Buckley v. Columbia Insurance

Mr. Justice Gordon

delivered the opinion of the court, February 9th 1880.

The thirteenth assignment of error is the only one that needs consideration, the others are not sustained. This assignment excepts.to the charge and is as follows: “That by law directors are vested with authority to make assessments to meet losses, and that a reasonable discretion must be allowed, and it is not a defence unless the directors fraudulently or wantonly abused their power to make their assessment too large.” The statement of the law as herein contained, without explanation, is too broad, and, considered aside from the facts, would be good cause for reversal. But, prima facie, by the act of incorporation, the certificate of the secretary is evidence of the rectitude of the assessment and of the amount due. Furthermore, as was said, by our brother, Mr. Justice Trunkey, in Rosenberger v. Washington Fire Insurance Co., 6 Norris 207, “ Managers may exercise a reasonable discretion in fixing the amount to be raised, for the charter must be construed in reference to its practical working.” It, therefore, rested with the defendants to show that the assessments.were so excessive as to be, in themselves, evidence of fraud or gross negligence. If, then, they had so arranged their evidence as to have proved the statement exhibited, showing assessments amounting to $119,000 to meet liabilities of only $51,000, and nothing more, they would have made out their case. But unfortunately for them they did much more than this; they proved that the company was on the verge of insolvency, and therefore had need of all its assets. From this view of the case the officers of the company instead of assessing too much did not assess enough. Furthermore, it was proved by a witness called by the defendants, that out of assessments Nos. 14,15 and 16, amounting, in all, to $35,000, but $14,500 were collected; by another, that of assessment No. 17 ($45,000), but $6000 were realized, and finally, of the deficiency assessment A ($100,000), as yet, only $15,000 had been collected. Thus, when all is summed up, there has not been enough received to meet the liabilities and expenses of the company. It also appears, from the testimony of these same witnesses, that the reason for these meagre returns, from assessments so large, is discovered in the fact that about one-third of the premium notes, held by the company, are worthless, because of the insolvency of the makers, and many of the others, like those of the defendants, are in process of litigation, and are therefore not available.

Thus it is, that the defendants, themselves, have shown good and substantial reasons for the assessments complained of; have shown that these officers have but complied with their duty in thus endeavoring to rescue the company from its embarrassments and save it from total insolvency.

Under a showing such as this, the error of the judge of the court below was harmless, since his charge upon this point might, and, perhaps, ought to have been binding.

Judgment affirmed.