Davenport Fire Ins. v. Moore

Day, J. i. isisttiiauoe: premium note, I. It is claimed that the insurance in question was effected upon the mutual plan, and that there can be no recovery without proof of losses, and an assessment of the amount payable by defendant. The answer alleges that the policy in question was issued to the defendant upon the mutual plan, and none other. If this allegation stood alone, it would be admitted by the demurrer. But to the answer copies of the charter of the company and of the policy of insurance are attached. These become parts of the answer, and in connection with the note sued on, the execution of which the answer admits, must be considered in determining the effect to be given to this allegation. The charter of the company authorizes it to conduct its business wholly or Li part upon the mutual principle, or wholly or in part upon the cash principle. The policy recites that the insurance is made in consideration of six dollars cash premium, and an instalment note of twenty-four dollars. The liability of the company is made to depend upon the payment of the instalments of the note as they fall due. Nothing is said about an assessment of losses to the insured. The note sued upon is payable absolutely in instalments, at specified times. We think the character of the insurance must be determined by the charter, the note and the policy, and that these show that the insurance in [626] question was not effected upon the mutual plan. The allegation in the answer that the insurance was made upon the mutual plan is contradicted by the admissions in, and the exhibits attached to, the answer, and is not, therefore, well pleaded. It is not admitted by the demurrer. The authorities cited by appellant upon this branch of the case (White v. Haight, 16 N. Y., 310; Mygatt v. New York Protection Insurance Co., 21 N. Y., 52; and Howland v. Edmonds, 24 N Y., 307) do not, we think, support a view contrary to that above announced. 2. —: compasm-emay 101 II. The answer alleges: “that April 23, 1869, the Cedar Valley Insurance Company transferred, so far as it had power or authority, all the premium notes received in the course of its business to the plaintiff, including the note in suit, in consideration of which plaintiff undertook and agreed to assume and carry all risks theretofore assumed by said Cedar Valley Company, and to indemnify said company against all claims for losses under or by virtue of any of its policies of insurance theretofore issued, which transaction is the only basis of plaintiff’s right or title to the note in question.” Appellant urges that, independently of chapter 138, Laws of 1868, the Cedar Valley Insurance Company had no authority to transfer the note in question to plaintiff, in the manner above alleged. The argument of the apppellant is based upon the idea that the Cedar Valley Insurance Company is simply a mutual company. As, in the view we take of the case, the insurance of defendant was not effected under the mutual plan, the reasoning of the appellant is not applicable. It is true that the Cedar Valley Insurance Company could not, without the consent of the defendant, transfer its liability to the plaintiff, and compel the defendant to accept the plaintiff as his insurer. But the charter of the Cedar Valley Insurance Company authorizes it to cause itself to be reinsured as to any risk taken. It is competent for an insurance company to effect rein [627] surance upon its risks. Flanders on Insurance, 30; Angelí on Fire and Life Insurance, 20; Clarke on Insurance, 263. What the answer alleges to have been done by the Cedar Valley Insurance Company amounts, in legal contemplation, to reinsurance upon its risks. As the Cedar Valley Insurance Company had the right to effect such insurance, it was competent for it to pay the plaintiff for the risk assumed by the transfer to plaintiff of any property to which the said company had the absolute right. As the Cedar Valley Insurance Company owned the note in question, we can see no valid reason why it might not transfer the note to plaintiff. :3. —con-statute. III. It is urged further that the transfer is invalid under chapter 138, Laws of 1868. Section 3 of this act provides that no joint stock company shall be incorporated with a smaller capital than fifty thousand dollars, of which not less than twenty-five thousand dollars shall be paid up in cash; and that no company on the mutual plan of insurance shall commence business until agreements have been entered into for insurance with at least two hundred applicants, the premiums upon which shall amount to not less than twenty-five thousand dollars, of which at least five thousand dollars shall have been paid in actual cash. Section 26 provides that any insurance company, before the passage of the act, organized under the laws of this State, shall conform to the provisions of the act by January 1, 1869, and when necessary shall change its charter to comply with said act, and makes it a penal offense for the officers or agents of a company to do business without complying with the act. Section 28 makes it the duty of the Auditor of State, when he shall deem it expedient, to appoint one or more persons to examine into the condition of any insurance company doing business in this State, and authorizes him, when it shall appear from such examination that the assets are reduced or impaired more than twenty per cent below the paid-up capital stock required by the act, to communicate the fact to the Attorney General, whose duty it shall be to apply to the [628] Supreme Court, or a judge thereof, for an order requiring said company to show cause why their business should not be closed; and, in case it shall appear that the interests of the public require it, the court or judge shall decree a dissolution of the company and a distribution of its effects. The answer alleges that on and prior to January 15, 1869, the capital stock of the Cedar Yalley Insurance Company was less than fifty thousand dollars, and that it did not have agreements of insurance with two hundred persons. Because of the failure of said company to comply in this respect with the provisions of chapter 138, Laws of 1868, it is claimed by the appellant that it was not competent for the said company to effect reinsurance, or transfer the note in question in consideration thereof. It does not, however, appear that any steps were taken, as authorized in the act, to close the business of the Cedar Rapids Insurance Company. The law itself did not have that effect. It made it penal for the officers of the company to do any more business as an insurance company. They could not, until the law was complied with, take any more risks. But they were not, we think, inhibited from indemnifying the company by reinsurance for risks already assumed. The taking of such reinsurance was not, as we understand it, violating the provisions of the act as prescribed in section 28 thereof. We are of the opinion that the demurrer to the answer was properly sustained. Affirmed.