Smith v. Bell

Mr. Justice Trunkey

delivered the opinion of the court, November 10th, 1884.

The defendant concedes that he was not bound for any certain sum of money, that his liability was conditional, and that no action accrued against him until an assessment made in accordance with the charter of the company. He contends that the plaintiff was bound to levy all assessments for losses and expenses which occurred during his membership, within six years from the expiration thereof, and that he may avail the bar of the statute of limitations against any assessment made more than six years after the policy had expired. Thus the single question is presented whether, upon contracts of the nature of the one in suit, the statute begins to run before an action has accrued.

Where a man contracts to pay another a sum of money on demand, he may be sued immediately, the suit itself being a sufficient demand. But if the defendant’s liability depends on the performance of a condition, until it be performed, no action will lie. When a note is given to a mutual insurance company to stand in the place of capital, and the time for requiring payment is left to the uncontrollable will of the company, it is payable on demand, and the statute bars a suit commenced more than six years after the date of the note: Howland v. Edmonds, 24 N. Y. 307. In that case the difference was defined between the note in suit and a note given to a mutual insurance company for a policy, as an engagement to pay the proportion of the losses, not exceeding the nominal amount of the note; no action being maintainable on the latter until after an assessment to ascertain the proportion. It was vain to note the difference, or to inquire when an action would accrue, unless the statute would not begin to run until there would be a right to begin suit.

When subscription was made to a capital stock of a corporation, payable in such proportion and at such times as should be determined by the president and managers, the charter providing that if any proportion be not paid within thirty days after notice, the company may bring suit therefor, it was decided that no action was maintainable until the proportion and time for payment had been determined and the requisite notice given, and therefore, the statute of limitation did not begin to run until the plaintiff had a right to sue: Sinkler v. Turnpike Co., 3 P. & W. 149. Subscribers to capital, upon payment of twenty per cent, on their shares, agreed with the corporation that no further assessment should be made thereon, and certificates for full paid shares "were issued to them. The corporation was adjudicated a bankrupt, and to satisfy the claims of its creditors it became necessary to assess the unpaid stock. It was held that the agreement, though binding the parties, was void as to creditors of the corporation; that before the assignees in bankruptcy could maintain an action against the stockholder, there must be some proceeding in the proper court in the interest of the creditors; and until order by such court and assessment, or an authorized demand upon the stockholder, no cause of action accrues against him by the assignees, and the limitation provided in the Bankrupt Act does not begin to run: Scovill v. Thayer, 105 U. S. 143.

The doctriue of the foregoing eases is not only applicable to an agreement by the insured to pay his proportion of the losses and expenses to the insurer, but it has been enforced in other states where the question has arisen. A sufficient answer to the plea of the statute of limitations is, that the note was not payable at once, or on demand, but is payable by instalments, upon the happening of a loss and assessment therefor; and so, until an assessment is made, the statute does not .begin to run: In the matter of Slater Mutual Fire Insurance Co., 10 Rhode Isl. 42; Bigelow et al. v. Libby, 117 Mass. 359. The same principle was ruled, though the action was not on a premium note, in Hope Mutual Life Insurance Company v. Weed, 28 Conn. 51. In New York it was decided by the Supreme Court, that the liability of the maker of a premium note given to a mutual insurance company, payable “in such portions and at such times as the directors may agreeably to their charter and by-laws require,” is not absolute but conditional; and the cause of action is not perfect until an assessment, and notice thereof given to the maker, and an action thereon will not be barred by the statute of limitations until six years from that time: Howland, Receiver, v. Cuykendall, 40 Barb. 320. This decision was not by the Court of Appeals, but it seems to have been accepted as sound.

To repel the current of authority the defendant referred to Laforge v. Jayne, 9 Pa. St. 412; Pittsburgh & Connelsville R. R. Co. v. Byers, 32 Id. 22; Morrison’s Adm’r v. Mullen, 34 , Id. 12, and Codman v. Rogers, 10 Pick. 112. It is only necessary to refer to Girard Bank v. Bank of Penn Township, 39 Pa. St. 92, to learn how inapplicable those cases are to cases “between an ordinary debtor and creditor, or depositor and depositary, or bailor and bailee for custody” or,"it maybe added, between insured and insurer in an action on a conditional premium contract. In Finkbone’s Appeal, 86 Id. 368, Laforge v. Jayne Is mentioned as overruled. Codman v. Rogers was no authority against the adjudication in Bigelow et al. v. Libby, for the principle involved in the former case did not touch the latter. Lapse of time with other circumstances may sometimes be sufficient to warrant an inference of payment, or the abandonment of a contract, or to induce a chancellor to dismiss a bill because the plaintiff’s claim is stale and inequitable; but such cases do not overthrow the established rule, that the statute of limitations is no bar to an action brought within six years of tlie date when the claim became suable. To hold that tlie statute is a bar to the plaintiff’s claim on the ground that demand should have been made within six years, would be equivalent to converting this conditional contract dependent on the happening of losses, into an absolute contract to pay a certain sum on demand.

Judgment affirmed.