Korn v. Mutual Assurance Soc. Against Fire on Buildings of Va. , 3 L. Ed. 195 ( 1810 )

10 U.S. 192 (1810) 6 Cranch 192

KORN AND WISEMILLER
v.
THE MUTUAL ASSURANCE SOCIETY AGAINST FIRE ON BUILDINGS OF THE STATE OF VIRGINIA.

Supreme Court of United States.

C. Lee, for the plaintiffs in error.

Swann, contra.

JOHNSON, J. delivered the opinion of the court as follows:

This cause comes up from the circuit court of Alexandria, in which a summary judgment has been given for the recovery of a contribution demanded of the members of the mutual assurance society conformably to its by-laws.

The plaintiffs here contest their liability upon several grounds.

1. Because, by the separation of Alexandria from the state of Virginia, they virtually ceased to be members of the institution.

2. That, by having omitted to revalue within seven years, they were no longer insured, and, of consequence, not liable to contribute.

3. That, by the alteration of the charter in 1805, their security and liability became so materially changed, as to discharge them from their contract.

4. That their revaluation in 1805 ought not to be obligatory upon them, because they were deluded into it by false or incorrect suggestions.

5. That they are not liable, under the description of persons who had insured prior to 1804, as they ought to be considered only as having insured at the time of their revaluation.

On the first of these points, the court are of opinion, that the separation of Alexandria from the state of Virginia could have no effect upon existing contracts of individuals. Such divisions of territory are entirely political; a separation of jurisdiction takes place, but private interests and private contracts remain unaffected, and every individual relation continues the same, except that of being associated under the same government. The circumstance, that the law of Virginia, has limited the company to the bounds of the state, in performing its functions, could only prevent them from making new contracts subsequent to the separation, and until they had received additional powers, but could not release them from their liability to individuals with whom they had previously contracted. Nor can the circumstance of the members of the legislature being authorized to represent their respective counties, affect the case; for, although the Alexandria property could no longer be represented in that mode, there was nothing to prevent their appearing in person, or by proxy, at the meetings of the company.

The court are further of opinion, that all the other grounds assumed by the plaintiffs are equally untenable. Although, at the first view, it would appear reasonable that he who is not insured is not bound to contribute, yet there may exist strong reasons why, under the peculiar organization of this company, a different rule should be adopted; and certain it is that the individual may, by his own act, subject himself to such a state of things. The liability of the members of this institution is of a twofold nature. It results both from an obligation to conform to the laws of their own making, as members of the body politic, and from a particular assumption or declaration which every individual signs on becoming a member. The latter is remarkably comprehensive. "We will abide by, observe and adhere to the constitution, rules and regulations which are already established, or may hereafter be established, by a majority of the insured present in person, or by representatives, or by the majority of the property insured, represented either by the persons themselves, or their proxy, duly authorized, or their deputy, as established by law, at any general meeting to be held by the said assurance society, or which are, or may hereafter be, established by the president and directors of the society." It would be difficult to find words of more extensive signification than these, or better calculated to aid, explain and enforce the general principle, that the majority of a corporate body must have power to bind its individuals. It is true that the words of this declaration, as well as the general power of a corporate body, must be restricted by the nature and object of its institution; but apply this rule to the case before us, and it cannot avail the plaintiffs, for both the rule which suspends the security and the alteration made in its constitution, under a vote of the majority, are strictly conformable to the general objects for which the company was instituted.

We are of opinion that whilst Korn & Wisemiller continued members of the society, they remain subject to the general liability which that state imposes; and that, after becoming members, their ceasing to be so must be determined by the rules of the society, which rules, as far as we are at present advised, admit of only two cases; one is, where the house insured is consumed by fire, and the other, upon giving the notice, and conforming to the other regulations imposed by the by-laws.

It is observable that the rule which imposes the necessity of a septennial valuation of the property insured, does not contemplate a total rescission or annihilation of the contract; on the contrary, it is express in declaring that, upon a revaluation being made, the party shall continue insured by virtue of his former policy. We, therefore, consider this suspension of his security merely as a penalty imposed upon the member for neglecting to conform to a rule of the society. And it is certainly much more reasonable that he should be subject to a loss or inconvenience for his own neglect, than that he should be released from his liability to the society, in consequence of it.

As to what is contended to be a material alteration in their charter, we consider it merely as a new arrangement or distribution of their funds and whether just or unjust, reasonable or unreasonable, beneficial or otherwise, to all concerned, was certainly a mere matter of speculation, proper for the consideration of the society, and which no individual is at liberty to complain of, as he is bound to consider it as his own individual act. Every member, in fact, stands in the peculiar situation of being party of both sides, insurer and insured. Certainly the general submission which they have signed will cover their liability to submit to this alteration.

The view which we have taken of this subject affords an answer to the fifth ground, and, in a great measure, to the fourth.

We consider the insured, upon every revaluation, as in under his former right of membership, and, of consequence, that the plaintiffs come under the description of persons who had insured before 1804; and, for the same reason, the representation of Scot (could any effect at all be given to the circumstances to which he testifies) was true, as to the membership of the plaintiffs, and as to their liability in that capacity. They must have known it was a question of law, on which Scot possessed no power to commit the society, and on which the plaintiffs themselves ought to have been as well informed as any other individual

Judgment affirmed.