Case ID: mass_63/html/0140-01.html
Source: Caselaw Access Project
Author: {"author": "Dewey, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The New England Mutual Fire Insurance Company vs. Charles W. Belknap & another.
    In an action by a mutual insurance company against one of its members, for an assessment made on a deposit note, where the note itself recites the receiving of a policy, such recital is primó, facie evidence that a policy has been issued; and it is no ground for a new trial, that only an abstract of the policy was introduced in evidence by the company.
    The promisor in a deposit note, given to a mutual insurance company at the time of taking out a policy, is estopped from setting up, in an action for an assessment made on the note, the want of an insurable interest in the property.
    An assessment may be made by a mutual insurance company on the whole amount of a deposit note, although the promisor has an insurable interest in a part only of the property covered by the policy.
    A mutual insurance company need not proceed, after every loss happening to it, to compute the assessments on its deposit notes requisite to meet such loss, but may adopt a rule of proceeding that will approximate as near as is practicable and reasonable to the above method.
    This was an action of assumpsit, and was tried in the court of common pleas before Hoar, J., who signed a bill of exceptions substantially as follows.
    The action was upon a note signed by the defendants, of which the following is a copy: —
    “ Eor value received in policy No. 2458, dated the 14th day of November, 1846, issued by the New England Mutual Eire Insurance Company, we promise to pay the said company, or their treasurer for the time being, the sum of one hundred and ninety-six dollars, in such portions and at such time or times as the directors of said company may, agreeably to the act of incorporation and by-laws require.”
    The plaintiffs claimed to recover of the defendants the amount of two assessments, which they alleged to have been made upon the note, by their directors, agreeably to their act of incorporation and by-laws ; one of them for $31.36, made July 15,1849, and the other for $19.60, made November 14, 1849.
    The defendants pleaded the general issue, and contended that they were not owners of the property purporting to be insured by the policy of insurance, and had no title, legal or. equitable, in and to the same, at the time they made the application and obtained the policy of insurance mentioned in the plaintiffs’ declaration, and that, therefore, the policy was void, and the note was void and without consideration.
    The plaintiffs put in evidence the note and the application for insurance, signed by the defendants, the signatures of which were admitted; also the act of incorporation and bylaws of the company, and the record of the abstract of the policy issued by the plaintiffs to the defendants. The defendants objected to the admission of this abstract, but the objection was overruled.
    The plaintiffs then introduced William C. Prescott, who claimed to be, and to have been from June 21,1849, the clerk of the company, and who produced the book of records of the acts of the directors, and read from it what purported to be a record of the doings of the directors at a meeting held June 21,1849, at which meeting it appeared from the record that Prescott was chosen clerk, and which record appeared to be signed by John Whipple, as clerk pro tem. The witness testified that the record and signatures were in the handwriting of John Whipple, who was still alive; that, on the same day, he was called into the room by the directors, and informed of his election, and that he was then sworn in as clerk, under the provisions of a general law of New Hampshire; that he believed his oath was verbal only; that no record was made of such oath; that the book now produced was put into his hands by the directors, as the directors’ book of records; and that, from that time to the time of the trial, he had continued to act as clerk of the company, and to record the doings of the directors in such book; that, as to the boob being the record of the directors before that time, he had no personal knowledge.
    The defendants objected to the admission of the record and the testimony of the witness, but the judge admitted both.
    The plaintiffs then offered in evidence the record of a meeting of the directors, dated July 9, 1849, and of their doings at that meeting, signed by Prescott, as clerk, and recorded by Prescott, as clerk, in the book last referred to ; among which doings was a vote to levy an assessment of $48,000 on the premium notes of the company, to defray losses and expenses from the 14th of November, 1848. Prescott testified that he was present at that meeting, and recorded the vote; that, after the vote was passed, the treasurer proceeded to calculate the amount of the assessment upon the several premium notes which were in force during a part or all the time covered by the assessment; that, in this calculation, he assisted the treasurer; that the calculation was made by taking the loss book and the book of policies, and ascertaining what was the amount of premium notes outstanding at the date of the first loss accruing since the date of the former assessment, ascertaining what would be the percentage to meet the loss on the notes then in force ; that this calculation was repeated as often as the losses amounted to one half of one per cent upon the premium notes in force at the time of the loss, dropping and leaving out such notes as had expired since the last preceding loss, and taking in such notes as had been given since such preceding loss; and that in this way the percentage upon the different notes was made up; that he did not himself verify the treasurer’s calculation, or go over the calculation, so as to state from his own knowledge that it was correct; that the treasurer entered the amount of the assessment against each note in a book which he kept for that purpose, which contained the names of parties insured, arranged by towns, the amount of each note, and the sum assessed upon it; that he did not consider that the book was one of the records of the company, nor kept by him as clerk, but was the treasurer’s private memorandum book; that it was kept in a safe, with the other books, and that there was no other record on the books of the company of the amount assessed on each note.
    The witness then produced a printed table of the rates of assessment upon the different premium notes of the company, which he testified he took from the files of the company, and which was an exact printed copy of the table of rates so made up by the treasurer; that he knew it to be a printed copy of the original manuscript sent to the printer by the treasurer, and precisely litre it; that a large number of them was printed for distribution among their members; that it was seen and recognized by the directors as the table of the rates of assessment, and sent out by them as such to the members of the company; that it was the table of rates by which they demanded and collected the assessments, and that, to his knowledge, no objection had ever been made to its correctness; and that the greater part of the assessments based upon it had been paid. It appeared by the table, that the rate of the defendants was sixteen per cent.
    The witness also testified, that he had made no search for the manuscript at the printers ; and that the loss book above mentioned was merely his own memorandum of losses, as information was received of them, and was not kept as a record; that the company did not record verbatim copies of policies issued by them, and that the only record they kept of the policies issued by them was the one before referred to, which contained an abstract of the policies issued ; and every thing which was in the policy, except the formal printed parts. No loss book and no book of policies, except the one containing such abstracts, was offered in evidence.
    The defendants objected to the admission of the above testimony, table, and records, but the judge overruled the objection and admitted them.
    No other evidence that assessments had been made by the company on the note in suit was offered by the plaintiffs. The plaintiffs proved notice to the defendants of this assessment, and demand of payment thereof before suit brought.
    There being no evidence that the directors had ordered the last assessment claimed by the plaintiffs, they moved for leave to amend the declaration by striking out from it all relating to the second assessment; which motion, although the defendants objected, was allowed by the judge, after hearing what evidence the defendants proposed to introduce.
    The defendants offered evidence tending to show, that, about the first of April, 1846, William White was the owner of all the property named in the defendants’ application, and purporting to be insured by the policy, except the clothing and hay; that, at that time, he made a parol contract with the defendants, one of whom was his nephew, to sell them all of said property so owned by him, for the sum of $7,000 ; that they were to go into possession of the property, and pay him therefor $100 per month, until the whole of the purchase money was paid, or security given for it, when he was to give them a deed thereof; that they entered upon the possession, at that time, under such contract, and were in the possession at the time of effecting insurance, and had the,n made their payments regularly under the agreement; and that they still continued in possession until April, 1849, making their regular payments, but, at the time of effecting the insurance, White had given them no deed, bond, or other obligation in writing for such conveyance, nor did he, until April, 1849; when the defendant Grimes left the firm and relinquished all his interest in the property, and White resumed the possession of one half, and gave the defendant Belknap a conveyance of the other half of the real and personal estate.
    The defendants claimed that they made their application for insurance under a mistake, and without any fraudulent intent. To prove the surrender of their policy, the defendants put in evidence a letter to them, signed “John Whipple, treasurer,” saying to the defendants: —
    “ Your policy has been received, and will be discharged upon your paying what is due on your premium note for losses since November 15,1848, to May 21,1849, being fifteen per cent, making $27.40, which, if remitted by mail, at my risk, before any more losses occur, your note will be returned to you. No policies are discharged until all arrearages are paid.”
    On this evidence, the defendants contended that the plaintiffs could not recover either of the assessments of the defendants, because the defendants had no insurable interest in the property purporting to be insured, at the date of the policy, or, in case it should appear that they had an insurable interest in a part of the property, that there would be a short interest, and that the plaintiffs were therefore entitled to recover only a pro rata part of the assessment.
    But the judge ruled that the evidence offered by the plaintiffs was competent for the consideration of the jury, on the point of the regularity of the assessment, according to the terms of the note, and that the defence would not be sustained, in whole or in part, by the evidence offered by the defendants, and a verdict was returned for $32.42, the amount of the first assessment and interest from the date of the wilt. The defendants excepted.
    
      A. A. Ranney, for the defendants.
    
      T. S. Harlow, for the plaintiffs.
   Dewey, J.

The objection to the abstract ” of the policy introduced at the trial, furnishes no reason for a new trial. The promise in writing, upon which the suit is brought, recites the receiving of a policy, which was quite sufficient for the purpose of showing, prima facie, that a policy had been issued to the defendants.

It is then insisted, by the defendants, that, in fact, they were not the owners of the property insured, at the time of executing the policy; and so the policy did not take effect, and, therefore, no liability should attach to them to pay their note, or promise to pay such assessment, not exceeding $196.00, “ as the directors might, agreeably to their act of incorpora tion and by-laws, require.”

In ordinary insurance in stock companies, this objection if it existed, might entitle the party who had paid a premium, to receive back the same, as paid upon a consideration that had failed. But it by no means follows that this principle exists in reference to the promissory notes given by the members of a mutual fire insurance company, as deposit notes,, and which form the capital, to a great extent, of these companies.

Here are mutual promises to contribute pro rata towards losses, limited only by the amount of the deposit note. It is upon the strength of these notes that insurances are authorized to be made. Upon these notes all assessments are to be made, pro rata, to meet losses. Herein is the great difference between these deposit notes and the payment of a premium to a stock company.

Again; upon the strength of these notes, the party becomes a member of the company, and acts as such at all meetings.

There may be, therefore, strong ground for taking a distinction between stock companies and mutual fire insurance companies, where the insured alone are members. Whether such deposit notes may not, under certain circumstances, be discharged as to future liability, it is not necessary to decide now. In some cases, as that of alienation, it is directly provided that it may cease, by surrendering the policy and paying all liabilities up to that time. So here, it may be that, upon a surrender of the policy, when the party found he had insured property not his own, and in which he had no insura-, ble interest, and payed all assessments and liabilities, he might from that time be discharged.

But this would be the extent of his right to be discharged from future assessments.

The party thus standing in this relation to a mutual insurance company, is estopped from setting up the want of an insurable interest in a policy, by virtue of which he has become connected as a member of the company, and his deposit note has become a part of the capital of the company, upon the basis of which all assessments are required to be made.

In point of fact, here, the policy was not a void policy, inasmuch as certain articles, namely, the clothing and the hay, named in it. did belong to the assured; and this would present a difficulty in the way of the defendants’ treating the policy as a nullity, and their note as wholly without consideration. As to the other portion of the articles insured, the defendants themselves resort to the peculiar nature of this corporation, as a mutual one, to sustain their position, that, as to such articles, there was not a valid policy. A contract creates an interest, and articles agreeing to buy the property may, under some circumstances, be quite sufficient to create an insurable interest if insured in stock companies; but as a lien for the deposit note cannot attach, in a mutual office, such policy is held invalid, as respects the liability of the company.

A like reason, drawn from the peculiar character of this company, may strongly demand the application of the principle, that the payment of the deposit notes be enforced, although a note given for the premium in a stock company could not be.

It was objected that, in case of insurable interest for part only of the property, an assessment upon the whole note would be bad. But we think not so, before a surrender of the policy, and payment of all existing liabilities.

This brings us to the further objection, that the assessment was not made in proper form. As to the period of time for which the losses were assessed upon the defendants, the views already expressed, as to the continuing liability until a surrender of the policy, and payment of all past liabilities, fully meet that point.

But the further point is still open, as to the mode of making the assessment and the authority from whence it issued.

As to the authority, the statute provides that all assessments shall be determined by the directors, and it was so done here. As to the basis of the computation of losses, and the deposit notes liable to assessment, we think it was a reasonable one; and that, from the necessity of the case, these computations are not to be required to be made by assessments made upon each occasion of loss, but upon a rule that will approximate to it as near as is practicable and reasonable, and we think this did so.

We think no valid objection is shown as to the form of the assessment, and that the arrears of the assessment on the defendants is sufficiently shown by the papers introduced and the supplementary evidence, to justify the directions of the presiding judge, and authorizing the jury to find a verdict for the plaintiffs, for the assessment of $31.86, made July 15,1849.

Exceptions overruled, and judgment on the verdict.