Batson Walsh v. Insurance Co. , 78 S.C. 309 ( 1907 )

October 5, 1907. The opinion of the Court was delivered by This was an action at law in a magistrate's court to recover $72.27 as the pro rata share due plaintiffs by the defendant company on a policy of fire insurance. The magistrate dismissed the action on the ground that plaintiffs' remedy was to proceed in equity to compel an assessment so as to fix the amount payable under the policy, but on appeal the Circuit Court reversed the judgment of the magistrate and rendered judgment against defendant for the amount claimed.

The defendant is a mutual insurance company, incorporated under the laws of this State and authorized to mutually insure the buildings of its members from loss by fire, wind or lightning, upon such terms and conditions as may be fixed by its by-laws. The policy insured the plaintiff to the extent of $350, and stipulated to make good the loss not to exceed that sum by pro rata assessments on policies liable. The policy among other things stipulates:

"7. Payment of any loss or damages shall be due within sixty days after the assessment is made to pay the same."

"11. It is mutually agreed that no suit or action against this company for the collection of any claim against it, shall be sustainable in any court of law until after an award shall have been obtained, fixing the amount of such claim in the manner provided, and not until after an assessment has been made against the policies then liable for their pro rata share due on each policy according to the sum fixed by said award; and in all cases the burden of proof shall be upon the assured to prove affirmatively as a part of his case in chief that the award has been obtained or duly waived by the company after the assured had made tender of such arbitration in writing, which writing shall be the only competent evidence of such tender; and provided further, that the assured shall assume the burden of proof and prove affirmatively that such assessment has been made by the company or that the assured has taken such legal steps as may have been necessary to compel such assessment in case the company shall have refused to make the same. The amount received from said assessment shall fix the liability of the company for said loss."

The defendant denied all liability on the policy, and refused to make the assessment. It is not disputed that a pro rata assessment, if it had been made, would have realized the amount for which judgment was rendered.

The question presented is whether plaintiffs could maintain an action at law for the said sum as damages for breach of defendant's contract, or was their remedy in equity to compel an assessment? This question has been recently considered in Thompson v. Piedmont Mutual Ins. Co., 77 S.C. 486,58 S.E. Rep., 341, and the conclusion reached was that when an insurance company denies all liability and refuses to make an assessment, an action at law is maintainable to recover the amount of damages which the insured would be entitled to recover if the company had performed its part of the contract. The Court in that case cites Bent v.N.W. Aid Asso., 40 Minn., 202, 2 L.R.A., 784; Jackson v. N.W.M.R. Asso., 73 Wis. 507, 2 L.R.A., 786; Lawler v. Murphy, 58 Conn., 294, 8 L.R.A., 113, to which may be added Elkhart Mut. Aid, etc., Association v. Houghton (Ind.), 2 N.E. Rep., 763; Earnshaw v. Sun Mut. AidSociety, 68 Md., 465, 6 Am. St. Rep., 460; O'Brien v. HomeBen. Soc. (N.Y.), 22 N.E. Rep., 954.

The judgment of the Circuit Court is affirmed.