Fidelity Mutual Fire Insurance v. Vitale

Opinion by Smith, J., This case is not affected by the Act of May 1, 1876, P. L. 53 : Insurance Co. v. Groff, 154 Pa. 200; Insurance Co. v. Gackenbach, 115 Pa. 492. By section 56 of that act a certificate of the assessment is made prima facie evidence thereof; but it loses all probative force on the filing of the prescribed affidavit of defense. This provision relates to the evidence and not to the pleading. It is enough for the declaration to state a cause of action; it need not contain matters of evidence that may become necessary on trial should the affidavit be filed. Here the declaration sets forth, in sufficient detail, the contracts of insurance on which the defendant’s liability rests, the necessity for making assessments for paymént of losses and expenses, the amount assessed on each policy held by the defendant, due notice to the defendant and his refusal to pay. It recites the specific provisions of the policies relating to assessments, and has attached to it copies of the policies and of the by-laws of the insurance company. It further avers the subsequent issue of some five hundred similar policies. As a whole, it adequately sets forth a cause of action. The sufficiency of the affidavit of defense is to be tested by familiar principles. It must, either by denial or averment, exhibit everything necessary to a defense against the liability set forth in the declaration. The insolvency of the insurance company is no defense: Sterling v. Ins. Co., 32 Pa. 75. The assets of a mutual insurance company consist, principally, in the liability of its members to assessment. To admit insolvency as a defense to an assessment, is to hold that there is no liability unless the assessments that may legally be made will prove sufficient to meet all claims. Such a proposition is opposed to its legalized system of business and has no foundation in either reason or authority. The members are bound to pay all lawful assessments, whatever the relation between their aggregate and the demands against the [161] company. Even if the alleged concealment of the company’s financial condition be deemed fraudulent, under the circumstances appearing here it is no defense, the rights of innocent third parties having intervened: Dettra v. Kestner, 147 Pa. 566. The allegations of unnecessary, excessive and illegal assessments are not sufficiently specific. The facts upon which they depend should be set forth so as to enable the court to draw the conclusions. The argument at bar, that it would be extremely inconvenient to give facts and figures showing the alleged errors and fraudulent calculations upon which the defense is based, cannot be accepted unless we reverse the principle that fraud must be proved and is not to be presumed. “ Nor is it an answer to say it would be difficult to specify with exactness. If such were required, it is to be remembered that the defendant is a member of the company, with right of access to the books. There is no pretence that this was denied him, therefore the contrary is to be assumed:” Insurance Co. v. Groff, supra. In that case also, as in the present, twenty-five per cent was added as liquidated damages for default in payment of assessments, in accordance with the terms of the bylaws and policy, and this was sustained by the Supreme Court. The presumption of law is in favor of the regularity of the proceedings to. assess and the legality of the assessment, and this presumption cannot be overcome by a general indefinite denial. It has often been held also that general averments of matters which in themselves are legal conclusions, from facts not stated, are insufficient to carry a case to the jury. The issue now presented is based on the declaration and the affidavit of defense, and upon examination of the latter we must, for the reasons indicated, hold it to be insufficient to prevent judgment. Judgment affirmed.