Langworthy v. Garding

COLLINS, J. This is an action brought by the appellant, as receiver of the Mutual Fire Insurance Company of Chicago, to recover an assessment made by a decree of the circuit court of Cook county, Illinois, in the case in which the appellant was appointed receiver, against the respondent, upon his premium note of date July 26, 1887, and membership liability as a member and policy holder in said insurance company. The answer admitted the execution and delivery of the note, and also the policy set out in the complaint, but averred that the note was executed and delivered, and the policy accepted, only by reason of certain fraudulent statements made by the insurance company and its agents with reference to its business and financial condition ; alleged that such representations were made in order to cheat and defraud the defendant and others, and that on the strength of such representations the note was executed and the policy received, and not otherwise. It was also averred that the assessment was void because the defendant was called upon to contribute towards the payment of losses and expenses which accrued prior to the time when he became a member. It was also alleged that the insurance company was insolvent at all times at and after the execution of the said note, and continued to do business in violation of the law, [329] and that therefore the note was void; that the cause of action did not accrue within six years; and, further, that the cause of action did not accrue within five years. The answer demanded that the suit he dismissed, with costs; that plaintiff be compelled to surrender and cancel the note; and for further relief. When plaintiff’s counsel rested his case, counsel for defendant moved the court to instruct the jury to return a verdict for the defendant, which motion was granted, and an instruction given and verdict returned accordingly, to which exception was taken by counsel for plaintiff, who thereupon made a motion for judgment, or for a new trial, which was denied. 1. At the trial plaintiff’s counsel offered in evidence a duly-certified copy, made by the state insurance commissioner, of a copy on file in his office of the original certificate of authority to do business in the state of Minnesota, issued to the insurance company in question, covering the year 1887, that being the year in which the note and policy were executed and delivered. Objection being made to the reception of this copy of a copy as insufficient, and not in compliance with O. S. 1894, § 3152, or with § 5733, the court excluded the offer. Therefore it was not shown that, at the time the insurance was solicited, the policy issued, and the note given, the defunct company, or its agent, had complied with the law (sections 3157, 3167, 3168), and had procured the required certificates of authority to transact business. The primary question involved in this ruling is whether, in an action brought by a foreign corporation in this state, it is incumbent upon it affirmatively to prove compliance with the statutes, which require it to obtain a certificate of authority to do business within our borders; or is noncompliance a. matter of defense simply? That plaintiff cannot recover in this proceeding unless the company he represents had complied with the requirements of the statute regulating the transaction of business in this state by foreign insurance companies is not questioned. Seamans v. Christian Bros. Mill Co., 66 Minn. 205, 68 N. W. 1065. But the claim is that, having transacted business here and issued policies, the presumption, rebuttable of. course, is that the law has been observed and the authority granted. While there has been [330] some diversity of opinion on this subject in the different states, we believe the rule which applies to the acts of a private individual is the proper one to be applied to the acts of a corporation, whether foreign or domestic, and that it is to be presumed that all things are rightly done unless the circumstances of the case overturn the presumption. Acts done by corporations which presuppose the existence of other acts to make them legally operative are presumptive proofs of the latter. In this case, a promissory note having been executed and delivered, in which it appears that the consideration therefor was the delivery of an insurance policy issued by the payee of the note, a foreign corporation, we must presume that the issuance of the policy was within the power of the company until the contrary is duly made to appear. Williams v. Cheney, 69 Mass, 215; American v. Smith, 73 Mo. 368; Cassaday v. American, 72 Ind. 95; 6 Thompson, Corp. § 7965. And on the general subject of presumptions, see President of Bank of U. S. v. Dandridge, 12 Wheat. 70. We have not overlooked Solomon v. Dreschler, 4 Minn. 197 (278), which was practically followed in Olson v. Hurley, 33 Minn. 39, 21 N. W. 842; but we now hold that it was unnecessary for plaintiff, as part of his cause of action, to show that the insurance company had complied with the statute, and had obtained a certificate of authority to transact business within our borders. Noncompliance with the law in reference to foreign corporations was a. matter of defense. Nor was it necessary to show that its agent who solicited this insurance had complied with the statute. In view of the facts that in these days there are very many classes of business to be transacted for which authority, national or state, must first be obtained, that no well-founded distinction can be made between them, and that the rule contended for by defendant’s counsel would have to be applied to every person, natural or artificial, whose business is prohibited, unless some police or revenue regulation is first observed, the courts should and must presume that these regulations have been complied with. 2. Plaintiff’s counsel offered, and there was received in evidence, a certified copy of proceedings had, and of a decree made, by the [331] circuit court of Cook county, Illinois, in a proceeding instituted by the state auditor, as authorized and required by law, for the purpose of winding- up the affairs of the insurance company in question as an insolvent concern. From this copy it appears that the court making the decree had jurisdiction of the subject-matter and of the corporation, and did therein and thereby levy an assessment of 65 per cent, on all policy holders whose notes remained unpaid, and among them this defendant. He was a member of the corporation, and was so far an integral part of it that, in view of the law, he was privy to the proceedings touching the corporation of which he was such member. It was no more essential that all of the members should have been brought into the proceedings when the order of assessment was made than it was when the decree declaring the company insolvent and appointing a receiver was entered. The members of such corporations, like the shareholders in stock corporations, are parties to the proceedings through representation by the corporation itself. The assessment was not made by the directors as provided for in defendant’s contract, but by the court, as the successor in this respect of the directors, and was, until directly attacked and set aside by appropriate judicial proceedings, conclusive evidence of the necessity for making such an assessment, and to that extent bound each of the members without personal notice to him. Great Western Tel. Co. v. Purdy, 162 U. S. 329, 16 Sup. Ct. 810. This is as far as the status of the present appeal requires us to go. 3. We cannot concur in the contention of defendant’s counsel that it was not shown that his client was a member of the defunct company; for the answer admits the execution and delivery of the contract sued on, and that it was given in -consideration of an insurance policy issued by the company and bearing the same date. By the express terms of this policy, as was also admitted by the answer, defendant became a member of the company, and agreed to pay an annual fixed premium of $170, and, in addition thereto, such sum or sums, not to exceed five times the amount of such annual premiums, at such time or times, in such manner and in such instalments, as the directors of the company might assess or order. The duty to assess devolved on the court on the failure of [332] the directors to perform their duty and the insolvency of the company. 4. As to the statute of limitations. The contract was made in 1887, and the promise was to pay by instalments, at such time as the directors might order or assess, for the losses and expenses of the company. Nothing became due until an assessment was made. The cause of action could not accrue until the assessment, and until then the statute did not begin to run, notwithstanding the dilatoriness and delay of the directors in levying the assessment. Smith v. Bell, 107 Pa. St. 352; Eichman v. Hersker, 170 Pa. St. 402, 33 Atl. 229. See also Great Western v. Gray, 122 Ill. 630, 14 N. E. 214; Lycoming v. Batcheller, 62 Vt. 148, 19 Atl. 982; Hawkins v. Glenn, 131 U. S. 319, 9 Sup. Ct. 739. 5. This disposes of the case, and the court below erred in dismissing when plaintiff rested. Order reversed and a, new trial granted.