Hinkley & Egery Iron Co. v. Maine Mutual Marine Insurance , 1876 Me. LEXIS 135 ( 1876 )

Dickerson, J.

The petitioners pray for leave to prove their claim against the defendant company, arising from a judgment rendered against them in behalf of said company upon a note of $1001, dated January 2, 1871. They allege that they have paid said judgment, and thus state their ground for reimbursement: “when they gave said note they received therefor an open policy from the Maine Mutual Marine Insurance Company, and by said policy said company agreed to furnish and provide insurance for the petitioners to the amount of one thousand dollars in premiums, but that on account of the insolvency of said company it has become unable to perform its agreement, so that your petitioners now have a just claim against said company for the amount paid by them as aforesaid on said judgment.”

The petitioners occupy the somewhat anomalous position of an unsuccessful litigant seeking to recover back of the successful one the amount he has paid upon the judgment recovered against him. The parties having agreed that, if the court shall be of opinion that the claim should be allowed, the time for presenting claims may be extended, the only question to be determined by the court is whether the claim is allowable.

This question was substantially and definitively settled in the action upon the very note on which the judgment sought to be allowed was rendered, viz: Howard et als., receivers, v. The Hinkley & Egery Iron Co., 64 Maine, 93, and in same v. Palmer et al., 64 Maine, 89, which is made a part of that case.

It was decided in those cases :

I. That the notes of that class were given under § 9 of the charter of the defendant company.

II. That they were founded on sufficient consideration.

III. That they constitute or stand for the capital stock of the company.

IV. That they are enforceable in the hands of the receivers to pay losses. And,

V. That it is no defense to such notes that no insurance has been effected under the open policies for which the notes in question were given, nor that the company has become insolvent.

The claim of the petitioners is not materially distinguishable from that set up in defense of these actions. The exhaustive arguments of the learned counsel for the petitioners in this case are in fact but re-arguments of those cases. If the principles of these decisions are to be maintained, it is clear that the prayer of the petitioners must be denied; that prayer is irreconcilable with them. If these notes constitute the capital stock of the insurance company, or are a substitute therefor, “for the better security of those concerned,” it is not competent for the promisors to withdraw them, or, if paid, the amount so paid, from the common fund, and thus deprive the holders of unpaid policies, upon which losses have been incurred, of the security the notes were designed to afford. If one promisor may do this, others may; until the imposing fund of “$50,000” required to be secured by the charter becomes a myth, vanishing at the wand of the sagacious and crafty operator, when the confiding holders of policies with incurred risks approach it for indemnity. In this respect they stand upon the same basis as the premium notes by persons actually insuring in the company under § 7, “which shall not be withdrawn from said company, but shall be liable to all the losses and expenses incurred by the company during the charter.”

We do not perceive that the inability of the insurance company, by reason of insolvency, to perform its alleged agreement to insure for the petitioners, changes the legal status of their note or the judgment thereon one iota. If there was any such agreement, it was upon the condition that they should apply for insurance, which they never did. It was optional with them whether to do so or not. Their failure to insure was not the fault of the company, but their own voluntary choice. It is now too late for them to escape the consequences of that election. Nor was their promise to pay the note to the company conditioned upon the continuing solvency of the company. The insolvency of the insurance company was one of the possible, if not probable, contingencies attending the enterprise. The petitioners voluntarily assumed that risk and must abide the consequences. The insolvency of the insurance company is indeed but another reason for preserving its remaining assets from the contemplated spoliation ; the admitted inadequacy of them to pay its indebtedness enhances their relative importance. In no view that we have been able to take of the case does the insolvency of the insurance company afford the petitioners legal ground for the allowance of their claim. To do so would be to overrule the cases cited, and thus to dissipate the common fund designated in the charter and relied upon by policy holders with underwritten risks as the guaranty for their indemnity.

Petition denied with costs for respondents.

Appleton, C. J., Walton, Barrows, Vir&in and Peters, JJ., concurred.