Court Opinion

ID: 6657180
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:58:43.413746+00
Date Added: 2024-06-11T15:59:59.881667
License: Public Domain

The following opinion on motion for rehearing was filed May 10, 1907. Rehearing denied:
1. Mutual Insurance Companies: Assessments. A by-law which provides “that assessments shall be made by order of the directors, and shall be prorated according to the time the insurance has been in force,” is not authority for making assessments at stated intervals.
2. -: -. An assessment levied by such company must be against the entire membership, and if levied against a part only is invalid.
3. By-Law: Validity. The authority of the board of directors to adopt a by-law authorizing themselves to levy assessments, questioned.
Albert, C.
The facts in this case are set forth at some length in our former opinion, ante, p. 742. From an examination of that opinion it will be seen that the vital question *747between the parties is whether the assessment there referred to was authorized and valid. If it was, the plaintiff was in default when the loss occurred, and the defendant is not liable on the policy. The reargument leaves some doubt in our minds whether the fact that the minutes of the defendant company failed to show affirmatively that the assessment in question was authorized by a two-thirds vote of the directors would justify their exclusion, when offered in evidence for the purpose of showing that the assessment had been made. For that reason, and since their exclusion may be justified on other grounds, it is thought best to leave that question open.
As shown in the former opinion, the defendant company exists under and by virtue of chapter 33, laws 1801. The authority to levy assessments is restricted, and the manner of its exercise prescribed by section 12 of that act, which is as follows: “Whenever the amount of any loss shall have been ascertained, which exceeds in amount the cash funds of the company, the secretary shall make an assessment upon all the property insured by the company. Provided, that any company may provide in its by-laws for making assessments at stated intervals only, and may also provide that assessments shall be made by the board of directors.” An analysis of this section shows that there are two agencies of the company by which assessments may be made: (1) The secretary, under the general authority conferred upon him by the statute; (2) the board of directors, when authorized by by-law. It also shows that, as a prerequisite to a valid assessment, there must be either an actual loss, for the payment of which the assessment is required, or a by-law authorizing assessments at stated intervals. The assessment in question was not made by the secretary, nor was it made for the payment of a loss which had actually occurred. Consequently it was incumbent upon the defendant to show : (1) A by-law authorizing the board of directors to make assessments; and (2) a by-law authorizing assessments to be made at stated intervals. In order to do this the defendant *748offered in evidence tbe minutes of a meeting of tbe board of directors held on tbe 8tb day of January, 1901, showing that tbe following amendment to tbe by-laws bad been proposed: “That assessments shall be made by order of tbe directors and shall be prorated according to tbe time tbe insurance has been in force.” It also offered in evidence tbe minutes of a meeting of tbe board of directors held tbe following April, showing tbe adoption of tbe proposed amendment to tbe by-laws. Tbe minutes in each instance were excluded, and, we think, properly. Tbe most that can be claimed for tbe amendment is that it authorizes assessments to be made by tbe board of directors instead of tbe secretary. It contains no bint that assessments shall be made at stated intervals, or at any time other than when required to meet a loss which has actually occurred. Besides, tbe assessment in question, which it is claimed was levied under this amendment, was levied only against those who bad been members of tbe association more than two years. Tbe entire act contemplates that assessments shall be levied upon tbe entire membership, and even if it Avere possible to change this feature of tbe act by a by-law of the company, tbe one offered in evidence contains nothing to indicate that any such change Avas intended. Besides, tbe power of tbe board of directors to adopt a by-law conferring authority upon themselves to make assessments may well be doubted. There is certainly some ground for tbe belief that tbe legislature intended to confer no «such poAver on tbe directors, but to leave it in tbe bands of tbe membership at large. But upon that point Ave express no opinion. The evidence was properly excluded, and, as this left tbe defendant without any proof that tbe assessment in question was authorized or legal, tbe court properly directed a verdict in favor of tbe plaintiff.
It is recommended that tbe motion for rehearing be overruled.
Duffie and Jackson, CC., concur,
*749By the Court: Motion for rehearing
Overruled.