In Pink v. A. A. A. Highway Express, 191 Ga. 502 (13 S.E.2d 337, 137 A.L.R. 934), it was sought, as in this case, to recover of residents of this state assessments levied in similar proceedings in the courts of the State of New York against members of a mutual insurance corporation of that State. Their policies, in many respects similar to the policy in this case, contained no provision making them members by acceptance of the policies; but each policy did contain a recital that it embodied all agreements relating to the insurance, as in this case.Summary of this case from Gaston v. Keehn
JANUARY 16, 1941. REHEARING DENIED FEBRUARY 14, 1941.
Equitable petition. Before Judge Paul S. Etheridge. Fulton superior court. August 22, 1940.
Powell, Goldstein, Frazer Murphy and Elliott Goldstein, for plaintiff.
Reynolds Brandon, Howell Post, Thomas R. R. Cobb, James C. Howard Jr., Bright, Brannen Howard; Bryan, Richardson Mobley; Hooper, Hooper Miller; J. L. Flemister, Hirsch, Smith Kilpatrick, A. S. Clay, J. E. Gortatowsky, William Woodruff, G. N. Bynum, R. Earl Camp, Joseph E. Webb, P. J. Smith, Carlisle Cobb, Erwin Nix, Boykin Boykin; Earle Norman, Martin, Martin Snow, and Jones, Jones Sparks, for defendants.
1. Construing the amended petition as a whole, most strongly against the pleader, the averment therein that "all the defendants were policyholders and members of the company during the year prior to November 10, 1937," is held to be an averment that the defendants were members because they were policyholders.
2. When a court of the domicile of an insolvent mutual insurance corporation, having acquired jurisdiction thereof, proceeds according to the applicable statutes to determine the necessity for, and to fix by its decree, the amount of an assessment against those who became members of such corporation in accordance with the laws of the State under which it was organized, whether or not such decree is conclusive as to the necessity for and the amount of such assessment when asserted against policyholders who were non-residents of the domiciliary State, not personally served, and who did not personally appear therein, it is not necessary to decide.
3. Such a decree, as to policyholders who were not made parties to the original proceedings, was not conclusive on the question whether their relation to the corporation was such as to subject them to such liability.
4. If liable at all, the defendants are so only because their contracts constituted them members of the corporation. Whether or not these made them personally liable for the assessments will be determined by the law of this State when such liability is asserted against them in the courts of this State, in the absence of any showing that the contracts were entered into in some other State or were to be performed in some other State, and the law of such other State, if any, governing contracts of this character not being set forth.
5. Applying the law as found in our statutes and as expounded by our courts and in harmony with the principles of general law not in conflict therewith, it must be held that the mere acceptance of a policy of indemnity insurance issued for a stated premium, by a company that bears the name "mutual," but is not shown to have a lodge system with ritualistic form of work and representative form of government, with a statement in the policy that by acceptance of the policy the insured agrees that it "embodies all agreements existing between himself and the company or any of its agents relating to this insurance," does not make the policyholder a member liable to assessment in accordance with the laws of the State of the company's domicile, although on the back of the policy under the heading. "Notice to Policyholders," there is printed a statement that "The contingent liability of the named insured under this policy shall be limited to one year from the expiration or cancellation hereof, and shall not exceed the limits provided by the insurance law of the State of New York, or of the State in which the insured is domiciled and/or this policy is written," there being in the face of the policy no reference to any contingent liability or assessment, or to any law providing for such. This is true notwithstanding the charter of the company provides that the members shall be the policyholders, that its by-laws provide that every member shall be liable to assessment, and that the insurance law of the State of the company's domicile contains a like provision.
6. The court did not err in sustaining the general demurrer.
No. 13549. JANUARY 16, 1941. REHEARING DENIED FEBRUARY 14, 1941.
This suit was brought by Louis H. Pink, superintendent of insurance of the State of New York, jointly against A. A. A. Highway Express Inc. et al., the defendants being approximately twenty-five in number, seeking to collect from them assessments levied in New York against all members of Auto Mutual Indemnity Company, an insolvent insurance corporation, the defendants in this case being alleged to be such members. The defendants are residents of the State of Georgia, and one or more of them residents of Fulton County, where the suit was instituted. The allegations of the petition were substantially as follows: The Auto Cab Mutual Indemnity Company was incorporated under article 10-B of the insurance law of the State of New York, on May 26, 1932, as a mutual automobile casualty insurance company. With approval of the Insurance Department of the State of New York, its name was changed, on February 21, 1933, to Auto Mutual Indemnity Company, and is hereinafter referred to as the company. All provisions of the charter and amendment relevant to the issues in this case were attached as an exhibit. On the application of the superintendent of insurance of the State of New York, an order was made by the Supreme Court of that State, placing the company in rehabilitation pursuant to article 11 of the insurance law of that State, the order being duly filed of record. All sections of article 11 and all of the aforesaid order relevant to the issues in the case were attached as exhibits. The company being insolvent, it was placed in liquidation on that ground, by an order of the Supreme Court of the State of New York, made, entered and filed in the office of the clerk of the New York court on November 24, 1937, and all of that order relevant to the issues in the case was attached to the petition as an exhibit. The liquidation proceedings were entitled "In the matter of Liquidation of the Auto Mutual Indemnity Company," and those proceedings are still pending.
Pursuant to section 422 of the insurance law of the State of New York, on February 4, 1938, which was within one year from the date of the entry of the orders of rehabilitation and liquidation, the superintendent of insurance filed in said proceedings a report setting forth the reasonable value of the assets of the company, its probable liabilities, and the probable necessary assessment to pay all allowed claims in full. That report being quite voluminous, it was not set out or attached as an exhibit, but petitioner promised to introduce it into evidence at the trial. Upon the basis of that report, pursuant to section 422, an order was made by the New York Supreme Court, on February 7, 1938, directing that an assessment of forty per cent. of premiums earned during the preceding year be levied against all members of the company, against whom an assessment might have been levied on November 10, 1937, the date of the commencement of the proceedings against the company. This order was duly filed, a copy of it being attached to the petition as an exhibit. The superintendent thereupon computed the amount of assessment due from each policy, and, pursuant to section 432 of the insurance law of New York, computed the amount of indebtedness of each member to the company apart from the indebtedness for assessment. These computations were attached as an exhibit, showing the names of the defendants, their residences, the numbers of their policies, the premiums earned, and the amount of assessment for which such member was liable. On the basis of the report an order was made, August 12, 1938, which, together with the petition, report, and exhibits of the superintendent, was duly filed in the office of the clerk of the New York court, the order directing each member during the year previous to November 10, 1937, to pay the amount assessed against him to the superintendent of insurance. The order further directed, that, failing to make such payments, the members were to show cause, on September 29, 1938, why they should not be held liable to pay such assessments, together with costs, and why they should not be held liable to pay any other indebtedness which they might owe the superintendent of insurance, and why the superintendent should not have judgment therefor. This order was attached to the petition as an exhibit. Pursuant to section 422 of the insurance law of New York, notice of this order was mailed to all of the members of the company, including each of the defendants in this case. None of the defendants appeared to show cause, nor have they made payment as directed. All of them were policyholders of the company during some part of the year before November 10, 1937.
A copy of the policy issued to each of the defendants was attached, being merely a form policy, but alleged to be the type of policy contemplated in the court's order of February 7, 1938, above referred to. While these policies provided that the insured should be entitled to "an equitable participation in the funds of the company in excess of the amounts required to pay all policy and other obligations," etc., and were headed or captioned "Auto Mutual Indemnity Company (a mutual insurance company)," they did not otherwise contain any reference to the laws of the State of New York, or to any particular law of that State, or to the charter or by-laws of the company, or to the policyholder as a "member," or to any liability for assessment. The policy declared that it embodied "all agreements existing between" the policyholder and the company, and mentioned nowhere that the assured would be liable for any assessment of any nature. It is true, on the back of the policy, but not in the face of the policy itself, there were printed paragraphs entitled, "What to do and what not to do in case of accident," "Safety code reminders," and "Notice to policyholders," each containing subparagraphs, and under the last-named heading the policyholder was notified that he was a "member" of the Auto Mutual Indemnity Company, and entitled to vote at all meetings of the company, and stating when and where those meetings would be held, and that "the contingent liability of the named insured under this policy shall be limited to one year from the expiration or cancellation hereof, and shall not exceed the limits provided by the insurance law of the State of New York." It was further alleged: At the time each of the defendants purchased his policy and became a member of the Auto Mutual Indemnity Company there was in force a statute of the State of New York, which, under the statutes and court decisions of New York, became a part of his contract binding upon him, to wit, section 346 of the insurance law of the State of New York, which provides: "The corporation shall in its by-laws and policies fix the contingent mutual liability of the members for the payment of losses and expenses not provided for by its admitted assets; but such contingent liability of a member shall not be less than an amount equal to twice the amount of, and in addition to, the cash premium provided for in the policy, except that a corporation which has amended its charter to provide for the transaction of additional kinds of insurance may amend its by-laws to provide that the contingent mutual liability of a member shall not be less than an amount equal to, and in addition to, the cash premium provided for in the policy. Every member shall be liable to pay, and shall pay his proportionate part of any assessment which may be laid by the corporation in accordance with law and his contract on account of losses and expenses incurred while he was a member, if he is notified of such assessment within one year after the expiration of his policy. All assessments, whether levied by the board of directors, by the superintendent of insurance in the liquidation of the corporation, or otherwise, shall be for no greater amount than that specified in the policy or by-laws." The names and addresses of the defendants, the numbers of their policies, the period for which each was alleged to be liable to assessment, and the amount of judgment prayed against each, was set forth in the petition. There was also attached a copy of a portion of the bylaws to the effect that "the members of the corporation shall be the policyholders herein," in accordance with the provisions of the corporation's charter.
By amendment the plaintiff alleged that the action presents a common right to be established by the plaintiff against the several defendants named in the petition, and that it is proper that a court of equity determine the whole matter in one action; and that by so doing a multiplicity of actions will be avoided, speedy and effectual relief will be granted, and unnecessary costs will be obviated. By further amendment the petitioner averred that he would present to the court on the trial of the case the acts of the legislature of the State of New York, referred to in the petition, duly authenticated by the great seal of that State, and would present the records and judicial proceedings referred to, duly attested under the seal of the court, all as is provided by section 38-627 of the Code of Georgia, and by the United States Revised Statutes, section 905, title 28, section 687. Petitioner contended, that said public acts, judicial proceedings, and records of the State of New York are entitled to and should receive full faith and credit in the courts of this State and in this proceeding, as is specifically provided in section 38-627 of the Code of Georgia of 1933, and by article 4, section 1 of the constitution of the United States (Code § 1-401); and that any judgment which denies or has the effect of denying to the judgments and statutes aforesaid, the full force and effect to which they are entitled under the constitution and laws aforesaid, abridges the privileges and immunities of petitioner as a citizen of the United States, contrary to the fourteenth amendment of the constitution of the United States. Petitioner prayed that second originals issue directed to the sheriffs of all counties in which the defendants reside, for service upon every defendant residing outside of Fulton County; and that petitioner have judgment against each defendant for principal, interest, and costs.
The defendants filed general demurrers, which fall into two categories in so far as the defendants are concerned, as follows: that the policies issued to each of the defendants were not assessable, since they contained no provisions for assessment; and that some of the defendants were not policyholders of the Auto Mutual Indemnity Company at the time of its dissolution, and for that reason are not subject to assessment. The general demurrer of each defendant was sustained, and the plaintiff excepted.
1. The pronouncement made in the first headnote will not be discussed. See Strickland v. Lowry National Bank, 140 Ga. 653 ( 79 S.E. 539); Anderson v. Anderson, 150 Ga. 142 ( 103 S.E. 160).
2. Touching the proposition of law referred to in the second headnote, see Swing v. Humbird, 94 Minn. 1 ( 101 N.W. 938); Hawkins v. Glenn, 131 U.S. 319 ( 9 Sup. Ct. 739, 33 L. ed. 184); Great Western Tel. Co. v. Purdy, 162 U.S. 329 ( 16 L. ed. 810, 40 L. ed. 986); Glenn v. Liggett, 135 U.S. 533 ( 10 Sup. Ct. 867, 34 L. ed. 262); Selig v. Hamilton, 234 U.S. 652 ( 34 Sup. Ct. 926, 58 L. ed. 1518); and the authorities collected in Chandler v. Peketz, 297 U.S. 609 ( 56 Sup. Ct. 602, 180 L. ed. 881, and citations in the note). The rule referred to is based on the theory that in litigation to which the corporation is a party its stockholders are represented by it to the extent that they are bound by any judgment rendered against the corporation in so far as it relates to corporate matters; and that the action of the court in determining the necessity for, and fixing the amount of, the assessments, is merely performing a duty which would have fallen on its directors had it continued to be a going concern; the court substituting its decree for the formal call of the directors, which call is ordinarily a prerequisite to fixing an individual liability on the stockholders. As shown by the citations above, the same principle has been applied to mutual assessment insurance companies; but, as indicated above, it is not necessary to decide whether the principle contended for is sound.
3. The turning point in the case is whether or not the defendants, who were not parties to the original proceeding, are so far concluded by the decree rendered therein as to prevent them from showing that their relation to the corporation was not such as to subject them to liability for assessment. When we refer to their not being parties to the original proceeding, we mean that their they were not personally served, and that they have not had their day in court for the purpose of asserting their non-liability. It is the insistence of the plaintiff, that these policyholders were represented in the New York litigation, and are bound by the decision of the court therein; and that while certain personal defenses are still available to them, they are not the type of defenses such as are here raised; that when it is admitted, as the demurrer does, that they were policyholders, they became members; and that the decree of the New York court adjudging that the members were liable to the assessments in the amount sued for was binding on them when sued by the superintendent of insurance seeking to recover a judgment therefor in personam against them. Let us bear in mind the rationale of the rule contended for, to wit, that the court of the domicile of an insolvent corporation the affairs of which are being administered by a receiver may determine that an assessment is necessary, and fix the amount of it. Although these defendants were not parties to the original proceeding, the corporation was. As to those policyholders not personally served in the New York court and who did not personally appear therein, all the decree could have done was to determine the necessity for and amount of the assessment, and to call on the members to pay. This was all the directors could have done; and this was at most all the court could do, unless the policyholders were made parties to that proceeding, so as to be personally bound by other matters adjudicated therein. If in that suit it was asserted that certain policyholders were members of the company and were liable in a certain amount because they were members, and such policyholders were not personally served and did not appear, an adjudication that they were liable because under the New York law they were members is not conclusive on them. Whether they were members or not was vital on the question of their liability to assessment. On such an issue they are not bound until they have had an opportunity to contest it.
4. Counsel for the plaintiff take the position that to deny the element of conclusiveness to the decree of the New York court upon the question of the liability of each of the defendants to assessments would be to refuse to give effect to the full-faith and credit-clause of the constitution of the United States. The answer to that contention is, that before that constitutional provision can become operative one must have had his day in court; and over against it we place the other guaranty, to wit, the due-process clause; and it is of the essence of due process that one must be given an opportunity to be heard. Walton v. Davis, 188 Ga. 56, 62 ( 2 S.E.2d 603), and cit. In Great Western Telegraph Co. v. Purdy, 162 U.S. 329 (supra), after holding that the order of assessment was conclusive and binding on every stockholder without personal notice to him, it was said: "But the order was not, and did not purport to be, a judgment against any one. It did not undertake to determine the question whether any particular stockholder was or was not liable in any amount. It did not merge the cause of action of the company against any stockholder on his contract of subscription, nor deprive him of the right, when sued for an assessment, to rely on any defense which he might have to an action upon that contract. In this action, therefore, brought by the receiver in the name of the company, as authorized by the order of assessment, to recover the sum supposed to be due from the defendant, he had the right to plead a release, or payment, or the statute of limitations, or any other defense, going to show that he was not liable upon his contract of subscription."
Their liability to assessment depends upon whether or not they became members of the company. A person can not be made a member or stockholder of a corporation without his consent. 18 C. J. S. § 478, note 42, and cit. It was incumbent on the plaintiff to show that these defendants became members, in order to subject them to the payment of the assessment, the necessity for and amount of which was determined by the decree of the court wherein the corporation had its domicile. As to this, all that is shown is that they purchased a policy in a mutual insurance company, organized under the laws of the State of New York, which laws provide that a policyholder is a member and liable to assessment. This is not sufficient. New York Life Insurance Co. v. Street (Tex.Civ.App.), 265 S.W. 397, and cit. Couch's Cyclopedia of Insurance Laws, § 251 et seq.
The Supreme Court of Minnesota had the identical question, in Swing v. Humbird, 94 Minn. 4 ( 101 N.W. 938). It was there ruled: "Action to recover upon an assessment of the policyholders of an insolvent mutual insurance company, made by a court having jurisdiction to wind up its affairs. Held: 1. Such assessment is not conclusive upon any policyholder as to the question whether his relation to the company was such as to subject him to liability for an assessment." In Shuey v. Adair, 24 Wn. 378 ( 64 P. 536), in answering the contention of the receiver that the order was conclusive even as to the liability of each stockholder for the amount assessed against him, the court observed: "But if this be true, it would seem there was little need for the present action. To give the order the force and effect here contended for is to give it the force and effect of a judgment, and there could be no reason why an execution should not issue directly upon the order without the further intervention of the courts."
It was ruled by the Court of Appeals of New York as follows: "An order of the United States district court directing an assessment upon the stockholders of a certain amount per share to meet a deficiency in the assets of a bankrupt corporation to meet its obligations to its creditors was not, in a subsequent action in a State court for the assessment, conclusive upon the existence or nonexistence of an obligation on the part of the stockholders to pay the assessment." Southworth v. Morgan, 205 N.Y. 293 ( 98 N.E. 491, 51 L.R.A. (N.S.) 56). In the opinion it was said: "It is urged by the respondent, at this point, that the order of the United States district court directing the assessment of the shares of the defendant conclusively determined the validity and the amount of the assessment. It is true that the regularity and validity of the proceeding in that court and its conclusions can not be attacked in this action; but the existence or non-existence of an obligation on the part of the defendant to pay the assessment was not within the subject-matter of which that court took jurisdiction. To enable the plaintiff to enforce the liability of the delinquent shareholders to the extent only which the deficiency in the corporate assets required, and to effect parity of contribution between them, it was necessary that an account of the assets and debts, of the entire amount of the capital remaining unpaid upon the issued shares, and the part of the face value of his shares unpaid by each stockholder, should be taken, and the aggregate assessment required equitably rated by the court, and it is upon those issues that its order is beyond attack in this action. Great Western Telegraph Co. v. Purdy, 162 U.S. 329, 16 Sup. Ct. 810, 40 L. ed. 986; Howarth v. Angle, 162 N.Y. 179, 56 N.E. 489, 47 L.R.A. 725. In the former case the court, speaking of an analogous order of a court of Illinois, said: `But the order was not, and did not purport to be, a judgment against any one. It did not undertake to determine the question whether any particular stockholder was or was not liable in any amount. It did not merge the cause of action of the company against any stockholder on his contract of subscription, nor deprive him of the right, when sued for an assessment, to rely on any defense which he might have to an action upon that contract.'"
We find nothing in Howard v. Glenn, 85 Ga. 238, 264 ( 11 S.E. 610, 21 Am. St. R. 156), contrary to the above holdings. That was a suit against Glenn for his unpaid subscription to capital stock. In the opinion we find this: "In the present case the main issue was, whether the plaintiff in error was a subscriber to the stock of the National Express and Transportation Company. It was affirmatively alleged in the declaration that he was; and if he was such subscriber [italics ours], his liability under the facts of the case was clear and unmistakable." So we may concede here, that if the defendants were members of the corporation, they would be liable. But, as in that case so in this, whether they were or not, was a proper inquiry in the present suit.
The oral arguments in the instant case were unusually strong, and the briefs filed in support thereof were excellent. It would unduly prolong this opinion to notice all branches of the argument or to analyze all the authorities cited. All of them have been considered and examined. We may, however, make a brief reference to some of the stronger of them. Stone v. Old Colony St. Ry. Co., 212 Mass. 459 ( 99 N.E. 218), is relied on. That decision, while holding that the decree of a foreign court in receivership proceedings against an insolvent insurance company within its jurisdiction, levying an assessment on policyholders, is conclusive, in a suit against a policyholder in another State, of the receiver's authority to enforce any contract liability of the defendant for the assessment, and of the amount required, also holds that it does not preclude a defendant from asserting that it is not liable.
In Stone v. Penn Yan, K. P. B. Ry., 197 N.Y. 279 ( 90 N.E. 843), also relied upon, the ruling was: "Where policies issued by a foreign assessment-insurance company stipulated that if the premium charged is insufficient to pay losses the directors might charge a pro rata additional sum to make up the deficiency, insured, though not a party in insolvency proceedings against insurer, was bound by an order of the foreign court directing an assessment so far as the necessity for making the assessment was determined; but the decree was subject to direct attack in a suit by the foreign receiver, and insured could show that it was not liable either by reason of payment or of release or of running of limitations or of any other legal defense." Here again, it is to be observed, the New York court held that the policyholder was by the decree concluded only on the question as to the necessity for making the assessment. Nor did the ruling in Longworthy v. Gardner, 74 Minn. 325 ( 77 N.W. 207), strongly relied on by the plaintiff, go any farther. The decision in Supreme Council of the Royal Arcanum v. Green, 237 U.S. 531 ( 35 Sup. Ct. 724, 59 L.ed. 1089, L.R.A. 1916A, 771), recognizes the same distinction as to what matters the decree of the foreign court is held to be conclusive.
5. Having determined that these policyholders are not by the New York decree concluded on the question as to whether or not they became members and as such liable to assessment, the next inquiry is this: Was there anything in their contracts with the companies, to wit, the policies themselves, which constituted them members? This involves a proper construction of the contract; that is, what is its legal import? In ascertaining this, the law of what State shall be applied? The policy is that of a company chartered in the State of New York, but a contract of insurance is made, not where the policy was executed, but where it was in fact delivered. Swing v. Dayton, 196 N.Y. 503 ( 89 N.E. 1113); Mutual Life Insurance Co. v. Hill, 193 U.S. 551 ( 24 Sup. Ct. 538, 48 L. ed. 788); McClement v. Supreme Court I. O. F., 88 Misc. 475 ( 152 N.Y. Supp. 136), and the many other authorities there cited. If the question would ordinarily be referable to the lex loci contractus, it is enough to say that as to where the contract was made the petition is silent, leaving us without chart or compass. For that reason also we are not here concerned with the rule that, as to a contract made in another State that was one of the original thirteen, or carved from the territory of one of them, and sued upon in this State we will presume the common law to be of force in such other State. Trustees of Jesse Parker Williams Hospital v. Nisbet, 189 Ga. 807 ( 7 S.E.2d 737); Alropa Corporation v. Pomerance, 190 Ga. 1 ( 8 S.E.2d 62). Nor whether the court of the forum will decline to apply the law of the situs when the application of such law would contravene the established public policy of the forum. Hartford Accident Indemnity Co. v. Delta Pine Land Co., 292 U.S. 143 ( 54 Sup. Ct. 634, 78 L. ed. 1468, 92 A.L.R. 928, and cit.); Ulman c. Woolen Co. v. Magill, 155 Ga. 555 ( 117 S.E. 657), and cit. In such a situation, we find the correct rule stated in Pritchard v. Norton, 106 U.S. 124 ( 1 Sup. Ct. 102, 23 L. ed. 248): "The rule deduced by Mr. Wharton, Conflict of Laws, section 401, as best harmonizing the authorities and effecting the most judicious result, and which was cited approvingly by Mr. Justice Hunt in Scudder v. Bank, 91 U.S. 406, 411 [ 23 L. ed. 245], is that `Obligations in respect to the mode of their solemnization are subject to the rule locus regit actum; in respect to their interpretation, to the lex loci contractus; in respect to the mode of their performance, to the law of the place of their performance. But the lex fori determines when and how such laws, when foreign, are to be adopted, and, in all cases not specified, supplies the applicatory law.' This, it will be observed, extends the operation of the lex fori beyond the process and remedy, so as to embrace the whole of that residuum which can not be referred to other laws. And this conclusion is obviously just; for whatever can not, from the nature of the case, be referred to any other law, must be determined by the tribunal having jurisdiction of the litigation, according to the law of its own locality." In addition to planting the rule on the basis of necessity, it can safely rest on still another foundation, to wit, it ought to be assumed that if it be true that the contract was made elsewhere, and if the law of such other State be different from that of the forum, and more favorable to plaintiff, such facts would have been made to appear from the petition.
5. "In determining whether an insurance contract is one on the assessment plan, the articles of incorporation and the by-laws of the company are not to be considered unless they are made a part of the policy." Lee v. Missouri State Life Insurance Co. (Mo.App.), 238 S.W. 858. "One purchasing policy of mutual insurance company held not by that act alone to have become a stockholder in company, chargeable with notice of mutual features in its charter. . . Status of stockholder in mutual insurance company can arise only by consent expressed or implied." New York Life Ins. Co. v. Street (Tex.Civ.App.), 265 S.W. 397.
There are numerous cases holding that a mutual insurance company may issue policies on a cash premium and to policyholders who do not become members. Typical of these are Buck v. Ross, 59 S.D. 422 ( 240 N.W. 858); Johnson v. School District, 128 Oregon, 9 (273 P. 386). See Greenlaw v. Aroostock County Patrons Mutual Fire Ins. Co., 117 Me. 514 ( 105 A. 116); New York Life Ins. Co. v. Street (Tex.Civ.App.), 265 S.W. 397; Watts v. Equitable Mutual Life Assn., 111 Iowa, 90 ( 82 N.W. 441); Lee v. Missouri State Life Ins. Co. (Mo.App.), supra. See particularly Dwinnell v. Kramer, 87 Minn. 392 ( 92 N.W. 227), where it was held that the policyholder in such company is liable to assessment — "For losses not simply in accordance with his contract. Any such company may fix the contingent mutual liability of its policyholder not merely by its by-laws, but by its policies and the `total amount of the liability of the policyholder shall be plainly and legibly stated in the face of each policy.' . . We accordingly hold that the defendants are not liable upon this policy, contingently or otherwise, in any amount in excess of the cash premium therein named." Many other authorities might be cited, and the decision extended, but it does not seem necessary. In a recent case, brought by the same plaintiff in the district court of the United States for the middle district of Georgia, a similar issue was involved, and the decision therein is in harmony with the views herein expressed. Pink v. Georgia Stages Inc., 35 F. Supp. 437. Our conclusion is that the defendants by merely accepting these policies did not thereby become members so as to subject them to assessment.
The notation on the back of the policy referred to in the preceding statement of facts was not a part of the policy, and therefore not a part of the contract. On the contrary, the policy specifically negatives this. 14 R. C. L. 934. The terms of the policy not only fail to put the defendant on notice that he was accepting a policy in a company which was subject to assessments under laws of the State of New York, but fail in any wise to suggest that the company issuing the policy was an assessment company at all. The only provisions in the policy which throw any light upon the nature and character of the company are such as would merely indicate that it was mutual in character, and that the policyholders would be entitled to participate in the profits and surplus which might be derived from the operation of the company.
6. Since no other contract appears to which the defendants were parties, it follows that the suit was properly dismissed on general demurrer.
Judgment affirmed. All the Justices concur.