Swing v. Red River Lumber Company

• Decision Date: 07 August 1908
• Docket Number: 15,726 - (228)
• Parties: JAMES B. SWING v. RED RIVER LUMBER COMPANY
• Court: Minnesota Supreme Court

117 N.W. 442

105 Minn. 336

JAMES B. SWING v. RED RIVER LUMBER COMPANY

Nos. 15,726 - (228)

Supreme Court of Minnesota

August 7, 1908

Action in the district court for Hennepin county by the trustee for the creditors of an insolvent mutual fire insurance company to recover $919.03 upon an assessment of the policy holders of the company. The case was tried before Holt, J., who found in favor of defendant. A motion for a new trial was denied. From a judgment entered upon the findings, plaintiff appealed. Affirmed.

SYLLABUS

Mutual Fire Insurance Company -- Assessment Against Policy Holder.

Action to recover upon an assessment of the policy holders of an insolvent mutual fire insurance company, made by the ex parte decree of a court having jurisdiction to wind up its affairs. The trial court found that the company was organized under the act of its incorporation, and not under an amendatory statute imposing a contingent liability upon policy holders for company losses, and that the company was not authorized to do business in this state. As a conclusion of law therefrom, the court found that the plaintiff was not entitled to recover. Held, such findings of fact are sustained by the evidence, and they justify the conclusion of law.

Decree of Foreign Court.

The decree is conclusive as to the necessity for and the amount of the assessment, but it is not conclusive as to the question whether the contract relations of an alleged member to the company were such as to subject him to liability for an assessment, and, further, that it did not deprive a member of any defense going to show that he was not liable to be assessed for the losses of the company.

Tryon & Booth and Patterson A. Reece, for appellant.

Van Derlip & Lum, for respondent.

OPINION

START C.J.

This is an appeal by the plaintiff from a judgment of the district court of the county of Hennepin.

It is also the second appeal herein. Swing v. Red River Lumber Co., 101 Minn. 428, 112 N.W. 393. The first appeal was by the defendant from an order overruling its general demurrer to the complaint, and reference is here made to the opinion in the case cited for a fuller statement of the allegations of the complaint than here given. The action was brought by the plaintiff, as trustee of an insolvent mutual fire insurance company, to recover the amount of an alleged assessment, purporting to have been made by the ex parte decree of the supreme court of Ohio, against the defendant for the payment of the liabilities of the company. The principal point considered and decided by this court on the former appeal was whether the complaint alleged a cause of action against the defendant by virtue of the statute of Ohio which went into effect July 1, 1888. The court reached the conclusion that the complaint alleged a cause of action, and affirmed the order, and in so doing it held that:

"It is quite obvious from these allegations of the complaint that it was the intention of the plaintiff to allege a cause of action against the defendant by virtue of the Ohio statute. It is equally clear that, if the complaint does not allege facts sufficient to show a statutory obligation of the defendant as a member of the company for the payment of its losses, the complaint fails to state a cause of action. * * * If, as seems probable, from the provisions of the Ohio statute to which reference was made in Swing v. Humbird, 94 Minn. 1, 101 N.W. 938, there are other provisions of the statutes of Ohio, which will show that those alleged in the complaint are not applicable to this company unless it reorganized, they can be pleaded in the answer. * * * if in fact such statutory provisions set out in the complaint, by reason of other provisions not pleaded, have no application to this company, unless it elected to and did reorganize under the amended statute, the defendant has the right to allege, and prove, if denied, such omitted statutory provisions, and then the burden will be upon the plaintiff to show that the company did so reorganize."

When the case reached the district court, the defendant answered, and set up such other provisions of the statutes of Ohio, and alleged, in effect, that the company was organized on May 27, 1887, under the statutes of Ohio then in force, and did business both on the premium note and cash plans, as provided by such statutes; that it never elected to dispense with such plans, or to embody in its policy the contingent liability provided for by the amendatory act of April 14, 1888, which went into effect July 1, 1888, or to reorganize under such act at any time or in any manner; and, further, that it never altered its by-laws or policy, nor did it in any way bring itself within the scope and application of such act. The answer also alleged that: "Neither at the time of the issuance of any policy issued to or accepted by the defendant, nor at any time, did said Union Company comply with the requirements of the laws of the state of Minnesota to permit or authorize it to do business in said state as an insurance company, nor was it ever authorized so to do business."

These allegations of the answer were put in issue by the reply, but the trial court found as a fact that they were true; or, in other words, it found as a fact (a) that the insurance company was organized under the statute of Ohio in force prior to July 1, 1888, and never reorganized; (b) that the company was never authorized to do business in the state of Minnesota. The plaintiff assigns as error that neither of the findings of fact is sustained by the evidence.

The plaintiff's claim as to the first finding is, in effect, an admission that the company was never reorganized, as provided by the act of 1888, with an unqualified assertion that it was organized under the act of 1888; hence there was no occasion to reorganize. In view of the claim urged by this same plaintiff in the case of Swing v. Humbird, supra, the claim made by him in this case seems to be a surprising one; for in that case he alleged in his complaint that the company was a mutual fire insurance company incorporated under the laws of Ohio May 27, 1887, and doing business as such during the years 1888, 1889, and 1890. The answer in that case alleged that the company never reorganized under the amendatory act of 1888, which was put in issue by the reply. The trial court found as a fact the allegation to be true. On appeal to this court the plaintiff assigned as error that the finding was not supported by the evidence, and in support of such assignment claimed that: "The court found that said insurance company had never reorganized in compliance with section 3650 of the Revised Statutes of Ohio, as amended April 14, 1888 (Laws 1888, p. 275), which went in force July 1, 1888. The evidence is uncontradicted, and is not attempted to be contradicted, that said insurance company did, on July 31, 1888, pass a resolution adopting the by-laws providing exactly for the change in the business of said mutual insurance company."

But this aside, the plaintiff now claims that there is a distinction between the incorporation of a company and its organization, and that the company here in question was organized under the act of 1888. It may be conceded that there is technically such a distinction. With this in mind, we have examined the evidence in this case, and find that it is amply sufficient to support the finding of the trial court to the effect that the company was organized under the original statute and that it was never reorganized. It is not our purpose to discuss the evidence in detail, but to refer to an item of evidence which the plaintiff seems to regard as conclusive in his favor. The record of a meeting of the company's board of directors, held August 18, 1888, contains this entry: "The secretary reported the result of his journey to...