Dawes v. North River Insurance — 7 Cow. 462

Majority

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*Dawes against The North River Insurance Company.

UTICA,

August,1827.

Headnote

The president of the North River Ins. Oo., moorporated by the statute, (sess. 45, oh. 23,) the 9th section of which requires one third of the directors to constitute a quorum for doing business, &c., has no power, as president, to waive the preliminary proof upon a policy of insurance; or, ~n general, to do other business for the company.

The general ?ule is, that a x)rporate body ~an act only in ;he mode pre~cribed by the law creating it.

The rule that strict preliminary proof may be waived in case of fire insurance, the same as in ease Of marine insurance, recognized*

ASSUMPSIT on a policy of insurance against fire; tried at the New York circuit, December 5th, 1825, before EDWARDS, 0. Judge; when the plaintiff made out the following case:

The defendants, by a policy, daly executed, insured against fire, for the plaintifi~ a large quantity of wines and other liquors, valued at $3000. Certain conditions were annexed to the policy, and. made part of the contract, The ninth condition required of the insured, the production of certain documents, and, (among others,) a certificate under the hand of a magistrate, notary public, or clergyman, that they were acquainted with the character and circumstances of the insured; and that, having investigated the circumstances of the loss, they knew or believed that the insured had sustained loss' to the amount mentioned; and until such proof &c., should be produced, the loss should not be payable.

The plaintifi in his declaration, averred that the property was burnt, &c.; that the plaintiff procured and produced the certificate of Robert J. Oheeseborough, a notary public, that he had examined into the cause of the loss,

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and expressing his opinion thereon, as required by the policy.

Cheeseborough, the notary, was examined as a witness; and testified that he was employed to make out the preliminary proofs of the plaintiffs’ loss; that he delivered certain affidavits; that on the 27th of April, 1824, he called upon the president, while in the office of the company, and stated that he, the witness, had in his posession a certain deposition, and also, a notarial certificate in relation to the fire. He told the president, (which was the fact,) that, in drawing his certificate, he had omitted to state his own opinion of the amount of the loss, having understood that full proof of the amount had already been '“made; that he had made but one notarial certificate, which he intended to serve on the Washington Insurance Company who had underwritten on the same property; that if the company required it, he would make out a new certificate, expressing his opinion. To which the president replied, that he need not make a new certificate; that they would not require the formality of his expressing his opinion; that service of the certificate he had drawn on the Washington Insurance Company, would be sufficient.

The defendant’s counsel objected to the sufficiency of the preliminary proofs. The objection was sustained by the judge, and the plaintiff nonsuited.

T. A. Emmet, for the plaintiff,

now moved to set aside the nonsuit, and for a new trial. He said, it is well settled, in regard to marine policies, that full preliminary proof may be waived. ( 9 John. 192 , 196.) The same reason applies to policies ágainst fire. This is a case of express waiver, by which the condition precedent was discharged. (Rol. Abr. 453, 454, Condition, (N.) pl. 5, cites 3 H. 6 , 37.)

The president was competent to waive the proof. He was acting in his hours of business as the ostensible agent of the company; and they should be bound by his acts. A. by-law might be inferred, conferring authority so to act. It is impossible for us to know the extent of his authority;

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or how far he may be limited at private meetings. Nor are we t)0Un¿ to look to that. He is to be regarded as a general agent. ' His power as such may be inferred from the usual manner of doing business by the like corporations. At least, it lies with the company to show the want of authority. The question should have gone to the jury-

C. Graham and G. Griffin, contra.

The averments as to the preliminary proofs were not supported by the evidence. They state a strict compliance with the condition, and should have been literally proved. (6 T. R. 722. 2 H. Bl. 577, note.(a) Condy’s Marsh. 808, et seq.)

*The president had no power to waive the proof. ( 2 John. 109 , 114,) and the cases there cited by Thompson, J. The charter of this company, sess. 45, ch. 23, s. 9, 6 Laws N. Y. 16, a.) This charter requires the concurrence of the president and one-third of the directors, on the transaction of business. Per se, the president has no power to do anything. The onus of showing authority lay with the plaintiff. ' If there be a general agency, the proof of this always lies with the party who would avail himself of it. We admit that a corporation may act by a general agent; but the agency must be proved. The plaintiff was bound to make out the president an agent quoad hoc, by showing a series of like acts, recognized by the company.

The only question is, -whether the president had power to dispense with the preliminary proofs.

By the ninth section of the act incorporating the defendants,. passed February 6, 1822, (sess. 45, ch. 23,) the president, with one-third of the directors,-shall constitute .a quorum; and be competent to the transaction of all the business of the corporation.^[1]

By the tenth section, it is provided that -policies signed

(a) (a) This is one illustration of what .the court say,’ ante, 409, “ Some stat utes of incorporation declare, expressly, what number is necessary to make a board.”

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by the president, and countersigned by the secretary, shall be obligatory upon the company; and that all business may be conducted by committees, without the presence of a board.

By the act of incorporation, therefore, the .president is not clothed with any power to settle or pay claims, without one-third of the directors; nor to do any other act, except signing policies of insurance.

In the case of Beatty v. The Mar. Ins. Co. ( 2 John. 109 , 114,) the agent of the plaintiff called on the secretary, who, with the amount claimed by the plaintiff, in his hand, went into another room, where the president and assistants were sitting, and returned, and informed the agent of the plaintiff that the loss was passed, and wanted the plaintiff *to take a note. Afterwards, the company refused payment ; and the court held that there was no valid acceptance.

In cases of this kind, great strictness is required; and the plaintiff cannot recover without a literal compliance with the conditions. (2 H. Bl. 577, n.(a.) Marsh, on Ins. 808, 9.) In Beatty v. The Mar. Ins. Co., Thompson, justice, says, the defendants, being a body corporate, the general and invariable rule is, that such body can act only in the mode prescribed by the law creating it. By the act incorporating the defendants, the president has no such power as he assumed to exercise. None is shown by any by-law, or the appointment of a committee. Of course, no such power existed; and the company are hot bound by his act.^[2]

[1] [1] Corporations, in this country, owe their existence to the legislative power, they are created for specific and defined objects and purposes; and they derive all their powers from their charters. To ascertain their capacity, reference must be had to their acts of incorporation. It cannot be inferred from the mure fact that they are created bodies politic and corporate. Bard v. Chamberlain, 3 Sandf. Ch. Rep. 31. A corporation which has discontinued its business, pursuant to its charter, iannot resume it without the sanction of the legislature. Green v. Seymour, 3 Sandf. Ch. Rep. 285. Corporations are deemed to possess such powers as are specifically granted by the act of incorporation, or are necessary for the purpose of carrying into *465 affect the powers expressly granted, and as not having any other. Camden and Amboy Railroad, &c., v. Remer, 4 Barb. S. C. Rep. 127. Corporations have such powers and capacities as are given to them, and none other; and, every abuse of such powers is a violation of the law of their being, and a forfeiture of their franchises. The establishment of an agency or office at a place not authorized by the charter, was held to be a violation of it. Attorney General v. Oakland County Bank, Walker’s Ch. Rep. 90. A. corporation is merely a creature of the law, a politic and not a natural body. It is made up by the compact entered into by the stockholders, eacn of whom becomes a corporator, identified with and forming a constituent part of the corporate body. Verplank v. The Mercantile Ins. Co., 1 Edw. 84 . Where a corporation relies upon a grant of power from the legislature, for authority to do an act, it is as much restricted to the mode prescribed by the statute for its exercise, as to the thing allowed to be done. Per Welles, J. The Farmers' Loan and Trust Company v. Carroll. 6 Barb. S. C. Rep. 613 (Am. Ch. Dig., pp. 380, 382, §81.)

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The case of Vos v. Robinson, ( 9 John. 192 ,) is not in point. Ho question was made as to the power of the defendant’s agent to transact any business of his principal. Had this proof been dispensed with by a board of directors, or a committee authorized to settle the claim, the defendants would have been bound by it. . But the president had no more power to dispense with the terms of the contract than any other stockholder.

The plaintiff was properly nonsuited. The motion must be denied.

Motion denied.

Sutherland, J., not having heard the argument, gave no opinion.