Great Falls Mutual Fire Insurance v. Harvey

Bartlett, J The plaintiffs must show that the assessment made against the defendant was an assessment to which he was legally liable. Atlantic Company v. Fitzpatrick, 2 Gray, 279. The plaintiffs’charter, among other things, provides for four classes, and that "each class shall be hable for its own losses”; that the premium notes of each class "shall be holden and assessed to pay the losses occurring in their respective classes, and not each for the other”; that [the company shall open books of account with each class, and that "all the business receipts, disbursements, losses, assessments and expenses, shall be put to the several classes to which they are applicable”; and that "the general expenses of the company,which are not strictly applicable to either class, shall be apportioned to the several classes according to the amount insured by each; provided that any member of said company may at any time surrender his policy, and in sixty days thereafter be entitled to receive his premium note upon the payment of his proportion of all losses and expenses incurred at the date of such surrender”; that all persons becoming insured in the company "shall be deemed and taken to be members thereof during the term specified in their respective policies and no longer”; that every person who shall become a member "shall, before he receives his policy, deposit his promissory note for such sum of money as shall be determined by the directors, apart, not exceeding ten per cent., of which note shall be immediately paid for the purpose of discharging the incidental expenses of the institution, and the remainder of said deposit note shall be payable, in part or the whole, at any time when the directors shall deem the same requisite for the payment of losses or other expenses ; and, at the expiration of the term of insurance, the said note or such part of the same as shall remain unpaid after deducting all losses and expenses accruing during said term shall be relinquished and given up to the signer thereof.” Secs. 2,3,6. It also provides that every member shall be bound "to pay his proportion of losses and expenses happening or accruing in and to the class in winch his property is embraced”; that, in case of loss or damage by fire happening to any member upon any prop [298] erty insured in the company, such member shall give notice thereof in writing to the directors, (he., wdthin thirty days of the time of such loss or damage, and thatthe directors shall ascertain and determine the amount of such loss or damage within ninety days after such notice, &c.; that "all assessments shall be determined by the directors, and the sum to be paid by each member shall always be in proportion to the original amount of his deposit note of the class in which his property is embraced,” &c.; that, in certain cases of neglect by a member "to pay the sum assessed upon his note in conformity to this act, the directors may sue for and recover the whole amount of said deposit note, with costs of suit, and the money thus collected shall remain in the treasury of the company subject to the payment of such losses^and expenses as have or may thereafter accrue, and the balance, if any remain, shall be returned to party from whom it was collected, on demand after thirty days from the expiration of the policy”; that "the directors shall settle and pay all losses within three months after they shall have been notified as aforesaid,” unless they elect to replace or repair the property, &g. ; that, upon the alienation of any property insured, the policy thereupon shall be .void and shall be surrendered, and, upon such surrender, the insured shall be entitled to receive his note upon the payment of his proportion of all losses and expenses that have accrued prior to such surrender; that, in case of the destruction of property insured by fire, "the directors may retain the amount of the premium note given for the insurance thereof, until the time for which such insurance was made shall have expired, and, at the expiration thereof, the insured shall have the right to demand and receive such part of said retained sum as has not been expended in losses or assessments.” Secs. 7, 8, 9, 12, 13 and 14. Under this charter and the by-laws established under it, the defendant was liable to assessment only for losses and expenses properly chargeable to the second class, in which his property was insured, accruing during the term mentioned in his policy. Herkimer Company v. Fuller, 14 Barb. 375; Bangs v. Gray, 15 Barb. 272; S. C. 2 Kernan, 482; Tallmadge v. Rensselaer, 21 Barb. 611; Devendorf v. Beardsley, 23 Barb. 663; Ohio Company v. Marietta, 3 Ohio State Rep. 350; Brown v. Williams, 28 Me. 254; and see Swamscot Company v. Partridge, 25 N. H. 373. The declaration accordingly avers that the directors "did settle and determine the sums to be paid by the several persons who were members in said second class of said company at the time when said losses happened and said expenses were incurred.” The evidence fails to support this allegation or to show that the losses and expenses for which the defendant was assessed accrued during the term of his policy, for it merely tends to show that certain losses had occurred and certain expenses had accrued before the assessment. The evidence as to what was included in the assessment is by no means distinct; but we understand it as showing that expenses and liabilities incurred long before the defendant became a member of the company were included in the assessment, and this seems admitted in the argument of the plaintiffs’ counsel. An assessment including such expenses would be invalid as against the defendant. Long Pond Company v. Houghton, 6 Gray, [299] 77. The present case, therefore, differs from N. E. Insurance Company v. Belknap, 9 Cush. 140, and Marblehead Company v. Allen, 3 Gray, 210, where substantial accuracy in the assessments was held sufficient. After the defendant’s policy was issued,the company adopted the two by-laws numbered fourteen and fifteen. These by-laws were offered by the plaintiffs and were, we think, properly rejected by the court. The fifteenth by-law provides that notice of assessments shall be given by publication, &c., "and by depositing in the post office at Great Falls, a like notice addressed to each person insured, at his place of residence as designated in his original application for insurance, at least thirty days before the time fixed for the payment of the same”; that "the certificate of the secretary, subscribed and sworn to before a justice of the peace, that an assessment was necessary and was duly and legally made by the directors, and a like certificate of the treasurer,that notice of an assessment has been given as required by the by-laws, shall be conclusive evidence of the facts, and shall be admitted and received as such in all trials and suits,” &c., "instituted for the collection of assessments or to enforce the payment of premium notes, and no further or other evidence of loss, assessment or notice shall be required in any case whatever”j that, "when any person insured having been notified of an assessment, as required by the by-laws, shall neglect to pay such assessment for the space of thirty days after the time fixed and limited in the notice for the payment of the same, then his whole premium note shall become due and payable, and the directors may collect or cause the same to be collected, and, after deducting the assessments and all expenses attending the collecting of the same, shall hold the balance till the expiration of the policy,” &c. We are of opinion, that this by-law conflicts with the charter in several respects. By the charter, the directors are to ascertain and determine the amount of losses, and to keep a record of their proceedings. Secs. 8 & 5. Section nine requires that all assessments shall be determined by the directors, and that "the sum to be paid by each member shall always be in proportion to the original amount of his deposit note of the class in which his property is embraced”.] and, by section seven, every member is bound "to pay his proportion of losses or expenses happening or accruing in and to the class in which his property is embraced.” Under the charter, a neglect by a member to pay his assessment for thirty days after actual notice, is necessary to entitle the company to recover the whole amount of his deposit note because' of his neglect to pay an assessment, and in such case the company may recover the whole amount of the note with.costs of suit, and the money thus collected is to remain in the treasury "subject to the payment of such losses and expenses as have or may thereafter accrue,” and the balance,&c. Sec. 9 The fourteenth by-law is as follows : "The directors shall have power to borrow from time to time such sums of money as may be required to meet all losses, and may assess the sums thus borrowed, with interest thereon, and all necessary incidental expenses, upon the class or classes for which the money was borrowed; provided, that, if from any cause sufficient funds to pay such borrowed money, interest and necessary in [300] cidental expenses, shall not be collected on the assessments, the directors may make such further assessments as they may deem necessary for that purpose.” If this by-law is to be construed as giving to the directors power to make assessments upon members for any sums for which they could not be assessed under the charter, it is void, at least so far as the rights of the defendant in the present suit are concerned. If it is not to be so construed, it is entirely immaterial to any question in the present case. These by-laws were made after the defendant’s contract was entered into, and there is no evidence of his assent to them, and if they are in conflict with the charter, and would in fact change and impair the defendant’s rights under his contract, Ms assent will not be presumed. Angelí & A. Corp. 838. It is unnecessary to inquire into the effect of the adoption of the additional act of incorporation by the plaintiffs after their contract with the defendant was made, for that act has no provision bearing upon any question material in the present case. There must be Judgment on the nonsuit.