Lewelling v. Manufacturing Wood Workers Underwriters

• Decision Date: 13 October 1919
• Docket Number: 130,197
• Citation: 215 S.W. 258,140 Ark. 124
• Parties: LEWELLING v. MANUFACTURING WOOD WORKERS UNDERWRITERS
• Court: Arkansas Supreme Court

215 S.W. 258

140 Ark. 124

LEWELLING v. MANUFACTURING WOOD WORKERS UNDERWRITERS

No. 130, 197

Supreme Court of Arkansas

October 13, 1919

Appeal from Howard Circuit Court; James S. Steel, Judge; reversed.

Judgment reversed, and cause remanded. Motion for rehearing denied.

James S. McConnell, Mann & Mann and Hughes & Hughes, for appellants.

1. The court erred in quashing the service and dismissing the complaint. The concern was properly sued in its own name Manufacturing Wood Workers Underwriters. Acts 1915, p. 610. It was a voluntary association without incorporation, but upon methods and forms used by incorporated bodies for the prosecution of a common enterprise. 5 C. J. 1333; 96 Miss 720; 24 L. R. A. 298.

2. An unincorporated association can not, in the absence of statute, be sued in the company name, but statutory authority may be implied and it need not be expressed. 30 Cyc. 102; 235 F. 1; 191 App. Cases 426; 30 Cyc. 102.

3. The act itself, 1915, p. 610, makes the concern suable as a legal entity. The act requires and permits the subscribers to select a name, and when so selected may contract and be bound by that name. Here they are bound by the name selected.

4. The attorney in fact was a proper party defendant and was so named in the amended complaint and properly served with process. 105 Ark. 307; 43 L. R. A. (N. S.) 527; 94 Ark. 277. The intention of the act and of the documents in evidence is that the underwriters may be sued as an association, but if not the attorney in fact was a proper defendant, and it was error to dismiss the cause.

Mann Bussey & Mann, also for appellants.

Kinsworthy Henderson & Kinsworthy and Zane, Morse & McKinney, amici curiae.

1. The question here is one arising out of reciprocal or inter-insurance. 96 Mass. 725, 778.

The act of 1915, p. 610, was not passed to create corporations or associations, but it is recognized that a class of contracts theretofore known and existing is brought under State regulation and is intended to authorize Arkansas corporations to make such contracts, but not to enable a corporation to become a member of an insurance association but to enable corporations to exchange interinsurance contracts with other persons, firms and corporations and to provide regulations by and revenue to the State. This is plain from its title. Service must be had upon the subscribers as individuals, and they are liable. The service was properly quashed, and suit dismissed. 57 Vt. 358; 11 S.W. 12; 53 S.W. 267; 76 Id. 931; 34 Ark. 144; 56 Id. 166; 94 Id. 277; 105 Id. 300-306. See also 50 S.E. 978; 73 Ga. 474; 33 So. Rep. 343; 30 Cyc. 98, 99, 100.

An unincorporated association can not be sued by name. 76 S.W. 931; 64 Iowa 220; 73 Ga. 474; 33 So. Rep. 343; 50 S.E. 887; 2 L. R. A. (N. S.) 788; 192 Mass. 572; 116 Am. St. Rep. 272-289. The suit was a nullity. Supra.

2. As the suit was a nullity, the complaint could not be amended. 31 Cyc. 487; 34 Ark. 144; 56 Id. 166; 105 Id. 300-306; 94 Id. 277. See also 73 Ga. 474; 33 So. 343; 11 S.W. 12; 76 Id. 931.

3. The subscribers were not even an unincorporated association under the act of 1915, which can be sued as such. Cases supra. The subscribers are only liable as individuals, if at all. 30 Cyc. 98 to 100; 76 S.W. 931; 60 S.E. 724; 147 N.C. 103; 7 Ga.App. 305; 52 Am. Rep. 436; 53 S.W. 267.

The rule is well settled in this State that no action lies against an unincorporated association in the absence of express legislative authority. 94 Ark. 277; 34 Id. 144. See also 2 L. R. A. (N. S.) 788; 75 N.E. 887; 116 Am. St. Rep. 272; 30 Cyc. 102; 31 Cyc. 487.

4. The action brought was forbidden by the policy. 56 L. R. A. 193; 62 N. J. Law 16; 39 N.Y.S. 585; 233 Ill. 487-497.

5. As to the liability of subscribers, see 91 F. 677; 48 N.Y.S. 239; 218 N.Y. 29; 1 Q. B. 135; 29 Mich. 254; 80 N.W. 726; 19 N.H. 560; 158 U.S. 356.

The original complaint was a nullity and unamendable, and the judgment should be affirmed.

STATEMENT OF FACTS.

On December 14, 1918, P. J. Lewelling and Vernon Price-Williams, a partnership, brought suit in the circuit court to recover on a fire insurance policy issued by the Manufacturing Wood Workers Underwriters alleged to be organized under a statute and empowered to issue policies of fire insurance to the members thereof. On April 23, 1918, said association issued a policy of insurance to Allen Lumber & Box Company, insuring it against loss or damage by fire in respect to certain sawmill property in Howard County, Arkansas, belonging to said company in the sum of $ 35,000. The plaintiffs bought the property, and the Allen Lumber & Box Company assigned the policy to them with the consent of the association. Subsequently the property insured was almost entirely destroyed by fire, the loss amounting to $ 24,900. Notice and proof of loss were made according to the terms of the policy, and although more than ninety days elapsed the said association failed to pay the amount of the loss to the plaintiffs. Hence this lawsuit.

A summons was issued against the Manufacturing Wood Workers Underwriters, which was served on the Insurance Commissioner of the State of Arkansas on the 21st day of December, 1918.

A. J. Neimeyer Lumber Company, a domestic corporation doing a lumber business at Little Rock, Arkansas, appeared in the suit solely for the purpose of moving to dismiss it for want of a party defendant. The court sustained the motion and dismissed the complaint of the plaintiffs. The plaintiffs have appealed.

OPINION

HART, J., (after stating the facts).

The Legislature of 1915 passed an act authorizing individuals, partnerships and corporations of this State to exchange reciprocal or inter-insurance contracts with each other, or with individuals, partnerships, and corporations of other States. Acts of 1915, page 610.

The only issue raised by the appeal is whether or not, in a suit to recover on a fire insurance policy, the subscriber may sue the association in its associated name. A voluntary association, being only a collection of individuals, could not, at common law, sue or be sued by its associated name, and, in the absence of an enabling act, suits against such associations should be brought against individual members. 4 Cyc. 312-313, and 5 C. J. 1369.

It is the contention of counsel for the plaintiffs that the statute under which the association was permitted to make insurance contracts in this case provides, in effect, that the association should be sued in its society or company name. The act in question is act 152 of the General Assembly of 1915, entitled An act authorizing and regulating certain classes of indemnity contracts empowering corporations to make such contracts and fixing certain fees and the penalty for violation thereof.

Section 1 authorizes the exchange of inter-insurance contracts of individuals, partnerships, and corporations.

Section 2 provides that such contracts may be executed by duly authorized and designated attorneys, and that the office where such contracts are issued shall be located as designated in the power of attorney.

Section 3 provides that the subscribers so contracting among themselves shall file with the Insurance Commissioner certain declarations, through their attorney, which shall be verified under his oath.

Section 4 is as follows: "Concurrently with the filing of the declaration provided for by the terms of section 3 hereof, the attorney shall file with the Insurance Commissioner an instrument in writing executed by him for said subscribers, conditioned that, upon the issuance of certificate of authority provided for in section 10 hereof, service of process may be had upon the Insurance Commissioner in all suits in this State arising out of such policies, contracts, or agreements, which service shall be valid and binding upon all subscribers exchanging at any time reciprocal or inter-insurance contracts through such attorney. Three copies of such process shall be served, and the Insurance Commissioner shall file one copy, forward one copy to said attorney, and return one copy with his admission of service."

Section 5 provides that the attorney shall file with the Insurance Commissioner a statement showing the maximum amount of indemnity upon any single risk and information as to the commercial rating of the subscribers.

Section 6 provides for a reserve sum for the payment of losses.

It will be noted that section 4 of the act provides for service of process upon the Insurance Commissioner in all suits in this State arising out of policies issued by the association. The object of the present suit was to establish the liability of the association upon the policy sued on which was issued by the association. It is true the act does not, in express terms, provide that suit shall be brought against the association under its associated name, but such is, we think, the effect of the statute when all its parts are read in the light of each other. It would be a vain and idle thing to provide that service of process should be had upon the Insurance Commissioner in all suits in this State arising out of such policies and contracts, and that such service should be valid and binding upon all subscribers exchanging at any time reciprocal or inter-insurance contracts through the attorney in fact if the plaintiffs had to resort to the common law method of procedure as to the parties to the suit. In other words, it would be useless to provide that suits should be brought against each subscriber in his individual name and that service might be had upon the Insurance Commissioner.

Section 2 provides for the execution of the contracts by the attorney who acts for the subscribers and that the office where such contracts are issued shall be located as...