#### Farmers’ Mutual Ins. Co. *v.*Mylin.

In an action against a mutual fire insurance company to recover additional insurance not noted on the original policy, the policy is admissible to prove membership in the company, to be followed by evidence of the contract for additional insurance.

A provision in the charter as to premiums was as follows : “Every person who shall become a member of the company, by effecting insurance therein, shall, before he receives his policy, deposit with the treasurer the sum of twenty-five cents for every thousand dollars’ worth of property he shall have insured, for the purpose of defraying such incidental charges as shall be necessary for transacting the business of said company.” One of the by-laws provided that any person having the consent of the majority of the directors, and paying into the treasury, at the rate of twenty-five cents on each thousand dollars’ worth of property insured, and otherwise complying with its requisitions, may become a member of the company. *Held,*that these provisions do not apply to a contract for additional insurance in a mutual company, where the insured is already a member, and has paid the premium, and the practice of the company is not to issue policies for additional insurance.

It is not error to submit to the jury the question of a contract for additional insurance, where the evidence to prove the contract showed that the premium, if paid, was paid to the secretary in drinks, it appearing by the evidence that a similar amount of insurance was noted on the policy-record book by the secretary, and that assessments were levied and paid on this amount.

May 16, 1888.

Error, No. 158, Jan. T., 1888, to C. P. Lancaster Co., to review a judgment on a verdict for the plaintiff in an action of debt to revover fire insurance, by Eli K. Mylin, against the Farmers’ Mutual Insurance Co., at Nov. T., 1885, No. 44. Trunkey, J., absent.

The declaration averred that the plaintiff, holding a policy of *460perpetual fire insurance issued by the defendant company on plaintiff’s barn, entered the contents of the barn for insurance, which was granted to the extent of $1000, being duly entered on the policy-record; that defendant made assessments on this sum, which were paid by the plaintiff; reciting the loss by fire of the contents of the barn, the damages, etc. Plea, non est factum.

On the trial, the plaintiff produced himself as a witness, and was asked:

“ Q. Was this policy issued to you by the Farmers’ Mutual Insurance Co., policy No. 2611?” [1] Objected to by the defendant’s counsel, unless it is shown that it was on the property that they claim here to have been insured; unless this policy shows the contents, the property which they claim was lost and on which this suit was brought. Objection overruled. Exception. “Q. Was this issued to you at the time it bears date? A. Yes, sir.”

By Mr. North: I now offer this policy in evidence. Objected to by the defendant’s counsel. By the Court: It shows he was a member. By Mr. North: Yes, sir, and his connection with the company. Objection overruled, and exception.

Plaintiff was also asked:

“ Q. Did you, or not, pay the premium to the company for your insurance when this policy was issued to you, when you first became a member of the company in 1877?” [3] Objected to by the defendant’s counsel. Objection overruled, and exception.

The evidence further showed that policy No. 2611, was issued April 14, 1877, for $1850.00, to cover-loss by fire on plaintiff’s dwelling house, and that the premium and assessments were paid. On Oct. 29,1877, the plaintiffmade written application for $1725.00 insurance on his barn. The application was granted, and this additional insurance was endorsed on the policy. Plaintiff further testified that, in the following year, he asked JohnStrohm, the secretary of the company, to enter $1000 insurance on the contents of the barn. As to the payment of the premium on this insurance, plaintiff testified, on cross-examination: “ I gave him twenty-five cents, if my memory serves me right. I asked him what it costs; he said this costs nothing; I told him to come out and get a drink; he said this costs nothing. Q. Then you didn’t pay him any money at all ? A. I paid him the drinks. Q. Did he give you a receipt for the drinks? A. He gave me the insurance. Q. You didn’t pay him for the insurance; you just paid him for the drinks? What was it for ? A. I can’t tell about that; it is too long. Q. I want to know whether you swear positively that you paid for the drinks? A. Yes, sir. Probably I did pay him the balance, too; I can’t tell; but I am positive I got a receipt; in what form I can’t tell. Q. You swear you paid him the drinks ? A. I did; he said this costs nothing;, he handed me the receipt and said, this costs nothing, and he gave me the receipt.”

A. O. Newpher, secretary of the company defendant, who suc*461ceeded Strohm, then deceased, was called by the plaintiff, and, producing the policy-record, was asked:

“ Q. State what entry is made in that book in regard to insurance in favor of Eli K. Mylin, including the contents of his barn?” [4] Objected to, unless confined to insurance on the contents of the barn. Objection overruled and exception.

The witness then read as follows : “ ‘ Mylin, Eli K., Pequea, $1850. No. of policy, 2,611.’ The next entry in the order of date is immediately above the otter : ‘ October 29th, 1877, $1,725,’ then there is a summing of this, $3,575- Immediately under that, ‘Aug. 5th, 1878, $1,000;’ under that thesumming of all, $4,575-”

This witness further testified : “ All these entries that I have read are in Mr. Strohm’s hand-writing. Q. And were the assessments that you made against Eli K. Mylin for losses made on that $4,500, from the time you became secretary of the company ? A. Yes, sir. As far as I remember. Q. That' included the $1,000? A. Yes, sir.”

The same witness, being called as a witness for defendant,'was asked by defendant’s counsel:

“ Q. State whether or not, in every case, a written application is to be made for insurance, and whether that written application is not always on file in the office of the company ?” [5]

Objected to by plaintiff’s counsel, objection sustained and exception.

The court charged the jury as follows :

“ The policy was first offered in evidence and admitted by the court to show on its face that the plaintiff, Eli K. Mylin, was a member of the defendant company. [The execution and delivery of that policy is not disputed. It has not been disputed that the company made assessments on the amount insured for and appearing on the face of the said policy, that is, the first amount, being $1,850.00. Then there was an additional sum added to it, making it $3,575.00. At two different times on which assessments were made,] [6] as well was it assessed on the $1,000, entered in the policy book, provided you find that the $1,000 there relates to this $1,000 then insured for Mr. Mylin. Then it is proved that ‘ August 5th, 1878,’ and the figures opposite, $1,000.00, is in the hand-writing of Mr. Strohm, the then secretary. [If you believe the policy No. 2611, the first policy which was issued, dated April 14, i877,for$i,85o, was issued by this company, then the plaintiff in this suit, Mr. Mylin, was a member of this company when he applied for the insurance of $1,000 to cover the contents of his barn.] [7] If you look at § 6 of the charter you will find that, before he receives the policy, he must pay a premium before he receives it, not when he applies. It reads thus: ‘Every person who shall become a member of this company by effecting an insurance therein, shall, before he receives his policy, deposit with the treasurer the sum of twenty-five cents for every thousand dollars’ worth of property he shall have insured, *462for the purpose of *defraying such*incidental charges as shall *be*necessary for transacting the business of said company.’ It don’t say when he makes the contract with the secretary, but before he receives his policy. By that policy, on its face, it appears that two additional insurances were made after the date of the original policy. Since then, Oct. 29, 1877, he adds one building, a new frame bank barn, carried out and insured to the amouut of $1,725.00; that was added to the first, $1,850, making $3,575. Then, after that, on June 1st, the face of the original policy wouM show June 1st, 1885, Mr. Mylin gave for insurance a tobacco shed with a cellar, and so forth, and asks an insurance for that to the amount of $700, making in ali $4,275. [I can find no authority for entering those additional insurances, but if it is recognized by the company, and they are all in the same body under the same rules and law, of course, they will pay those entries of insurance as well as the original, but I can find nothing in their law or charter or by-laws to authorize the addition of insurance in this way, by verbal contracts of insurance, and adding them to an original policy under seal, and they recognize them.] [8] And I would say here further on that point that one of the gentlemen who were appraisers or directors testified that, as to this additional insurance which the by-laws and the charter provide for, they do not issue a new policy for it; it is not usual or customary for the company to issue a policy for that; they put it on the face of the policy or enter it in policy-record, or both. On the face of that policy, it appears that two additional insurances were entered previous to anything having been done, — to any application having been made for the insurance of $1,000. To effect an insurance, there must be a contract. Was'there a contract here? You will remember the testimony in regard to the coming together of the secretary of this company and Mr. Mylin, the plaintiff in this case. Was there a contract there for the additional $1,000 insurance on the contents of the barn, which was recognized by the parties. It was alleged that two-thirds of the directors must consent to something of that kind before it would be binding, and paying into the treasury at the rate of twenty-five cents for each $1,000, of property. Was there a contract for the $i,ooo, on Aug. 5, 1878, between the plaintiff and Mr. Strohm ? That is a question of fact for you, to be gathered from what has been testified before you from the entry in the policy-record, as well as the testimony in regard to making the assessments upon that $1,000, added to what is in the policy. That you will decide. Your province is to find the facts, and the facts arise out of the testimony, whether parole or written. You must find whether that contract existed or not.

“ Now, gentlemen, your verdict depends upon the finding by you from the testimony you have before you as to that contract, and whether the twenty-five cents was paid or not; if there was a receipt taken for it, — and they, dispute it, — Mr. Mylin testified he took a receipt; he is certain of that, but he was not certain that he paid it *463in cash down but he paid it in the way mentioned. If the secretary chose to take the pay in that way, and he acknowledged that it was twenty-five cents, would not he be bound to pay it into the treasury of the company? And would you believe he would not have done what any honest man would have done, account for it ? I wouldn’t, and I knew the old gentleman for a life-time. He was in public life a great deal when he was a middle-aged man, and he had a reputation for honesty and integrity among allpersons. [Now, if he acknowledged that he got twenty-five cents in that way, and gave a receipt for it, has the company or any other party a right to dispute it?] [9] You will judge of that.”

The defendant presented, inter alia, the following points:

“ 3. The officers of the company could not abrogate the charter and by-laws, or waive the provisions thereof so as to make a contract of insurance with the plaintiff which would conflict therewith. *Answer:*They can abrogate them, if they do it in the proper way, according to the conditions of their charter, which says that ‘ these by-laws cannot be altered or amended, except by the consent of a majority of the members who may attend at a regular stated meeting of the members of the company.’ It does not say a majority of all the members, but a majority of those who attend. A majority of those who attend can alter the by-laws at any time.” [10]

“ 5. As § 1 of the by-laws of the company defendant requires the consent of the majority of the directors and the payment into the treasury of twenty-five cents on each one thousand dollars’ worth of property insured, to entitle him, the plaintiff, to become a member, as a condition precedent to the completion of the contract of insurance in question, and as such consent was not given, and no payment of such membership fee had been made, this action cannot be sustained. *Answer:*We must deny that point as a whole. In the opinion of the court, he was a member before he applied for the additional *$*1,000 insurance, if you believe this policy was issued, because it cannot issue till he had paid the twenty-five cents.” [11]

“ 6. The plaintiff was not a member of the company as to the alleged one thousand dollars on the contents of his barn, unless he complied with § 6 of the charter and § 1 of the by-laws, by paying the premium of twenty-five cents to the company, the same as for a new insurance. *Ans.:*The testimony is that it does not issue policies for these additional insurances at all. So that § 6 does not apply to that at all. Now what is § 1 of the by-laws? It reads thus : ‘Any person having the consent of the majority of the directors, and paying into the treasury at the rate of twenty-five cents on each one thousand dollars’ worth of property insured, and otherwise complying with its requisitions, may become a member of this company ’ That is § 1 of the by-laws. Now, if we look at it right, and say he was a member when he paid it, and it being a mutual company, then we must answer this point in the negative, as a whole.” [12]

“ 7. Under the law and the evidence in this case, the verdict *464must be for the defendant. *Answer:*We decline to affirm that point. We say it depends upon what the jury find as the facts of the case whether the defendant is entitled to your verdict or whether the plaintiff is.” [13]

The plaintiff offered this point:

“ If the jury believe, from all the evidence in the case, that plaintiff paid the defendant’s secretary for the insurance of $1,000 on the contents of plaintiff’s barn, or paid the defendant assessments on said thousand dollars, and the appraisers appointed by the defendant valued the loss of contents at one thousand dollars, the plaintiff is entitled to a verdict for that amount with interest after seventy days from the fire. *Answer:*We affirm that point with this addition. If you believe, from all the evidence in this case, that the plaintiff contracted with Mr. Strohm, the secretary, for one thousand dollars’ insurance on the contents of his barn, and the plaintiff paid the defendant’s secretary for the insurance of one thousand dollars on the contents, and so forth, with that addition we affirm this point. And I put that in because it is the very basis of the whole thing. If, under these instructions, you find there was a contract there, and find that this plaintiff paid this amount and made this contract, then you ought to give him a verdict for the amount he asks ; but if not, your verdict should be for the defendant.” [14]

Verdict and judgment for plaintiff for $1,139.65.

*The assignments of error*specified, 1, 3-5, the rulings on the evidence, quoting the questions but not the bills of exception or the evidence; 2, the admission of the policy, without quoting the bill of exception; 6-9, the portions of the charge within brackets, quoting them; 10-13, the answers to defendant’s points, quoting points and answers; and, 14, the answer to plaintiff’s point, quoting point and answer.

*H. C.*Brubaker, with him *A. 0.*Newpher, for plaintiff in error.

The policy was irrelevant. It referred to the old insurance, and had nothing to do with the new. The entry in the policy-record was also irrelevant. It did not designate any property.

The by-laws required the payment of twenty-five cents for the additional insurance. The by-laws are a part of the contract: Shaffer *v.*Ins. Co., 7 W. N. C. 387; Susquehanna Mut. Ins. Co. *v.*Gackenback, 19 W. N. C. 287.

Membership dates only from the consummation of the contract of insurance: Eilenberger *v.*Protective Mutual, 89 Pa. 464. Before the applicant for insurance in a mutual company has a right to hold his associates responsible, he must of necessity have the contract completed: Baxter *v.*Chelsea Mutual Fire Ins. Co., 1 Allen, 296. Where the effect of the stipulation of the by-law is that the applicant for insurance must pay a premium for effecting insurance, the contract is not completed until the premium is 'paid as directed by said by-law: Brewer *v.*Chelsea Mutual Fire Ins. Co., 14 Gray, *465208. The leading principle of mutual insurance companies is that the applicant is bound to take notice of the by-laws: Susquehanna Mutual Ins. Co. *v.*Perrine, 7 W. & S. 351.

An officer of a mutual company is but a special agent for the company, and could not, by his agreements, effect insurance on terms forbidden by the by-laws: Baxter *v.*Chelsea Mutual Fire Ins. Co., 1 Allen, 296. The president, secretary and board of directors of the mutual company, are all special agents with limited powers, and have no authority to dispense with the by-laws: Brewer *v.*Chelsea Mutual Ins. Co., 14 Gray, 208; Murley *v.*Shawmut Mutual, 4 Allen, 116; Hale *v.*Mechanics’ Mutual, 6 Gray, 173; Buffum *v.*Fayette Mutual, 3 Allen, 360.

The court erred in putting a construction on § 6 of the charter and § 1 of the by-laws, which the plain language thereof does not warrant. It erroneously assumes here, as was done before, that it was not necessary for a member of a mutual insurance company to pay for any subsequent insurances the premium, “ at the rate of twenty-five cents on each thousand dollars’ worth of property insured.”

*H. M.*North, with him *W. M.*Franklin, for defendant in error.

Plaintiff’s whole argument relative to the various assignments of error overlooked the fact of an actual contract of insurance, and assumed that, if the assured had no policy stipulating for the insurance of the contents of his barn, then he had no such insurance and was not entitled to recover. The contention of the company in the court below, from which the assignments of error have arisen, turns upon this abstract proposition, while the plaintiff, on the other hand, based his claim for recovery, and directed his evidence accordingly, on the actual contract of insurance that he made with the company.

After the first formality of becoming a member and paying the initiation fee, which is to be applied in the manner prescribed, nothing further is required to obtain additional insurance; the members may then enter any of their buildings or the contents of buildings for insurance, and no fee or charge for this additional insurance by the members of the company is required under the charter or the by-laws. However, Mr. Mylin did pay the premium when he entered the contents of his barn for insurance, but such payment was not really necessary and was not obligatory.

The contract is binding on both the company and the assured, when there is mutuality of obligation: Schaffer *v.*Mutual Ins. Co., 89 Pa. 296; Hamilton *v.*Lycoming Mutual Ins. Co. 5 Pa. 339.

An insurance made without issuing a policy, is to be regarded as made upon the terms and subject to the conditions in the ordinary form of the policies used by the company at the time: Eureka Ins. Co. *v.*Robinson 56 Pa. 256.

If no policy is formally drawn out and executed, a suit can be *466maintained on the memorandum thereof, made and signed by the agent: State Fire and Marine Ins. Co. *v.*Porter, 3 Grant, 123.

Oct. 1, 1888.

A contract of fire insurance is complete when it appears that the terms of the contract have been settled by the concurrent assent of the parties. ... . The actual delivery of the policy is not essential to its completion : Flanders, Fire Ins., 116, 130.

Per Curiam,

An examination of this case satisfies us that none of the assignments of error can be sustained; hence we concur in the judgment of the court below.

Judgment affirmed.