Baker v. Citizens' Mutual Fire Insurance

Campbell, J. Baker sued defendant on a policy of insurance and recovered judgment. The defense set up was —first, the cancellation of the policy; and second, the forfeiture of the insurance by non-payment of assessment. Upon the first point no legitimate question arises, as the policy was not canceled until after the loss and right of action accrued, and there was nothing in the mere act of cancellation to operate retroactively so as to cut off the claim for damages already existing. The controversy all turns upon the second point; for the other questions raised on the trial do not appear to have any materiality. The defendant, which is a mutual company organized under the laws of Michigan, appears to have divided its risks into various classes at different rates. Plaintiff held what was known as one first-class risk for $400, which is the one [244] in question. He also held, two fourth-class policies for $700'.. On January 11, 1882, the board of directors passed a resolution ordering all policies issued previous to October, 1881,. to be assessed, at the rate of two mills on the dollar for first-class policies, and additional rates at 10, 20 and 30 per cent, respectively on the second, third and fourth classes, and directing an assessment to be levied accordingly, payable on the first of March and for thirty days thereafter, and that the secretary give notice on the 1st of March. The resolution directed that all policies not paid within the 30 days-should be suspended till paid. The by-laws directed a total forfeiture, retaining nevertheless personal liability for future assessments. The charter directed that the mode of assessing should be fixed by the by-laws. The by-laws provided that when the board ordered an assessment, the secretary should prepare it, and it should be signed by a majority of the board and by the secretary, and placed on file. The secretary prepared a paper which was not signed by himself or by any one else, which contained no headings showing what was meant by the various columns in which entries were made, and in which the only reference to plaintiff was as follows: The notice sent by the secretary was dated March 1,1882,. and after setting out ■ the resolution of January, informed plaintiff that the grade and amount of his insurance was “No. 1 and 4 grade, $1100; assessment, $2.48.” It required him to pay the assessment to the treasurer within 30 days from date. The plaintiff did not pay until May 13, the day after the fire, when he paid the entire amount specified in the notice, and informed the secretary of the fire. On May 16 he presented his claim, which the board refused to allow. No objection was made on any formal grounds. The record shows conclusively that no such assessment was made as was required by the charter and by-laws, and without this there could be no forfeiture. The charter and [245] bty-laws botb treat the assessment as an act to be done subsequent to the resolution of the directors. Until the assessment is put in shape there is nothing to found a notice on, and nothing to create a liability. The purpose of the by-law is to secure the personal attention and oversight of the officers to the preparation of the assessment, so as to secure accuracy, and to prevent omissions or mistakes in regard to the persons responsible and the amounts of their dues. Evéry member is interested in having assessments ■correct, and in having others properly charged for their •share of the common burden. We need not consider whether the omission of certain policies would have been fatal had the directors and secretary acted in preparing the assessment. The directors paid -no attention to it whatever, and there was no assessment properly so called made at all, for it is impossible under •the charter to regard a mere unsigned and uncertified paper to be treated as an official act of persons who never had .anything to do with it and probably never saw it. Without referring to other difficulties, we think the court helow correctly decided that this was no valid assessment, .and created no forfeiture. The judgment must be affirmed with costs. The other Justices concurred.