Appeal
from Superior Court, Wake County; Parker, Judge.
Action
by James W. Fuller, on behalf of himself and all other
taxpayers of Wake County who desire to make themselves
parties, against John C. Lockhart, Superintendent of Public
Instruction for the County of Wake, and others. From an
adverse judgment, plaintiff appeals.
Affirmed.
This
was a civil action instituted on behalf of the plaintiff and
all other taxpayers of Wake county who desire to make
themselves parties, against the county board of education of
Wake county and the three mutual fire insurance companies
above set forth, named as defendants.
The
plaintiff in his complaint, among other things, alleges: That
the county board of education of the county of Wake, by
unanimous vote, adopted a resolution authorizing the
superintendent of public instruction of said county to insure
against loss by fire certain school buildings located in Wake
county, under the jurisdiction of said board, and in
pursuance of said resolution that the superintendent of
public instruction applied for a fire insurance policy
insuring the Green Hope High School against loss by fire to
be issued by defendant fire insurance companies. That the
said three insurance companies delivered a single policy to
the county board of education of Wake county, as is set forth
in the record, in the amount of $2,000, limiting the
liability of each to one-third of any loss sustained not
exceeding the amount of the policy, for a period of one year
reciting a consideration of $12.35 premium and a contingent
liability against said county board of education to an
assessment in an equal additional amount.
The
plaintiff further alleged that unless restrained the county
board of education would accept said policy of insurance and
pay the cash premium and assume said contingent liability for
assessment for equal and additional amounts to the great and
irreparable damage and injury of plaintiff and other
taxpayers in said county.
The
plaintiff further alleges: "The acceptance of said fire
insurance policy and payment of said cash premium will and
does constitute said defendant county board of education of
the county of Wake a member of each of said defendant mutual
insurance companies; and in accepting said insurance and
becoming members of said defendant insurance companies, said
county board of education of the county of Wake does and
will: (1) Assume an unlimited liability to assessment to pay
losses and expenses of the companies, notwithstanding any
limitation of this liability recited in the policy, and
assumption of such liability by the county board of education
of the county of Wake would be wholly ultra vires and
contrary to law; (2) undertake to pay for the insurance
coverage obtained an indeterminate price which would be left
to the arbitrary determination of the companies, contrary to
the laws of the state relating to school districts and other
public corporations; (3) assume or underwrite the obligations
of private individuals and corporations, contrary to the
Constitution and laws of the state; (4) undertake to raise
money by taxation for private purposes, contrary to the
Constitution and laws of the state; (5) lend its credit to a
private corporation, contrary to the Constitution of the
state; (6) become a stockholder in a private corporation
contrary to the Constitution of the state; (7) engage in the
business of fire insurance, and in so doing would be acting
ultra vires and contrary to the law of the state relating to
public corporations and insurance companies. (8) Associate
itself as a partner in the conduct of a private business in
which it has no authority or power to engage, and in so doing
would be acting ultra vires and contrary to the Constitution
and laws of the state."
And the
plaintiff prayed that the county board of education of Wake
county be enjoined and restrained from accepting the policy
of insurance or any other policy of insurance issued by any
mutual fire insurance company, and from paying, or
undertaking to pay, the premiums under any policy of
insurance issued by said defendant insurance companies or
doing any act or assuming any liability to give effect to
such fire insurance policies, and that the insurance company
its officers and agents, be forever enjoined and restrained
from accepting any payment of premiums under said contract of
insurance or asserting any liability or obligation against or
on the part of said county board of education, or by virtue
of said policies or contract of insurance, or asserting the
membership of said defendant, county board of education, in
any of said defendant fire insurance companies or doing any
act or thing to give effect to such policy or contract of
insurance.
In
answer the defendants, and each of them, "admit that all
of the losses and expenses of the defendant companies are and
must be paid out of moneys derived ultimately from the
amounts collected from their member policyholders past,
present and future; but further say that a large part of the
moneys available for the payment of such losses and expenses
are derived directly from the income from the investment of a
portion of the premiums collected from their members and
accumulated as reserves, guaranty funds and surplus, the
principal of which funds, now aggregating a large amount in
the case of each of the defendant companies, as well as the
income therefrom are at all times available, if needed, for
the payment of losses and expenses of the said companies.
They admit that the county board of education of Wake county,
and its officers intend to accept said policy of insurance
and pay the cash premium of $12.35 and assume a contingent
liability to assessment for an equal and additional amount,
but it is denied that such action on their part will result
in the damage or injury of plaintiff or of any other taxpayer
of the county of Wake. * * * They admit that the acceptance
of said fire insurance policy and the payment of the cash
premium will and does make the county board of education of
the county of Wake a member of each of said defendant mutual
fire insurance companies, but not a stockholder or partner in
or with any of them. * * * Further answering the defendants,
and each of them, assert that the present condition and
record of all and each of said defendant companies justify
the trustees and officers of the defendant and school
district, in the exercise of a sound administrative
discretion, in applying for and accepting the policy or
policies of which complaint is made in said petition, and
thereby obtaining for said school district a large saving in
its insurance expense as to the property covered by said
policy or policies, and undertaking as consideration for such
indicated savings the possible payment under certain
extraordinary conditions of the further premium in the form
of assessment which can, under no condition, exceed the
amount of the cash premium."
The
judgment of the court below is as follows: "This cause
coming on to be heard before his honor, R. Hunt Parker,
Judge, and being heard upon the restraining order heretofore
made by his honor, Clawson L. Williams, enjoining the
defendants herein from making any payment of the premiums
under the policy of insurance set forth in the complaint or
asserting any liability or obligation against or on the part
of the county board of education of the county of Wake under
and by virtue of said policy or contract of insurance, or
asserting the membership of said county board of education of
Wake county in any and all of said defendant fire insurance
companies or doing any act or thing to give effect to said
policy or contract of insurance and from the payment of the
premium alleged to be due thereon, and after argument by
counsel representing the plaintiff and the defendants, the
court being of the opinion that said temporary restraining
order should be vacated, it is accordingly ordered and
adjudged: That the temporary restraining order heretofore
issued in the above-entitled cause be and the same is hereby
set aside and vacated; that the defendants go hence without
day and recover their costs of the plaintiff. R. Hunt Parker,
Judge Presiding over Courts of the Seventh Judicial
District."
The
plaintiff excepted, assigned error to the judgment as signed,
and appealed to the Supreme Court.
CLARKSON
Justice.
The
many objections made by plaintiff to the contract made
between the county board of education of Wake county, N. C.,
and the three defendants, mutual fire insurance corporations,
cannot be sustained.
The
county board of education of Wake county insured in these
corporations a two-story brick building, known as Green Hope
School, in White Oak township in said county. The amount of
insurance was $2,000, and for one year from April 1, 1935, to
April 1, 1936. The language of the policy applicable to the
controversy: "In Consideration of the Stipulations
herein named and of Twelve and 35/100 Dollars Premium do
insure Board of Education of Wake County, etc. * * * This
policy is issued on a mutual basis for cash premium with a
contingent liability in an amount as set forth in the by-laws
of the respective companies on page three hereof, and by the
acceptance of this policy, the policy-holder becomes a member
of each of said companies, subject to the provisions of the
by-laws thereof for all purposes. In determining
the contingent liability of a policy-holder in each company,
the total premium of this...
