Detroit Manufacturers' Mut. Fire Ins. Co. v. Merrill

• Decision Date: 05 July 1894
• Citation: 59 N.W. 661,101 Mich. 393
• Parties: DETROIT MANUFACTURERS' MUT. FIRE INS. CO. v. MERRILL ET AL.
• Court: Michigan Supreme Court

59 N.W. 661

101 Mich. 393

DETROIT MANUFACTURERS' MUT. FIRE INS. CO. v. MERRILL ET AL.

Supreme Court of Michigan

July 5, 1894

Error to circuit court, Bay county; George P. Cobb, Judge.

Action by the Detroit Manufacturers' Mutual Fire Insurance Company against George H. Merrill and others. There was a judgement for plaintiff, and defendants bring error. Reversed.

Simonson Gillett & Courtright (John L. Stoddard, of counsel), for appellants.

Bowen Douglas & Whiting, for appellee.

GRANT, J.

Plaintiff is a corporation organized under Act No. 78, Laws 1883 (3 How. St. c. 134a). May 24, 1890, a policy was is sued to the defendants, who gave their note for the premium, which reads as follows: "$324.00. Detroit, Mich., May 24, 1890. In consideration of policy No. 1,023, dated the 24th day of May 1890, we promise to pay the Detroit Manufacturers' Mutual Fire Insurance Co. the sum of three hundred and twenty-four and 00-100 dollars, by installments at such time as the directors of said company may order and assess, for the losses and expenses of said company, pursuant to its charter and by-laws. It is hereby expressly understood and agreed that this note is not transferable, and that there is no liability beyond the face amount thereof." Two installments were paid, amounting to $64.80. November 11 1891, the board of directors made an assessment of 40 per cent. on the face value of the premium or deposit notes then outstanding. The total sum thus assessed upon the policy holders was $28,230.16. Defendants' assessment was $109. The court directed a verdict for the plaintiff but gave no reason therefor, except to say that the assessment was valid. Plaintiff has filed no brief in this court, and its counsel announced that they did not desire to, thus virtually confessing error. The assessment cannot be sustained, for the following reasons:

1. The assessment includes losses amounting to $4,000, which occurred prior to the date of the defendant's policy. In companies organized under this and similar laws, the policy holder is liable only for losses occurring during the lifetime of his policy. Wardle v. Townsend, 75 Mich. 395, 42 N.W. 950; Insurance Co. v. Houghton, 6 Gray, 77; Insurance Co. v. Hartshorne, 90 Pa. St. 465; Evarts v. Association (Sup.) 16 N.Y.S. 27; Ward, Ins. � 541.

2. A large proportion of the assessment was for the purpose of paying unearned or return premiums. Defendants did not contract to pay any unearned...