Opinion
November, 1900.
William B. Ellison, for demurrer.
John Notman, opposed.
The plaintiffs, as a firm, being associated with fourteen other persons, under the name of "The Individual Underwriters at Commercial Lloyds," seek in this action to enforce the liability of the defendant upon a contract made by it with the association for the reinsurance of its outstanding risks, and the question raised by the demurrer is whether or not the other members of the association are necessary parties-plaintiff.
There is no room for question that these underwriters constitute an unincorporated association of more than seven persons (Board of Fire Underwriters v. Whipple Co., 36 A.D. 49), and, while it is alleged in the complaint that, by the policies which were the subject of the reinsurance, each underwriter was liable only in a fixed and stated proportion of the risk, it by no means follows that each could recover from the defendant that stated proportion under the policy of reinsurance where he, as an individual, had paid the amount upon a loss which fell within the reinsurance, and which the defendant had failed to adjust.
The policy issued by the defendant covered all the outstanding policies of this association, as such, and the association was entitled to recover upon it — not the individual members, whose rights in any contract made with the association depended upon the settlement of its joint affairs, and the determination of their shares in the proceeds after deducting expenses. McMahon v. Rauhr, 47 N.Y. 67. The restricted individual liability of each underwriter, as set forth in the complaint, is to be taken as applying to the measure of a recovery against him upon a policy which he has subscribed, but in no aspect can this restriction be viewed as giving the underwriter an individual cause of action upon contracts made with the association itself.
At the election of the association, it could sue by its president or treasurer (Code, § 1919), or by an agent performing corresponding duties (Board of Fire Underwriters v. Whipple Co., supra), but, otherwise, the action must be brought by all the associates, and may not be by one. McMahon v. Rauhr, supra; Habicht v. Pemberton, 4 Sandf. 657.
I conclude, therefore, that the demurrer for a defect of parties-plaintiff and for insufficiency is well taken upon this ground. I do not think, however, that the complaint is to be held defective upon the further ground urged, that these underwriters should set forth their compliance with the provisions of the Insurance Law (Laws of 1892, chap. 690, §§ 9, 54, 57), relative to their right to do business, as a condition precedent to their maintaining this action, founded upon an act done in the prosecution of that business. The situation is, I think, analogous to the case of a foreign corporation, whose failure to comply with the law, restricting its right to do business within the State, is held to be a matter of defense, the fact of compliance not being a necessary part of the complaint. W.H. Sawyer Co. v. Bussell, 31 N.Y.S. 1103; Nicoll v. Clark, 13 Misc. 128.
For the reasons stated, the demurrer is sustained upon the first and third grounds thereof. Leave to amend upon usual terms.
Demurrer sustained upon first and third grounds thereof, with leave to amend.