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HYATT, receiver, &c. vs. WAIT and SIMMONS.

A clause in a policy of insurance providing that the interest of the assured in the policy, or in the property insured, is not assignable without the consent of the insurers, in writing; and that in case of any transfer or termination of such interest without such consent, the policy shall thenceforth be void and of no effect, is to be regarded as a provision made for the exclusive benefit of the company, and to be practically exercised by them or not, at their option.

If, after the assured has transferred his interest in the policy and in the property insured, without the written consent of the company, the company choose to ratify the transfer, and, notwithstanding the transfer, to continue the insurance, the policy will not be absolutely void. MILLER, J. dissented. And if, after notice of such transfer, they treat the assignee as a member of the company they will be estopped from denying such ratification and approval.

Whether a policy of insurance be regarded as originally void, or only voidable, in consequence of an unauthorized transfer, it is nevertheless conditionally susceptible of ratification and confirmation.

Notwithstanding a policy be regarded as absolutely void, by reason of an unauthorized transfer, so far as to prevent an action for a loss by the assured, against the company, the former is not released from the obligations of his deposit or premium note until he has complied with a condition of the policy and charter, requiring "the payment of his proportion of all losses and expenses that may have accrued prior to the surrender" of the policy, or alienation of the property.

The assured will remain liable upon his deposit note, as well for losses occurring after as before the alienation, until all assessments are paid. MILLER, J. dissented.

For a proper understanding of the rights and obligations of the parties, the charter of a mutual insurance company, a policy issued by the company, and the conditions annexed thereto, must be read together. The result will be, 1. That a sale cannot take place without the consent of the company. 2. That the assured cannot terminate his membership in the company, nor be released from the obligations of the premium note, without paying up all arrears of assessments for losses previously incurred. 3. That the purchaser must be one whose purchase has been made with the consent of the company, or has been ratified and approved by them. 4. That the purchaser must be a different person from the parties insured, or either of them. In other words, the sale must be to a third person, and not to one of the assured. The entire interest must be transferred to some one who was not interested in it previously.

Notwithstanding a clause in the charter of a mutual insurance company, declaring that all persons who shall insure with the company, and their heirs, &c., so long as they shall be insured in said company, shall be and con

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Hyatt v. Wait.

tinue members thereof, and no longer," persons insured are still members of the company, and liable to contribute for the losses sustained, although they have alienated the property without the written consent of the company.

Upon a recovery on a premium note, for the non-payment of assessments, the plaintiff is entitled to interest, from the time when the assessments were payable.

THIS

THIS action was brought by the plaintiff as receiver of the Rensselaer Insurance Company, against the defendants, to recover the amount of a premium note for $350, given by them to said company, and dated the 25th day of April, 1850. It was tried by the court, (Judge HOGEBOOM,) without a jury, at the Rensselaer circuit, in February, 1861, upon a statement of facts agreed on, in writing, signed by the attorneys of the respective parties, of which the following is a copy:

"We stipulate to admit on the trial of this action the organization and reorganization of the Rensselaer Insurance Company; the appointment of the plaintiff as receiver of the same; the execution of the note by the defendants; the execution and delivery of the policy of insurance by the company to the defendants, who were at that time copartners; the making of the assessment; the regularity of the same, and publication of notice of and demand of the same of the defendants, as alleged in the complaint. Also, that on the 17th day of May, 1852, Thomas Simmons sold his interest in the insured property to the defendant William G. Wait, and executed the assignment on the policy to Wait, and that on the same day he wrote a letter to the secretary of the company, which is hereto annexed; that said letter inclosed the policy; that the secretary answered, declining giving consent unless the assessments were paid, as stated in the memorandum at the foot of the letter. That the policy was found in a bundle of old policies in the office of the company, January 30th, 1857, by the plaintiff, and that the letter of May 17th, 1852, was found in the policy. That the policy was sent to the office of the company the 17th day of May,

Hyatt v. Wait.

FARVARY

1852, with the letter of that date, and remained there till January 30th, 1857. That at the time, May 17th, 1852, there was an assessment of $17.21 on the note in suit, made July 27th, 1851, which had not been paid, and has never since been paid. That the assessments mentioned in the complaint were made for losses which accrued subsequently to January 13th, 1853. That there were some losses intermediate the 27th July, 1851, and May 17th, 1852, towards the payment of which the note in suit had not and has never since contributed. Dated February 4th, 1861."

The following is a copy of the letter of Wait to the secretary of the company, referred to in the above stipulation: "Vail's Mills, May 17, 1852.

J. RANSOM, ESQ.: Will you have the goodness to approve of the assignment of the interest of the policy inclosed, to me, as I have purchased his interest of the property mentioned in the policy inclosed. I have also procured an additional insurance on stock and bark, both in and out of the tannery, of $1000. Will you have the goodness to return this policy as soon as convenient. Direct your letter Vail's Mills, Fulton co., N. Y. Yours respectfully,

WILLIAM G. WAIT."

Indorsed, "Declined giving consent unless the assessments are paid. May 20, 1852."

The other exhibits were copies of the policy of insurance with the conditions annexed, the assignment of the same from Simmons to Wait, dated the 17th day of May, 1852, and the charter of the Rensselaer Insurance Company. The court found the facts as contained in said statement and exhibits, and as a conclusion of law decided that the plaintiff was entitled to judgment for the whole amount unpaid of the assessments upon said note, with interest from the time the same became payable as claimed in the complaint. The defendants excepted as follows: "The defendants except, because the court did not decide that the sale of the property by Simmons to Wait, and the refusal of the

Hyatt v. Wait.

company to ratify the sale and the policy, operated to destroy the policy, and to discharge the defendants from all liability on the note for assessments thereon for all losses which might occur after the sale, &c., and the refusal of the company to ratify the same. The defendants except, because the court decided that the defendants were liable to be assessed on the said note for losses after the sale of the property by Simmons to Wait, and after the notification thereof and the refusal of the company to ratify the sale and the policy. The defendants except, because the court did not decide, upon all the facts found, that the plaintiff could not recover; and because the court did not decide that the defendants were entitled to judgment in their favor."

Judgment having been entered on this decision, for the plaintiff, for $444.35 damages and the costs of suit, the defendants appealed to the general term.

W. Wait, for the defendants.

C. F. Tabor, for the plaintiff.

HOGEBOOM, J. The plaintiff brings this suit to recover of the defendants, as members of the Rensselaer County Mutual Insurance Company, the amount due on a premium or deposit note signed by them for $350, which on its face is payable in such portions and at such times as the directors may require. The complaint alleges a proper assessment for losses incurred, and the neglect of the defendants to pay the same. No question is made but that the plaintiff, in these respects, has made the necessary averments and proof, and is entitled to recover, unless the defense relied on can be sustained.

That defense is, that one of the defendants, Simmons, sold out his interest in the insured property to the other, Wait, without the consent of the company; that the purchaser notified that sale to the company, and by letter requested

Hyatt v. Wait.

their approval of the assignment of the interest in the policy (inclosed) to him, and a return of the policy as soon as convenient; that the company declined giving such consent unless the prior assessments were paid; that the policy never was returned; that such letter was subsequently found, by the receiver, with an indorsement on it by the agent of the company declining to give consent unless the assessments were paid, assessments then unpaid having been actually made previous to that time for losses incurred previous to the sale; and that subsequently to the receipt of the indorsement upon said letter, assessments were made for losses thereafter incurred, on account of the non-payment of which this action was brought.

The defendants' legal propositions are: 1st. That by the unauthorized sale the policy became void, and the defendant ceased to be a member of the company; and that assessments for losses can only be made upon and collected of actual members. 2d. That if, by the unauthorized sale, the policy was only voidable at the pleasure of the company, they elected to treat it as void by not returning the policy as requested in the letter of the defendant Wait, and not acceding to the transfer of the subject insured, mentioned in his letter, except upon conditions not authorized by the charter or the contract between the parties. These are the questions to be examined.

I. By the terms of the policy and conditions annexed, it is unquestionable that the sale of the property insured, without the consent of the company, renders the policy either void or voidable.

The policy provides that "the interest of the assured in this policy, or in the property insured thereby, or in any part thereof, is not assignable without the consent of the said company in writing; and in case of any transfer or termination of such interest, or any part thereof, either by sale or otherwise, without such consent, this policy shall thenceforth be void and of no effect."

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