Susquehanna Mutual Fire Insurance v. Gackenbach & Seislove , 115 Pa. 492 ( 1887 )

Mr. Justice Trunkey

delivered the opinion of the court March 21st, 1887.

When the charter of a mutual insurance company provides, that in an action for the recovery of the assessment, the certificate of the secretary of the company shall be prima facie evidence of the assessment and the amount due, the burden is on the defendant to show that the assessment is invalid for fraud or gross mistake: Buckley v. Ins. Co., 83 Pa., 288; 92 Id., 501.

In absence of such provision in the charter, or in the Statute relating to such companies, the company is bound to prove the facts establishing the claim. The burden was on the plaintiff to show liabilities which made an assessment necessary, and that it was made according to the terms of the charter and bylaws. A reasonable amount may be included in the assessment for expenses and for losses likely to occur by reason of insolvency of members of the company. If the plaintiff proves its claim without showing so large an excess in the assessment, as in itself satisfies the jury of fraud or gross mistake, it is entitled to recover, unless the defendant adduces evidence of matter which defeats the action. There is no presumption that the officers committed fraud or gross mistake; the presumption is that they acted honestly and with reasonable skill. The burden of showing fraud or misconduct is on the defendant when he relies upon that as a defence": Rosenberger, Light & Co. v. Insurance Co., 87 Pa., 207.

The affidavit filed by the defendant precluded the use by the plaintiff of the certificate as evidence, and the.plaintiff was bound to prove its claim as if tbe statutory provision relative to the certificate had not been enacted. The learned judge of the Common Pleas charged that the assessment had been shown to be legal, and that the plaintiff “ must prove that there were losses for which the company was liable, and must then show that an assessment was made, and that the defendants’ share of the losses there sought to be provided for in the assessment, was their just share.” In accord with that instruction were the plaintiff’s first and second points, and they ought to.have been affirmed. They are as follows:

“First. The board of directors of a mutual insurance company, in making assessments, may exercise a reasonable discretion in fixing the amount to be raised, and an assessment so made is presumed not to be excessive until the contrary is shown.”

“Second. The burden is upon the defendant in these cases to show that the assessments, for which these suits are brought, are so excessive as to be in themselves evidence-of fraud or gross negligence.”

If it were the misfortune of the plaintiff in the attempt to establish its claim, to put in evidence a fact which would defeat recovery, that does not change the law of evidence. The defendant may avail himself of that fact, or evidence tending to show it, but whatever the evidence relied on to establish fraud, or other matter, affirmed to defeat the claim, the burden is on the defendant. The presumption that the officers whose duty it was to make the assessment, acted with due care and fidelity, stands until overcome by sufficient proof. The rule is the same when the defendant relies on the testimony on part of the plaintiff as when upon his own.

None of the remaining assignments of error, except the tenth, need be remarked, for there is no error in the instructions therein complained of, save that resulting from the refusal of the plaintiff’s first and second points.

The tenth assignment is to the ruling of the court that the action, No. 153, was not supported by any evidence.

One of the by-laws provides, “ That all members, whose policies are in force at the time the assessment may be declared, shall be liable to assessment for all losses adjusted properly and unpaid, and all other liabilities then existing against the company shall be subject to abatement as hereinafter specified. All members whose policies have expired, and are not in force at the time such assessment is declared, shall, nevertheless, be liable to assessment for all unpaid losses and other liabilities which existed at the time of the expiration of such policy or policies, pro rata with those then in force, and the amount thus ascertained and levied upon such policies to be deducted from the gross amount of liabilities of the company, for which such assessment is to be made, and the balance of liabilities remaining to be assessed upon the policies then in force.”

This by-law is part of the contract of insurance and plainly designates what members are liable to be assessed for losses at the time the assessment may be declared. All are liable whose policies are in force, and all are liable whose policies have expired, for unpaid losses which existed at the time of the expiration. It is competent for the members to so contract, and the directors have no right to make an assessment on another basis. Decisions in cases where the contract contained no similar provision, do not apply. Were this by-law not in the contract, the authorities cited by the plaintiff would sustain the contention that members are liable “ to assessments for the payment of all losses and debts incurred by the company during the time their policy was in force, but not for any losses or liabilities incurred either before they obtained their policy or after its expiration or cancellation.”

The plaintiff concedes that the policies in force at the time the assessment was declared, which were not in force at the time the losses and liabilities were incurred, were not included in the assessments. Its secretary, called to prove the claim, testified that there were a large number of such policies, and that they were not included. It follows that assessment “No. 9” was invalid, and that the court rightly ruled that the plaintiff could not recover.

The ruling may have been based on other ground, yet being free of error, it must be affirmed. In effect, the jury were instructed that the plaintiff had failed to adduce evidence to establish its claim. That the court erred in refusing the plaintiff’s first and second points, as propositions, did the plaintiff no injury, for the court could properly have ordered a nonsuit, or have directed a verdict for the defendant, without answering any proposition.

In two of the cases no assignment of error raises the question, whether the plaintiff’s evidence was sufficient to submit to the jury. The defendants urge that if it be conceded that the court erred in answering the plaintiff’s points, it does not follow that the judgment should be reversed. But no precedent is cited for going outside the assignments, which must be sustained, for a cause to ground a refusal of reversal. Where an assignment reveals a fatal defect in the case of the plaintiff in error, he shows cause for affirmance of the judgment.

Judgment affirmed, “No. 153 January Term, 1885.”

In each of the other causes, judgment reversed and venire facias de novo awarded.