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under a statute and derives his authority to make the assess. ment from the statute, he must, in addition to making proper averment of his appointment as receiver, aver and prove the existence of the facts upon which the statute predicates his right to make the assessment.' Such premium notes embody a promise on the part of the maker to make payment of assessments upon the happening of certain conditions named therein; and, upon an elementary principle of pleading, it is incumbent upon the receiver, in order to support an action upon such a note, to aver and prove the happening of such conditions. But, in Indiana, it is not necessary that the complaint should be accompanied with a transcript of the decree appointing the plaintiff receiver, and imposing the assessment sued for. He must aver and prove that the losses, which are to be paid with the money to be collected from the assessments which he sues to enforce, occurred during the time when the defendant was a policy-holder and member of the company.' In other words, he must state the period of time for which the policy note was given, and that the losses, for which the assessment was made, occurred during that period of time." He must, in Indiana, allege that the court, from which he derives his authority, has determined on the validity of the claims for the payment of which the assessment is made. Where

in his official capacity, and not by the • Manlove 0. Naw, 39 Ind. 289; person named as plaintiff; and the Whitman v. Mason, 40 Ind. 189. reply averred that the plaintiff was • Einbree v. Shideler, 36 Ind. 423. the receiver mentioned in the answer, See also Downs v. Hammond, 47 Ind. and as such owned, and sought to re- 131. cover upon, the note,- it was held, 6 Downs v. Hammond, 47 Ind. 131. on a demurrer to the reply, proceed. Where, in that State, the receiver, to ing on the ground that it departed sustain such an action, read in evifrom the complaint, that the plaintiff dence the order of the court appointwas entitled to judgment. White v. ing him and authorizing him to bring Joy, 13 N. Y. 83.

suits, and another order of court recitThomas 1. Whallon, 31 Barb. ing that the receiver had submitted a (N, Y.) 172; Manlove v. Burger, 38 report showing the condition of the Ind. 211.

company, but did not set out the report * Thomas . Whallon, 31 Barb. in the bill of exceptions, but left the (N. Y.) 172, 178; Ferris v. Purdy, 10 words "here insert” with a blank; and Johng. (N. Y.) 359. See ante, § 1827. the order confirmed an assessment of * Boland v. Whitman, 33 Ind. 64. fifty per cent, made by the receiver;

the corporation is a mixed company, having a capital stock, and the note is given by the stockholder in settlement of his subscription, the receiver, in order to maintain an action upon the note, must aver and prove that the paid-in capital stock has been absorbed by losses, in order to show a necessity for maintaining the action;' and the same rule would, by parity of reasoning, be applicable in the case of an action brought upon a so-called premium note given in a mutual insurance company. He must allege that the claims for losses had been adjusted, or were justly due to parties setting up such claims. Upon the question what evidence will support such an action, it has been held that the receiver must give some evidence of the existence of losses such as render the assessment proper. In respect of the quality of this evi. dence, it has been reasoned that such evidence of the loss, and the settlement and allowance of the same, as would conclude the company whilst engaged in its proper business, will be sufficient to support such an action by the receiver. It is sufficient to show that losses have accrued during the time the defendant's policy was in force, and that the defendant's note was assessed to meet them. He ought to exhibit the substantial facts upon which he or the company has allowed the losses for which the assessment was made; but he is not required to do more in this respect than to prove that sufficient claims for losses were presented to the company or to him, and allowed by the company or by him, to make up the sum for which the assessment was levied.

8 7248. Recovery of Interest on Such Premium Notes. It has been held that upon recovery upon a premium note, for

and the receiver also read in evidence another order of court, which recited that he had submitted another report which was confirmed, but the report was not put in evidence; and the receiver also read the note sued upon, and proved the giving of notice of the assessment, and rested;- it was held that his evidence was wholly insufi

cient to show & right of recovery.
Ibid.

· Lamar Ins. Co.o. Moore, 84 111.575.
• Manlove v. Burger, 38 Ind. 211.
* Jackson v. Roberts, 31 N. Y. 304.

Ibid.
* Ibid.

. Sands v. Hill, 42 Barb. (N. Y.) 661. See Jackson v. Roberts, 31 N. Y. 304.

the non-payment of an assessment laid thereon by the receiver of an insolvent insurance company, the plaintiff is not entitled to interest on the amount of the note, for the reason that the recovery for the whole amount is in the nature of a penalty."

$ 7249. Receiver Takes Premium Notes Subject to Equities. — The general rule is that the receiver takes no greater rights than the company had, though he may, under certain circumstances, impeach the transactions which the company, while a going concern, might be held estopped to impeach.” Those who stand liable to the company, under valid contracts, cannot, on any principle known to law or equity, be placed under a greater liability, from the mere circumstance that the company became insolvent and that its assets passed into the hands of a receiver. For instance, the liability of members of the company upon their deposit notes cannot be increased by such a circumstance. The receiver of a mutual insurance company takes its premium notes subject to all the equities which exist in favor of their makers. It has been said that he takes the notes and assets of the company subject to all the conditions and legal disabilities with which they were trammeled in the hands of the corporation itself, and that he cannot impeach or disaffirm its authorized acts, nor the authorized acts of its agents. We have already discovered a difference of judicial opinion upon the question, whether a receiver stands strictly, like a voluntary assignee, in the shoes of the corporation, or whether, in right of the creditors whom he represents, he may impeach acts which the corporation itself would be estopped to impeach? In the case of the receiver of a strictly mutual insurance company, there is less room for the discussion of this question, since, in general, all

Bangs 0. McIntosh, 23 Barb. • Devendorf v. Beardsley, 23 Barb. (N. Y.) 591. There is no sense what- (N. Y.) 656, 659; following Hyde o. ever in this decision.

Lynde, 4 N. Y. 387, · Ante, I$ 3562, 3680, 3639, et seq. Ante, $$ 3562, 3680, 3639, a

• Shaughnessy v. Rensselaer Ing. seg. Co., 21 Barb. (N. Y.) 605.

the creditors are members. Here, the prevailing view seems to be that the receiver takes only in right of the company and subject to every equity which would be good against the company, and to every estoppel which would estop the company." It follows from this doctrine that, if a premium note given to the corporation, and which has passed into the hands of the receiver, is void in the hands of the corporation and incapable of enforcement, by reason of fraud or illegality in its procurement or inception, the judicial act of passing it into the hands of a receiver does not purge it of those defects, but it remains subject to those defenses when sued upon by the receiver, in like manner as though it had been sued upon by the corporation.

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§ 7250. Illustrations of This Principle. — By the charter of a mutual insurance company created in New York, a policy issued by the company became, by its terms, void, in consequence of a sale of the insured property, and the assured became thereby entitled to have his deposit note surrendered and canceled, but only on paying his proportion of any losses then incurred. Under this provision, a member surrendered a policy which he held from the company, and the secretary of the company canceled and surrendered his deposit note. At the time of the surrender there were contested clairns for losses against the company, some of which were subsequently established, and a receiver, appointed in consequence of the insolvency of the company, made a demand upon a class of deposit notes, including that of the defendant, for the purpose of paying such claims. The note had been given up without the payment of any. thing toward the losses, but there was no proof of fraud or of any mistake of fact in regard to existing claims against the company. It was held that the surrender was a valid transaction, and that the receiver could not maintain an action on the premium note. The reasoning of the court, in substance, was that the amount to be paid by the insured, if anything, toward previous losses on a surrender of his deposit note, was a legitimate subject of adjustment between him and the company, and that, when an adjustment had been

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made and the policy and note surrendered, the settlement was binding upon the parties, unless impeached on the ground of fraud or mistake; and, being binding upon the parties, was binding upon the representative of one of them. Where a mutual insurance company was authorized to receive notes in advance for premiums of insurance, and a note was received upon an agreement that the maker might pay it in premiums on policies which he might procure in his own name or for his friends, and the agreement was fully performed and the note returned to the maker, - it was held that neither the company nor its receiver could repudiate the agreement and collect a part of the note, which was paid by policies issued to other persons than the maker. Such an agreement, thus executed, was held good, on the theory of ratification, when made with the secretary and approved by the president of the company, notwithstanding it had not been ratified by a formal vote of the directors.'

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§ 7251. Right to Set-off in Actions on Premium Notes. In conformity with a principle already stated, the defendant in such an action may set off a demand in his favor against the

company, which was liquidated before the receiver's appointment, and in respect of which a right of set-off then existed. On principle, it is incumbent on the defendant to show that the demand accrued in his favor so as to be the subject of a set-off, prior to the appointment of the receiver." But we have already had occasion to note a difference of view as to the status of receivers in general, in this particular.

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Hyde o. Lynde, 4 N. Y. 387. receiver, - and we have seen that it

v. Reed, 8 N. Y. 312. is peculiarly appropriate in the case Ante, 9 6965.

of a strictly mutual company, — takes Berry v. Brett, 6 Bosw. (N. Y.) the assets in the same plight and sub627. To the general principle that a ject to the same equities under which receiver takes the assets of the corpo- they were held by the corporation, ration subject to any equitable offsets and that he is not a bona fide purchasin favor of those who are indebted to er for value, in the sense which gives it,– see Colt v.Brown,12 Gray(Mass.), him a higher right than the corpora233; Hade v. McVay, 31 Ohio St. 231; tion. Van Wagoner v. Paterson GasVan Wagoner v. Paterson Gaslight light Co., 23 N. J. L. 283 (case of an Co., 23 N. J. L. 283.

insolvent bank). • See Smith v. Mosby, 9 Heisk. Ante, $ 6964, et scq. Oompare (Tenn.) 501. The principle which ante, 9 3785, et seq. allows this right of set-off is, that the

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