Mound City Mut. Fire & Marine Ins. Co. v. Curran

• Citation: 42 Mo. 374
• Parties: THE MOUND CITY MUTUAL FIRE AND MARINE INSURANCE COMPANY, Respondent, v. PETER CURRAN, Appellant.
• Decision Date: 31 March 1868
• Court: United States State Supreme Court of Missouri

42 Mo. 374

THE MOUND CITY MUTUAL FIRE AND MARINE INSURANCE COMPANY, Respondent,

v.PETER CURRAN, Appellant.

Supreme Court of Missouri.

March Term, 1868.

Appeal from St. Louis Circuit Court.

Plaintiff's charter contained the following provisions:

“Sec. 9. That in all cases where real or personal property insured by said company shall become alienated by sale, or change in partnership or ownership, or otherwise, the policies issued thereon shall be void, and shall be surrendered to said company to be canceled; and said company shall not be liable for any loss or damage which may happen to any property after such alienation as aforesaid, unless the policies issued thereon shall have been duly assigned or confirmed, by consent of the directors, to the actual owner thereof, previous to such loss or damage; and no policy issued by said company shall be deemed to have been duly assigned or confirmed, unless the consent of the directors to such assignment or confirmation is certified on such policy by the secretary of said company.

Sec. 16. When any house or building shall be alienated by sale or otherwise, the policy thereon shall be void, and be surrendered to the directors of said company to be canceled; and upon such surrender the assured shall be entitled to receive his, her, or their deposit note, upon the payment of his, her, or their proportion of all losses and expenses that have occurred prior to such surrender: Provided, however, that the grantee or alienee having the policy assigned to him may have the same ratified and confirmed to him, her, or them, for his, her, or their proper use and benefit, upon application to the directors, and with their consent.

Sec. 12. If any member, his heirs, executors, administrators, or assigns, shall neglect or refuse the payment of any assessment duly ordered by the directors of said company for the term of thirty days after the same shall have become payable, agreeable to public notice given as aforesaid, the party so in default shall be excluded and debarred, shall lose all benefits and advantage of his, her, or their insurance or insurances, respectively, for and during the term of such default or non-payment, and notwithstanding shall be liable and obliged to pay all assessments that shall be made during the continuance of his, her, or their policies of insurance, and the directors may sue and recover the whole amount of his, her, or their deposit note or notes, with cost of suit.

Sec. 14. Said company may make insurance for any term not less than one month nor more than ten years; and for the convenience of shippers may issue open policies, as is usual in other insurance companies; and any policy of insurance issued by said company, signed by the president and countersigned by the secretary, shall be deemed valid and binding on said company.”

Appellant, on the 5th day of March, 1860, insured certain property with the respondent, for the term of six years, and gave his premium note, in the sum of $180, for the payment of the assessments thereon. On the 12th day of February, 1862, appellant sold the said property, and the alienee declined to accept an assignment of the policy. On the 14th of February, 1862, appellant, to avoid the expense of a new policy, made a verbal application to the respondent's secretary to have the said policy so changed as to cover other property in another part of the city belonging to appellant. In compliance with this application the secretary agreed to so alter the policy, which agreement was evidenced by the following indorsement on the policy:

“ST. LOUIS, February 14, 1862.

It is agreed that from and after this date this policy cover the ____ story brick building erected by the assured on the southwest corner of Eleventh street and Cass avenue, block numbered 588, in the sum of two thousand dollars, the property mentioned in the policy having been sold. It is also agreed that as the building now covered by this policy is to be fitted up as a distillery, when so fitted up it shall be surveyed, and the rate then agreed on shall be paid. Payment of cash assessment to be paid to make this policy valid.

DAVID H. BISHOP, Secretary.”

Appellant, in consideration of this agreement, permitted the premium note to remain in the hands of the company as premium for this insurance; and afterward, in consideration of additional risk and increased rate of insurance, gave another premium note for $435.

Appellant paid all assessments on both notes from the time they were given until the last one, ordered shortly before his policy by its terms expired. This he refused to pay, and respondent brought suit under the twelfth section of the charter above quoted.

John W. Moore, for appellant.

I. At the instant of the sale this policy was absolutely voided by the terms of respondent's charter. The assignment of the policy to Curran's grantee was the only way in which the policy so voided could be continued as a valid and binding policy of insurance. (Sess. Acts 1855, p. 96, § 9.)

II. The note of $180 ceased to be a legal demand in the hands of the company, because no longer subject to assessments. (8 Blackf., Ind., 50, 150.) While it may be that under ordinary circumstances a party to a contract cannot avoid it by his own act, yet when forfeiture is, by the contract, the expressly declared incident of any violation of its terms, then this is the law of the contract, and by it the parties must be governed. (Keenan v. Mo. St. Ins. Co., and Ryder v. Mo. St. Ins. Co., 12 Iowa, 126; McCullough v. Ind. Mut. Ins. Co., 8 Blackf., Ind., 50, 150; 3 Hill, 508; Frost v. Saratoga Mut. Ins. Co., 5 Den. 156-7; 1 Phil. on Ins. § 87, and cases cited in notes.)

III. The writing of Feb. 14, 1862, not having the formalities of an original instrument, nor being executed in the mode prescribed in section 14 of respondent's charter, was not a valid, binding policy of insurance upon the property on Eleventh street and Cass avenue. It is evidently nothing more than a declaration of the terms upon which the company was willing to insure. (Plahto v. M. & M. Ins. Co., 38 Mo. 248; Ang. & Ames on Corp., cases cited, ed. 1858, p. 291-2; 6 Exch. 137; 11 C. B. 928; 16 Q. B. 290; 9 Exch. 457.) The Plahto case settles a part of this fallacy, and affirms the well-settled rule of law that the charter is an enabling act giving the company all the powers it possesses; and that when there is a particular mode expressed for contracting, that mode must be strictly followed, or it is no more a contract than if the company had no existence. (Ang. & Ames on Corp. 291; 11 C. B. 926-7.) When the directors of a company do acts in violation of their deed, in a matter in which they have no authority, such acts are altogether void. (31 Eng. L. & Eq. 57.)

IV. The payment of assessments by appellant after the alienation does not estop appellant from denying the validity of the charter and the consideration for the premium notes. (35 N. H. 328; 9 Cush. 140; 7 Hill, 49; 16 Barb. 254.)

V. No power is vested in the secretary by the policy or charter, or proven as custom or an irregularity adopted by the company, to substitute one risk for another, even when the policy is in force, much less by such an indorsement when the policy was null and void at the time of such attempted substitution. The subject matter of the risk is of more importance than the “moral hazard,” and no change can be made save by an instrument in form, usual mode, etc.

T. A. & H. M. Post, for respondent.

I. The alienation of property originally insured did not, ipso facto, release defendant from his subsequent obligation on the premium note or the assessments based upon it.

The principal end aimed at by sections 9 and 16 of plaintiff's charter, providing that policies of insurance should not be alienated without the consent of the insurers and certain prescribed formalities, was to establish a safeguard against the practices of unknown and unprincipled men. The contract is one of personal indemnity, and is founded mainly in a reliance upon the character of the insured. (Ang. on Ins. §§ 1, 194, 200; Tillon v. Kingston Ins. Co., 7 Barb. 574.) This end was accomplished by the original contract of insurance. The party insured continued the same.

II. Sections 9 and 16, in case of alienation, make the forfeiture, if the insurers so elect, conditional upon surrender of the policy for cancellation by the insured.

III. Even assuming that such alienation avoided the policy,

defendant continued liable upon his deposit note until the surrender thereof. The policy and premium note are independent contracts. The former is not the consideration of the latter. Mutual insurance companies are quasi partnerships. The premium notes are their capital. The standing and credit of these companies and their capacity to meet losses depend upon their power to collect assessments upon them. Hence, a definite and sharplydefined rule by which to determine who are liable, and to...