Hill v. Farmers' Mutual Fire-Insurance

Grant, J. (after stating the facts).' 1. The court held that there was no forfeiture, that plaintiff was a perpetual member of the company, and that the provisions of the charter and by-laws in regard to suspension simply mean “that during the time that members of this company are in arrears they can collect no loss, but as soon as they are paid up they can collect for any and all losses that may occur either before or after the time, — that is, if there is nothing due to “the company.” We think that the court did not construe these provisions of the charter correctly. Courts cannot make contracts; they can only construe them. Plaintiff and defendant made a contract of insurance, and both parties must abide by it. In the con [144] tract it was agreed that “no insurance shall be considered as binding until the payment of the premium” (section 2 of by-laws); that, in default of the payment of assessments as provided, the insurance shall be suspended, and that the insured shall have no claim for losses until his assessment is paid (section 19 of charter); and that no insurance policy shall be binding until the actual payment of premium (section 20 of charter). Under these provisions, as interpreted by the court below, the insured may let his premiums or assessments run until a fire has occurred, then pay them, and recover his loss. “Assessments ” and ‘ ‘ premiums ” are interchangeable words, and mean the same thing. They are the consideration for the contracts. In stock companies an annual premium is required. In these mutual companies the premiums consist of the assessments made from time to time to pay losses and expenses. Each member of the defendant company contracted to pay these premiums within 30 days after notice, and that his failure to so pay should operate as a suspension of his policy, rendering it void so long as he chose to let the premiums remain unpaid. • It does not affect the question that defendant might sue delinquent members to recover the premiums. If the defendant had promptly canceled the policy for nonpayment, it could have sued plaintiff to recover the premiums, because it had already earned them, and plaintiff had already had the benefit of them. In the absence of a waiver of payment, the defendant is not liable for losses incurred while the insured is in default, as was plaintiff in this case. Williams v. Insurance Co., 19 Mich. 451 (2 Am. Rep. 95). It was the duty of the plaintiff to pay. He agreed that his policy and all rights under it should be suspended while he was in default. Under the ruling of the court, this right of suspension is valueless to the company, because any insured would pay his back premiums after a loss if by so doing he could reinstate his insurance and collect his loss. This is not a reasonable construction of this contract of insurance. [145] 2. The payment of the premium to the treasurer and its receipt by him did not constitute a waiver. Neither did defendant’s silence for a year constitute a waiver, or operate to keep the policy alive. The payment was promptly returned, and nonliability asserted, as soon as knowledge of the facts came to the directors and officers of the defendant. Defendant was guilty of no laches. Plaintiff was the party to move by paying his premium or obtaining an extension of time. Plaintiff relies upon Elmondorph v. Insurance Co., 91 Mich. 36 (51 N. W. 926); Towle v. Insurance Co., 91 Mich. 219 (51 N. W. 987). In those cases the companies had said or done things inconsistent with the idea that the policy was forfeited. In this case there is nothing but silence. Defendant had a right to keep silent, and to believe that plaintiff knew what his contract was, and that he chose to suspend it by nonpayment. * Reversed, and no new trial ordered. Montgomery, C. J., Hooker and Moore, JJ., concurred. Long, J., did not sit.