Court Opinion

ID: 7943867
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:18:00.927826+00
Date Added: 2024-06-11T16:33:50.330617
License: Public Domain

Hooker, J.
I concur in the affirmance of the judgment in this cause upon the ground that by the policy itself the plaintiff was apprised of the want of authority on the part of defendant to make the contract of insurance sued upon. Pfister v. Gerwig, 122 Ind. 568; Mitchell v. Insurance Co., 51 Pa. 402; Burger v. Insurance Co., 71 Pa. 422; Susquehanna Mut. Fire-Ins. Co. v. Leavy, 136 Pa. 500; Van Loan v. Insurance Ass’n, 90 N. Y. 280.
I am not satisfied to rest the denial of the application of the doctrine of estoppel upon the ground that the plaintiff was a member of the company, and that therefore he is to be treated differently in that respect than he would be were the defendant a stock company, or the policy issued by this company one which was inconsistent with such membership. See Farmers & Merchants’ Ins. Co. v. Smith, 63 Ill. 187; Illinois Fire-Ins. Co. v. Stanton, 57 Ill. 354; Given v. Rettew, 162 Pa. 638; In re Assignment of Mutual Guaranty Fire-Ins. Co., 107 Iowa, 143; In re Minneapolis Mut. Fire-Ins. Co., 49 Minn. 291; Osius v. O’Dwyer, 127 Mich. 244.
To hold that one dealing with a corporation must know the limit of its power to contract in all cases, upon the ground that it will be presumed to know the law, would seem to be fatal to all cases of estoppel when ultra vires is set up as a defense. While there is a conflict upon this doctrine between the Federal cases and those decided by most of the State courts, this court has followed the latter, and it is now too late to question the doctrine. That this is the general doctrine is established by many authorities. See 29 Am. & Eng. Enc. Law (2d Ed.), pp. 50, 51, and cases cited. The cases of Eddy v. Insurance Co., 72 Mich. 651, and Corey v. Sherman, 96 Iowa, 114 (32 L. R. A. 490), and In re Assignment of Mutual Guaranty Fire-Ins. Co., supra, are distinguishable for the reason that in each the statute under which the company was organized contained an express prohibition against the making of the *641contract. In the latter case the distinction is pointed out, and the statement made that—
“ Were it not for the statutes prohibiting mutual companies organized under section 1160 (Code 1873) from taking premiums and from doing business on the stock plan, we would be inclined to hold that, as the corporation had accepted and used the premium paid for the policy in suit, it should be estopped from pleading ultra vires as a defense. Indeed, the modern authorities seem to sustain that rule. Thompson v. Lambert, 44 Iowa, 239. See Denver Fire-Ins. Co. v. McClelland, 9 Colo. 11; Matt v. Protective Society, 70 Iowa, 455; 2 Beach, Private Corporations, § 423, and cases cited.”
In our own case of Eddy v. Insurance Go., supra, the express prohibition is found, the act expressly limiting the issue of policies to three contiguous counties. There are many cases since decided, which are at variance with this case, and which, of necessity, overrule it if this distinction be disregarded. Thus, in Fourth Nat. Bank of Grand Rapids v. Olney, 63 Mich. 58, a mining corporation was held to be estopped from denying the authority to contract. The opinion was written by the same justice who a short time afterwards wrote the opinion in the Eddy Gase, and it is improbable that he overlooked the earlier case, or the distinction referred to which is essential to consistency. The case of Day v. Buggy Co., 57 Mich. 146, recognizes a difference between a contract which has been performed and one which has not, and is cited by Mr. Justice Sherwood in the case of Cleveland Paper Co. v. Courier Co., 67 Mich. 158, in support of an estoppel. The plea of ultra vires was overridden in the case of Carson City Sav. Bank v. Elevator Co., 90 Mich. 554, and in Dewey v. Railway Co., 91 Mich. 351, while in Coit v. City of Grand Rapids, 115 Mich. 494, a majority of the court applied the doctrine to a municipal corporation, while Mr. Justice Montgomery, who dissented as to the application to a city, used the following language:
*642“ The settled rule is that executed contracts of private corporations, not unlawful, but ultra vires, will be treated as binding upon the corporation. Carson City Sav. Bank v. Elevator Co., 90 Mich. 550; Dewey v. Railway Co., 91 Mich. 351. But the weight of authority is opposed to the contention that a municipal corporation can estop itself from asserting a want of power to enter into an engagement which is in fact ultra vires.”
The rule was again applied in Rehberg v. Surety Co., 131 Mich. 135. There is as much reason why this doctrine should be applied to the contracts of insurance companies as to those of other corporations, and mutual insurance companies should be equally subject to the rule, unless it be where its contract is with one who is, or by the very terms of the contract becomes, a member. There it has been said that such person sustains a double relation to the company, and some cases attach significance to it, from which we may infer that it would avoid an estoppel.
In the case of In re Assignment of Mutual Guaranty Fire-Ins. Co., 107 Iowa, 143, the assured was not a member, and therefore that case throws no light upon this question.
There are many cases where the courts seem to have disregarded the rule that every one is presumed to know the law, and apparently rested their decisions upon the strong equity in favor of one who has faithfully carried out his agreement, as against one who would retain the consideration and deny liability upon the ground of ultra vires. 29 Am. & Eng. Enc. Law (3d Ed.), pp. 50-54b; and note 1; Holt v. Winfield Bank, 25 Fed. 812; Tennessee Ice Co. v. Raine, 107 Tenn. 151; Peterson v. Saving Ass’n, 124 Mich. 573. I am not convinced that a member of a mutual insurance company or other corporation is precluded, by the mere fact of his membership, from asserting an estoppel as against the company. Willcuts v. Insurance Co., 81 Ind. 307; Wallace v. Mystic Circle, 121 Mich. 263. In the case of Russell v. Insurance Co., 80 Mich. 407, an estoppel was recognized *643as an answer to a claim of ultra vires. See, also, Carson City Sav. Bank v. Elevator Co., 90 Mich. 554; Osius v. O’Dwyer, 127 Mich. 244. Some building and loan cases have an analogy to the question. Peterson v. Saving Ass’n, 124 Mich. 573, 580, and cases cited.
In some of the cases cited the mere fact of membership appears to be conclusive of the question of notice, but in this casé the statute and by-laws are printed upon the policy, and nothing implies a want of knowledge of them, if that would make a difference, which we do not intend to imply. Whether the plaintiff might, in a proper action, recover the amount paid by him to the company, is a question not arising upon this record.