Farmers Milling Co. v. Mill Owners' Mut. Fire Ins. Co.

• Decision Date: 12 April 1905
• Citation: 103 N.W. 207,127 Iowa 314
• Parties: THE FARMERS' MILLING CO. v. MILL OWNERS MUTUAL FIRE INS. CO., Appellant
• Court: Iowa Supreme Court

103 N.W. 207

127 Iowa 314

THE FARMERS' MILLING CO. v. MILL OWNERS MUTUAL FIRE INS. CO., Appellant

Supreme Court of Iowa, Des Moines

April 12, 1905

Appeal from Kossuth District Court.--HON. W. B. QUARTON, Judge.

ACTION on policy of insurance resulted in judgment as prayed, and defendant apeals.

Affirmed.

Berryhill & Henry, for appellant.

Sullivan & McMahon and E. A. Morling, for appellee.

OPINION

LADD, J.

The defendant was organized as a mutual insurance company under title 9 of the Code of 1873, and as such on June 1, 1898 issued the policy under which the loss occurred. The only defenses interposed are (1) that the policy was in a state of suspension at the time the property was burned; and (2) that it had been cancelled. Under the plan of insurance prescribed by the articles of incorporation and by-laws, each person applying for a policy executed to the company a note equal to the premium on the indemnity proposed for one year, at the maximum rate established on the risk, and upon the issuance of the policy this note became the basis for an equitable assessment of sums necessary to pay losses and the expenses of operation. The articles provided for assessments "on the semiannual and annual anniversary of the issuance of the policy and in such amount as may be directed by the beard of directors." The amount of plaintiff's note was $ 225, and on the 2d day of December, 1901, the secretary undertook to levy an assessment thereon to pay losses and expenses, amounting to $ 67.50. Due notice of this was given by registered letter, and under the articles the policy would have been suspended on January 2, 1902, had there been a legal assessment. But the amount had not been directed by the board of directors, and the evidence leaves it doubtful whether the secretary had been instructed by it to fix the same. This, however, is immaterial, for the authority of the board could not be delegated to him. Garretson v Ass'n, 93 Iowa 402. Moreover, this article must be construed in connection with section 1706 of the Code, which required that:

The directors shall as often as necessary, after receiving notice of any loss or damage, determine the sums to be paid by the several members thereof as their respective portions of such loss, assess the same against them, respectively, and notify them thereof in such manner as they shall determine or the by-laws prescribe; but the sum to be paid by each member shall always be in proportion to the original amount of his premium note, and be paid to the officers of the company within thirty days after the giving of said notice.

This is mandatory in terms, and there is no reason for supposing that the authority of making assessments conferred on the directors was not intended to be exclusive. Having directed the particular act to be performed by certain officers of the corporation, under the chapter of which the above section is a part, the power is by clear implication denied to others. The point was not raised in Fee v. Nat. Masonic Acc Ass'n, 110 Iowa 271, 81 N.W. 483. The secretary, then, could make no assessment, and his action in the matter was without authority.

II. The action was begun September 4, 1902, and the defendant answered on the 20th of the same month, expressly averring that "on the 28th day of January, 1902, said policy was cancelled for nonpayment of the assessment aforesaid." More than a year later, October 15, 1903, an amendment was filed, in which No. 10 of the articles of incorporation was set out, providing that "the policy of a member may be cancelled in the discretion of the board of directors, or executive committee or secretary." The record up to that time leaves no doubt of defendant's claim of having canceled the policy because of the nonpayment of the alleged assessment. The secretary had written to defendant on January 20, 1900, requesting a remittance of the assessment, saying "If we do not hear from you within a few days the policies will be cancelled." Again, on the 28th of the same month, he wrote that: "The semiannual assessment made on your deposit notes Nos. 2811 and 2891 representing policies of the same date and number...