Clark v. The Manufacturers' Mutual Fire Insurance Company

Decision Date16 February 1892
Docket Number16,239
Citation30 N.E. 212,130 Ind. 332
PartiesClark et al. v. The Manufacturers' Mutual Fire Insurance Company
CourtIndiana Supreme Court

From the Marion Superior Court.

Judgment reversed, with instructions to the superior court of Marion county to overrule the demurrer to the petition, and for further action in accordance with this opinion.

V Carter, S. J. Peelle and W. L. Taylor, for appellants.

F. M Finch and J. A. Finch, for appellee.

OPINION

McBride, J.

The Manufacturers' Mutual Fire Insurance Company, organized under the laws of this State, was, on the 26th day of April 1890, by the superior court of Marion county, at the suit of one of its policy-holders, and on a showing and confession of danger of insolvency, placed in the hands of a receiver to close up its affairs with a view to going out of business.

The controversy in this case is between the receiver and certain creditors of the company, who, by their intervening petition, show, in substance, the following facts.

The company, while doing business, issued two forms of policies, one under the purely mutual plan, wherein the assured executed a premium note, which note was liable to be assessed to make assets with which to pay all just claims founded on policies issued by the company. Such policy-holders were, as such members of the company, entitled to share in the profits, if any, in addition to their liability to assessment on their premium notes to pay losses.

The other form of policy is designated in the petition as the "all-cash premium policy," in which the assured paid a fixed and certain premium in cash, and gave no note. Such policy-holders were not members of the company, were not entitled to share in its profits, and were not liable to assessment to pay losses. Both forms of policy contained stipulations reserving to both parties the right to cancel the policy on certain conditions, and providing for the refunding of unearned premiums paid.

It is shown by the petition that, immediately on the appointment of the receiver, he, by order of the court, cancelled all out-standing policies. The claims of the petitioners are all for unearned, return premiums, due on policies thus cancelled, and with one exception the policies were all-cash premium policies.

The petition makes the following showing of the assets and liabilities of the company:

Assets.

Premium notes, assessable under the statute

$ 100,000

Cash received for premiums on

all-cash premium policies

5,000

Cash received from other sources

5,000

Total

$ 110,000

Liabilities.

Fire losses unpaid

$ 40,000

Amount due on unearned return premiums on all-cash

policies at date of cancellation

4,000

Amount of the unearned cash portion of premium on

the mutual policies

2,000

Total liabilities

$ 46,000

The petition shows the amounts of the several claims of the petitioners, that they had made and filed proofs thereof with the receiver, who, it was alleged admitted and recognized them as indebtedness of the company, but refused to allow or admit them as proper demands to share in any dividend or dividends that might be declared by him on the liabilities of the company.

It is further shown that the receiver has declared and paid a dividend of twenty per cent. upon the claims for fire losses, which was paid out of the cash on hand, including the $ 5,000 received from premiums on all-cash premium policies, but refused to allow or pay a like dividend on their claims, or to admit and include them in any amount for which an assessment can be made on the premium notes. The petitioners asked for an order directing the receiver:

1st. To apply the sum of $ 5,000, received from premiums on all-cash premium policies, to the payment of their claims.

2d. If this could not be done, to order him to pay them a dividend of twenty per cent., to make them equal with the claims for fire losses.

3d. That their claims for unearned premiums be allowed as valid claims, entitled to share in all dividends declared.

4th. That the receiver be directed to admit and include their claims in the amount for which an assessment shall be made on the premium notes.

The petition concluded with a general prayer for relief.

The court sustained a demurrer to the petition, on the ground that it did not state facts sufficient to constitute a cause of action, or to entitle the petitioners to any relief whatever.

The determination of this question requires us to construe sections 3752 and 3753, R. S. 1881, which are as follows:

"3752. Every person who shall become a member of such company shall, before receiving a policy, deposit his, her, or their promissory note, as a premium note, and shall pay such further consideration, on or before receiving the policy, as may be agreed upon; and such note shall be payable, in whole or in part, when, on any assessment, the directors may require the same. But should any person insuring in such company so desire, he can pay a definite consideration, in lieu of giving a premium note; and in this case, the person so insured shall not be deemed a member, nor entitled to share in the accumulations of the company. And such company may, if it so desire, take a promissory note, for the cash premium, for such length of time, on any policy, as may be agreed upon; and if such premium note shall remain unpaid after it becomes due, the company shall not be held responsible for any loss or damage that may take place under any policy for which such note was given."

"3753. The funds of every such corporation shall be invested in stocks or loaned on security, as the directors may order; and shall be appropriated, first, to pay the expenses of the corporation, and then to pay the damages which any member may be entitled to recover on his policy. And if any member shall have a just claim on the corporation, founded on a policy issued by it, exceeding the amount of its then existing funds, exclusive of deposit notes given by the members, the directors shall forthwith assess such sum as may be necessary to pay the same upon the members, in proportion to the amount of their premiums and deposits, severally, for seven years; but no member shall be liable to pay, in the whole, more than the amount of his premium and deposit note."

It will be observed that the section last above quoted, which relates to the investment and appropriation of the funds of the company, only recognizes, in terms, two objects to which the funds (by which is evidently meant all money received from any source except that realized from assessments on...

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1 cases
  • Clark v. Manufacturers' Mut. Fire Ins. Co.
    • United States
    • Indiana Supreme Court
    • February 16, 1892
    ... ... C. WALKER, Judge.Action by James H. Clark and others against the Manufacturers' Mutual Fire Insurance Company. Judgment for defendant. Petitioners appeal. Reversed.Vinson Carter, for ... ...

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