Blackburn v. Friend's Cove Farmers' Mutual Fire Insurance , 1927 Pa. Super. LEXIS 323 ( 1926 )

Argued October 25, 1926. This case was rightly decided in the lower court.

The policy in suit was issued by a mutual fire insurance company. The plaintiff paid a small initial fee and gave his premium note upon which assessments were to be levied as required. The policy provided that "dues not paid within 60 days after due will render a policy void, until said dues are paid." It also contained provisions (1) authorizing the directors, at their option, to annul the policy whenever an assessment duly made was not paid within thirty days after the same had been duly demanded by the company; and (2) the usual five day cancellation clause contained in the standard stock company form of policy (Act of May 17, 1921, P.L. 682, p. 737).

It is undisputed that while the policy was in force the board of directors of the defendant company, on October 8, 1923, met in regular session and levied an assessment of 8% upon the members to pay losses and necessary expenses incurred. Notices of this assessment were sent out on the 27th, 28th and 29th days of November 1923, one of which was received by the plaintiff early in December of that year. The notice contained this warning: "To all accounts not paid within sixty days 5% will be added, also after thirty days from that date all accounts will be placed for collection, and that part of our policy relative to nonpayment of dues will be strictly adhered to." By direction of the board a second notice was sent on February 9, 1924 to delinquent policyholders. The plaintiff did not pay the assessment, and the account was placed in the hands of a justice of the peace for collection.

On March 18, 1924, more than sixty days after plaintiff received the first notice of assessment, his dwelling and personal property covered by the policy were destroyed by fire, and on March 21, 1924, he paid the assessment to the justice.

Plaintiff bases his right to recover on the fact that the directors took no action to annul or cancel the policy; contending that while, under the terms of the policy, they might have done so, they did not, and hence he is entitled to recover for his loss. But this by no means follows. The provision of the policy that "dues not paid within 60 days after due will render the policy void, until said dues are paid," clearly provides for an automatic suspension of the policy until the dues are paid: Hummel Co.'s Appeal, 78 Pa. 320, 324; Columbia Ins. Co. v. Buckley, 83 Pa. 293; Lantz v. Vermont Life Ins. Co., 139 Pa. 546, 561. The policy is not annulled or cancelled, but it is suspended as soon as the insured lets sixty days go by after he receives notice of an assessment, without paying it. The suspension is removed and the policy restored to operation whenever the assessment is paid before the directors annul or cancel the policy, but if a loss occurs during the period of suspension the insured cannot recover. This is settled by numerous decisions of the Supreme Court and this court, among which may be mentioned, Washington Mut. Fire Ins. Co. v. Rosenberger et al., 84 Pa. 373; Crawford County Mut. Ins. Co. v. Cochran, 88 Pa. 230, 235: Lycoming Fire Ins. Co. v. Rought,97 Pa. 415; Knouse v. Mut. Fire Ins. Co., 78 Pa. Super. 542. The sending out of a second notice did not operate to postpone the date when, under its terms, the policy became suspended for default in payment of the assessment.

It follows that the learned court below committed no error in entering judgment for the defendant non obstante veredicto.

The judgment is affirmed.