Union Mutual Fire Ins. v. Spaulding

Campbell, C. J.

Defendant was sued asa member of the Mutual Insurance Company, which is plaintiff, for the proportion calculated according to his premium note on an assessment. He surrendered his policy May 1, 1884, and on that day paid $100, which was his full proportion of the only assessment then outstanding, and that' assessment- had been *80 called for $19,759.86, which covered all losses existing at the time it was made, and a further sum of $1,683.99 for estimated expenses and shortages.

In November, 1881, a deficiency of $3,791.98 remained unpaid on this assessment, in addition to a further loss claim of $1,091, and a new assessment -of between $7,000 and $8,000 was made to provide for this deficiency. Defendant was notified, but refused to pay. Some questions arose upon the regularity of the assessments, but they are not important, as we consider the facts. Facts are fully found, and judgment was given below in favor of defendant on the merits.

The statute leaves the relations and liabilities of members to be governed by the charter in most respects. The charter of this company provides that any member may withdraw, on application to the secretary, by surrendering his policy, “and paying to the'secretary his proportion of all assessments to which this company is liable at the time of withdrawal.” The by-laws contain the same provision in slightly^ different words: “By paying his proportion of all assessments, if any, at the time of his withdrawal.”

There can be no doubt on the findings that defendant did pay in full all that was his proportion of any existing losses of the company, as well as of any assessment levied. Whatever losses subsequently arose from failures to collect, or from any other cause, were not existing losses. He was very clearly, we think, within the language of the charter and by-laws.

The purpose of a surrender is undoubtedly to cut off all future relations between the parties. This subject was within the contemplation of every one when the charter was drawn and when defendant became insured. It is a customary and reasonable arrangement. There would be no object in providing for a surrender which would continue to be of no avail so long as any default might exist on the part of any other member. A complete collection of the assessment may never be made, and no one can ever tell, on such a condition, when his membership ceases.

There may be circumstances which, by reason of fraud or serious error, might render a surrender inoperative. But it *81 can never be presumed that serious deficiencies will arise in a well-managed company, and such a possibility cannot destroy a surrender in good faith. That is an arrangement whereby the company discharges the member from his relations, and there is no legal objection to it. The withdrawal of membership is directly sanctioned by recognitions in the statute under which plaintiff was organized: How. Stat. § 4254.

The New York court of appeals, in Hyde v. Lynde, 4 N. Y. 387 , recognized the finality of such a surrender where it was afterwards ascertained that claims were good for previous contested losses which were not calculated in the terms-of surrender. It is there clearly explained that the purpose of the transaction is to put an end to all future liability, and that it should not be impeached unless for fraud or mistake. We think the doctrine is fair and reasonable.

The court below was of this opinion..

The judgment must be affirmed, with costs.

■Sherwood and Champlin, JJ., concurred. Morse, <L, did not sit in this case.