Washington Mutual Fire Insurance v. Rosenberger, Light & Co. , 84 Pa. 373 ( 1877 )

Mr. Justice Sterrett

delivered the opinion of the court,

In consideration of the policy of insurance issued to the plaintiffs below, they promised to pay, Avithin sixty days after notice, on demand, such assessments as might be required to pay losses by fire and expenses. In April 1871 an assessment, knoAvn as No. 5, Avas duly made and notice thereof given to them, but they neglected to pay it. The property covered by the policy was destroyed on the 27th January 1872, and two days thereafter an offer was made to pay the assessment, which w'as declined by the company, on the ground that it had not been paid within the required time, and, in consequence thereof, the policy was not in force when the property was destroyed. The jury was instructed that the plaintiffs could not recover unless the failure to perform their part of the contract was excused by the action of the company. In concluding his charge, the learned judge says: “ The only question is, whether or not there was a misleading of the plaintiffs by the conduct and actions of the defendant company, as evidenced by their resolutions, their notices, and by their general practices, as proved by their minutes and the evidence of the secretary. If you find that the plaintiffs were misled to their injury, it excuses them, and they would be entitled to recover. Otherwise the verdict should be for the defendant.”

Several of the numerous assignments of error relate to the admission of testimony, introduced for the purpose of showing that the insured were excused in the non-payment of the assessment, and others relate to the sufficiency or legal effect of the evidence; and it is claimed that there was error in refusing to instruct the jury that there was no sufficient evidence to excuse the nonpayment. It is unnecessary to consider the assignments in detail. If the evidence was insufficient, the jury should have been so instructed, in accordance with the points to that effect submitted by the counsel to the company.

The consideration for the insurance was that the defendants in error would pay, within the time stipulated, their share of the losses sustained by their fellow members. The mutuality of the contract required them to perform their part before they could demand performance by the company. 'While they were in default in the payment of their assessments they had no standing to demand payment of their own loss. This principle lies at the very bottom of the relation existing between such associations and their individual members. By the express terms of the contract the company had the right to cancel the policy, and thus terminate the contract relation, upon giving notice to the insured; but it is not claimed that this was done. Without any action on the part of the company, however, the neglect to pay the assessment had the effect of suspending the protection of the policy until the default was removed. Upon the payment of the assessment the policy would .have revived in its full vigor; but it was never paid or even tendered until after the fire; and as delinquent policy holders they had no right to maintain the action without showing that the default was either waived or excused by the company. There is no evidence of waiver, nor do we think there is any evidence to excuse the default. There was considerable testimony showing that great indulgence was extended to delinquent members, and that the company was accustomed to receive assessments long after they were clue ; but this is entirely consistent with the fact that while the default continued the protection of the policy was suspended. It is claimed that the action of the company in issuing notices and informing members that a penalty would be exacted if assessments were not paid by a certain time, was calculated to mislead and induce them to believe that by submitting to the penalty they might pay when it suited their convenience, and in the meantime their policies would continue in full force. This is a mistaken view of the subject. Whether the company had authority to impose penalties or not, the notices could furnish no excuse for non-payment. They contained no intimation of any change or modification of the .contract. On the contrary, they were calculated to remind members of the necessity of payment, and warn delinquents of their default. The resolution of January 1872, appointing a collector and directing notice to be given that the policies of all who neglected to pay would be cancelled after the 15th February following, &c., could not possibly mislead any one. Assessment No. 5 was then long past due, and as a consequence of the default the protection of the policy was then suspended. The resolution was designed to give notice, that unless the default was removed by the date mentioned the policy would be cancelled. Instead of extending indulgence, this was urging payment. But the resolution never went into effect; and inasmuch as the insured had no notice of it, they could not be prejudiced, even if it had been calculated to mislead. If -there had been any testimony to show that the company had ever recognised its liability, or paid losses that occurred while the assessments were over-due and the protection of the policy suspended in consequence thereof, there might be some reason for claiming that such action on the part of the company was calculated to mislead members who were cognizant of the fact; but nothing of the kind was shown. While it is evident that the company was indulgent, it is equally clear that they endeavored to collect over-due assessments in a manner that was not calculated to waive any of their rights, or mislead any of the members to their injury. We see nothing in the testimony to excuse the default of the defendants in error in not paying the assessment according to the terms of their contract, or to justify the court in submitting the question to the jury.

Judgment reversed and a venire facias de novo awarded.