Bone v. Grange Mutual Fire Insurance

Insurance — Fire Insurance — Mutual Associations — Exhausting Remedy — Right to Maintain Action. Where a member of a mutual fire insurance company failed to exhaust his remedy within the association as provided for by the articles ef association which were a part of the contract he entered into when he became a member and took out his policy, he could not maintain an action in the courts to recover for a loss by fire.

Error to Isabella; Hart (Ray), J. Assumpsit by Pat Bone against the Grange Mutual Fire Insurance Company of Michigan, Limited, on a policy of insurance. Judgment for defendant. Plaintiff brings error. The defendant is a mutual fire insurance company, limited, incorporated under the provisions of Act No. 262, Pub. Acts 1895 (2 Comp. Laws 1915, § 9586 et seq.). January 26, 1914, plaintiff made written application to it for insurance, such application containing the following clause: “I accept this insurance subject to the articles of association and the rules and regulations and by-laws of said company, now in force or that may hereafter be in force.” A few days later the policy was issued and delivered to plaintiff. It recited that the articles of association and by-laws together with the application are a part of the policy and agreement and contained the following: I “Assessment is levied August 1, and made payable in October each year.” Article 6 of the articles of association provides for filing proofs of loss and contains the following: “Within ten days of receiving such notice of loss, in case the loser and secretary of the company shall fail to agree on the amount of the loss for which the company is liable, an adjusting board shall be appointed, one by the president and secretary of the company, one by the losing member, which two shall appoint a third, who shall be a member of some other grange in the county of which the losing member resides, and who shall act as chairman. No member-of the adjusting board shall be an officer of the company. Said adjusting board shall meet within ten. days of their appointment and adjust the loss, notice of such meeting having been given the loser. “(c) The duties of said adjusting board shall be to investigate the standing of the losing member in his subordinate grange, his compliance with the policy contract, the justice of his claims, the validity of his policy, the cause of the loss and the liability of the company, and to fix the amounts and valuations of the property lost, and shall make a full report of their proceedings and findings to the secretary of the company.” Article 7 provides for an appeal from the determination of the adjusting board to the executive committee of the State Grange and contains the following: “And no appeal to such board of appeals shall be taken by either the loser or the company after the expiration of thirty days from the date of the determination of the adjusting board; but in such case the determination of the adjusting board shall be final and conclusive as to both the loser and the company.” Article 10 contains the following: “The secretary shall make the assessment rolls in which every member shall be assessed ratably to cover all losses, expenses and liabilities of the company in the class or classes in which he is insured, which assessment or assessments shall be due and payable forthwith to the secretary and treasurer, who shall collect the same. The assessment rolls of this company shall be evidence in all courts that the sums assessed are due this company and payable by the persons assessed.” Section 25 of the by-laws is as follows: “All assessments made by the company shall be made payable within thirty days from date of assessment roll, and policies on which the assessments shall not be paid before the expiration of sixty days from the date of said assessment roll shall be suspended and the company shall not be liable for any loss or damage sustained while such assessment remains unpaid.” The August 1, 1917, assessment was compiled by the secretary and about the 1st of September notices were sent to the members. About the 20th of October, another notice was sent. Plaintiff claims to have received but one of these notices, and that about the 25th of October. He did not pay his assessment and on November 16th the property insured was destroyed by fire. On November 19th plaintiff notified the secretary of his loss and sent a draft for his assessment which was retained. The company denied its liability and the validity and enforceability of the policy because of the failure to pay the assessment within the time provided in the by-laws. It was, however, suggested that the matter be taken up before the board of directors and this was done, plaintiff being represented by a member of his grange. . The board reached the conclusion that the loss should not be paid. It was also suggested that it be submitted to an adjustment board provided for by the articles of association, and the company selected Mrs. Coon, wife of the secretary, as its representative. Plaintiff selected Mr. St. John,, a member of his grange, as his representative, and at /the request of plaintiff and Mr. St. John, another member of plaintiff’s grange a Mr. Stevens, was agreed upon as the third member, and plaintiff in writing agreed upon Mr. Stevens as perfectly satisfactory to him. Plaintiff had employed an attorney who was spending the winter in Florida, and Mrs. Coon signed a paper stating that if the third man was not satisfactory to the attorney, another meeting of the board would be held. She was not an officer of the company. A full hearing was had before the adjustment board without either party being represented by an attorney and the board found that the company was not liable. Upon the return of the attorney from Florida he signified his dissatisfaction with the third member and requested another hearing. There is some conflict in the testimony as to who was at fault for .the failure to have another hearing. Mrs. Coon claims to have made three efforts to get the board together and places the blame upon plaintiff; other testimony on the part of defendant; to the effect that plaintiff’s attorney stated he was nc ready for the hearing. Testimony on behalf of plain tiff is in conflict with this. The trial judge who heard the case without a jury seemed to accept defendant’s claim. He held that plaintiff had not exhausted the remedy provided by the articles of association, and that his policy had lapsed by his failure to pay the assessment within the time required by the articles of association and the by-laws of the company and entered judgment for the defendant.