Hill v. Baker
Decision Date | 25 February 1910 |
Citation | 205 Mass. 303,91 N.E. 380 |
Parties | HILL v. BAKER. |
Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Hill, Barlow & Homans, for receiver.
Chas W. Clifford, for defendants in first five cases and plaintiff in sixth case.
When a mutual fire insurance company has become insolvent and a receiver has been appointed to settle its affairs under St 1907, c. 576, § 8, its outstanding policies cease to afford any protection to their holders, being canceled as to any future losses, but the premiums which have been paid, for future as well as past protection, and the contingent liability to assessment upon premium notes which have been given by the policy holders remain as a fund for the payment of all the debts and liabilities of the company; including losses that have been incurred. Commonwealth v Massachusetts Ins. Co., 119 Mass. 45, s. c. 112 Mass. 116. As was said by Wells, J., in the case last cited: The deprivation of the right to recover for a future loss does not of itself terminate his membership in the company and his consequent liability to contribute, to the extent of his note, to the payment of losses. Cumings v. Sawyer, 117 Mass. 30. The fundamental question in this case is whether the same rule is to be applied to the Mutual Marine Insurance Company of which the plaintiff in the first five of these actions is the receiver; whether policy holders in that company are liable to the receiver upon their promissory notes given for insurance premiums, although the terms of the policies have not expired, and the total amounts of the premiums have not been earned, or in other words although they have not enjoyed the full benefit of the insurance for which their notes were given. This question is to be determined upon the several contracts of insurance and the statutes under which these contracts were made. Pendergast v. Commercial Mutual Marine Ins. Co., 15 Gray, 257.
In each of these cases the company has made a contract of insurance against definite risks for a fixed period and in consideration of a stipulated premium. In each case except the last the premium was paid, in whole or in part, by a note given by the insured to the company. Each policy describes the insured as a member of the company. By the charter of the company (St. 1853, c. 262) it was to make 'insurance against marine losses on the mutual principle, with all the favors and privileges and subject to all the duties, liabilities and restrictions set forth in the thirty-seventh and forty-fourth chapters of the Revised Statutes and all subsequent laws in force relating to mutual insurance companies, so far as applicable to' this company. The by-laws of the company provide that all persons who have property insured with it shall be members of the company during the period of such insurance and shall have votes accordingly. And see Pub. St. 1882, c. 119, § 121, continued in force by Rev. Laws, c. 118, § 53, and St. 1907, c. 576, § 54. The by-laws also provide for the division of profits among policy holders upon terminated risks.
It seems clear to us that the effect of the policies under this provision of statute is that the policy holders must be treated as having taken their insurance strictly upon the mutual principle, unless there shall be found to be something in subsequent legislation to alter this. But the decisions already cited did not rest upon principles applicable only to mutual fire insurance companies. They went upon broad rules which were to be applied to all cases of mutual insurance, although modified by our statutes as to the manner of enforcing the contingent liability upon premium notes given as additional security to the company and its policy holders. Those general principles have been applied and enforced in other states under statutes more or less similar to our own, without distinction as to the general doctrine between mutual companies, whether they issued insurance upon lives, against loss by fire, or upon marine risks. The cases as to fire insurance companies are of course more numerous. Mygatt v. Protection Ins. Co., 21 N.Y. 52; Lawrence v. Nelson, 21 N.Y. 158; Doane v. Millville Ins. Co., 43 N. J. Eq. 522, 11 A. 739; Hillier v. Alleghany Ins. Co., 3 Pa. 470, 45 Am. Dec. 656; Dewey v. Davis, 82 Wis. 500, 52 N.W. 774; Taylor v. North Star Ins. Co., 46 Minn. 198, 48 N.W. 772. But we find also decisions put upon the same grounds as to life insurance and marine insurance companies. Hone v. Boyd, 1 Sandf. (N. Y.) 481; Vanatta v. New Jersey Mutual Life Ins. Co., 31 N. J. Eq. 15; Mayer v. Atty. Genl., 32 N. J. Eq. 815. The cases go on the general rule that there is no liability on the part of the insurance company for failing to continue the performance of its agreement when that performance has been made impossible by the action of the state under existing laws. People v. Globe Mutual Life Ins. Co., 91 N.Y. 174; Baylies v. Fettyplace, 7 Mass. 325; Wade v. Mason, 12 Gray, 335, 74 Am. Dec. 597; Woodward v. Cowing, 13 Mass. 216. The fact that the insurance company has become insolvent, instead of being a reason against the full collection of outstanding premiums, furnishes a reason why they should be collected. Fogg v. Pew, 10 Gray, 409, 415, 71 Am. Dec. 662; Alliance Mutual Ins. Co. v. Swift, 10 Cush. 443; Lester v. Webb, 5 Allen, 569. All these cases that have been referred to go upon the principle that the premiums paid or absolutely agreed to be paid by the members for their policies constitute a fund for the payment of losses; and the principle is the same whether the payment is in cash or by note, so long as the policy is issued upon the mutual principle to one who by accepting the insurance becomes a member of the insurance company. State v. Manufacturers' Ins. Co., 91 Mo. 311, 3 S.W. 383; Ohio Mutual Ins. Co. v. Marietta Woolen Factory, 3 Ohio St. 348; Hart v. Achilles, 28 Barb. (N. Y.) 576; White v. Havens, 20 How. Prac. (N. Y.) 177.
We find nothing to alter the general principle in the legislation which followed the charter of this company. The definition of the 'net assets' of a...
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