Patrons' Mut. Fire Ins. Co. of Mich. v. Brinker, 93
| Decision Date | 04 October 1926 |
| Docket Number | No. 93,June Term.,93 |
| Citation | 236 Mich. 367,210 N.W. 329 |
| Parties | PATRONS' MUT. FIRE INS. CO. OF MICHIGAN v. BRINKER. |
| Court | Michigan Supreme Court |
OPINION TEXT STARTS HERE
Error to Circuit Court, Delta County; Richard Flannigan, Judge.
Action by the Patrons' Mutual Fire Insurance Company of Michigan against John Brinker. Judgment for defendant, and plaintiff brings error. Affirmed.
Argued before the Entire Bench.Thomas J. Riley, of Escanaba, (Kinnane & Leibrand, of Bay City, of counsel), for appellant.
S. M. Matthews, of Escanaba, for appellee.
The plaintiff is a mutual fire insurance company reorganized under chapter 4 of part 4 of Act No. 256, P. A. 1917, as amended by Act No. 407, P. A. 1919. Section 13 thereof provides:
‘It shall be the duty of the incorporators of any company organized under, or subject to the provisions of, this chapter to prescribe in their articles of association, the liabilities of the members to be ratably assessed towards defraying the losses and expenses of such companies, and the mode and manner of collecting such assessments, and the members shall be liable to assessment for all liabilities of the company to the extent declared in the articles of association; and the liability of the persons insured in such companies and the members thereof, for the losses or expenses of such companies, shall not exceed the liabilities assumed by such persons when taking such insurance or by such members when joining such company, and in payment in full by such person or member of the amount assumed or agreed to be paid on taking such insurance, or on becoming a member of such company, the said persons so insured as aforesaid and the said members of such companies shall be released and absolved from any and all further liability, for such loss or expenses.’
On April 11, 1922, the defendant made application for $5,000 of insurance upon a three-year term class 3 policy. The premium fee on class 3 policies was fixed at an amount which the company estimated would take care of all losses and expenses apportionable to policies of that class during the insured period, and in defendant's case it amounted to $48.67, a membership of $1.00, and a policy fee of 50 cents, making a total of $50.17, which he paid in cash.
The liability of the members was not prescribed in the articles of association as required by the quoted section of the statute, but in the application for insurance it was provided that such application was subject to the ‘articles of association, by-laws, rules and regulations now in force, or that may hereafter be in force.’
In May, 1922, and again in June, 1923, the company amended its articles of association to provide for the right to levy an assessment upon policies in class 3, not to exceed the amount of one premium thereon, in the event that business in that class should not be sufficient to pay losses and provide a sufficient reserve.
In July, 1923, pursuant to such amendments, an assessment was made on class 3 members for their pro rata share of losses, which had been very heavy. Defendant's assessment amounted to $41.60, and upon his refusal to pay the same suit was commenced against him in justice court. From a judgment in his favor an appeal was taken to the circuit court, where by direction of the court a judgment was again rendered in defendant's favor, and is here reviewed on writ of error.
It is the contention of plaintiff company that the provision of the statute, requiring the liability of the members to be prescribed in its articles of association, is not mandatory, but directory only; that the omission from the articles was an oversight, a mere irregularity, and that the statute, containing a provision for the liability of members to be assessed for losses, expenses, and liabilities of the company, constituted a part of the contract between the parties, making it unnecessary to repeat its provisions in the articles of association; and therefore that, while the liability of the defendant was not prescribed in the articles of association, such liability was not to be measured by the amount paid by defendant when he became insured, but that, because he had agreed in his application to become subject to any rule or regulation that might thereafter be put in force, his liability to the company could at any time be enlarged by an amendment to the articles of association, making provision therefor.
If plaintiff's contention is correct, the section of the statute above quoted, under which the company was organized, and a compliance with which should determine its right to exist and continue, must be held for naught. The purpose of this section of the law was to provide accessible means for the prospective member to ascertain the extent of his liability. He was not to be compelled to go to the law, which in any event he would have difficulty in finding or understanding, but it was made as easy as possible for him by requiring that it be set out in the articles of association, which were a part of his policy, so that he might read there what his liabilities were in return for the protection of insurance that was to be...
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