State v. Hudson

• Decision Date: 14 June 1920
• Docket Number: No. 13394.,13394.
• Citation: 222 S.W. 1049
• Parties: STATE ex rel. CHORN, Superintendent, et al. v. HUDSON.
• Court: Missouri Court of Appeals

222 S.W. 1049

STATE ex rel. CHORN, Superintendent, et al. v. HUDSON.

No. 13394.

Kansas City Court of Appeals. Missouri.

June 14, 1920.

Appeal from Circuit Court, Boone County; David H. Harris, Judge.

"Not to be officially published."

Action by the State, on the relation of Walter K. Chorn, Superintendent, and others, against C. E. Hudson. Judgment for defendant, and plaintiffs appeal. Reversed and remanded for new trial.

Russell E. Holloway, of. Columbia, for appellants.

Harris & Price, of Columbia, for respondent.

TRIMBLE, J.

This is an action upon an insurance premium note dated October 2, 1915, given by the defendant to the Farmers' Town Mutual Fire Insurance Company of Mexico, Mo., for $216, in payment of the premium for a period of six years on an insurance policy, issued concurrently with the execution of the note, and covering defendant's mercantile stock, with insurance to an amount not exceeding $1,200. At the close of an the evidence defendant's demurrer thereto was sustained, and a verdict for defendant was directed. The verdict being returned, judgment was entered thereon, and plaintiffs have appealed.

The suit is by the receiver of the insurance company, and also the North Missouri Trust Company, a banking corporation, the latter having a special property interest in the note by reason of the fact that the insurance company had turned over the note in question to it, along with a number of other notes, as collateral security for a loan to the insurance company. The execution and delivery of the note as an insurance premium note is admitted by the answer. The defenses relied upon therein will be stated as they are respectively passed upon herein.

The note provided that the $216 should be paid "in such portions and at such times as the directors of said company shall demand for payment of losses and expenses, as required and provided for by charter, by-laws, and rules of said company." It further provided that the note, "or such part thereof as shall remain unpaid at the expiration or termination of said policy, shall be returned to the maker, provided all assessments on this note and all liabilities of the maker to said company have been paid"; that, "if default is made in payment of this note as above provided, then the whole of this note shall become immediately due and payable." The by-laws provided that 15 per cent. of the note should be paid in cash at the time of its execution and the issuance of the policy, and that the remainder of said note should be payable at any time and in part or in whole upon an assessment made whenever deemed necessary to pay losses, expenses, or other liabilities of the company. This initial payment of $32.40 was paid at the time of the note's execution and delivery, and was credited on said note. By the terms of the policy, the insured, upon acceptance thereof, becomes a member of the mutual insurance company, and is governed by its articles of association and by-laws which become a part of the contract.

Under section 4, article 3, of the by-laws, the amounts assessed upon each note shall be due and payable within 30 days after notice to the maker has been deposited in the post office, postage prepaid, or delivered to him in person. Section 5, article 3, of the by-laws provides that, if the maker of any note neglects or refuses to pay the sum so assessed upon him for 30 days after the mailing or delivery of said notice, the directors of said company may sue for and recover the whole amount of his premium note held by the company with costs of suit. It further provided that the party so in default should lose all benefits and advantages of his insurance during the term of such default and nonpayment, and notwithstanding shall be liable and obliged to pay all assessments that may be made during the continuance of his policy of insurance, provided the full amount has not been recovered by suit. But no person should be liable for a greater amount than the face of his note. Section 4 of article 4 of the by-laws provided that the —

"insurance may be terminated by request of insured or by the company, on given notice to that effect, but such cancellation shall not impair the right of this company to recover any existing claims on the note."

The policy provided that it should —.

"be canceled at any time at the request of the insured, or by the company by giving five days notice of such cancellation. If this policy shall be canceled as hereinbefore provided, * * * the premium having been actually paid, the unearned portion shall be returned on surrender of this policy * * * this company retaining the customary short rate."

As heretofore stated, the note was dated, and the policy was issued and accepted by insured, and 15 per cent. or $32.40 of the amount of the note was paid and credited thereon, on October 2, 1915. On July 15, 1916, the directors of said company made an assessment of 25 per cent. on said note, amounting to $45.90, and the plaintiff introduced evidence tending to show that notice of such assessment was duly mailed. On September 5, 1916, the insurance company wrote defendant, calling his attention to the assessment of $45.90 levied on July 15, 1916, and saying they were calling his attention for the third time to the assessment past due and unpaid, and demanding its payment in five days; otherwise, they would be obliged to enforce collection of the assessment.

Upon a report made by the company to the superintendent of insurance on September 9, 1916, the latter, deeming that the company had become insolvent, applied to the circuit court of Audrain county for the appointment of a receiver, and one was appointed on September 16, 1916, and the company was enjoined from doing further business. On September 25, 1917, the court, upon a proper hearing and finding, ordered a levy of 100 cents on the dollar of all unpaid balances on assessment premium notes of the company, and directed the receiver to collect same. Thereafter defendant was notified that the balance on said note, $183.60, was due, and payment thereof demanded. According to defendant's evidence, he wrote in answer to this demand, asking what they would take for the note.

It will be observed that under the terms of the note, and the contract made by the by-laws and policy, and the acceptance of the latter by defendant, the assessments were to become due in 30 days after notice thereof, and if default were made in the payment of said assessments the whole note should become due, and the note could be collected, with costs of suit. The 25 per cent, assessment was made by the directors on July 15, 1916, and the 30 days were up on August 15, 1916. So that it is plaintiffs' contention the whole note became due when the defendant failed to pay the assessment by August 15, 1916, and that when the court, in control of the receiver, made a levy of 100 cents on the dollar on the assessment notes, and authorized the receiver to sue therefor, the obligation of the defendant to pay the balance on said note, to writ, $183.60, became complete.

The defendant, however, claims that on September 7, 1916, he sent to the insurance company a check for $45.90 in payment of the 25 per cent. assessment levied on the notes by the directors July 15, 1916, and that he wrote the company a letter, saying he did not want the insurance longer, and asked the company to cancel the insurance. No such letter was introduced, nor do plaintiffs concede that such was written....