Cass County v. Mercantile Town Mut. Ins. Co.

• Decision Date: 30 March 1905
• Citation: 188 Mo. 1,86 S.W. 237
• Parties: CASS COUNTY et al. v. MERCANTILE TOWN MUT. INS. CO.
• Court: Missouri Supreme Court

86 S.W. 237

188 Mo. 1.

CASS COUNTY et al. v. MERCANTILE TOWN MUT. INS. CO.

Supreme Court of Missouri, Division No. 2.

March 30, 1905.

INSURANCE—MUTUAL COMPANIES—REINSURANCE—DEFENSE OF ULTRA VIRES—EXECUTED CONTRACTS—INDEPENDENT CONTRACTS—EXTENT OF LIABILITY—ASSIGNMENT OF POLICY —PRESUMPTION.

1. A mutual insurance company organized under Sess. Acts 1895, p. 200, for the sole purpose of insuring the property of its members for the purpose of paying any losses incurred by any

member by assessment as provided by its constitution and by-laws, may reinsure property insured by a company organized under the same law, and doing business on the same plan.

2. A mutual insurance company organized under Sess. Acts 1895, p. 200, for the purpose of insuring property of its members, may reinsure another company organized under the same act without violating Rev. St. 1889, § 5875, forbidding such an insurance company from doing business on any other plan than that on which it is organized, when the reinsurance was made on the same plan as the original insurance.

3. A mutual insurance company which is not prohibited from reinsuring property already insured by another company cannot invoke the defense of ultra vires in an action on a policy of reinsurance which has been executed to the fullest extent by the company reinsured, as such defense is not open to a corporation when the contract has been executed by the other contracting party and is not expressly prohibited by law.

4. Where a mutual insurance company reinsured in another company, and the contracts were independent, when a loss occurred which was covered by both policies, suits could be instituted at once on both policies by the holders, unless otherwise provided by the policies, and the liability of the company issuing the reinsurance was not restricted to a pro rata of the amount paid by the other company.

5. Where an assignment of an insurance policy in due form by the directors of a company is averred, without denial, the authority of the board to make the assignment must be presumed, in the absence of evidence to the contrary.

Appeal from Circuit Court, Bates County; W. W. Graves, Judge.

Action by Cass county and another against the Mercantile Town Mutual Insurance Company. From a judgment in favor of plaintiffs, defendant appeals. Affirmed.

Fyke, Yates & Fyke, for appellant. C. W. Sloan and R. T. Railey, for respondents.

BURGESS, P. J.

The petition is in the usual form. Among the defenses set up in the answer is that the policy sued upon was ultra vires of the defendant company. The court made a special finding of facts as follows:

"In this cause the court doth find, from the evidence and admissions, the facts to be as follows:

"That defendant is a mutual fire insurance company organized under the laws of Missouri (Acts 1895, p. 200). That the State Town Mutual Fire Insurance Company of Nevada, Mo., is a similar company, organized and doing business by authority of the same legislative act. That on October 28, 1898, said last-mentioned company, by its policy No. 4,451, insured a certain brick storehouse for one Wm. Dolan, in the town of Freeman, Cass county, Mo., in the amount of $3,000; said policy running the period of one year. That prior thereto Wm. Dolan and wife had executed to Cass county, one of the plaintiffs herein, a mortgage on said store building and lots to secure the payment of a note of $2,000, bearing interest at the rate of 7 per cent. per annum, which mortgage was duly recorded. That to this policy of insurance was a mortgage clause attached, making loss, if any, payable to said Cass county as its interest might appear. That on December 29, 1898, the building described in said policy No. 4,451 aforesaid was totally destroyed by fire. That on the 27th day of March, 1899, said Wm. Dolan and Cass county, as plaintiffs, instituted suits on said policy against the said State Town Mutual Fire Insurance Company of Nevada, Mo. That thereafter Chas. W. Sloan was appointed receiver, and later trustee, of Wm. Dolan, a bankrupt, by the United States District Court, and by said court authorized to prosecute said case so instituted as above stated. That afterwards the venue of said cause was changed to the circuit court of Bates county, Missouri, where said cause was tried on July 3, 1899; said trial resulting in a judgment for plaintiffs in the sum of $3,045.55 on said policy No. 4,451, and for costs. That from this judgment no appeal was taken. That on said judgment only the sum $300 was ever paid by Nevada Company. That of the pendency of this suit the defendant in this cause was duly notified long before the trial thereof, and the defendant herein advised with the defendant in that action as to proper matters of defense.

"The court further finds: That the defendant herein on November 8, 1898, issued to said Nevada Company its policy No. 4,981, covering a period from November 8, 1898, to December 28, 1899, insuring said Nevada Company against all direct loss by fire under its policy No. 4,451 to an amount of $1,500, which policy No. 4,981 is filed in this cause. That said policy No. 4,981 was on the 14th day of October, 1899, duly assigned to the plaintiffs herein by the Nevada Company. That after the burning of the store building of the said Wm. Dolan on January 10, 1899, the general manager and adjuster of defendant met the agent and adjuster of the Nevada Company at Freeman for the purpose of adjusting the loss, but after investigation the said manager and adjuster of this defendant advised the Nevada Company to resist payment of said policy No. 4,451, which was done, with the result aforesaid. On January 28th this defendant received from the Nevada Company the proofs of loss theretofore made to it by said Dolan, and, upon the receipt thereof, again advised the Nevada Company to resist a payment of its policy No. 4,451. That the Nevada Company made no formal proof of loss under policy No. 4,981, except as above stated, until March 9, 1899, but that the conduct of the two companies with reference to the matter was such as to show that any further proof of loss was waived, if in fact required under the policy and circumstances.

"The court further finds that, after the trial of the cause first above mentioned in the Bates circuit court, the Nevada Company notified defendant of the result, and requested defendant to notify it if an appeal was desired upon its part, but got no further response or word from defendant; that, in said trial between the plaintiffs herein and the Nevada Company as aforesaid, all of the issues, matters, and things pleaded in the answer of the defendant herein, so far as liability of said Nevada Company upon its policy No. 4,451 is concerned, were fully pleaded in said former cause, and were fully and finally adjudicated therein, and, if said adjudication is binding upon this defendant, all such matters and things as herein pleaded by defendant herein as defense to the clam of Wm. Dolan under said policy No. 4,451 have been fully and finally adjudicated.

"The court further finds that in the charter of defendant are found the following provisions:

"`Article 1. The name assumed by this company and by which it shall be known is "Mercantile Town Mutual Insurance Company, of Jackson, Mo."

"`Art. 2. The principal office of this company shall be located in the city of Jackson, county of Cape Girardeau and state of Missouri.

"`Art. 3. The specified kind of business this company proposes to transact is to make insurance on the mutual plan, against loss or damage by fire, lightning and windstorm on houses, buildings, merchandise, furniture and all other kinds of property belonging to the members of this company.'"

"`Art. 5. The corporate powers of this company shall be exercised by the board of directors and such other officers and agents as shall be elected or appointed in the manner provided by the constitution and by-laws of this company.

"`Art. 6. All and every person or persons applying for and receiving a policy of insurance in this company shall be deemed and taken as members of this company for and during the life of their respective policies and no longer, shall be bound by all provisions, stipulations, conditions, statements and agreements contained in the articles of association, by-laws and the application for and policy of insurance of this company, all legal acts of the company and its officers and for the payment of their respective proportionate shares of all losses and expenses of this company. It is expressly provided, however, that no member or members of this company shall be personally or individually liable for losses or expenses, or any other indebtedness of this company to any amount exceeding the cash premium paid in and the amount of the premium note or notes executed by them respectively.'"

"`Art. 10. The board of directors of this company shall have the power to make an assessment as often as they may deem it necessary, upon the premium notes given by persons who are members of this company in order to settle the losses insured against and the expenses and other liabilities of the company without regard to what may have accumulated by reason of the cash payments. Such assessment shall be made on each and every note held by the company prior to the date of the assessment, and shall be for a sum upon each note which bears the same ratio to the whole amount to be raised by the assessment as the full amount for which all the notes assessed were given. The amount so assessed upon each note shall be due and payable within thirty days after the notice of such assessment to the maker of such note has been deposited in the post office, postage prepaid, and addressed to the person at his address last known to the secretary of the company. If any person neglect or refuse to pay the sum assessed upon him for thirty days after the date of the mailing to him in said manner said notice, the directors...