Reynolds v. Mutual Fire Insurance

34 Md. 280, 1871 Md. LEXIS 58

• Court: Court of Appeals of Maryland
• Decided: March 3, 1871
• Status: Published

Opinions

Grason, J.,

delivered the opinion of the Court.

On the 5th day of October, in the year 1868, the appellant obtained insurance against fire, upon buildings in Caroline county, in the Mutual Fire Insurance Company of Cecil county, for $2,383, and at the same time, in consideration thereof, executed and delivered to the company his note, called a premium note, for $108.89, to be paid “in whole or in such sums and at sucli times as the managers of the said company shall or may call for the same, according to the provisions of the Act of incorporation and by-laws of the said company, as recognized and authorized by said Act of Incorporation, and interest thereon, at six per cent., to be paid annually in advance, so long as the managers of the said company may find it necessary to call in and receive the same.” The record shows that the appellant regularly paid the interest on said note, and the taxes assessed by the company to August, 1862, inclusive, and that, on the 25th day of December, 1860, he applied to the Circuit Court for Caroline county, for the benefit of the insolvent laws, and was finally discharged in the month of October, 1862, and that the buildings described in the policy were destroyed by fire in February, 1863. The company refused to pay the insurance, and the appellant instituted suit against it in the Circuit Court for Cecil county, and the judgment being in favor of the company, the plaintiff below took this appeal.

The consideration given for the policy of insurance was the premium note of the appellant. Where insurance companies conduct their business exclusively upon the mutual plan, they have to look to the premium notes of the insured for the means of paying losses that may occur, and for this purpose they assess upon their members and call in such sums as may be necessary. It is therefore essential that the parties giving their premium notes shall be under a legal obligation to pay the amounts of their respective notes, in such sums and at such times as the companies may require and call for the same, in accordance with their charters and by-laws. If the insured be discharged from their liability to pay, it follows that the insurers are also released from their obligation to indemnify against loss by fire; otherwise there would be no mutuality in the contract between the parties. Was the appellant released from the legal obligation of his contract with the appellee by his discharge under the insolvent laws ? The 4th section of the 48th Article of the Code provides that, “if the creditors, endorsers or sureties shall fail to make any allegations or propose interrogatories, or if the same shall be answered satisfactorily, or determined in favor of the insolvent, the Court shall discharge the insolvent from all debts and contracts made before the filing of his petition, and he shall be released from all sueh debts and contracts.”

The contract of the appellant with the appellee was entered into before the former filed his petition for the benefit of the insolvent laws, and his discharge operated a release from all liability upon his note to the appellee; and had any necessity arisen for calling in sums from parties insured for the purpose of paying losses incurred by fire, the appellant could have successfully resisted any such call upon him, by pleading his discharge under the insolvent laws. After his discharge there remained no mutuality in the contract between him and the appellee, and he cannot be permitted to hold it bound by its contract, while ho himself has been released from all liability upon his note, which is the only consideration on which the policy was issued. Pie is therefore not entitled to recover from the appellee for the loss he has sustained by the destruction of his buildings by fire, even if it appeared from the record that he had an insurable interest therein at the time of the fire.

But it was contended that, by reason of the receipt by the appellee from the appellant, of interest upon the premium note after the filing of the petition for the benefit of the insolvent laws,- it has waived any right it may have had to treat the policy of insurance as at an end, and no longer binding upon it, and is estopped from now denying its continuing validity. This argument is based upon the fact that the proceedings in insolvency were had in a Court of record, whose proceedings are constructive notice to the whole -world, and that, having received the interest on the appellant’s note with this constructive notice of his application for the insolvent laws, the appellee cannot now avail itself of said application as a defence to this action. If the proof had shown that the appellee had received the payments of interest with actual knowledge of the appellant’s application for the benefit of the insolvent laws, there might have been some reason for the argument that it had thereby waived its right to hold itself absolved from its contract; but, upon that question, we do not mean, to express any opinion. But the proof clearly shows that the proceedings in insolvency were had in a Court at some distance from the county in which the office of the appellee was located and its officers resided, and that they had no actual notice of those proceedings, and the discharge of the appellant, until long after" the mouth of August, 1862, when he made his last payment of interest. The principle is well-settled, that a party will not be held to have waived his rights or to be estopped by his conduct and acts, unless it is shown that he has acted with full knowledge of all the facts affecting his rights, Ijams vs. Hoffman, 1 Md., 437, 438; Gray vs. Murray, 3 Johns. Ch. Rep., 188; Bennett vs. Colley, 2 Myl. & Keene, 225; Howard vs. Carpenter, 11 Md., 279; Flagg vs. Mann, 2 Sumner, 563.

(Decided 3d March, 1871.)

We find no error in the rulings of the Court below, in refusing the instruction asked by the appellant, or in granting that asked by the appellee.

The evidence in the second exception, which was objected to by the appellant and admitted by the ■ Court, was legally admissible. Proof having been offered to show that Alexander Stewart was agent of the appellee, residing in Caroline county, the evidence objected to was admissible to show the special character and extent of the agency. The judgment appealed from must be affirmed.

Judgment affirmed.