Ingle v. Batesville Grocery Co.

• Decision Date: 22 February 1909
• Citation: 117 S.W. 241
• Parties: INGLE et al. v. BATESVILLE GROCERY CO. et al.
• Court: Arkansas Supreme Court

117 S.W. 241

INGLE et al. v. BATESVILLE GROCERY CO. et al.

Supreme Court of Arkansas.

February 22, 1909.

Appeal from Circuit Court, Sebastian County; Daniel Hon, Judge.

Action by the Batesville Grocery Company and others against A. J. Ingle and others. From a judgment for plaintiffs, defendants appeal. Reversed and remanded, with directions.

T. W. M. Boone and Chas. E. Warner, for appellants. Mechem & Mechem and S. M. Carey, for appellees. Ashley Cockrill, W. F. Coleman, and Murphy, Coleman & Lewis. amici curiæ.

BLACKWOOD, Special Judge.

The plaintiff in the court below brought suit in the Marion circuit court against the Ozark Insurance Company, on a policy issued March 30, 1904, for loss of $1,000 on stock of goods, and $200 on the building, and recovered judgment for the full amount sued for. The bondsmen were not joined in this suit; neither was there any allegation that the company had failed to promptly collect or pay over all assessments to the policy holders. The insurance company answered, and appealed at the first trial, where judgment was entered against it, and afterward a new trial was granted. At the second trial there was no appearance for the defendant, and judgment was rendered against it. The policy is set out in the transcript, and is what is known as a "standard policy," but it has attached to the printed copy, in typewriting, this clause: "This being a policy issued by the Ozark Insurance Co., an organization under the laws of the state of Arkansas governing mutual insurance companies, all special regulations lawfully applicable to its organization, membership, policy or contracts of insurance shall apply to and form a part of this policy." Plaintiff then brought suit against the bondsmen in the Sebastian circuit court for the amount of the loss, as evidenced by the judgment against the insurance company, and obtained judgment against them for the amount of the judgment of the Marion circuit court. The records contain no part of the company's charter, articles of association, or by-laws. The bond sued on sets forth that the insurance company is doing the business of insurance upon a mutual or assessment plan, as provided in sections 4132, 4133, Sand. & H. Dig. The bond is for $20,000, and is as follows: "Know all men by these presents, that whereas, The Ozark insurance Company of Ft. Smith, Arkansas, has filed its articles of association, and has in other respects conformed to the requirements of the statutes in such cases made and provided; and, whereas, the said company proposes to continue in the business of insurance upon the mutual or assessment plan, as provided in sections 4132 and 4133, Sandels & Hill's Digest, for the period of two years, ending on the 23d day of July, 1905, now, therefore, we, the Ozark Insurance Company, twenty thousand as principal, and the several persons whose names are in addition subscribed as sureties, are held and firmly bound unto the state of Arkansas, for the use of the beneficiaries of the policy holders of said company, in the sum of twenty thousand ($20,000.00) dollars, lawful money of the United States. The conditions of the above obligation are set forth in section 4133 of Sandels & Hill's Digest, and are as follows: `Conditioned for the prompt payment of all assessments to the parties or beneficiaries entitled thereto, and the makers of said bond shall be liable thereon for any violations of the conditions thereof, or any loss which may accrue to the policy holders or beneficiaries of such company.' When said Ozark Insurance Company has complied with all the requirements of this bond, then this instrument shall become null and void, otherwise to remain in full force and effect. Witness our hands and seals this 22d day of July, 1903. Ozark Insurance Company. By E. H. Stevenson, President. James B. Moore, Secretary."

The appellants urged as grounds for reversal: First, that the bond is a fidelity bond, and by it the sureties are only bound to see that the insurance company pays over all assessments to the parties or beneficiaries entitled thereto; second, that the court erred in admitting the judgment of the Marion circuit court as conclusive evidence against the bondsmen; third, that the lower court erred in refusing appellants permission to introduce evidence to show that the assessments collected had been promptly paid over according to the by-laws of the insurance company. The appellees urged for an affirmance of the judgment that it was obligatory upon the insurance company and the bondsmen to pay the loss absolutely, under the policy, and to sustain their contention rely upon this clause of the bond: "And the makers of said bond shall be liable thereon for any violations of the conditions thereof, or any loss which may accrue to the policy holders or beneficiaries of such company." What, then, is a true construction to be given to this bond? The liability of the insurance company is fixed by the policy of insurance, without regard to the character of the insurance company to be made liable. Block v. Valley Mutual Association, 52 Ark. 201, 12 S. W. 477, 20 Am. St. Rep. 166. But the liability of the sureties on the bond is fixed by the bond itself.

Our statute does not undertake to define a mutual insurance company, and neither the articles of incorporation nor the by-laws...