Court Opinion

ID: 6413957
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:54:44.336621+00
Date Added: 2024-06-11T15:51:28.369118
License: Public Domain

Dewey, J.
This case comes before us upon the report of an auditor, who, after a full examination of the details of the manner of making the assessment, and the principles by which the same was regulated, finds “ that the ratio for each month was accurately obtained, that the computations were made with substantial accuracy, that the sums raised were necessary and proper to be raised, and that all the assessments were just and equal, and approximated as near to equality as is possible, upon all the members liable to assessment.” This report is to be adopted by us, unless the facts stated in reference to the assessment show some irregularity in the proceedings fatal to its validity. Upon the part of the defendants, various reasons are assigned in avoidance of it.
1. It is contended that there were no directors competent to make this assessment. It is said that this result follows from *32the vote of the directors cancelling all the outstanding policies on the 26th of November 1861, whereby the directors ceased to retain their offices, and the company was in fact disorganized. But we think this position untenable. The directors had been legally chosen, and continued in office and were competent to act in making assessments. In the order of this court of June 22d 1861, enjoining the corporation from the further prosecution of their ordinary business, it was ordered that the corporation be empowered “ to do all necessary acts to continue their corporate existence, until the concerns thereof shall be fully and finally closed, and also to lay all such assessments, according to the provisions of law, as may be necessary to pay the liabilities of said company.” The only practical effect of the vote to cancel the policies of the members of the company on the 26th of November 1861 was to fix a date upon which to calculate the liability of the company for losses and return premiums.
2. It is said that the special meeting of the directors, at which the assessment was laid, was not duly called, because it was called by the president only, and not by the president and directors. No mode of calling such meetings is prescribed by the by-laws of the company. By art. 5th it is provided that the president and directors “ shall meet at the company’s office on the first Monday of each month, and at such other times as they may deem necessary. Five members shall constitute a quorum.” In the absence of any express provision in the by-laws as to calling such meetings, we are of opinion that the notice given by the secretary, by direction of the president, was suffieient, and that, upon the assembling of a sufficient number of the directors to constitute a quorum, they might proceed to act upon the subject of ordering an assessment upon the members of the company to pay losses, and other liabilities that constituted proper subjects of assessment. Sargent v. Webster, 13 Met. 497. It may be further added that by the 6th by-law the secretary is to “ notify all meetings of the directors,” and such was the notice here given. This meeting of the directors, when assembled, w&s competent to make the assessment, although the president was absent.
*333. It is said that this assessment is void by reason of its omission to comply with the provisions of Gen. Sts. c. 58, § 54, requiring a statement showing the amount of cash on hand, deposit notes and liabilities subject to assessment, to be made by the directors, signed by them and duly recorded. In the opinion of the court, the facts stated show a sufficient compliance with the statute in that respect.
4. It is urged that these deposit notes should have been treated as absolute funds, to be applied to the payment of losses and expenses, before the assessment could lawfully be made. The cases of Long Pond Ins. Co. v. Houghton, 6 Gray, 77, and Appleton Ins. Co. v. Jesser, 5 Allen, 446, which are relied upon by the defendants, were unlike the present. No provision exists in the by-laws of this company declaring all premium and deposit notes to be absolute funds of the company, and as such to be first applied to the payment of losses and expenses. By art. 8 of the by-laws, “ the directors may make such assessments as may be necessary.” Nor was there-any violation of Gen. Sts. c. 58, § 48, in making the assessment. The case sufficiently shows that the just claims against this company exceeded the funds in their hands to be applied to discharge the same.
5. Upon the finding of the auditor, and the facts stated by him, no objection exists as to the omission of any deposit notes not included in the aggregate which was made the basis of the assessment.
6. In adjusting assessments upon deposit notes and liabilities arising under policies issued at different times, and to continue for different periods, some being for one year, and others varying from two to five years, a great practical difficulty arises in making the assessments exactly proportional and equal. All that has been required is a reasonable approximation to such a result. In the present case the auditor finds as a fact that the proportion adopted in adjusting this assessment to the different periods for which the policies were held “ was fair and reasonable, and is as near to perfect equality as can be approximates in such calculations.” No legal principle seems to have been violated in this respect, and we see no reason for avoiding the *34assessment for any error in the mode of adjusting the proportions as between the various policies, in reference to the period for which they were issued. Marblehead Ins. Co. v. Underwood. 3 Gray, 210. Jones v. Sisson, 6 Gray, 288.
7. It is further contended that this assessment is void, because it included the sum of $1226.15 for indebtedness for return premiums. Ordinarily assessments have been made to cover losses and expenses. The provisions of Gen. Sts. c. 58, § 48, are: “ When the just claims against a mutual fire insurance company exceed the funds, its directors shall assess such sums as may be necessary upon the members, in proportion to their premium and deposit.” The question then arises, whether the claims of the members of the company whose policies had been cancelled for a return premium were not, under the facts of the present case, to be considered as just claims, and as such to be included in the liabilities of the company for which an assessment might be made.
Art. 9 of the by-laws of the company clearly authorizes a cancellation, and imposes upon the company the duty of paying to the assured in such case the return premium. Each member in taking his policy took it subject to the claims of the other policy holders to receive a return premium. In this state of things, upon the application of the insurance commissioners, this court enjoined the company from proceeding further in their ordinary business ; but the directors were authorized and empowered, with the written assent of the receiver, to cancel any and all the outstanding policies issued by the company, according to the 9th article of the by-laws, and upon the terms therein expressed, and also to lay all such assessments as might be necessary to pay the liabilities of said company. The form of cancellation adopted here was by a vote of the directors to cancel all the outstanding policies, and the appointment of a committee by the president to value them. The receiver duly assented to the cancellation in writing, and the secretary and the receiver gave due notice of the fact of such cancellation to the holders of policies. Under these circumstances, the corporation became liable to the members of the company whose *35policies had been cancelled for a return premium, calculated upon a proper basis, and the amount thus due was properly made one of the items of the assessment.
The result is, therefore, that the objections to the assessment are not sustained. Judgment for the plaintiffs