Farmers Mutual Insurance v. Meese ( 1896 )

Irvine, C.

Tbe questions presented by this record are tbe sufficiency of tbe petition to state a cause of action and tbe sufficiency of tbe evidence to sustain tbe finding. Tbe action was by Meese against tbe insurance company, a mutual insurance company organized under tbe laws of this state, to recover on a policy or certificate issued by tbe company to Meese. Tbe petition sets out that on November 11, 1891, Meese was tbe owner of a certain mare. On tbat day tbe defendant agreed to insure said mare in tbe sum of $400 against loss or damage by fire, lightning', wind, tornado, or accident, agreeing to deliver to plaintiff within a reasonable time, its policy, and at the same time showing plaintiff a copy of its by-laAVs authorizing it to make such insurance. The plaintiff on his part made and delivered to the company his promissory note for $6, payable December 15, 1891. On the 11th of November the mare suffered an injury by accident. On the 36th of NoArember the insurance company, with knowledge of its liability, made and delivered its policy as agreed. The plaintiff gave notice of loss and the defendant proceeded to adjust the loss, and in pursuance of statute selected an arbitrator. The plaintiff also selected an arbitrator and these two selected a third. The three arbitrators so chosen made an award of $300 in favor of plaintiff, and, in the language of the petition, “thereupon, at the persistent importunities of defendant, the plaintiff consented to deduct from said award $50 on condition that defendant would pay without further trouble and annoyance, whereupon, as a final agreement and settlement of the amount of defendant’s liability which should be paid by defendant without further trouble to plaintiff, the defendant made to plaintiff its promissory note,” whereby it promised to pay to Meese, June 1, 1892, $250, with interest at eight per cent from its date, January 28, 1892. On the 18th of December, 3891, the plaintiff had paid in full his premium note and the defendant accepted such payment. The plaintiff prayed judgment accordingly. The defendant, by its answer, denied the authority of its agent to Avrite the insurance and pleaded that it was not authorized by law to insure property against loss by accident. It also denied certain other allegations of the petition, but on the trial there Avas an express admission made of the truth of all the averments of the petition, so that the only question presented was that of ultra vires. A jury was waived and the court found for the plaintiff.

We do not think we are called upon to enter into any consideration of the powers of mutual insurance com-panics as regards the nature of risks they may assume, nor are we even called upon to determine whether under the facts admitted the defendant was estopped to plead ultra vires. Prom the standpoint of the insurance company the claim of Meese had certainly sufficient merit to raise a contention, the result of which was doubtful. We may assume that to insure live stock against accidents was wholly beyond the powers conferred by statute on such companies. Nevertheless, this company, according to the admitted facts, had agreed to insure this property against accident. It had received the note for the premium. After the loss, and with knowledge thereof, it had issued its policy. It had entered into arbitration and an award had been made. It had received payment of the premium note. There was certainly a fair ground of contention, not only from all these facts, but from any part of them? that the company had es-topped itself from repudiating the contract. Indeed, it is not too much to say that it would shock the conscience of lawyer and layman alike were he to learn that an insurance company might write unauthorized risks, receive the premiums, and retain them if no loss resulted, but in cases where loss arose repudiate them on the ground of want of authority. Such a business might be profitable for a time to the insurance company, but its pursuit would not be creditable to the men engaged therein. The defendant’s liability under the circumstances being doubtful, after the award was made, it induced the plaintiff, in consideration of settlement “without further trouble and annoyance,” to accept its note for a less amount than the aAvard, payable at a future date. Whether or not we accept in full tlm argument of counsel for the defendant in error, that “a corporation always has power to be honest,” we are sure of its power to effect the compromise of a doubtful claim, even though it involve the company’s honesty or its corporate powers. This being true, its obligation to pay the amount agreed on by way of compromise was in any event valid and enforceable, and the judgment of the district court was right.

Affirmed.