Elliott v. Home Mutual Hail Ass'n of Cherokee

• Decision Date: 15 March 1913
• Citation: 140 N.W. 431,160 Iowa 105
• Parties: GEORGE E. ELLIOTT and JOHN I. ELLIOTT, v. THE HOME MUTUAL HAIL ASSOCIATION OF CHEROKEE, IOWA, Appellant
• Court: Iowa Supreme Court

140 N.W. 431

160 Iowa 105

GEORGE E. ELLIOTT and JOHN I. ELLIOTT, v. THE HOME MUTUAL HAIL ASSOCIATION OF CHEROKEE, IOWA, Appellant

Supreme Court of Iowa, Des Moines

March 15, 1913

Appeal from Johnson District Court.--HON. R. P. HOWELL, Judge.

ACTION on a certificate of membership in the defendant association resulted in judgment for damages, from which it appeals.

Reversed.

J. D F. Smith and McDonald & Olsen, for appellant.

Ranck & Bradley and S. K. Stevenson, for appellees.

OPINION

LADD, J.

The defendant is a mutual assessment association, and on May 24 1909, issued to plaintiffs a certificate of membership insuring their crops raised on land described against loss or damage by hail for a term of five crop seasons. On August 20 1910, their corn was injured by a hailstorm to the extent, as the evidence tended to show, found by the jury. The particular defenses interposed were (1) that the certificate was suspended at the time of the loss because of the nonpayment of an assessment; and (2) that notice and proofs of loss were not served as exacted by the contract.

I. The latter defense may be disposed of by saying that, upon receipt of notice and proofs of loss, the association denied liability, "for the reason that your policy was delinquent," and made no objection because of delay in furnishing such notice and proofs. Having elected to plant its defense on this ground alone, it will not be permitted, after costs and expense have been incurred in prosecuting the action, to mend its hold and set up others, even though at the outset these may have been available.

II. The main controversy is whether at the time of the loss the certificate had become suspended because of the assured's omission to pay an assessment of the year previous within thirty days after the second notice of such assessment. At the time the certificate was issued, the only provision with reference to delinquency was that "should any member fail to remit as aforesaid the secretary shall send him a second notice by registered letter adding a penalty of ten per cent., and, should it become necessary to collect any member's assessment by law, the member against whom suit is commenced shall be liable for all costs and a reasonable attorney's fee." This article was amended February 5, 1910, by insertion after the words "ten per cent.," in the above excerpt, "the failure of a member to pay his assessment within thirty days after the second notice shall relieve the association of all liability for loss or damages under said member's policy, while such delinquent assessments are unpaid, but the member shall remain liable for all assessments which may be levied for his share of losses and expenses incurred during such delinquency." The seventh article of incorporation authorized the adoption of amendments to by-laws, and provided that "all members shall be liable to the corporation for their prorata share of all losses sustained by any member or members, also for their pro rata share of all expenses and the expenses of the management of the association; they shall also be bound by and subject to the provisions of all duly enacted by-laws as they are or hereafter may be changed or amended." The fourth division of the answer set up the articles and by-laws as recited, and alleged that the plaintiffs were duly assessed to pay the association $ 47.50 in September, 1909, and were notified thereof as exacted in the by-laws, but that they omitted to pay the same, that suit was instituted March 4, 1910, and a defense interposed that their application for membership in the defendant association was procured by fraud, that they did not pay said association until October 12, 1910, and that because of this omission to pay for more than thirty days after the second notice of assessment, which payment continued delinquent at the time of the loss, the association was not liable for any damages to plaintiff's corn in consequence of hailstorm alleged in the petition. A demurrer to this division of the answer, on the ground that the contract of indemnity was not affected by the amendment to the by-laws, was sustained. The ruling was erroneous. The articles of incorporation and by-laws were by the terms of the certificate made a part thereof. But for the express stipulation contained in the seventh article, that all members "shall be bound by and subject to the provisions of all duly enacted by-laws as they are or hereafter may be changed or amended," the ruling would have been correct. Hobbs v. Iowa Ben. Ass'n, 82 Iowa 107, 47 N.W. 983; Sieverts v. Ass'n, 95 Iowa 710, 64 N.W. 671; Fort v. Iowa Legion of Honor, 146 Iowa 183, 123 N.W. 224; Jordan v. Insurance Co., 151 Iowa 73, 130 N.W. 177.

The authorities, however, are quite as conclusive that, where the assured agrees to be bound by amendments to the by-laws or articles subsequently adopted, he must take notice thereof and is as effectually bound...