Stoelke v. Hahn , 1894 Ill. App. LEXIS 465 ( 1894 )

Mr. Justice Shepard

delivered the opinion of the Court.

The Addison Farmers Mutual Insurance Company is a corporation organized and existing under the laws of Illinois and engaged in the business of a mutual fire insurance company in the counties of Cook and Du Page.

The appellee, Hahn, became a member of the company and held a policy of insurance issued by said company which covered a barn, grain and stock, for a term of five years, and expired October 24, 1886.

The barn and contents were destroyed by fire October 30, 1886.

On October 28, 1886, an agent of the insurance company called at the house of Hahn and notified his wife that the insurance had expired. Hahn was at work on his farm about a mile from his home and did not meet the agent. Some conversation took place between the agent and Mrs. TTa.hn concerning a renewal of the insurance and the agent went away. The only persons present at the conversation were the agent and Mrs. Hahn and her daugher, Amelia.

The agent did not testify on the hearing of the cause, but Mrs. Hahn and the daughter, Amelia, did.

Subsequent to the fire, and in due time, the appellee presented his claim for loss against the company, claiming a loss on building and contents of $1,300.

Controversy arose among some of the stockholders and some of the directors as to whether Hahn should be paid anything, because there was no policy of insurance in force when the fire occurred. This controversy was carried into the annual meeting of the stockholders which took place January 8, 1887, where a resolution was carried directing the officers of the company to pay Hahn, the appellee, $750; and about January 15, 1887, the board of directors directed the secretary of the company to issue a warrant on the treasurer to pay Hahn that amount, which warrant was accordingly issued and delivered to Hahn.

The appellants are members and policy holders of said company, and being dissatisfied with the action of the directors of the company in issuing á warrant to appellee as aforesaid, filed their bill in equity to restrain the directors and officers of the company from paying the amount of the warrant to Hahn or his assigns, and obtained a preliminary injunction to that effect.

After that injunction was issued Hahn brought a suit at law against the company to recover the $750, and thereupon the appellants filed their supplemental bill setting up that fact, and obtained an injunction against him from prosecuting his action at law. The cause was referred to a master and he reported in favor of dismissing both bill and supplemental bill, and his report was confirmed by the court and both bills were ordered to be dismissed. From that decree this appeal is prosecuted.

Humero ns questions of importance relative to mutual insurance companies are presented by the bill and are urged upon our consideration, but in the view we take of one of the questions that controls all the others, so far as this case is concerned, we are relieved of considering but that one.

A verbal contract of insurance is valid, in the absence of a statute to the contrary. People’s Ins. Co. v. Paddon, 8 Ill. App. 447; Ela v. French, 11 N. H. 356; Mobile Marine, etc., Ins. Co. v. McMillen, 31 Ala. 711; May on Insurance, Sec. 14; 1 Phillips on Insurance, 8.

Whether the undisputed testimony of Mrs. Hahn and Amelia Hahn proved a valid contract, need not be decided. It certainly tended toward establishing a sufficient contract, and was, clearly, enough to furnish grounds for a reasonable legal dispute, and as such, to furnish a good consideration and foundation for a compromise of the claim.

The compromise of a doubtful right is a good consideration to support the compromise agreement. Mulholland v. Bartlett, 74 Ill. 58.

A valid settlement, where both parties have yielded some right or legal claim in order to prevent litigation, constitutes a compromise that will not be disturbed.

As laid down by Lord Macclesfield, in Cann v. Cann, 1 P. W. 727, S. C., “ an agreement entered into upon a supposition of a right, or of a doubtful right, though it after comes out that the right was on the other side, shall be binding, and the right shall not prevail against the agreement of the parties, for the right must always be on one side or the other; and therefore the compromise of a doubtful right is a sufficient foundation for an agreement.” Stapleton v. Stapleton, 1 Atk. 2.

It would be a needless expenditure of time to demonstrate by argument and authority that the board of directors having charge of the affairs of the insurance company, had authority to settle the disputed claim and to appropriate the funds of the corporation to pay the compromise sum agreed upon. We hold, therefore, that there was a dispute between the company and Hahn upon which men, or courts and counsel learned in the law, might differ; (the cou rt below has found contrary to the contention of appellants’ counsel;) that there was a compromise of that dispute, and that its settlement was within the corporate powers conferred upon and exercised by the directors, and therefore affirm -the decree.