Freeland v. Pennsylvania Central Insurance

Mr. Justice Green delivered the opinion of the court, The first, second and third assignments of error maybe considered together." The suits were brought upon three promissory notes, alleged to be premium notes, given by a policy holder to an insurance company, for the purpose of recovering certain assessments made by the company for the payment of losses. The corporation was originally created by the Court of Common Pleas of Schuylkill county in November 1869, as a cattle insurance company, and was then called “ The Pennsylvania Cattle Insurance Company.” On September 4th 1871, the same court, on proceedings for that purpose, changed its name to “ The Pennsylvania Central Insurance Company.” The present actions are brought in the latter name. The power to insure property against loss by fire was conferred by an Act of Assembly passed December 27th 1871. By that act the name originally given to the company was restored and it was once [513] more known as “ The Pennsylvania Cattle Insurance Company.” But it notf possessed the power to insure property against loss by fire under an ill-conceived and incongruous provision which authorized'it “to connect an additional branch of insurance,” to be called the “Fire Insurance Branch of the Pennsylvania Cattle Insurance Company,” and by that name to have perpetual succession, and to sue and be sued. By the 16th section of the act the power to insure property against loss by fire was conferred upon this branch. We are strongly inclined to think that thereafter, all policies of insurance on property should have been eifected in that name. By an Act approved May 10th 1871, the legislature had conferred upon the Pennsylvania Cattle Insurance Company the same rights and powers as were possessed by the Lykens Valley Mutual Fire Insurance Company which was authorized to insure property against loss by fire. On February 26th 1872, the Court of Common Pleas of Schuylkill county, made another decree changing the name of the company back to “ The Pennylvania Central Insurance Company.” The defendant’s contract was made with this latter company by that name. He now contends it ought not to be enforced against him because the Act of December 27th 1871, conferring the power to insure property was unconstitutional for two reasons: 1st. Because it creates two distinct corporations - with separate names and different- powers, and 2d. Because the title does not indicate that the creation of a fire insurance company by a distinct name was intended, and the legislature could not thus create a distinct corporation or confer a power. If this were an open question of which the defendant might take advantage, we should be inclined to attribute great weight to it. But he is not in such a position. It is perfectly familiar law that the invalidity of a charter cannot be inquired into collaterally, and least of all by a member who has enjoyed the benefit of its privileges: Dyer & Co. v. Walker, 4 Wright 157. The violation of a charter cannot be set up as a defence to an action on a note given in violation of the charter: Irvine v. Lumbermens’ Bank, 2 W. & S. 204. See also to the same point: Flanders on Fire Ins. 19; Sands v. Hill, 42 Barb. 651; Dyer v. Walker, 4 Wright 157; Workingmen’s Building and Loan Association v. Coleman, 8 Norris 428; Rhoads v. Building Association, 1 Id. 180. But the learned counsel for the defendant reply to this that they do not question the validity of the act; they admit its validity, but deny the power to insure property, and argue, hence, that such a contract is ultra vires. This would be a good defence if it were well taken. But how is it made out ? Simply by alleging that the legislature had not conferred the power by a constitutional enactment, in other words, repeating the objections to the validity of the act. A corporation contract is ultra vires when it is beyond the powers conferred. But here the power ivas conferred, whether rightfully or not, and [514] the contract in question was within the very letter of the act. It cannot be said, therefore, that it was ultra vires within the proper meaning of that expression. If the act itself was invalid in attempting to confer the power, of course the power did not exist. But this defendant cannot be heard to make that objection, and hence the defence on this ground fails. The defendant says further, however, that the plaintiff has sued in the wrong name, that it could only sue in the name by which it was authorized to contract for the insurance of property. This also would be a good defence, but there is only one way in which it can be interposed, to wit, by plea of misnomer in abatement. No'such plea has been made, and the defendant has gone to trial under the general issue. After that it is too late to make such a a defence. A misnomer must be pleaded in abatement: Fritz v. Commissioners, 5 Harris 135; Gray v. Monongahela Nav. Co., 2 W. & S. 162. Even the want of a charter or one with great irregularities must be so pleaded. If there is no charter, it must be specially pleaded in bar: Rheem v. Wheel Co., 9 Casey 358, 363-4; Conard v. Atlantic Ins. Co., 1 Pet. 450; Society v. Town of Pawlet, 4 Id. 480. And a plea in bar will not be received if pleaded after the general issue and a full preparation for trial and a hearing on the merits; Zion Church v. St. Peter’s Church, 5 W. & S. 215. It is contended that the decree of the court of February 26th 1872, again changing the name of the company was illegal, because no fresh petition for that purpose was presented and no notice thereof was given to the auditor-general. This may well be, and if the question had come before us on appeal from that decree, it would probably have béen reversed for th-e reasons stated. But it is not here in that way. This defence amounts to a plea of misnomer, and it is introduced in a collateral proceeding by a member of the corporation who has contracted with it in the name in which the suit is brought. It is not possible to entertain such an objection interposed in such a mode and by a person so circumstanced, for the reasons already stated. See further on this subject the case of Association v. Feemar, Leg. Int. of March 28th 1879, p. 124. This disposes of ’the first three assignments of error. In the fourth assignment, it is claimed that as by the statute, a special remedy for the collection of assessments was provided by means of a warrant to the collector and a summary seizure of the member’s goods, no other remedy could be pursued. The remedy selected is an ordinary action at law upon the contract, in which action the defendant has a hearing in a court with a full opportunity of defence. The argument is that this kind of remedy has, in reality, been taken away, and thus that while the defendant could not be sued in a court of law, his goods could be arbitrarily taken by a warrant without previous notice, hearing or trial. We [515] certainly should never hold such a doctrine, unless we were absolutely compelled to do so by an irresistible necessity. Fortunately, we are not placed in such a position here. While it is true that the eighteenth section of the act provides that whenever an assessment is made by either branch, the board of directors shall issue their warrant for the collection of the same, it is also true that the eighth section provides that every member shall b'e bound to pay for all losses in proportion to the amount of his deposit note, and “ suits at law may be maintained by said corporation against any of its members for the collection of said deposit notes or any assessment thereon, or any other cause relating to the business of said corporation.” Section ten also contemplates and provides for actions brought for the recovery of assessments in the courts of the Commonwealth. It is argued that these sections are confined to the cattle insurance branch of the company, but we do not agree to that construction. There are no express words establishing .such restriction, and on the contrary, the language of the eighth section distinctly declares that suits may be ■ maintained by said corporation against any of its members for the collection of said deposit notes or any assessment thereon, or any other cause relating to .the business of said corporation. The generality of this language is such that we are not at liberty to restrict it to a particular branch of the corporation, and we are of opinion that the court below was right in its determination of this question. We see no error in the matters complained of in the fifth and sixth assignments. The subject of the representations made by the agent was carefully reviewed by the learned judge in his charge, and was left to the jury with proper instructions, as to whether the alleged representations were made, whether they were influential in inducing the defendant to enter into the contract, and whether they were true or false in the sense that would be necessary for the avoidance of the contract. The jury has found against the defendant on these facts, and their action cannot be reviewed here. We do not quite perceive the relevancy of the portion of the charge complained of in the seventh assignment, but do not find any positive error in what was said, nor anything calculated to mislead the jury. The court expressly said that “ there is no direct proof that by Mr. Freeland’s signing, others were induced to sign.” The question here is as to the defendant’s liability for the assessments on the note given by him. The influence of his membership in inducing others to join is not very material as to his liability, as that depends upon his written contract. We do not see how the remarks of the court on this subject did or could affect the verdict in any improper way. We think the court were right in their answers to the defendant’s seventh and eighth points, and hence the eighth assignment of error is not sustained. Judgments affirmed.