Audubon County Republican. [volume] (Audubon, Audubon Co., Iowa) 1885-1894, 1886-02-11
The Cost of Mutual Insurance
Unlimited.
Decision of The Supreme Court of
Michigan.


Insurance Companies organized on the
stock plan charge stated amount OF
premium for a stated amount of insurance
and the policy holder, whether he pays cash
or gives a note, can never be held liable
for more than the amount OF his premium
or premium note. To anyone who does
not fully understand the law, it would ceem
that the amount OF liability to mutual in
surance company would also be limited by
the amount of the note given, and that in
no case could more than theamount of the
note be collected.
The expensive experience of MIR / hos
Berry, OF Wayne county, Michigan, will, if
needed, prove cheap lessoi, TO farmers
who think they are obtaining c. cap insur.
ance by giving noe, 10 mutual insurance
conpani,.s Mr. Berry gave thc mutual
comranr three promi-snrr notes which
were called ''undertaki 1gSn These under
takngs are as follows:
One wa> Tor $50 90. and MAS credited
with S22 so Tie second was for IS 90,
and was credi ed with $4 80 The third
was for $500, a q was G. edited with S2.25.
The balance OF the undertakings which
Mr. Berry owed the c )mpany amounted to
80 10, and he supposed that more than that
amount could he collected from him, for
his policy contained a clause which provid.
ed that: 1.-The extent Of the liability of
the members Of the company shall not ex.
coed the amount OF undertaking given for
premium on their risk"
In September, 1881, Messrs. Blitz Il
Son, who wei members OF the company,
met with loss by fire in the sum of 81,
1865 SO. This loss caused the company to
be placed in the hands OF receiver For
the purpose of paving |, Blitz u Son, and
all other Indebtedness of the company, in
GLIDING the receivers salary and expenses,
Mr., Russell, the receiver, proceeded to levy
an assessment on the members according
to TIE amount of insurance held BY each Of
them, and although Mr.. Berry, "undertak-
ings" amounted in all to only $1,000, OF
w!2ich he had paid S29 %, he was assessed
for S9l 90 THIS amount he refused to pay
and Mr., Russell, the receiver, sued him in
the Circuit court Of Wayne county, and a
judgment for S9l 90 and cost was rendered
against Mr.. Berry, who appealed the case
to the Supreme court, and endeavored to
sust in his case by showing that in his ap.
plication and undertakings he promised to
pay whltcver assessments the directors
should, from time 10 time, declared to be
reJu' re /, bat rever in excess OF the amount
of the undertakings; he ref rred also to the
agreement in the policy that he should not
be held liable for a sum in excess of the
undertaking given for the premium But
these seemingly well taken poiFts did not
avail him; and the ipas ment OF the Wayne
county Cir-nrt Court was affirmed with
costs, all the Justices of The Supreme court
a re lug % the decision, which may be
found in full in the January, 1884 number
of the LaZg Gourmet
The .TgHS, in lis December, 1858, mum
Der, commenting on this decision of the
Supreme Court, says:
The decision is evidently Il IuNt ana most
righteous unc; and dinpo.eS finally of the
whole question Undoubtedly tue iiability
| under policy OF q mutual fire insurance
company i, limited only by the indebted
| ness ofthc said company, and pc: sons who
choose TO be foolish enough t. embark in
| such insurance must have community be.
fore their eyes the fact that whether or not
| tb4ir liability is limited by any article either
| in the bylaws o, the policy itself of a
mutual company, it certainly remains true
that they must pay in case OF disaster all
the losses, as we'll as all the expenses Incl,
| dent % winding up their insurers in the
courts
This is certainly good law, and deals a
| blow at mutual companies which they can,
not well survive; for let il be thoroughly
! known that such is the law, aud will indi
viduas want insurance which requires
| them in turn to insure the company to an
amount which may, in case Of : supreme
disaster, take the very property itself to pay
the loss? We think not.
O. course, as long as this decision is kept
| from the general knowledge of the people
there will be mutual companies who may
| beguil their members into the belief that
their liability may be limited by some
method similar to the above, but we fancy
that, when il becomes generally known
that nothing can so limit this liability, there
will not be many to invest in mutual in.
surance. - lit