Hauge v. Farmers' Mutual Hail Ins. Ass'n of Iowa

• Court: Iowa Supreme Court
• Writing for the Court: STEVENS, J.
• Citation: Hauge v. Farmers' Mutual Hail Ins. Ass'n of Iowa, 212 N.W. 473, 205 Iowa 1099 (Iowa 1927)
• Decision Date: 08 March 1927
• Docket Number: 37428
• Parties: JOHN M. HAUGE, Appellant, v. FARMERS MUTUAL HAIL INSURANCE ASSOCIATION OF IOWA, Appellee

212 N.W. 473

205 Iowa 1099

JOHN M. HAUGE, Appellant, v. FARMERS MUTUAL HAIL INSURANCE ASSOCIATION OF IOWA, Appellee

No. 37428

Supreme Court of Iowa, Des Moines

March 8, 1927

REHEARING DENIED APRIL 5, 1928.

Appeal from Polk District Court.--O. S. FRANKLIN, Judge.

Action upon a policy to recover loss to crops by hail. Verdict for the defendant by direction of the court. Plaintiff appeals.

Affirmed.

J. G Mitchell, for appellant.

Clark & Byers, for appellee.

STEVENS J. EVANS, C. J., and VERMILION and ALBERT, JJ., concur.

OPINION

STEVENS, J.

Appellee, the Farmers Mutual Hail Insurance Association of Iowa, is incorporated under the laws of this state, and has its principal place of business in the city of Des Moines. The policy in suit was issued June 28, 1920. The loss occurred July 5, 1922. The loss to appellant's crops was total, and appellee concedes that, if appellant is entitled to recover at all, it is for $ 2,000, the full face of the policy. An assessment of $ 34.25 was levied upon the policy of appellant, to cover his pro-rata share of the losses occurring during the year 1920. Appellant, after due and proper notice, failed to pay the assessment. It is tacitly conceded that, if the assessment was legal, the policy was in suspension at the time of the loss, and no recovery can be had thereon.

Appellant asserts that the assessment was not levied according to law, the articles of incorporation, and the by-laws of the association, and that the same is invalid. The invalidity thereof is predicated upon the following matters: (a) That it was not made by the board of directors, as required by the articles of the association; (b) that it was not based upon an audit of the association accounts, and that, in making the assessment, the amount of insurance in force was not ascertained, or the assessment based thereon; (c) that the assessment was made in part by the secretary, and not by the board of directors, notwithstanding the fact that the power to make the assessment was not delegable; (d) that the levy was made without regard to the provision of the by-laws that one half of the amount to be assessed should be levied upon all insurance in force in the state; and (e) that the assessment was arbitrary, unreasonable, and far in excess of the necessities of the association. Other alleged irregularities will be noted as we proceed.

The burden was upon appellee to show that the assessment was valid and legal, and that same was made in substantial conformity to the rules and laws of the association. Van Scoy v. National Fire Ins. Co., 191 Iowa 1318, 184 N.W. 306; Petite v. Atlas Ins. Co., 142 Iowa 265, 120 N.W. 642. The articles of incorporation conferred authority upon the board of directors to levy and collect assessments for the purpose of paying losses and expenses. This authority could not be delegated to the secretary, nor exercised by him alone. Farmers' Mill. Co. v. Mill Owners Mut. Fire Ins. Co., 127 Iowa 314, 103 N.W. 207. The by-laws of the association provided for the division of the state of Iowa into two districts, to be known as the northern and southern districts, for the purpose of making assessments to pay losses, etc., and also that one half of the amount of all losses should be levied on the whole insurance of the state.

The minutes of the meeting of the board of directors held on September 21, 1920, as kept by the secretary, were introduced in evidence, as were also the minutes of the annual meeting of the board of directors, and of the annual meeting of the policyholders, held on September 21, 1921. The record of these meetings includes the audit of the assets and liabilities of the association for those years.

No attempt appears to have been made to delegate authority to the secretary to ascertain the amount necessary and to levy the assessment for the year 1920. It does appear, however, that an attempt was made at the board meeting on September 21, 1921, to authorize the secretary to fix the rate on business located outside of the state of Iowa as to him seemed fair.

The policy of appellant was in suspension prior to the 1921 meeting of the board of directors. Nothing is said in the minutes of either meeting as to the assessment of one half of the total losses against all insurance in force in the state. The secretary, however,...