Bracken County Ins. Co. v. Murray

• Decision Date: 19 November 1915
• Citation: 166 Ky. 821,179 S.W. 842
• Parties: BRACKEN COUNTY INS. CO. v. MURRAY.
• Court: Kentucky Court of Appeals

179 S.W. 842

166 Ky. 821

BRACKEN COUNTY INS. CO. v. MURRAY.

Court of Appeals of Kentucky.

November 19, 1915

Appeal from Circuit Court, Bracken County.

Action by A. L. Murray against the Bracken County Insurance Company. From a judgment for plaintiff, defendant appeals. Reversed with directions.

Allan D. Cole, of Maysville, and W. A. Byron, of Brooksville, for appellant.

M Hargett, of Augusta, and G. F. Boughner, of Covington, for appellee.

TURNER J.

Appellant is an assessment or co-operative fire insurance company organized under subdivision 5, c. 32, Ky. St., and is authorized to do business in Bracken county. Appellee is a resident of and property owner in that county, and on the 10th day of February, 1914, signed, in the presence of an agent of appellant, an application for insurance on a building he owned. The application was promptly forwarded by the agent to the office of the company, and it thereafter wrote and inquired of him if the building sought to be insured was not the same building in which was located a stock of goods belonging to a certain mercantile company which appellant had already insured for $2,500. The agent immediately answered, stating that it was, whereupon, on the 14th day of February, the application was marked "Rejected," and the agent notified. But notwithstanding this notice to the agent, he failed to notify appellee of the rejection until after the 24th day of February, upon which day the building was destroyed by fire. This is an action on an oral contract of insurance entered into between appellee and the agent, the allegation being that the agent contracted with appellee that his property was insured by the company from the date of the application if it should be accepted, and, if not, until he was given notice of the rejection. Upon a trial in the circuit court appellee recovered a verdict and judgment for $1,200, the amount specified in the application, and the company has appealed.

Co-operative or assessment insurance companies from their very nature are organized for the purpose of insuring only the property of their members, and it is apparent from the reading of our statute on the subject that it so contemplates; and this purpose of appellant company is emphasized and clearly expressed in its by-laws.

The only question we deem it necessary to consider is whether the appellee, by his own voluntary act in signing the application for insurance, became a member of appellant company, without any action whatever upon its part; for unless he was a member, no valid contract of insurance, oral or written could have been made between him and the agent. After diligent search we have been unable to find any direct authority upon this question, but it seems that a statement of the proposition furnishes its own answer. Clearly it was the purpose of the statute to authorize the organization of such companies only for the purpose of insuring the property of its members, and giving such members, through the medium of the corporation, the authority to enter into mutual contracts of insurance with other members; that is to say, that each member who is admitted is at one and the same time both insurer and insured. To say that one may become by his own act a member of such a company, whether it be agreeable to the organization or contrary to its wishes, would be to compel the other members of the company to accept insurance risks which they might not be willing to accept, and would place such assessment companies, who would thus be compelled to accept unsatisfactory and undesirable risks, at a great disadvantage in their quest for business.

The last sentence in section 702 of the Kentucky Statute, providing for the organization of such companies, says:

"Every person insured in such a corporation, who shall sign an application for insurance, as

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