Farmers' Mut. Ins. Co. v. Kinney

• Decision Date: 21 May 1902
• Parties: FARMERS' MUT. INS. CO v. KINNEY.
• Court: Nebraska Supreme Court

64 Neb. 808

90 N.W. 926

FARMERS' MUT. INS. CO

v.KINNEY.

Supreme Court of Nebraska.

May 21, 1902.

Syllabus by the Court.

1. When a mutual insurance company is organized under the provisions of the laws of this state, the provisions of the statute authorizing its organization, the articles of incorporation and by-laws of the company, the application for membership, and the certificate of membership constitute the contract between the company and its policy holder.

2. When a member of a mutual insurance company agrees in his application to be governed by the by-laws and rules “now in force or hereafter adopted by said company,” he will be bound by subsequently enacted by-laws of his company, the same as he is by those in force at the time his certificate of membership is issued; provided that such subsequent by-laws are reasonable in their nature, and properly adopted in conformity with the authority conferred by the statute upon such company.

3. A by-law of a mutual insurance company, which provides that the company shall not be liable for any loss that may occur while a member is in default of the payment of a legal assessment, is a reasonable by-law, and will be upheld.

4. Where all the property covered by a policy of a mutual fire insurance company is not destroyed, the receipt of a subsequent assessment by the company from a member who has sustained a loss while his policy was suspended for default in the payment of assessments will not operate as a waiver of such default.

Commissioners' opinion. Department No. 2. Error to district court, Gage county; Stull, Judge.

Action by Samuel A. Kinney against the Farmers' Mutual Insurance Company. Judgment for plaintiff. Defendant brings error. Reversed.E. M. Coffin, E. O. Kretsinger, and E. J. Clements, for plaintiff in error.

A. D. McCandless and J. H. Broady, for defendant in error.

OLDHAM, C.

This was an action for damages on a fire insurance policy for the alleged loss by fire of a dwelling house and its contents on the 3d day of November, 1898. The issuing and delivering of the policy by the defendant insurance company was admitted in the answer, but liability for the loss was denied on the ground that an assessment of $5.63 was made on plaintiff's policy by the company on the 1st day of September, 1898, due notice of which was given to plaintiff, and that the same was unpaid at the time the fire occurred, and that on the 31st day of October, 1898, under the by-laws adopted by the company, the policy of plaintiff had lapsed in consequence of his failure to pay his September assessment. Plaintiff admitted that his September assessment had not been paid until after the fire, but claimed that the asessment had been made without authority, and that the by-law of the company under which his policy would lapse for nonpayment of an assessment, if in force at all, was adopted after his policy had been issued, and that he was, therefore, not bound by it. He also contended that the acceptance by the company of subsequent assessments on his policy operated as a waiver of his delinquency. He also claimed that he had tendered the full amount of the assessment to the officers of the defendant company before the fire occurred and before his policy became inoperative, and because of their negligence in not receiving the assessment when tendered the forfeiture, if any, had been occasioned. The court below sustained the contention of plaintiff, excluded the evidence offered by the defendant company of the passage of the by-law under which the policy was suspended for the nonpayment of the assessment, and directed a verdict for plaintiff, and defendant brings error to this court.

There is no disputed question of fact in the testimony, except as to whether or not the plaintiff had tendered the amount of the September assessment on his policy to the officers of the defendant company prior to the fire, and before his policy had lapsed under the provisions of the by-law on which the company relied. But this conflicting testimony can only become material in case the defendant insurance company has the right to excuse itself from liability under the provisions of a by-law passed after plaintiff's application had been received and approved and his policy issued, for there is no dispute about the fact that the by-law was adopted by the company in January, 1896, and that plaintiff's policy was issued in May, 1895. Defendant is a mutual insurance company organized under the provisions of chapter 33 of the Session Laws of Nebraska of the year 1891, the same being chapter 43 of the Compiled Statutes of 1897. This statute, together with the articles of incorporation and the by-laws of defendant company, and the written application made by the plaintiff, and the certificate of membership issued to him, constitute the contract between plaintiff and defendant. Association v. Burr, 44 Neb. 256, 62 N. W. 466; Bac. Ben. Soc. 181; Holland v. Supreme Council (N. J. Sup.) 25 Atl. 367;Ebert v. Association (Minn.) 83 N. W. 506;Hughes v. Insurance Co. (Wis.) 73 N. W. 1015. Plaintiff's application for membership in the defendant company contained, among other things, the following agreement: “I hereby agree to be governed by the articles of incorporation, by-laws, and rules now in force or hereafter adopted by said company, and also to pay all assessments made on me in accordance with the rules and by-laws of said company.” This same provision is incorporated in and made a part of the policy on which this cause of action was based. The question, then, arises as to whether plaintiff, in view of this provision in his application and certificate of membership, is bound by by-laws reasonable in their nature, and properly adopted under an authority conferred by the statute under which the company is organized, after he becomes a member of the association. An examination of many adjudged cases on this question leaves no doubt in our mind that under a great weight of authority a member of...