proportionate share of current expenses and losses happening during the life of his policy. Their respective promises are mutually dependent upon each other. The undertaking of the one is the only consideration for that of the other. It would be unreasonable therefore to contend that there could be any liability on the part of the company to the insured for the loss of his property, unless he at the same time had paid or assumed to pay his proportionate share of expenses and the losses sustained by other members. The principle upon which the system of mutual insurance rests is utterly inconsistent with any such proposition. The plaintiff in error had neither paid nor agreed to pay any premium or fees, nor had he in any manner assumed the payment of his share of expenses and losses. In fact he had entered into no contract whatever. There was nothing on which the company could have sustained an action against him on an assessment to pay losses, or anything else. At most, he had merely made application, not in person, but through Scheirer, for insurance and membership in the company, without as yet having complied with [302] any of the pre-requisites of membership. The charter and by-laws form an essential part of the contract of insurance, and these require the payment of a stipulated amount to defray incidental expenses. They also provide that all policies shall be issued in duplicate and be signed by the insured as well as by the president of the company. Soheirer was not furnished with funds to pay the premium and fees, nor had he any authority to sign Schaffer’s name, or in any manner bind him to discharge the obligations of membership, nor did he undertake to do so. At most, the evidence shows that there was a proposition to insure, which the company was ready and willing to accept, and all that was wanting to consummate the contract was the payment of the money by the plaintiff in error a,nd his signature to the policy, both of which were essential and neither of which was waived. Perhaps the secretary might have agreed to postpone the payment of the premium and fees, but there is no sufficient evidence that he did; nor does it appear that he had any authority whatever to dispense with the signing of the policy by the insured. The substance of Scheirer’s testimony is that he had another policy to be transferred uto the building association; that he requested the secretary to prepare both policies, make out a bill of amount to be paid, and he Avould pay it when he called for the policies. There is nothing in the testimony that Avould have justified the jury in finding that at the time of the fire there Avas any contract to insure, and if the fire had not occurred, no such thing Avould have been claimed. The .correct and natural explanation is that they did not anticipate that a fire would take place so soon-, and thought they would have ample time to close the transaction. While the negotiation Avas thus pending, the property was destroyed, and the company, as it had the right to do, refused to deliver the policy and assume payment of the loss. The questions involved are so fully and ably discussed by the learned president of the Common Pleas, in his opinion refusing to take off the nonsuit, that it is unnecessary to add anything to AYhat he has so Avell said. The assignments of error are not sustained, and the judgment is therefore affirmed.