Upton v. Pratt

VTIeuls, J. The plaintiff seeks to recover, from the directors of a mutual insurance company, the amount of an execution which he has obtained against the corporation, on the ground of neglect .by them to make an assessment for its payment [553] His right depends wholly upon the Gen. Sts. c. 58, § 48. By that statute, the directors become personally liable for the amount of an execution, if there is “ property belonging to the period assessed, the proceeds of which can be applied to satisfy such execution,” and they neglect to pay the same; dr if they “ neglect for thirty days after the rendition of judgment to make an assessment and deliver the same to the treasurer for collection, or to apply such assessment when collected to the payment of the execution.” By the same section, it is provided that, in case of classification of risks, the assessment “ shall be made upon such premium and deposit as were given upon hazards associated with the property upon which losses have occurred.” Section 51 entitles each member, at the expiration of his pol icy, to have a share in the profits of the company “ during th& time his policy was in force.” By § 53, the directors are authorized to divide the property insured into not exceeding four classes; and it requires that the assessments shall be made upon premiums and deposits belonging to the class in which the loss occurs. It also provides that “ no money belonging to one class, received either as premium or assessment in said class, shall be used to pay losses or expenses or other liability of any other class.” The directors of a mutual insurance company are, in effect, merely agents of the policy holders, charged with the administration of their mutual interests and relations, and the adjustment of their mutual rights and liabilities. Their responsibility for any claim due to one of the members upon a policy arises oiiiy from a failure to discharge their appropriate functions, or a neglect to perform some duty imposed upon them by their office. They cannot transcend those restricted powers which are so carefully defined in the statutes. They cannot be made liable for not applying to the payment of an execution funds which the statute forbids to be so applied ; nor for neglecting to make an assessment upon a class whose liability to assessment has already been exhausted or discharged. The directors for 1867 cannot be held responsible for the defaults of their predecessors of 1860 or 1861. [554] Upon these exceptions, it must be assumed that the loss from which the plaintiff’s debt arose occurred prior to 1860, upon a policy in the “ General Class that the business of that class was closed in 1861, and all the policies cancelled. It was not claimed that there was any property or assets of that class which could have been used by the defendants to pay the execution; or that any assessment could have been made upon that class from which they could have derived means of payment. They are not in fault, therefore, for failure to attempt such an assessment. The plaintiff contends that the execution is to be regarded as a loss occurring at the date of the judgment; and that the defendants were bound to apply to its payment the assets derived from current business, or to make an assessment upon present policy holders. But that would be in violation of their duty to those policy holders, and contrary to the provisions of the statutes. The plain intent of the statutes is, that .the assessment shall be made in reference to the period in which the loss occurred under the policy, and not to the time when the liability for such a loss is ascertained and recognized, or fixed by a judgment; and the assets which may properly be applied to its payment are to be determined in reference to the same period. The inquiry into the consideration of the note upon which the judgment was based is in no sense an impeachment of the judgment. It may be true that the defendants are not entitled to impeach it. Their liability does not result from the validity of the judgment, but from neglect to do those acts which the plaintiff is entitled to have done as a policy holder who has suffered a loss, to enforce contribution from other policy holders sustaining mutual relations with him in respect to such policies. The judgment determines the fact and amount of the loss; but not the class or period upon which the obligation to contribute must fall; nor the property or fund which ought to be applied to its payment. There being no fund or property which the directors could egally apply to the payment of this execution, and no class of policy holders against which an assessment could be enforced. [555] the defendants are not shown to have failed in their duty as directors, and cannot therefore be made personally liable in this action. Exceptions overruled