Farmers & Merchants' Insurance v. Smith

Citations

• 63 Ill. 187

Syllabus

<p>1. Insurance—giving note for instalments of premium—whether the assured a stockholder. Where an insurance company was authorized to insure either upon the customary mutual plan, taking deposit notes subject to assessments from time to time in proportion to the losses, or to insure for a term of years at a fixed annual premium, receiving the first year’s premium in advance and taking a note payable in instalments at the commencement of each of the years during which the policy would run, it was held, that a policy issued upon the latter plan did not make the assured a stockholder or liable for the debts of the company, but was merely a contract by which the company undertook to indemnify the assured against loss for a term of years, provided he would pay a certain sum at the beginning of each year.</p> <p>2. Same—bankruptcy of company—liability of assured on ps'emium note. A party executed to such a company a note for $16.80, payable in annual instalments of $4.20. The note was given for a policy of insurance running five years from its date. The premium for the first year was paid in advance, and the note was for the four succeeding years. The first instalment, due at the beginning of the second year, was paid, but before that year expired the company became insolvent and suspended business, and the assured refused to pay the next instalment. There was a provision in the policy that, in the event any instalment should remain unpaid for thirty days after maturity, all the instalments or premiums should be due and payable as liquidated damages. In an action brought by the receiver of the company to recover the remaining instalments, it was held, that nothing was recoverable, as, upon the company becoming bankrupt, the consideration of the note—the protection against loss—failed.</p>