#### Stutzman, Respondent, vs. Cicero Mutual Fire Insurance Company, Appellant.

*May 16*

June *4, 1912.*

*Fire insurance: Mutual companies: Assessments: Default in payment: Unliquidated demand against company: Suspension of policy:'Tender of assessment after loss: Waiver: Proofs of loss.*

1. ‘An unliquidated and disputed claim by a policy-holder against an insurance company does not justify refusal to pay an assessment, nor relieve him from the penalty of default.

2. A provision in the by-laws of a mutual fire insurance company that no person shall receive any benefit or advantage from the company under or by virtue of a policy until all assessments are fully paid, is a valid condition, is self-executing, and requires no affirmative action on the part, of the company to make it effective.

3. The words “any benefit” in such by-law include protection against loss or damage by fire.

4. Where a loss occurs during the suspension of the policy by reason of nonpayment of an assessment, subsequent payment or tender thereof cannot relate back so as to remove the suspension and default.

5. A demand by the insurer for the payment of an assessment in default is not a waiver of the suspension of the policy.

6. Service of proofs of loss by the insured without any request by the insurer, and the retention thereof by the latter, do not constitute a waiver of such suspension.

Appeal from a judgment of tbe municipal court of Outa-gamie county: Thomas H. Ryan, Judge.

*Reversed.*

This action was brought to recover upon a mutual fire insurance policy. The company does business in Outagamie county. The policy insured against loss by fire on certain property described therein for a period of five years and was issued in March, 1907. During the fall of 1908 members of the company sustained losses which were adjusted,, and the company, having no funds with which to pay the claims, levied an assessment on the members, and the members, in-*255eluding tbe plaintiff, were notified thereof, also tbe time when tbe same would become payable and tbe place of payment. Tbe assessment was payable April 1, 1909, and tbe plaintiff’s share thereof $10.46, which be never paid, although notified to do so. About two years after this assessment and while plaintiff was in default part of his property was destroyed by fire. He then offered to pay the assessment, which tender was refused. Plaintiff deposited in court $10.46.

Plaintiff claims to have sustained a slight loss by reason of lightning striking his barn, which occurred during the time that a former policy issued by the defendant was in force and four or five years before the assessment, in question was made and six or seven years before the loss for which this action was brought. The by-laws of the defendant company, which are made part of the policy and printed upon it as the conditions upon which it is issued, contain the following:

“Sec. 9. If any member of this company shall neglect or refuse to pay his *pro rata*share of any assessment made by said company within sixty days after the same shall be demanded by the company or its agent, the board of directors may annul the policy of the member thus in default, and collect such assessment as provided by law.”

“Sec. 15. No person shall receive any benefit or advantage from this company under or by virtue of his policy until all assessments against him or his property are fully paid.”

The only question submitted to the jury was the amount of loss. The court directed a verdict for the plaintiff for the amount of loss found by the jury, $1,550. Judgment was rendered accordingly, from which this appeal was taken.

Eor the appellant there was a brief by *A. S. Krugmeier*and *Oady, Strehlow & Joseph,'*and oral argument by *Mr-Samuel H. Oady*and *Mr. Krugmeier.*

*Framcis S. Bradford,*for the respondent.

EAiswiN, J.

1. As a justification for not paying the assessment against the respondent, he claims that he had an un-liquidated claim against the appellant' for alleged loss sus-*256tamed several years before by lightning. The claim was denied by the appellant, and under the evidence, if any such claim ever existed, it was trifling in amount, permitted to slumber without action, and was not considered by him after the fire for which he seeks damages in this action, because he tendered the full amount of the assessment against him which remained unpaid at the time of the fire for which he seeks to recover damages in this action. But in any event the existence of such an unliquidated and disputed claim would afford no justification for refusal to pay the assessment under the policy, or relieve the respondent from the penalty of failure to pay during suspension. 2 Joyce, Ins. § 1237; *Mutual L. Ins. Co. v. Girard L. I., A. & T. Co.*100 Pa. St. 172.

2. Sec. 15 of the by-laws, set out in the statement of facts, providing that no person shall receive any benefit or advantage from the company under or by virtue of the policy until all assessments are fully paid, is a valid condition. *Breakstone v. Appleton Mut. F. Ins. Co.*149 Wis. 303, 135 N. W. 853; *Joliffe v. Madison Mut. Ins. Co.*39 Wis. 111; *Farmers’ Mut. Ins. Co. v. Kinney,*64 Neb. 808, 90 N. W. 926; *Gorton v. Dodge Co. Mut. Ins. Co.*39 Wis. 121.

The suspension clause in the policy was self-executing. No affirmative action on the part of the appellant was necessary. *Iowa L. Ins. Co. v. Lewis,*187 U. S. 335, 23 Sup. Ct. 126; *Klein v. Insurance Co.*104 U. S. 88; *Betcher v. Capital F. Ins. Co.*78 Minn. 240, 80 N. W. 971; *Hollister v. Quincy Mut. F. Ins. Co.*118 Mass. 478; *Russell v. Oxford Co. P. of H. Mut. F. Ins. Co.*(Me.) 78 Atl. 459. The foregoing cases clearly demonstrate that appellant is not entitled to recover for a loss occurring during suspension.

In *Hollister v. Quincy Mut. F. Ins. Co., supra,*the by-law was as follows:

> “If the insured shall neglect for the space of ten days, when personally called on, or after notice in writing has been left at his last and usual place of abode or business, to pay any assessment, the risk of the company on the policy shall be suspended *257until the same is paid, and if the insured shall refuse to pay any assessment, . . . the directors may terminate the same by giving notice thereof in writing. . .

It was held that, the plaintiff not having paid the assessment of which he had notice, no further act of the company was necessary, and a loss having occurred under his policy during the default he could not recover. The court held that cancellation was not necessary; that the risk on the policy was suspended by failure of the plaintiff to pay the assessment within the time specified.

The right of respondent to recover in the present action does not turn, as seems to be assumed by counsel for respondent, upon the fact of cancellation of the policy, but upon suspension of benefits during default. Whether the policy was canceled or not, respondent cannot recover during the suspension period. It is established without dispute that respondent failed to pay the assessment within the time required, or at any time before loss.

3. The respondent insists that paying or tendering payment of the amount of the assessment after the loss operated to reinvest respondent as of his rights under the policy before default and suspension. In other words, the claim of respondent is that when tender of payment was made after the loss on which suit is brought, and kept good, the suspension ,and default were removed and a right of action accrued to recover for the loss by force of the tender. Such a construction of the policy would defeat the wholesome provision respecting suspension during default of payment. The law is well settled against the respondent’s contention. *Breakstone v. Appleton Mut. F. Ins. Co.*149 Wis. 303, 135 N. W. 853; *Hill v. Farmers’ Mut. F. Ins. Co.*129 Mich. 141, 88 N. W. 392; 2 Joyce, Ins. § 1209; *Continental Ins. Co. v. Dorman,*125 Ind. 189, 25 N. E. 213.

Obviously the provision for suspension during default is put in policies to insure prompt payment of assessments. If *258tbe respondent could remain in default, make no payment^ until a loss bad occurred and then pay bis assessment and recover tbe loss, there would be little inducement to pay assessment's.

Tbe respondent’s counsel further argues that tbe provision precluding benefits during suspension does not suspend tbe right to recover for loss, but has reference to other benefits or advantages. Tbe provision in sec. 15 seems plain and unambiguous. It precludes any benefit or advantage under or by virtue of tbe policy until all assessments are paid. Surely tbe most important benefit or advantage to be derived from tbe policy is tbe protection against loss or damage by fire and tbe right to damages in case of loss. Therefore such benefit or advantage is necessarily covered by sec. 15 referred to.

4. It is further contended by respondent that tbe appellant waived suspension by sending a postal card and a letter after suspension demanding payment of tbe assessment. These letters recognized tbe right of tbe respondent to pay before tbe policy was canceled, as might be done, but they by no means waived -or purported to waive tbe suspension of any rights which bad accrued or might accrue under tbe suspension.

It may be true that cancellation in some cases requires affirmative action, though that question- is not necessary to decide here. But the suspension clause is self-executing and requires no affirmative action. Suspension operates only during default of payment of assessment. There is no evidence of waiver or estoppel on tbe question of suspension.

5. It appears that respondent made certain proofs of loss and left them with appellant’s secretary. It does not appear that' such proofs were prepared or served because of any request from appellant. But on tbe contrary it appears that tbe secretary of appellant, when tbe proofs were left with him, denied liability. There was no waiver of suspension because of service and retention of proofs of loss.

At tbe close of tbe evidence tbe appellant moved for a di*259rected verdict, which motion was denied and due exception taken. We are convinced after a careful examination of the record that the motion should have been granted.

*By the Court.*— The judgment of the court below is reversed, and the cause remanded with directions to enter judgment for defendant dismissing the complaint.