People's Mutual Equitable Fire Insurance

Dewey, J.

This is a petition in the nature of a bil, in equity, setting forth that the directors of the People’s Equitable Mutual Fire Insurance Company have made certain assessments upon the members, and asking this court to examine the same, the necessity thereof, and all matters connected therewith, and to ratify, amend or annul the same, or to order the same to be made as law and justice may require. This proceeding is instituted under the provisions of Sts. 1862, c. 181, and 1863, c. 249. In pursuance of § 3 of the statute last cited, the subject of this application was referred to an auditor, who, after due notice to all parties interested, has heard the same, and made a full report, clearly presenting the facts in relation to the assessment, and all questions arising thereon are now properly before us.

The first objection taken to this assessment is that it is illegal, in that it includes, in the sum assessed, the sum of $17,808.63 for moneys which the company had received from its members upon certain previous assessments, which have been adjudged by this court invalid. The sum thus received from a portion of its members upon an illegal assessment, which another portion of the members treated as such, and refused to pay, in the opinion of the directors furnished a just claim against the company in favor of those who had paid the same; and for this purpose, and that they might place all the members upon an equal footing in bearing the common burden of discharging the liabilities attached to their membership, the directors have included that amount in the proposed assessment.

On the part of the respondents, it is said that these payments were voluntary, not made under a warrant of distress or process of law by which they or their property could have been taken without a day in court, and therefore that the same constitute no just claim against the company.

Had these members who have thus paid these sums instituted a suit at law to compel the repayment of the same, and had the corporation thought proper to set up that defence, it mignt probably have availed them. But it. is a different question whether the corporation may not voluntarily assume a liability to refund this money thus received under an illegal assessment. Such recognition and a vote to reassess a town, under similar circumstances, was decidedly approved of by this court in Nelson v. Milford, 7 Pick. 18, and the right to vote and assess a new tax to cover such illegal assessments was held to be unquestionable. In the case of People's Ins. Co. v. Allen, 10 Gray, 300, the principle seems to have been directly sanctioned, that a new assessment might be made when the directors subsequently became satisfied that the previous assessment was illegally laid; provision being made in the new assessment that those who had paid the previous one should be credited with that amount. This is precisely what is proposed to be done here. As it seems to us, there is no valid objection to including in the assessment the sum of $17,808.63 for this purpose.

The next objection taken is to so much of the proposed assessment as embraces the interest on the sums thus paid, to the 1st of January 1864. Here again the inquiry is not whether the payment of such interest could be enforced at law, but whether the company may not justly and legally assume, by their voluntary act, to pay to those from whom they have received money to which they had no legal right, not only the principal sum thus received, but also the interest thereon. The company, and through it all the members, have had the benefit of the use of the money of a portion of the members, and have applied the same to discharge the obligations of the company, and it seems no more than just to those who have advanced their money for the common benefit that they should recover the same, with the ordinary interest that would accrue thereon. We see no reason why the company may not voluntarily assume this obligation, and make it a part of the just claims due from them.

The item embraced in the proposed assessment of $7336.69 for overlay is more questionable, in reference to the proper amount to be added for this purpose. The sum thus assessed is designed to discharge the expenses of making the assessment and collecting the same, and of continuing the necessary officers requisite to effect that purpose, as well as to cover all deficiencies by reason of inability to collect a portion of the assessments. The sums required for the latter purpose will vary in different companies, and depend upon circumstances best understood by the directors of each company. The practical result of such assessments we suppose has been, that the sums usually assessed have proved insufficient to produce the amount that was required to discharge the claims against the company. In the peculiar circumstances of the present assessment, the same being to a considerable extent an assessment to cover the previous illegal assessments, and the practical operation of it being that the members who have heretofore paid their proportion of such illegal assessment will be credited with the amount so paid upon the new assessment, and thus a very considerable portion of the amount of the new assessment being already in the hands of the company, it is urged that a less sum for overlay than in ordinary cases would be proper. To this it is answered that the payments already thus advanced were by those prompt and solvent persons who may always be expected to pay, and for whose failure no overlay is ordinarily required, while a considerable amount must be assessed to those who paid nothing on the former assessments, and from whom nothing is to be expected.

In the opinion of the court, the sum proposed to be thus added to the amount of the assessment may be properly so added.

It is then said that the mode of assessment was not proper. It is objected that the debt due from the company on January 1st 1862, of over $8000, was assessed only upon such policies as were outstanding at that date, not including subsequent ones which were outstanding on January 1st 1864, when this assessment was made.

The reason for thus assessing this sum upon those who were policy holders on the 1st of January 1862, we suppose, was to comply as far as practicable with the requirement to assess forthwith, after an ascertained loss or liability. The purpose 's to assess those policies which are in existence when the liability accrues. That can only be approximately reached. The directors finding that there was an ascertained liability of $8000 existing against the company on January 1st 1862, and that ii was impracticable to assess this amount if strictly confined to policies which were in existence at the time when the items of which it was composed accrued, adopted, as the nearest practicable approximation to it, the present mode of assessing that sum upon all the policies outstanding on January 1st 1862, in proportion to the time of their existence and the amount of theii premiums.

In respect to the losses accruing after January 1st 1862, no cause existed for a departure from a much nearer approximation to assessing in each case the losses upon the policies then in existence. We have repeatedly held that the law does not require, nor is it commonly practicable, that entire precision should exist as to this. A rule which shall substantially accomplish this object is all that is required. People’s Ins. Co. v. Allen, 10 Gray, 297.

The mode adopted in the present case in computing the assessments made for liabilities accruing after the 1st of January 1862 is, in the opinion of the court, a sufficient compliance with the statutes, and this assessment thus made may well stand.

A question was raised as to certain policies issued to George H. Babbitt; and it was contended that these policies were not subject to any assessment for losses after the time when his policies were declared void by the company on account of his refusal to pay assessments. A by-law of the company gave such power to the directors in case of a refusal to pay assessments. But this necessarily applies only to the case of legal assessments. The previous assessments were not such. Babbitt's refusal to pay them did not terminate his policies Had a loss by fire occurred on any of them after June 28th 1862, the circular of the company declaring the policy void, if the party refused to pay them, would have been held a nullity. On the other hand, as he retained his full rights as a member, he must take the corresponding liability of assessment for losses. We find nothing in the report that shows that , the policies held by Babbitt were erroneously assessed.

The result is, that this assessment thus submitted to the court is ratified and confirmed, and a decree to that effect is to be entered.