Case Name: GERAGHTY v. WASHTENAW MUTUAL FIRE-INSURANCE CO.
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1906-09-20
Citations: 145 Mich. 635
Docket Number: Docket No. 17
Parties: GERAGHTY v. WASHTENAW MUTUAL FIRE-INSURANCE CO.
Judges: Grant and Blair, JJ., concurred with Ostrander, J.
Reporter: Michigan Reports
Volume: 145
Pages: 635–643

Head Matter:
GERAGHTY v. WASHTENAW MUTUAL FIRE-INSURANCE CO.
1. Insurance — Mutual Company — Farm Property — What Constitutes.
A policy of fire insurance, issued by a mutual company organized under chapter 195, 2 Comp. Laws, upon “farm products, farm implements, carriages, and live stock on premises,” does not cover the fixtures and utensils of a slaughterhouse, conducted by the insured, and used in a wholesale meat business in which he is engaged.
2. Same — Knowledge of Officer — Estoppel.
A farmers’ mutual fire-insurance company is not estopped to, deny liability for loss on property not insurable under its charter, by the act of its president in accepting the application and issuing the policy with full knowledge of the character of the property attempted to be insured.
Error to Washtenaw; Kinne, J.
Submitted April 5, 1906.
(Docket No. 17.)
Decided September 20, 1906.
Assumpsit by James A. Geraghty against the Washtenaw Mutual Fire-Insurance Company on a policy of in surance. There was judgment for defendant on a verdict directed by the court, and plaintiff brings error. Affirmed.
The defendant is organized under the provisions of chapter 195, 2 Comp. Laws, for the purpose of mutual insurance of the property of its members against loss by fire or damage by lightning. Under its articles of association, it may insure—
“ On farm property, both buildings and their contents, farm implements, hay, grain, wool, and other farm products, live stock, wagons, carriages, harness, farm tools, household goods, wearing apparel, provisions, musical instruments, pictures and books, being upon the premises of the insured; also detached dwellings and accompanying outbuildings and their contents, belonging to members of this company; also country schoolhouses.”
The language of the statute, after enumerating the classes of personal property which may be insured, is, “ being upon farms as farm property.” The policies issued by the company contain the charter and by-laws of the company. Plaintiff made written application for insurance to the amount of $600 upon property estimated to be of the value of $900, described as “farm products, farm implements, carriages and live stock on premises,” and received the policy of defendant, dated November 8, 1902, in which the property insured is described as in the application. The only location of “ premises ” in either instrument is by section number and township. Plaintiff paid assessments as demanded, and on or about January 2, 1904, a fire occurred which burned and destroyed, as the plaintiff claims, property insured by this policy of insurance. His claim was rejected by unanimous vote of the directors, for the reason that the property destroyed was not insured by the policy, but was, and the fact seems to be undisputed, the fixtures and utensils of a slaughterhouse, conducted by plaintiff, and used in the wholesale meat business in which plaintiff was engaged, and some dressed beef. The slaughterhouse leased by plaintiff was situated on an acre of ground, also leased by him, upon which he did not live, which was no part of any farm owned or occupied by him. There were on the premises, besides the slaughterhouse, a hogpen, wagon shed, and cattle barn. „
Suit was begun on the policy in justice’s court. On appeal to the circuit court, a verdict for defendant was directed for reasons stated by the trial judge as follows:
“ I say to counsel and to the jury in this case this action is brought to recover for the contents of a slaughterhouse, the paraphernalia or utensils used in a slaughterhouse. I think the testimony shows, although that is not very important, that the cattle that were burned there after being slaughtered were cattle that had been purchased for the purpose of slaughtering and sale, but I do not think a loss of that kind was contemplated or provided for in this policy which provides for loss on farm products, farm implements, carriages and live stock. In my opinion the articles that were used in this case were never farm products, farm implements, or carriage or live stock. I don’t think, therefore, there can be any recovery in this case under that contract.
“ I am inclined to think, also, although that is not very important, that it was incumbent upon the plaintiff before he brought this suit to submit to an arbitration, but that is not very important. I should render the decision upon this proposition, that this insurance is not within the terms of this policy, and I therefore direct a verdict accordingly.”
Lee N. Brown, for appellant.
Frank E. Jones, for appellee.

Opinion:
Ostrander, J.
(after stating the facts). The question is not whether the identical property which was destroyed was insurable by defendant if it was upon a farm and used as farm property, because it is conceded that it was not upon a farm nor used in. any way in connection with a farm or with farming. Kept in a building rented and used for a slaughterhouse, and a part of the paraphernalia of the business of slaughtering there carried on, it was not, in fact, property such as, under the statute referred to, the defendant had the right to insure.
Aside from a contention raised by the defendant that plaintiff should have submitted his demand to arbitrators, the case of the appellant in this court is made to rest, as we understand the brief, upon the testimony, either offered ;and rejected or offered and received, tending to show that the president of the company knew what property plaintiff desired to have insured and with that knowledge took the application, making it out himself, and issued the policy ; that the same property, or property in the same building, had been before insured in defendant company; that after the fire the president of the company had admitted that he always knew that it was a slaughterhouse, and that by accepting the application, when the director and president of the defendant knew that the building in which the property was situated was a slaughterhouse, .and receiving assessments from the plaintiff for two years, the defendant is estopped to deny liability; that, in any event, the testimony should have been submitted to the jury with proper instructions.
The testimony offered for the plaintiff does not tend to prove that he acquainted the president of the company at the time of making his application with the fact that he was carrying on at the place in question the business of slaughtering animals, or that the property which was sought to be insured was used in carrying on said business. Nor does it appear that the president of the company knew that the property which plaintiff desired to have insured was, in its use or otherwise, property not insur.able by the company. . But, admitting that if defendant was a stock company, authorized to carry on, generally, the business of fire insurance, the testimony was sufficient to require the case to be submitted to a jury to determine whether the company was estopped to deny liability, it does not follow that the court below committed error. Defendant is not authorized to insure any and all personal property, but to insure certain classes of personal property, "being upon farms as farm property." In form, the contract of insurance described property insurable by de. fendant. No such property was destroyed. A contract insuring the risk which plaintiff claims was actually covered, the defendant company could not lawfully make. Plaintiff was hound to know this. He was both insurer and insured. As contract holder, he is presumed to have knowledge of the terms of his contract, and as member of the defendant company, to have knowledge of its powers.
In Eddy v. Insurance Co., 72 Mich. 651, it appeared that the business of the company was, by the act of incorporation, restricted to certain territory. An amendment to the statute removed the territorial restrictions. The amendatory law was held to be invalid. A risk taken upon property outside the original territorial limits of business, during the time the amendatory statute was ^supposed to be in force, was held to be void as one which the company had no power to assume, although the company received and retained a premium of 1100, and was, upon the facts, otherwise liable.
It has been held that where a statute prohibits mutual companies from insuring property not owned by members of the company, regular members were not estopped by having received the benefit of insurance to deny liability to assessment to pay losses on policies issued by the company to nonmembers of which they had no knowledge. Corey v. Sherman, 96 Iowa, 114 (32 L. R. A. 490). So, where mutual companies were forbidden to insure one not a member or to receive premiums, it was held that a policy, issued to one not a member and who paid a' premium, was void, and that the company was not estopped to plead that the contract was ultra vires, since the insured was presumed to know that the contract was prohibited. In re Assignment of Mutual Guaranty Fire-Ins. Co., 107 Iowa, 143. And see, generally, 21 Am. & Eng. Enc. Law (2d Ed.), pp. 267, 268.
The judgment is affirmed.
Grant and Blair, JJ., concurred with Ostrander, J.