Fishback v. Lewis

• Decision Date: 24 October 1932
• Docket Number: 23715.
• Citation: 170 Wash. 39,15 P.2d 658
• Court: Washington Supreme Court
• Parties: FISHBACK, Insurance Com'r, v. LEWIS.

15 P.2d 658

170 Wash. 39

FISHBACK, Insurance Com'r, v. LEWIS.

No. 23715.

Supreme Court of Washington

October 24, 1932

Department 1.

Appeal from Superior Court, Whatcom County; Ed. E. Harden, Judge.

Action by H. O. Fishback, as State Insurance Commissioner liquidating the business and affairs of the Automobile Insurance Exchange, against H. T. Lewis, an individual doing business under the trade-name and style of the Lewis Motor Company. From a judgment granting plaintiff insufficient relief, plaintiff appeals.

Reversed and remanded for a new trial.

Harrison McAdams of Bellingham, and John A. Homer of Olympia, for appellant.

Sather & Livesey, of Bellingham, for respondent.

HERMAN J.

March 8, 1923, defendant applied for membership in the Automobile Insurance Exchange, which had previously been formed as an interinsurance association under Rem. Comp. Stat. § 7131. At the time defendant applied for membership he signed an instrument known as the 'Authority from the Subscribers.' This document is similar to that signed by all the other members of the association. It is in the nature of a power of attorney, by which Charles Sumner Best is authorized, as representative and manager for the subscriber to accept applications for and to make and issue policies of insurance of subscribers' property. More than one hundred policies of insurance were issued defendant by the exchange. Policies were made payable, first, to the Lewis Motor Company, which was the trade-name under which defendant did business, and, second, to the purchaser as his interest might appear. When these policies were being issued, defendant was selling automobiles under the conditional sale plan, whereby the defendant retained the legal title to the automobile until the full payment was made. On the request of the defendant the policy would be canceled by the exchange in the event of the cancellation of the contract of sale or the repossession of the car. Sometimes when the contracts had been paid Before they were due and the interest of the defendant had thereby been terminated, the policy would be turned over by defendant to the person who had bought the car. The exchange never refused to cancel a policy when requested so to do by the defendant. The evidence shows that the defendant did not make a practice of notifying the exchange when his interest in an automobile ceased.

On December 29, 1926, the superior court, in an action instituted by the Attorney General in behalf of the insurance commissioner, entered an order directing the insurance commissioner to take possession of the property and records of the exchange for the purpose of liquidating it as an insolvent insurance company. July 27, 1927, the court entered its order authorizing and directing the levy of an assessment against all members and policy holders.

This action was instituted by the insurance commissioner to recover from defendant the amount of the assessment levied against him on the policies issued to him by the exchange. In addition to certain denials, defendant's answer pleaded affirmatively that plaintiff's cause of action, if any ever existed, is barred by the statute of limitations. The trial court concluded that recovery against the defendant was barred by the six-year statute of limitations (Rem. Comp. Stat. § 157), except as to the assessment levied by virtue of the policy issued to defendant under date of April 8, 1925, and awarded plaintiff judgment for only $1.68, the amount of that assessment. From that judgment plaintiff has appealed.

The respondent asserts, first, that appellant's cause of action is barred by the statute of limitations. The trial court held 'that the assessment for each monthly period stands alone and are several and not cumulative and that plaintiff's right of action was barred by the statute of limitations within six years after the expiration of the month in which the loss occurred.' Respondent contends that, except in the case of the last policy issued, because more than six years have elapsed prior to the commencement of this suit since the end of any month in which loss occurred, appellant's action is barred.

In Rea v. Eslick, 87 Wash. 125, 151 P. 256, 258, it was stated: 'This court has repeatedly held that, when a receiver has been appointed for an insolvent corporation, it is a condition precedent to his right to maintain an action against a stockholder for an unpaid subscription that such stockholder have notice and an opportunity to be heard upon the validity of claims against the insolvent corporation, and that on such notice an order be entered directing suit against the stockholders whose subscriptions are unpaid for only such amount as, together with the assets, will suffice to meet the actual liabilities of the corporation and the costs of the receivership. Grady v. Graham, 64 Wash 436, 116 P. 1098, 36 L. R. A. (N. S.) 177; Beddow v. Huston, 65 Wash. 585, 118 P. 752; Chamberlain v. Piercy, 82 Wash. 157, ...