J. P. Lamb & Co. v. Merchants National Mutual Fire Insurance Company
| Decision Date | 31 December 1908 |
| Citation | 119 N.W. 1048,18 N.D. 253 |
| Court | North Dakota Supreme Court |
[Copyrighted Material Omitted] [Copyrighted Material Omitted]
Petition denied.
Counsel for respondent submit a petition asking a rehearing. They insist that the original opinion of this court indicates that certain controlling facts and authorities were overlooked. The petition is not framed in the spirit that we would expect to see exhibited by counsel of the high reputation for fairness which those signing it possess or should exhibit toward the court, and is not altogether entitled to the consideration which we give it. It seems also to rest upon a misconstruction of what we held to be the law applicable in the premises. We did not attempt to decide that the acts of appellant might not in some cases, or if done by officers of a stock company, constitute a waiver, although there is a vast number of authorities, we think, a very large preponderance of them, holding similar acts no waiver. Counsel assume that the delivery of the policy to respondent was unconditional. This is not the fact. The conditions on which it was delivered were plainly stated on the policy, and were a part of the by-laws of which respondent had notice as a member of the company, and by which it was bound. Farmers' Mutual Insurance Company v. Kinney, 64 Neb. 808, 90 N.W. 926; Corey v. Sherman, 96 Iowa 114, 64 N.W. 828, 32 L. R. A. 514; Brown v. Stoerkel, 74 Mich. 269, 41 N.W. 921, 3 L. R. A. 430; 74 Mich. 269, 41 N.W. 921, 3 L. R. A. 430; 7 Current Law, 1784. This by-law gave credit for 30 days. Afterwards, if the premium was still unpaid, the policy was suspended and in 60 days cancelled. The cancellation took place before the loss occurred and the premium was never paid. The policy and by-laws were actual notice of these conditions, and, as stated in the original opinion, were self-executing. 7. Cur. Law 1793, note 20; Lehman v. Clark, 174 Ill. 279, 51 N.E. 222, 43 L. R. A. 648. Had the insured paid the premium after default, and had it been accepted by the insurer, pursuant to a usage or custom which had become established either in its dealings with the respondent or generally, a different question would be presented, but, as we show in the original opinion, no part of the premium was accepted or retained, or even offered.
While we rested our decision upon the broad ground that the secretary cannot, under the laws which govern him, waive the conditions prescribed by such laws, respondent still argues that the waiver did take place. It must be borne in mind, as before stated, that this is a purely mutual company. It has no capital stock, and must depend solely upon the payment of premiums and the additional liability imposed upon its members by statute to enable it to pay losses. If its secretary can extend ambiguous or unlimited credit to one member, contrary to the terms of the agreement entered into through its by-laws by its members, of which respondent was one, he can do so with all members, and it would be wholly devoid of power to meet losses as they might occur. The same effect would follow, and the same law apply, as though it was an assessment company. It is said in National Masonic Accident Association v. Burr, 44 Neb. 256, 62 N.W. 466 "A member who fails to pay his assessment when due, though he may afterwards pay it, and his rights as a member be reinstated from the time of making such payment, has no cause to complain because his rights as a member and his claims against the association are not made to date back so as to cover any injury he may have received during the time of his default, for this is his express contract, and it is a reasonable one." The law of this state provides that mutual companies shall make collections in the shape of premiums, payable in advance, to enable them to meet losses. The premiums are fixed at figures which it is supposed will admit of all losses being paid therefrom, but, in case of a miscalculation or an emergency, an additional liability is placed upon members. Upon the other hand, if, at the end of the year, it is found that the members have overpaid, they are entitled to a return of the surplus. If losses are paid outside of reasonable limits, necessary to permit the transaction of business, without the payment of any premiums, it could only be by taking money with which to do so from the surplus in the hands of the company belonging to other members, or from the small percentage required as a reserve. The latter would soon be exhausted, and thus compel assessments to make up the deficiency or force a suspension, or both. Still further, the policy had ceased to exist by its terms and those of the by-laws of the company. For this reason, it is clear that the same principle does not apply that would be applicable had the policy still been in force. No contract was in existence. Can it be contended that by replying to letters of the respondent, or even by sending it a blank proof of loss, a new contract was entered into? It is not a question of waiving a mere suspension, but one of making a wholly new contract, and it requires an express agreement to do this. The doctrine of waiver is not applicable. The insurer had received no benefits under the policy, and, there being no policy in effect, no forfeiture in a legal sense occurred. It is held in Equitable Life Assur. Society v. McElroy et. al., 83 F. 631, 28 C.C.A. 365, that, where a life insurance policy has become void, it cannot be revived without a new contract between the parties. See, also, Diehl v. Adams County Mutual Insurance Company, 58 Pa. 443, 98 Am. Dec. 302; Beatty v. Lycoming County Insurance Company, 66 Pa. 9, 5 Am. Rep. 318. It is immaterial whether notice of suspension,...
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