Farmers' Mutual Fire Ins. v. Chase ( 1876 )

FROM BELKNAP CIRCUIT COURT. This action is assumpsit to recover assessments on premium notes, signed by the defendant. The assessments were all made under a vote of the directors of the company, passed May 2, 1871, as follows:

"Resolved, That the treasurer assess upon the premium notes held by this company a sufficient sum of money to pay all outstanding losses and damages by fire or lightning which have happened to members of this company, agreeable to the charter and by-laws of the same, and all money hired for the use of the company, with interest upon it, and interest on losses still unpaid, together with such sums as may be necessary for the incidental charges in making and collecting this assessment. Also, to equalize and reimburse the sums paid by members on unexpired policies, and for ascertaining the amount of the several losses by fire or lightning prior to December 2, 1870."

The case was sent to a referee, who found for the defendant, and made a special report, a part of which is as follows:

"I find that the treasurer, with the assistance of Isaac S. French, made the assessment, fixed the rates, made all of the calculations, and determined the amount to be paid by each person assessed; that no report of the same was submitted to the directors, and no ratification by them made of the assessment, unless the vote of July 2, 1872 — copy annexed — constitutes a ratification. Said assessment was made under that part of section eight of the act of incorporation, of which a copy is annexed hereunto.

"I find that the assessment was made to cover the entire indebtedness of the company, — losses, hired money, interest on the same, and unpaid expenses, and a large amount of old, uncollected assessments, made in years past — part of them during the existence of the defendant's policy — to cover losses, and an indebtedness commencing in 1859, which assessments had been remitted and charged off by the directors at different times — at one time to the amount of over $5,000, and at another of nearly $9,000; and if said assessments had been collected, I find that the assessment of May 2, 1871, would have been very much less. This was made for the purpose of closing the affairs of the company. I find that, in addition to the indebtedness of the company as it was then supposed to be, there was included in its assessment about $1,600 for making the same, and for estimated future expenses up to July, 1872, for salaries of officers, for attending courts, and for printing and advertising; and also thirty per cent. of the full amount, I find that, including said overlay of $1,600, was in violation of the statutes."

Assuming that this assessment might have been made under the charter of the company, and was such as the vote of May 2, 1871, authorized the treasurer to make, if the directors could confer such authority, the question arises whether it was not such an assessment as only the directors could make. Under their charter, could they delegate to others the power to make such an assessment? Section 8 of the charter provides, "That the directors shall, after receiving notice of any loss or damage by fire sustained by any member, and ascertaining the same, or after the rendition of any judgment as aforesaid against said company for such loss or damage, settle and determine the sum to be paid by the several members thereof, as their respective proportions of such loss," c. The plaintiffs refer in their brief to the Atlantic M. F. I. Co. v. Sanders, 36 N.H. 252. That case differs very materially from this. The ninth article of the charter of the Atlantic company provided "that all assessments should be determined by the directors;" and the court say, — "The directors must determine the assessment. Nothing more is to be done by them. The rule by which the assessment is to be made is fixed by the charter itself, leaving no discretion to be exercised by the directors, or by anybody else."

The opinion in that case was based on the assumption that there was no discretion to be exercised by the directors; that the assessment was a "matter of mere arithmetical computation," "analogous to the vote of a town for raising a tax." It can hardly be said, that to make such an assessment as the referee in this case has described in his report was a matter of mere arithmetical computation, which called for the exercise of no discretion on the part of the directors. The general rule is, that, when the power to be executed involves, necessarily, the exercise of judgment and discretion, it cannot be delegated. Delegatus, non potest delegare. Gillis v. Bailey, 21 N.H. 162; 2 Kent's Com. 633; Angell Ames on Corp., sec. 277; Rex v. Gravesend, 2 B. C. 602; Stoughton v. Baker,4 Mass. 522; Emerson v. Company, 12 Mass. 237; Brewster v. Hobart, 15 Pick. 307; Coles v. Trecothick, 9 Ves. 236; Paley on Agency 128; Commercial Bank of Lake Erie v. Norton, 1 Hill 501; Tibbetts v. Walker, 4 Mass. 595; Lyon v. Jerome, 26 Wend. 485; Percy v. Millondon, 3 La. 568; Commissioners v. Bank of Buffalo, 6 Paige 497; Haven v. N.H. Asylum, 13 N.H. 535; Blore v. Sutton, 3 Meriv. 237; Story on Agency, sec. 13.

The objection that the assessment was not made by the directors cannot be removed by the vote of July 2, 1872. The vote is a resolution that the treasurer be authorized to give up premium notes to those. who have paid assessments and dues, and contains a declaration that the directors made an assessment, which they certainly did not make. It does not show that the directors exercised any discretion in regard to the assessment, either before or after it was made. It is claimed that this vote is a ratification of the act of the treasurer and Mr. French. To say the least, it is not at all clear that the directors could ratify what they could not authorize under their charter.

It will be noticed that the referee finds that the assessment was made to cover, among other things, a large amount of old uncollected assessments made in years past, part of them during the existence of the defendant's policy. The defendant was assessed to supply a deficiency arising from uncollected assessments not made during the existence of his policy, — to what extent does not appear. In Company v. Harvey, 45 N.H. 298, the court say, — "The evidence as to what was included in the assessment is by no means distinct; but we understand it as showing that expenses and liabilities, incurred long before the defendant became a member of the company, were included in the assessment; and this seems admitted in the argument of the plaintiffs' counsel. An assessment, including such expenses, would be invalid as against the defendant. Long Pond Co. v. Houghton, 6 Gray 77."

CUSHING, C.J., and LADD, J., concurred.

Judgment on the report for the defendant.