Granite State Mutual Aid Ass'n v. Porter

The opinion of the court was delivered by Royce, Ch. J. The only question presented in this case is the construction to be given to sec. 3607 R. L., as amended by No. 45 of the Acts of 1884. Before amendment, that portion of sec. 3607 which is applicable, read as follows: “A mutual insurance company or co-operative insurance company, association or society, not organized under the laws of this State, shall not transact the business of such company in this State unless it has assets amounting to $100,000, invested in securities readily convertible into cash, not less than one half of which is invested in cash securities other than mortgages of real estate, nor unless it has such assets equal to its outstanding liabilities, including re-insurance to be estimated as in the case of joint stock insurance companies above named, and including the amount of guarantee capi [583] tal as a liability; nor until the laws of this State relating to insurance companies of other states have been complied with,” etc. The clear import of this language’is that in order to entitle it to a license to conduct business in this State, as provided in sec. 3611 R. L., the applicant company must show assets to the amount of at least $100,000, and so much more as may be necessary to balance its outstanding liabilities, such liabilities to be computed, and such assets to be invested, as is provided in the section. It is well known that in mutual fire insurance companies, ordinarily, if not universally, the bulk of assets consists of premium notes, and as the amount of these is graded according to the .amount of insurance in force, this language is obviously adapted to that class of companies; and as mutual life companies accumulate assets in proportion to the business transacted, it is equally applicable to them; Its requirement is simply that the company shall be of such standing and consequence that it can show at least $3.00,-000 of assets, and that the investment of its assets and proportion of resources and liabilities shall conform to the standard established by the law. With co-operative insurance companies the conditions are different. Beyond such paid-up capital or reserve fund .as they may have, if any, the amount of their tangible assets is ordinarily inconsiderable, if not entirely absent. They are simply based on the mutual agreement of the members of the association to respond to assessments for the payment of losses in such manner as is provided by the rules of the company or association, and the failure to do this operates to cancel the insurance of the member so failing to perform his part of the mutual agreement. In the case of a co-operative company, then, supposing it to have a paid-up capital or reserve fund of $100,000, whenever its liabilities. exceeded that amount, upon the basis prescribed by the law, it would ordinarily become impossible for it to comply with sec. 3607, so as to establish its right to a license; and the larger its member [584] ship and correspondingly stronger its real condition, the wider the breach, because the larger the membership the larger would become its liabilities, with no corresponding increase in any kind of assets recognized by' the law. A consideration of this state of affairs strongly suggests that the amendment of 1884 was intended to remedy it, by providing for the recognition of this intangible class of assets, namely, paying membership. But to assume that the legislature intended to dispense with all requirement for any other kind of assets would involve the proposition that it intended to permit foreign insurance companies to do business in this State, under regulations which would subject the citizen who might insure in them to the risk of having his claim for a loss cut down, by whatever amount of deficit there might happen to be on account of the failure of members to respond to their assessments, without any convenient or certain remedy. Such a conclusion would be entirely at variance with the policy of the legislature, as shown by the various successive enactments upon this subject, all of which have plainly had in view the more complete protection of the rights of citizens insuring in nonresident companies; and so far from requiring it, the language and grammatical construction of the section, as amended, are clearly against it. The provisions of the amendment are plainly alternative only with the clause immediately preceding, and do not refer back to that which requires assets amounting to $100,-000. The section, as amended, permits the granting of a license to a mutual or co-operative company having assets of at least $100,000, and which shows whatever amount in addition thereto may be necessary to balance its liabilities as ascertained in the manner prescribed, or a compliance with the conditions prescribed in the amendment. The petition is dismissed, without costs.