Case Name: Greenhow, Principal Agent of the Mutual Assurance Society v. Buck
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1816-11-30
Citations: 5 Munf. 263
Docket Number: 
Parties: *Greenhow, Principal Agent of the Mutual Assurance Society v. Buck.
Judges: 
Reporter: Virginia Reports
Volume: 19
Pages: 426–430

Head Matter:
*Greenhow, Principal Agent of the Mutual Assurance Society v. Buck.
Decided, Nov. 30th, 1816.
i. Mutual Assurance Society — Quotas—Power of Officer». — The President and Directors of the Mutual Assurance Society against Fire on Buildings of the State of Virginia are empowered, in calling for quotas to supply a deficiency in its funds, to descriminate between the members, so as to make the requisition from those only, who were insured at the time when the deficiency occurred.
A Motion was made in the Superior Court of Frederick County, in behalf of Samuel Greenhow, principal Agent of the “Mutual Assurance Society against Fire on Buildings of the State of Virginia,” at October Term, 1812, against Thomas Buck, for the sum of $105,60 cents, (being the amount of his two thirds quota due to the said Society, per his declaration, No. 137, filed in the General Office of Assurance,) with interest on the same from the 10th of December, 1806, until payment, with costs, damages and expenses, according to law, and the rules and regulations of the said Society; also, for the farther sum of $8,80 cents, (being the amount of his two thirds of a quota due to the said Society, per his declaration, No. 143, filed in the General Office of Assurance,) with interest on the same from the same day, until payment, with costs, damages and expenses as aforesaid.
The defendant filed two special pleas, in the following words:
“The said defendant by his attorney, defends the motion aforesaid, and saith that the said plaintiffs their motion against him ought not to have and maintain, because he saith ; as to the quotas in the notice aforesaid mentioned, that, by the laws, constitutions, rules and regulations of the said Society, it is among other things provided, that every loss, which had happened before the 29th of January, 1805, should be paid for out of the funds belonging to the said Society on the said day, without discrimination between the towns and the country, and that such quota, or quotas, as might be necessary to repair any such loss, should be required in the same manner, and on the same principles, as the same might on the said 29th of January, 1805, have been required, without a discrimination between the towns and the country.” And the said defendant farther saith, that the said quotas in the said notice mentioned, were required to repair a loss, or losses, which had happened previous to the said 29th of January, 1805. And he farther in fact saith, that the said quotas in the said notice mentioned, were not called for by a requisition, which did require quotas without discrimination between the towns and country, but which required a payment of*quotas by the subscribers in the country alone, and this he is ready to verify, &c.”
“And the said defendant, by his attorney, for farther plea saith; that the said plaintiffs their motion aforesaid against him ought not to have and maintain, because he saith, as to the quotas in the motion aforesaid mentioned, that, by the laws, constitution, regulations and rules of the said Society, it is, among other things, in substance provided, that, ‘in case the funds of the Society should at any time require the President and Directors to require from the insured the payment of a quota or quotas, such quota or quotas should be required of all the persons insured; Provided always, that no person should be compelled to pay any quota towards repairing a loss or losses which may have happened before the date of his insurance:’ ‘and the said defendant in fact saith, that the said quotas in the said notice mentioned, were not required to repair any loss or losses, which happened before the 24th day of February, 1804: and he farther in fact saith, that the same were called for by a requisition, which required a payment of quotas from members of the said Society, who were insured in the Country Insurance previous to the 24th of February, 1804; and that no quota or part of a quota was required from any Country Insurers, who were insured subsequently thereto: and he farther saith, that divers persons residents of the country, and members of the Country Insurance became and were insured subsequent to the said 24th of February, 1804, and before the requisition of the said quotas. And this he is ready to verify, &c.”
To these pleas, the plaintiff filed the following special replications:
“And the said plaintiffs, by their attorney, say, that they by any thing by the said Thomas Buck in his first plea above in pleading alleged ought not to be precluded from having and maintaining their motion aforesaid thereof against him, because they say, that the quotas, in the said notice and plea mentioned, were not required to repair a loss or losses, which had happened previous to the said 29th day of January, 1805, as in the said plea is alleged ; but were required in pursuance of the first section of the 7th article of the Rules and Regulations of the said Society adopted by the President and Directors *of the said Society, in obedience to the Act, entitled, ‘an Act for carrying into execution the Constitution of the Mutual Assurance Society against Fire on Buildings of the State of Virginia, lately adopted at a general meeting,’ passed the 29th day of January, 1805; which said Rules and Regulations, among other things provide, in the said 1st section of the said 7th article, that, whenever the funds of the Society shall be reduced below one per cent, on the sum total insured in the towns, or in the country, as may be, the President and Directors may require from the insured the payment of a quota, or quotas, to any amount not exceeding the premium or premiums which shall have been paid by the persons so insured.” “And the said plaintiffs farther say, that the President and Directors of the said Society made provision for all debts, and contracts, and obligations, due from or binding on the said Society, at the commencement of the above recited Act, to wit, on the 31st day of January, 1805, out of the funds then in their hands, belonging to the said Society, before the division of the funds between the towns and country; agreeably to their duty under the laws, constitution, rules and regulations of the said Society then in force: that they divided the remaining funds between the towns and country agreeably to the said laws, constitution, rules and regulations; and, afterwards, to wit, on the 31st day of July, 1806, at a meeting of the Board of Directors of the said Society, held at the General Office in Richmond, the state of the funds of the Society, belonging to the country, was under one per cent, on the sum total insured in the country; wherefore the said President and Directors, at their meeting aforesaid, on the said 31st day of July, 1806, did, in pursuance of the said 1st section of the 7th article of the said rules and regulations, require from the insured in the country a quota equal to two thirds of the premium or premiums originally paid by them, as by an authenticated copy of the proceedings of the said Board of Directors on the said 31st day of July, 1806, now here shewn, to the Court appears: and the said Thomas Buck being, on the said 31st day of July, 1806, and previous to the 24th day of February, 1804, and during all the time between the said 24th day of February, 1804, and the said 31st day of July, 1806, a member of the said Society, *and having insured a dwelling-house in Frederick County, prior to the said 24th of E'ebruary, 1804, barn and two mills, (as per his declaration, No. 137, in the said notice mentioned, filed in the General Office of the said Society, a copy of which declaration, legally authenticated, is now here shewn to the Court, bearing date on the 21st day of December, 1802,) in the country, and having also insured a store-house in the said County of Frederick, prior to the said 24th day of February, 1804, (as per his declaration, No. 143, also in the said notice mentioned, filed in the General Office of the said Soéiety; a copy of which last mentioned declaration, legally authenticated, is now here shewn to the Court, bearing date the 21st day of December, 1802;) he, the said Thomas Buck, became liable, under his said declarations, and the laws, constitution, rules and regulations of the said Society, and the requisition aforesaid, to pay the sums mentioned in the said notice, that is to say, &c., (as per account now here shewn to the Court appears,) not to pay for a loss, or losses, which had happened prior to the said 29th day of January, 1805, but to meet the losses which might reasonably be expected to happen after-wards: as they lawfully might do: and this they are ready to verify, wherefore they pray Judgment, &c.”
“And, as to the second plea of the said defendant, respecting the laws, &c. of the said Society having provided that, in case the funds of the Society should at any time require the President and Directors to require of the insured the payment of a quota or quotas, such quota or quotas should be required of all the persons insured, &c., the said plaintiffs say; that they, by any thing, in the said second plea above pleaded, alleged, ought not to be precluded from having and maintaining their motion aforesaid thereof against him, because (admitting that the said quotas in the said notice mentioned, were not required to repair any loss or losses, which happened before the 24th day of February, 1804, that the same were required from members of the said Society, who were insured in the Country Insurance previous to the 24th day of February, 1804, and that no quota or part of a quota was required from any person, or persons, who had insured subsequent thereto, and that divers persons became and were insured in the ^Country Insurance subsequent to the said 24th day of February, 1804, and before the requisition of the said quotas,) they say that, by the laws, constitution, rules and regulations of said Society, made and passed, and in force on the 29th day' January, 1805, and subsequent to that day, and before the requisition aforesaid of the said quotas in the notice aforesaid mentioned, to wit, on the 31st day of January, 1805, the funds of the said Society were divided between the towns and country, and the provision mentioned in the second plea was repealed by the 16th section of the Act, passed pn the said 29th day of January, 1805, entitled, an Act for carrying into execution the Constitution of the Mutual Assurance Society against Fire on Buildings of the State of Virginia, lately adopted at a general meeting; and the said President and Directors were, by the said Act, (now here shewn to the Court,) authorized and empowered, among other things, to form such rules and regulations for the transacting of the business of the Society, whether it be to fix the rates of hazard, the quantum of interest to be insured, the recovery of monies due .to the Society, or any other matter, that they may think conducive to the interests of the said Society, ‘and more especially in the calling for and enforcing quotas:’ and they farther say that, in calling for the said quotas, the said President and Directors did think it conducive to the interests of the said Society to place the old and new members on an equal footing; and, to effect that object, they deemed it necessary to confine the call to those members of the Society, who had insured in the country' prior to the 24th day of February, 1804, which they did, as by their proceedings on the 31st day of July, 1806, herein before referred to, more fully appears; which proceedings were reported to the general meetings of the Society, held on the 15th day of January, 1807, and the 10th of February, 1808, and approved by the said meetings, as appears by copies of the proceedings of said general meetings now here shewn to the Court, bearing date on the said 13th day of January, 1807, the 15th day of January, 1807, and 10th day of February, 1808, legally authenticated ; which, under the laws, constitution, rules and regulations of the said Society, the said President and Directors, and general meetings, had a right to do, and as it was just, lawful and right they should do; *without that they, by any law, constitution, rule or regulation of the said Society in force on the said 31st day of July, 1806, were bound to make such requisition on all the persons insured in the Country Insurance; and this they are ready to verify; therefore they pray judgment, &c.”
The Defendant rejoined to the plaintiff’s Replication to the first Plea, and the plaintiff took issue.
To the Replication to the second plea, the defendant (after praying Oyer of the said Act of Assembly,) demurred generally ; and the plaintiff joined in Demurrer.
Whereupon, the matters of law arising on said Demurrer being argued, the Court was of opinion that the law was for the defendant, and judgment was entered that the plaintiff take nothing, &c.
From which judgment he appealed to this C.ourt.
Williams, Wirt and Wickham for the Appellant.
Beigh for the Appellee.
The Counsel for the Appellant observed, that the plea was defective, in not setting forth the particular by-law, on which the Appellee relied.
They farther contended, that full power was given to the President and Directors to make the requisition in question, by the 10th and 20th sections of the Act of January 29th, 1805. The only limitation to their powers was, that they could not transcend the bounds of natural justice. Their Resolution was also approved by the General Meeting, which removes all doubt.
The Directors pursued precisely the course which natural justice required. Equality is the fundamental principle of the institution, declared by the original Act of 1794, sect. 2d. And, by the fourth section of that Act, unlimited power of modification was given to attain this object. It was this which led to the separation of the town and country fund; the benefit and the hazard being unequal under the old arrangement. On the separation of the funds, after paying for the losses occasioned by the great fire at Norfolk, on the 24th of February 1804, (which event was the cause of the new ^arrangement) it was found, that the funds were reduced too low to ensure payment for future losses.
How was the deficiency to be supplied? Was it by making an equal call, for quotas, on those who were members when the deficiency occurred, and those who had become members since? Or by making such a call on the former, as would bring them on a par, merely, with the new subscribers?
To shew the inequality of making the call equally on the old and the new, let us suppose the original premium to be $100; that, by the fire at Norfolk, there were left on hand only $33,1-3, belonging to each of the old subscribers; the subsequent subscribers had each $100: if no call had been made, would the association have been on an equitable footing, while a partner, who had full stock in trade, should draw no more benefit from the trade, than another who had only one third? Would it not have violated the principle of equality to have permitted the members to rest equally insured, on an aggregate fund composed of such unequal contributions? In like manner, when, instead of resting on the funds in hand, the call of a quota became necessary, would the principle of equality have been regarded, if the call had been made on all equally, as contended for by the Ap-pellee? Or would not the same inequality, as in resting on the old funds, have been still kept up? Suppose a full quota had been called for of $100 from each member, then the funds would have been composed of $200 contributed by the new subscribers, and only $133,1-3 by the old.
Again. By the third section of the second article of the Constitution of the Society, it is provided, that no person shall be compelled to pay any quota towards repairing a loss or losses, which may have happened before the date of his insurance. Now, although it be true, that the quota in ibis case was not called for to pay the Norfolk losses, yet the deficiency, which made the quota necessary, v^as produced by that event: and, according- to an equitable construction of this Statute, no after subscriber should be affected by any loss, which occurred before the date of his insurance. And would not an after subscriber be injuriously affected by a previous loss, if, to make up a deficiency, arising from such loss, he should be '"'compelled to contribute equally, and thus, from an advance more than equal, derive only an equal insurance.
On the other side, it was said, that the supposed defect in the plea did not exist. There is a distinct reference to a particular by-law, viz. the 7th article of the by-laws passed in consequence of the Act of January 29th, 1805. The Replication admits the by-law in question, but says it was repealed by that Act, which is plainly impossible !
Let it be granted, that the Society had power, under the tenth section, to amend, alter, repeal or add to all their rules and regulations. The question is, have they repealed or altered that by-law, by any subsequent regulation? Their Replication does not pretend, that they have done so. And, if we inspect the proceedings now in controversy, it does not purport to be a bylaw or regulation; but only a resolution adopted in conformity with by-laws and regulations, supposed to be already in existence. It is a report and resolution adapted to a single case, and does not purport to be a general rule, to be applied to all similar cases. As such a Resolution, it was adopted by the President and Directors; as such, they reported it to the General Meeting; and as such, the General Meeting approved it. Under the tenth section they could make by-laws; but the calls for quotas must be conformable to such bylaws, when made, until repealed or differently modified by other by-laws. It follows, that before the requisition, which forms the ground work of the present motion, could be legally made, the by-law article 7, should have been repealed or modified, so as to authorize such a requisition: but, for any thing appearing in the Record, that has not been done.
If it be asked, where is the difference between this Resolution and a by-law? The answer is obvious; that, if the Resolution had been adopted in consequence of a bylaw, previously passed, the Members would have had an opportunity to exercise their option of with-drawing, under the 13th section of the same Act.
But, if this was a by-law, the Society had no right to pass it, being directly contrary to the sixth section of the original Act of incorporation, which, not being repugnant to the Act of January 29th, 1805, is not thereby repealed. By that sixth '''section it is declared, that “if the funds should not be sufficient, a repartition among the whole of the persons insured shall be made.” &c. Equality, therefore, is to be pursued in a particular manner: the principle, which the Legislature has adopted must be followed, though it do not answer the end of its institution : the reasonableness or unreasonableness of the regulation is not to be considered by the Court. Suppose, before the separation between the Town and Country Insurances, a loss had occurred in a town, could the Society have subjected the Town subscribers only to pay such loss? The principle of equity required this: yet they could not have done it, because bound by the Act of Assembly to follow a different rule.
Argument in Reply.
Whenever the Society calls for a quota, it is a regulation that a quota shall be called. It is as much a legislative Act, as any Act can possibly be; especially when the requisition has been approved by a General Meeting. There is nothing, that prohibits a discrimination in the proportions to be paid by individuals. Under the general rules, as the) existed at the time, the Society had a perfect latitude. But, if this be thrown out of the question (the by-laws, generally, not being inserted in the Record) the Demurrer admits the truth of the Replication, which refers to the by-laws, and denies, that they require an equal call from all the subscribers.
It is admitted, that the sixth section of the Act of 1794 is not repealed by the Act of January 29th, 1805: but that section is to be construed with reference to the time at which it was passed, and also to the fundamental principle of equality. As to the time, the Legislature was looking to the original establishment of the institution, when all the members, coming in together, were, of course, on an equal footing. It is very questionable, whether it contemplated any thing more than a deficiency in the original subscription, nothing being said of deficiencies arising from losses. But if the provision was intended prospectively, to cover cases of deficiencies arising from losses, it must be construed equitably, in relation to the principle of mutual advantage and equal responsibility. So construed, it applies only to levying the quotas on those, who were insured at the time the deficiency occurred.
*Where the words of a Statute are ambiguous, the general intent must be considered. The general intent of the Legislature, in this case, was to establish equality. Injustice must be done, if the Act is to be construed, as Mr. Leigh contends. The question then is, are the words so plain as to be capable of no other construction, than that leading to this injustice? If the words must be construed strictly, and not equitably, all new subscribers are bound to contribute for old losses; a consequence so unreasonable, that he disclaims it. Such a construction would tend to destroy the Society, by preventing persons from becoming Members.
For monographic note on Arson, see end of case.
See generally, monographic note on “Insurance, Fire and Marine” appended to Mutual, etc., Soc. v. Holt, 29 Gratt. 612.
The principal case is cited in Stratton v. Mut. Assur. Soc.. 6 Rand. 29, 30, 32.
Rev. Code 2d. vol. Appen. No. VII. ch. 6, p. 81.
Ibid. ch. 1, p. 75.

Opinion:
November 30th, 1816.
JUDGE ROANE
pronounced the Court's opinion, that the Judgment be reversed; the law arising upon the defendant's Demurrer to the plaintiff's Replication being for the plaintiff. And Judgment was entered, that the plaintiff recover against the defendant the sum of $105,60 cents, being the amount of two thirds of a quota due to the said Society per declaration No. 137, filed in the General Office of Assurance, and also the farther sum of eight dollars and eighty cents, being the amount of two-thirds of a quota due to the said Society per declaration No. 143, filed in the General Office of Assurance as aforesaid, with legal interest on both of the said sums, from the tenth day of December, 1806, to the time of payment, together with seven and a half per cent, damages on said principal and interest, and also their Costs by them in the said Superior Court of law expended.