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§ 7242. Particularity in Making the Assessment. - Such an assessment need not be so formally particular as to specify the name of the party bound to contribute, nor the amount of the note. A general assessment by which the receiver declares that each premium note is assessed to the full amount thereof, has been held valid. On the other hand, in a decision where

' the statutory steps seem to have been strained to an unreasonable strictness, it was held that an assessment made by such a receiver upon such premium notes is not complete and consummated until it is ascertained, fixed, and determined, by carrying out upon the extension book the amount which each member is to pay, and that a notice of such an assessment, if published before this is done, is premature and will not support an action by the receiver.?

§ 7243. Requisites of Notice of the Assessment. - It has been held that the notice, in order to support a right of action on the assessment, must state the amount which each member is to pay. It is no objection to such an assessment, or to the notice of it, that the persons called upon to contribute are apprised of the amount of their liability only by a statement of the rate per cent at which the premium notes in force at specified dates are respectively assessed. It is enough that

' the makers of the notes, who are bound to know their amounts, date, etc., are furnished with the data for making the proper computation. It is not necessary to inform each one how much he has to pay.$

§ 7244. Notes Payable Absolutely where No Assessment is Necessary. — Under many special charters in the State of New York, and subsequently under a general law enacted

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after the prohibition against the granting of special charters contained in the constitution of 1849, a class of notes was authorized to be given to insurance companies by their policyholders, which were declared, by the statute, to stand in lieu of the capital of the company, which notes were the absolute property of the company, transferable for the purposes of its business or the settlement of its losses, the same as any other absolute evidences of indebtedness are transferable, and suable without any preliminary assessment made thereon, either by the directors while the company was a going concern, or by its receiver thereafter. A history of the special charters creating mutual insurance companies, under which assessable premium notes were given, and of those under which notes thus payable absolutely were given by the members in lieu of capital, “ as a security for dealers,” - is given by Denio, C. J., in a case decided by the Court of Appeals of that State in 1857. The theory of the court in regard to this class of notes is that they stand in the place of capital subscribed and paid in by the members of the company, and not as a mere guaranty fund subject to assessment; that they are payable absolutely to the extent of their full face value, when demanded by the company or its representative; that the company may transfer them or deal with them as an owner may deal with his absolute property, subject, of course, to any limitation of its powers imposed upon it by its charter or its governing statute; that their quality is to be determined by the statute in pursuance of which they have been given; that they are thus given to the corporation in absolute ownership, in consideration of the benefits accruing to the members from their shares in the profits of the business of the company; and that they are payable absolutely, and not merely when an assessment is made upon valid conditions precedent, although they may, on their face, embody a promise to pay in such portions and at such times as the directors may require.?

1 White v. Haight, 16 N. Y. 310.

In White v. Haight, 16 N. Y. 310, 324, the following cases are referred to by Denio, O. J., as settling

the question that notes of this character “are payable absolutely, and may be collected without any allegation of loss, and without an assess

§ 7245. Arrangements among the Members Limiting their Liability. We have already seen, that when it becomes necessary to charge the stockholders of a corporation in favor of its creditors, no arrangements made among themselves or between the particular stockholder and the directors, officers, or other agents of the corporation, discharging or reducing the liability of the stockholder, will avail, as against the rights of the creditors. Upon the same principle, it has been justly held that the liability of persons insured in a mutual insurance company to pay their proportion of such assessments as shall be necessary to meet all of the company's losses and liabilities, cannot be avoided by any arrangement entered into with the company, whereby the insured seeks to limit such liability, nor lessened by any provisions in the articles of association. But where the company has not taken any insurance on the stock plan, and the question concerns only the liability of the members inter sese, that is to say, the liabil


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ment":-Furniss v. Gilchrist, 1
Sandf. (N. Y.) 53; Brouwer v. Hill, 1
Sandf. (N. Y.) 629, note; Brouwer v.
Appleby, 1 Sandf. (N. Y.) 158; Hone
v. Allen, 1 Sandf. (N. Y.) 171, note;
Hone v. Folger, 1 Sandf. (N. Y.) 177;
Caryl v. McElrath, 3 Sandf. (N. Y.)
176; Deraismes v. Merchants' Mut.
Ins. Co., 1 N. Y. 371; Howland v.
Myer, 3 N. Y. 290; Brown v. Crooke,
4 N. Y. 51; Emmet v. Reed, 8 N. Y.
312. These cases do not decide, in
terms, that an assessment upon notes
thus given" as security for dealers "
with the company, is not necessary
in order to enable the receiver to sue
on them; but they were all actions
by receivers upon such notes themselves,
without a previous assessment, so far
as the writer can see from an ex-
amination of them; and the doc-
trine embodied in them, that such
notes are absolute assets of the com-
pany, and, as such, transferable in
the course of its business at its pleas-

ure, is inconsistent with the conclu-
sion that they must be assessed like
ordinary premium notes, and that
the action is an action to recover the
assessment, and not an action on the
note. It was therefore held that an
action might be maintained by the
receiver of an insolvent mutual in-
surance company upon a note of the
following tenor, without any previous
assessment:- -"$500. For value re-
ceived, in policy No. 122, dated Au-
gust 16th, 1850, issued by the Union
Mutual Insurance Company, at Fort
Plain, N. Y., I promise to pay the
said company, or their treasurer for
the time being, the sum of five hun-
dred dollars, in such portions and at
such time or times as the directors of
said company may, agreeably to their
act of incorporation, require." White
v. Haight, 16 N. Y. 310; recognized
in Savage v. Medbury, 19 N. Y. 32.
1 Ante, §§ 1400, 1514.

Russell v. Berry, 51 Mich. 287.

ity of all to be assessed to pay losses which have been sustained by some, - it does not appear why a general arrangement or understanding among the members, limiting their liability to assessment for losses to a less sum than the amount allowed under the governing statute, should not be upheld and applied by the courts, if clearly proved; and such was the holding of the same court in a subsequent case. A member of an insolvent mutual insurance company filed a bill in equity to restrain an assessment by a receiver, averring it to be the general understanding of the members, as well as of himself, that no one was to be assessed beyond the amount which he had agreed to pay by his premium note. A demurrer admitted this allegation. It was held that, as general agreements to that effect would not be illegal, and as individual members could waive provisions made by the statute for their protection, it would be inequitable for any member of the company to insist on its enforcement, after all had become insured with the understanding that their liability was limited to their premium notes.'

§ 7246. Actions to Enforce Assessments upon Premium Notes. — In an action to enforce such an assessment, the statutory conditions precedent to the making of the assessment must be averred and proved, at least where the assessment is made by the receiver, and not by the court superintending the administration. This qualification is added, because if the assessment is made by the court, after an account taken and stated of the resources and liabilities of the company, the order of assessment may be regarded as in the nature of an adjudication that the amount ordered to be assessed is required to meet the necessities of the liquidation.' But where the assessment is made by the receiver, by virtue of his statutory authority, and not by the court superintending the administration, it is a mere ministerial act,

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23 Barb. (N. Y.) 656; Thomas v. Whallon, 31 Barb. (N, Y.) 172.

Ante, 93537, et seq.; ante, 183752, 3754.

possessing of itself no vigor; and in order to enforce it by an action in a court of justice, it is necessary for the receiver to allege and prove that the conditions, which warranted him in making it, existed. When, therefore, in such an action there was no averment or proof of the existence of any liabilities on the part of the company, for the payment of which an assessment was necessary, it was held that the receiver could not recover.2

§ 7247. What the Receiver must Aver and Prove. — At the outset, a statutory receiver must aver and prove that he has been duly appointed a receiver in conformity with the governing statute, and if issue is taken upon that allegation, he is bound to make proof of it. It has been held not enough to aver that, on a day named, the plaintiff was duly appointed receiver by the Court of Chancery, but that the place must be stated, and it must be directly averred that an order of appointment was made by the court. This is in conformity with the rule of pleading that the place, as well as the time, of every traversable fact should be stated. An averment that the plaintiff was duly appointed receiver has been held not to present any issue capable of trial, because it consists partly of matter of law and partly of matter of fact. "The plaintiff should have stated what in particular was done, and then the court could determine whether he was duly appointed; or, if an issue of fact was tendered, the jury could answer as to the truth of the allegation." Where the receiver is appointed


Thomas v. Whallon, 31 Barb. (N. Y.) 172, 178. See also Bangs v. Gray, 12 N. Y. 477; Herkimer &c. Mut. Ins. Co. v. Fuller, 14 Barb. (N. Y.) 373; Re Bangs, 15 Barb. (N. Y.) 264.

2 Thomas v. Whallon, 31 Barb. (N. Y.) 172.

Bangs v. McIntosh, 23 Barb. (N. Y.) 591.

• Gillet v. Fairchild, 4 Denio (N. Y.), 80.

Ibid.; reaffirmed in White v. Joy,

13 N. Y. 83, 86. But where, in an action under the Code of Procedure of New York, upon a promissory note, the plaintiff was described as receiver of a banking corporation, but there was no allegation in the complaint of his appointment; and the answer alleged the appointment of a receiver of the corporation, without naming him, and that the note in suit was transferred to such receiver in payment of a debt owing to the corporation, and was held and owned by the receiver

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