Akers v. Hite

• Court: Pennsylvania Supreme Court
• Writing for the Court: Trunkey
• Citation: Akers v. Hite, 94 Pa. 394, 39 Am. Rep. 792 (Pa. 1880)
• Decision Date: 31 May 1880
• Parties: Akers, Receiver, <I>versus</I> Hite et al.

94 Pa. 394

Akers, Receiver, versus Hite et al.

Supreme Court of Pennsylvania.

May 11, 1880.

May 31, 1880.

May 11th 1880.

Before MERCUR, GORDON, PAXSON, TRUNKEY and STERRETT, JJ. SHARSWOOD, C. J., and GREEN, J., absent

Error to the Court of Common Pleas of Bedford county: Of May Term 1880, No. 105.

COPYRIGHT MATERIAL OMITTED

Frederick Jaekel and J. M. Reynolds, for plaintiff in error.— The board of directors of a mutual insurance company have no authority to pass a resolution to cancel the policies of dissatisfied members without paying existing debts: Maine Mutual Ins. Co., 66 Me. 130. As long as the insured are members to the extent of their notes they are liable to pay a pro rata share of the losses: Rhinehart v. Allegheny County Mutual Ins. Co., 1 Barr 59. Neither the surrender, cancellation nor the expiration of the policy nor the insolvency of the company, releases the holder of a policy from his liability to assessments for losses which occur during his membership: May on Ins. 691; Wilson v. Trumbull Ins. Co., 7 Harris 372; Sterling v. Mercantile Mutual Ins. Co., 8 Casey 75. The mere handing of a policy by a member of a mutual insurance company to one of the directors, with the request to have it cancelled, is not such an action as would, in the eyes of the law, justify the surrender of the premium notes. While in the sense of the contract the company and each member stand to each other in the relation of insurer and insured, both parties had to agree as to a cancellation of a contract entered into. As defendants did not tender their dues the directors were justified in not cancelling their policies. They are not relieved from paying their pro rata of the losses until the company cancels their policies and surrenders their notes. Their membership is not terminated by a notice to the agent of the company: Buckley v. Columbia Ins. Co., 2 Norris 294. Each member is liable to assessment while his policy remains uncancelled, although he has no right to recover thereunder: Upton v. Hornbraugh, 3 Bissell 417; Ins. Co. v. Connor, 5 Harris 136. The receiver was legally appointed; is the officer of the court; is appointed for the benefit of all parties concerned, and is bound by the charter of the company to the same extent as the directors: Daniel's Chancery Practice 1714; Sulfield v. People, 85 Ill. 558; Yeager v. Wallace 8 Wright 294; Singerly v. Fox, 25 P. F. Smith 112.

John Cessna, Alexander King and J. B. Cessna, for defendants in error.—The facts as found in the special verdict, in law amounted to a cancellation of defendant's policies, by virtue of which their membership was dissolved, and the defendants released from further claims, both for past and future losses, the same being an adjustment of mutual claims. It is clear, that the plaintiff's company authorized the cancellation of policies of dissatisfied members upon certain conditions, and that those conditions were complied with on the part of the defendants. By the resolutions of the company, the defendants were required to pay only their just dues or assessments. This they did. Two of them had been assessed upon horses which died or were sold more than a year previous. This was illegal, as is fully established: Wilson v. Trumbull Mutual Ins. Co., 7 Harris 372; Columbia Ins. Co. v. Buckley, 2 Norris 372; Finley v. Lycoming Ins. Co., 6 Casey 311. These assessments being illegal, were not just.

The agreement to cancel policies and surrender notes to defendants was a legal contract so far consummated on part of defendants as to discharge their liability upon their notes. It was in law a cancellation: May on Insurance, 690-1; Roland v. Whitman, Receiver Mutual Ins. Co., 33 Ind. 64; Sands, Receiver, v. Hill, 55 N. Y. (reversing 42 Barb. 651); Columbia Insurance Company v. Masonheimer, 26 P. F. Smith 138; Cumberland Valley Mutual Protection Company v. Herbert, 2 W. N. C. 155; Campbell, Receiver, v. Adams, 38 Barb. 132; Hyde v. Snyder, 4 N. Y. 387; Woodworth v. Davis, Receiver, 13 Ohio 123. The company retaining the policies and the money, the defendants had a right to suppose that their policies were cancelled. The plaintiff's company having accepted the payment made by them, promised to cancel their policies without any conditions or reservations. If there was any mistake or legal objection to the cancellation, it was the duty of plaintiff to so notify the defendants. This they did not do, and retaining the money and policies upon promise to cancel waived all objections if any existed. If defendants had sustained a loss, they would soon have been told, "you have surrendered your policy. It is cancelled. We will pay you nothing."

The directors had ample power to make the contract, which they did. What they did by virtue of the charter itself is binding on all the members of said company. Their action in passing the resolutions referred to, comes within the management of the affairs and business of the company, and is therefore binding on all its members. The appointment of the receiver only passed to him the assets of the corporation, not its franchises. Not having the power to do any corporate act, his attempted assessments are void, and therefore cannot be recovered: Schimpf v. Lehigh Valley Mutual Insurance Co., 5 Norris 373. These principles are clearly established by the decision of Judge Blodgett, United States District Court, Cincinnati, delivered December 24th 1879, in case of Cook, assignee of the Protective Life Insurance Company.

Mr. Justice TRUNKEY delivered the opinion of the court, May 31st 1880.

The business of an insurance company, whether conducted on the mutual or stock plan, is managed by its officers and agents, and the corporators are bound by the acts of such agents in all matters properly done within the scope of the powers committed to them. A policy of insurance and the premium note given therefor, constitute a contract between the company and the insured, and the parties usually have the same power to rescind it by mutual agreement as they had to make it....