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invalid. “A member of a mutual insurance company is not liable to assessments upon his premium note to meet deficiencies of means arising from a failure to collect of other solvent members. When a member has paid towards any loss or expenses, in proportion to the amount which his deposit note bears to the other deposit notes, legally assessable, his liability to assessment in respect to such loss or expenses is discharged. He cannot be assessed beyond such proportion, without a violation of the charter of the corporation; and no such assessment, either by the directors or by a receiver duly appointed by the court upon such corporation becoming insolvent, can be upheld. A receiver of an insol. vent mutual insurance company cannot legally assess any person insured therein, beyond his proportion of the losses; and he is bound to allow toward the proportion of members what they have paid on former assessments for the same losses, etc., whether void or valid." “ The amount of claims which the receiver or the court will allow as just demands against the company, together with any indebtedness previously allowed by the directors of the company, as shown by their books, must be ascertained before an assessment can be made to pay such indebtedness.":
· Embree v. Shideler, 36 Ind. 423, length of time any person has been a 429. The receiver under the New member, in determining the amount York statutes, and, it may be as- of his assessment, or in determining sumed, under most other statutory whether he shall be assessed at all. systems, proceeds, in making such an If they omit to assess the deposit assessment, exactly as the directors notes of any persons who were memshould have proceeded if the com- bers at the time of the loss, and who pany had remained a going concern. are liable, consequently, for their Having ascertained that the company proportion of it, or if they include in is liable for a loss, and that it has not the assessment the amounts of presufficient funds to pay the same, the vious assessments, from the payment directors are to ascertain who were of which the parties assessed have the members of the company, at the been released, the assessment is time when the loss occurred; and invalid. Herkimer County Mut. Ing. then their assessment is to be made Co. v. Fuller, 14 Barb. (N. Y.) 373. upon each such member, in the pro- • Embree v. Shideler, 36 Ind. 423, portion which the amount of his 429; opinion of the court by Dowdeposit note bears to the amount of all the deposit notes. They have no • Downs v. Hammond, 47 Ind. 131, right to take into consideration the 132.
§ 7236. Effect of Assessments by a Former Receiver. As the action of the receiver, in making an assessment under the direction of a statute, is ministerial and not judicial, there is no ground for the contention that an assessment by a former receiver is in the nature of an adjudication and an estoppel against the present assessment.
The fact that a former receiver has made an assessment upon the same notes, which assessment remains unenforced, will not prevent his successor from making a new assessment for the same purposes; since it is merely repeating the performance of a condition precedent to a right of action upon the notes by the receiver, and is, in no sense, a judicial determination of a controverted matter. In making such an assessment, the receiver may properly include, as a portion of the amount to be raised, an unpaid balance under former assessments, which ought to have been paid by delinquent members, but which, owing to their inability or insolvency, has not been paid; and this, although the result will be to assess the solvent members to make up the deficiencies caused by the insolvent ones.'
§ 7237. Extent and Proportion of the Assessment. - In this, as in other cases, the general principle is, that the receiver has no right to make an assessment for more than enough to liquidate the debts of the company, and pay the
, costs of the proceeding. It has been held that, in an action to enforce an assessment, the declaration should allege the amount of the debts of the corporation, and that the capital stock paid in, where there is a capital stock, has been exhausted."
i Sands v. Sweet, 44 Barb. (N. Y.) to be paid by the members of the 108; Jackson v. Van Slyke, 44 Barb. company as their respective portions (N. Y.) 116, note a; overruling Camp- of a given loss, and that the sum to bell v. Adams, 30 Barb. (N. Y.) 132. be paid by each member shall always
; Bangs v. Gray, 12 N. Y. 477; re- be in proportion to the original versing 8. c. 15 Barb. (N. Y.) 264. amount of his deposit note or notes,
* Lamar Ins. Co. v. Moore, 84 Ill. the members are liable only to pay 575. Under a statute providing that upon their premium notes their whenever the directors shall deem it proper shares respectively of the necessary to make an assessment for losses or damages sustained by the the payment of losses, etc., they members. Shaughnessy v. Rensseshall settle and determine the sums laer Ins. Co., 21 Barb. (N. Y.) 605.
A member of a mutual insurance company in New York, the charter of which was similar to that of the Jefferson County Mutual Insurance Company,' which was the type of many special charters granted in that State, was liable, upon his deposit note, for losses, in the proportion which the amount of his note bore to the aggregate of the deposit notes, held by the company, which were collectible, and legally subject to assessments for such losses; and his liability was not limited to the proportion which the amount of his note bore to the whole amount of deposit notes legally assessable for the loss, whether the latter were collectible or not; but he was bound to pay an assessment made upon his note to meet a deficiency in funds to pay losses arising from the inability of other creditors to pay the proportion of such losses assessed upon their notes."
8 7238. Valuation of Policies in Winding up. —On this subject there has been considerable difference of opinion. The English Court of Chancery have held that the amount to be proved in respect of a policy in winding up, as its surrendervalue, is the sum which would be required by a solvent insurance company to effect a new policy of the same amount, on the same conditions, and at the same premium, as the policy in respect of which the proof is made. But Lord Cairns, sitting as arbitrator in the winding up of the Albert Life Assurance Company, felt constrained, on account of the practical difficulty of applying this rule, to adopt a different one,- which was, that the sum to be proved was the difference between the present value of the sum insured and the present value of the premiums which the insured would have to pay in order to keep the policy on foot."
IN. Y. Laws 1836, ch. 41.
vent gureties.” Ibid. 486; citing 1 * Bangs v. Gray, 12 N. Y. 477. Story Eq. Jur., $ 496. Said Denio, J.: “ The obligation to • Holdich's Case, L. R. 14 Eq. 72; contribute among the members of Bell's Case, L. R. 9 Eq. 706. these companies closely resembles • Lancaster's Case, L. R. 14 Eq. that which prevails among several 72, n.; with which compare Lord Bureties, for a common principal. Romilly's observations upon it in The rule in equity in such cases is to Holdich's Case, Ibid. divide the whole loss among the sole
8 7239. Rule Adopted by Statute in England. -- The rule thus laid down by Lord Cairns was substantially adopted by a subsequent act of Parliament, in the following language: “Where a life assurance company is being wound up by the court, or subject to the supervision of the court, or voluntarily, the value of every life annuity and life policy requiring to be valued in such winding up shall be estimated in manner provided by the first schedule to this act; but this section shall not apply to any company, the winding up of which has commenced before the passing of this act, unless the court having cognizance of the winding up so ordered, which order that court is hereby empowered to make if it think expedient so to do, on the application of any person interested in the winding up of such company."
“ First Schedule: Rule for Valuing an Annuity. -- An annuity shall be valued according to the tables used by the company which granted such annuity at the time of granting the same, and where such tables cannot be ascertained or adopted to the satisfaction of the court, then according to the table known as the Government Annuities Experience Table, interest being reckoned at the rate of four per centum per annum."
“Rule for Valuing a Policy. — The value of the policy is to be the difference between the present value of the reversion in the sum assured on the decease of the life, including any bonus or addition thereto made before the commencement of the winding up, and the present value of the future annual premiums. In calculating such present values, the rate of interest is to be assumed as being four per centum per annum, and the rate of mortality as that of the tables known as the Seventeen Offices' Experience Tables. The premium to be calculated is to be such premium, as according to the said rate of interest and rate of mortality, is sufficient to provide for the risk incurred by the office in issuing the policy, exclusive of any addition thereto for office expenses and other charges."
“ Second Schedule. Where an assurance company is being wound up by the court, or subject to the supervision of the court, the official liquidator, in the case of all persons appearing by the books of the company to be entitled to or interested in policies granted by such company, for life assurance, endowment, annuity, or other payment, is to ascertain the value of such policies, and give notice of such value to such persons; and any person to whom notice is so given shall be bound by the value so ascertained, unless
he gives notice of his intention to dispute such value in manner and within a time to be prescribed by a rule or order of the court."
§ 7240. Manner of Making the Assessment. In making such an assessment, it has been held that no discrimination is to be made between notes given when higher rates of insurance existed, and those made under reduced rates. Separate assessments should be made for the payment of several losses for which the note is liable, upon all the premium notes in force at the time when each successive loss happened,3 — unless it appears to the receiver that it is necessary to collect all that is collectible on all the notes deposited. Where several losses have occurred at the same time, or so near together that the same notes are liable to be assessed for the payment of them all, only one assessment is necessary.
§ 7241. Equalizing Those Who have Paid Premiums in Cash. Where a portion of the buisness of an insurance company has been transacted on the stock plan, and a portion upon the mutual plan, and the premiums received from persons obtaining insurance on the stock plan, by paying the whole premium in cash, have been expended in the payment of losses and expenses, thus relieving former members from assessments upon their premium notes and leaving others to be assessed for the payment of subsequent losses, there is said to be no remedy for any inequality which may result from this mode of transacting the business of the company, and the receiver cannot so apply the funds in his hands as to produce an equality, although the effect may be to allow a greater burden to rest upon those whose notes happen to be in force at the time when the insolvency of the company occurred.
1 Stat. 35 & 36 Vict., ch. 41, § 5, Lind. Comp. Law (5th ed.), 733, 734.
'Shaughnessy v. Rensselaer Ins. Co., 21 Barb. (N. Y.) 605; citing Herkimer &c. Ins. Co. v. Fuller, 14 Barb. (N. Y.) 373.
Shaughnessy v. Rensselaer Ins.
Co., 21 Barb. (N. Y.) 605; Embree v.
Ante, § 3386.
'Shaughnessy v. Rensselaer Ins. Co., 21 Barb. (N. Y.) 605.