U.S. Supreme Court Mutual Assurance Society v. Korn & Wisemiller, 11 U.S. 7 Cranch 396 396 (1813)
Mutual Assurance Society v. Korn & Wisemiller
11 U.S. (7 Cranch) 396
ERROR TO THE CIRCUIT COURT FOR THE
DISTRICT OF COLUMBIA AT ALEXANDRIA
Decided: that the proprietors of buildings in Alexandria, insured by the society, were bound by the act of assembly of Virginia passed in 1805, and the subsequent regulations of the society, to pay an additional premium upon the increased rate of hazard according to the new regulations of 1805.
The Mutual Assurance Society against free, &c.;, was incorporated by an act of the Legislature of Virginia in 1795.
According to the original plan of the institution, the houses in the towns and country were blended together in one general mass, and were mutually pledged to each other, to make good the losses which might be respectively sustained by fire.
In January, 1805, the Legislature of Virginia, at the request of the society, passed a law changing the original plan of the institution by separating the town buildings from those in the country and making the town buildings liable only for town losses, and the country buildings for country losses. This law directed that there should be a revaluation of the buildings which had been previously insured, and authorized the society, as in the first instance, to fix the rates of hazard, and make such bylaws, rules, and regulations as they might think proper.
The society was authorized to recover its debts by motion in a summary manner.
Under the act of 1805, the society made a new tariff of rates of hazard.
The houses of the defendants were revalued under the act. The revaluation was less than the original valuation, but the rate of hazard, or in other words the premium for the insurance, was increased under the new regulation.
By the third section of a bylaw of the society, made in January, 1805, under the authority of their original act of incorporation and of the act of 1805, it is enacted
"That if the revaluation of any building shall prove it to be of less value than that at which it was insured, there shall be no demand against the society of restitution of any part of the premium which may have been paid, and the proprietor of such building shall pay the additional premium (if the materials of which his building be erected, or its contiguity require it) which according to the new rates of hazard ought to be paid."
In July, 1805, the defendants, Korn & Wisemiller, agreeably to a form prescribed by the society, made a declaration, under their hands and seals, as follows:
"We do hereby declare and affirm that we hold the above-mentioned buildings, with the land on which they stand, in fee simple, and that they are not, nor shall be insured elsewhere, and that we will abide, observe, and adhere to the constitution, rules, and regulations which are already established or may hereafter be established by a majority of the insured, present in person or by representatives, or by the majority of the property insured, represented either by the persons themselves, or their proxy duly authorized, or their deputy, as established by law, at any general meeting to be held by the said assurance society, or which are or hereafter may be established by the president and directors of the society."
To this declaration were annexed a plat, description, and new valuation of the buildings insured.
The buildings had been originally insured by the defendants in the year 1796.
The sum now claimed of the defendants was for the additional premium arising out of the increased rates of hazard according to the new regulations, made in January, 1805.
JOHNSON, J. delivered the opinion of the Court as follows:
In the case decided between Atkinson and these plaintiffs, February term, 1810, the question arose on the construction of the 7th section of the act of 1805, and the additional premium in that case was imposed upon a revaluation without relation to a change in the rates of premium, but resulting from the increased valuation.
In this case, the sum demanded arises from the changes made in the rates of premium, arising from a
variation of risk, to equalize which the 8th article of the present rules of the society requires an additional percentage to be paid by the present members of the company, in conformity to what is to be imposed upon subsequent applicants for insurance. And it is contended that, the contract being complete between the parties, the insurers cannot add to the consideration to be paid for insurance. In general, this doctrine is unquestionably correct, but peculiar circumstances except this from ordinary cases. This subject was considered in the quoted case decided between these same parties in February, 1810. It is there laid down, and on reflection we are confirmed in the opinion, that in the capacity of an individual of the body corporate, the defendants are bound by the bylaws of the society as far as is consistent with the nature of its institution.
This case is within the 4th section of the 8th article of those bylaws, and therefore the judgment below ought to have been for the plaintiffs.