
    INSURANCE — MUTUAL FIRE.
    [Franklin (2d) Circuit Court,
    1903.]
    Wilson, Sullivan and Summers, JJ.
    Channing W. Richards, Receiver, v. H. D. Hale.
    1. Parol Proof not Admissible to Change Terms of Insurance Power.
    In the absence of fraud or mistake parol evidence is not admissible to vary the terms of an application for an insurance policy.
    2. Policy Holder Estopped to deny Knowledge and Acceptance Thereof, When.
    A person who receives and holds an insurance policy issued upon an application therefor signed by him, during the time it was in force by its terms, is estopped to deny his knowledge and acceptance thereof.
    3._ Presumption that Policy Holder has Signed Constitution of Mutual Insurance Company, When.
    In the absence of direct proof to the contrary it will be presumed that a person shown to be a member of a mutual fire insurance company, under Sec. 3689 Rev. Stat., which provides that none but members can be insured, has conformed to the requirements of Sec. 3690 Rev. Stat., by signing the constitution of the company.
    4. Where Irregularities in Proceedings to Assess Mutual Insurance Members not a Defense in Action by Receiver Therefor.
    In an action by the receiver of a mutual fire insurance company against a policy holder to recover assessments to pay liabilities incurred during the time the policy was in force, mere irregularities'in the proceedings to assess will not avail as a defense.
    Heard on Error.
    Arnold, Morton & Irvine and Patterson A. Reece, for plaintiff, argued and cited: '
    A person who accepts and holds a policy in a mutual' insurance organization, is conclusively presumed to know the law governing it and the obligations of its charter and by-laws, whether such laws, charter and by-laws are referred to in the policy or not; and such policy holder will not be allowed to set up as a defense in a suit for the benefit of creditors of such organization, that he did not know the law, or the contents of the policy which he so accepted and held. Golden Rule v. Ainsworth, 71 Ala. 487; Edwards v. Williamson, 70 Ala. 145; Micou v. Tallassee, 47 Ala. 656; State v. Paup, 13 Ark. 129 [56 Am. Dec. 303]; Broom Legal Maxims on “ Ignorantia; ” Wilson v. Young, 25 S. W. Rep. 870 [58 Ark. 599]; Jacoway v. Denton, 25 Ark. 625; Stohr v Fund Soc., 22 Pac. Rep. 1125 [82 Cal. 557, 559]; Fry v. Insurance Co., 31 Fed. Rep. 197; Hull v. Rollins, 11 So. Rep. 97 [29 Fla. 79, 89; 16 L. R. A. 308; 30 Am. St. Rep. 95]; Moultrie v. Smiley, 16 Ga. 294; Railway Passenger &"F. C. Mut. A. & B. Assn. v. Robinson 35 N. E. Rep. 168 [147 111. 138, 139]; Supreme Rodge K. of P. v. Knight, 20 N, F. Rep. 479 [117 Ind. 489; 3 R. R. A. 409]; Sitneral v. Insurance Co., 18 Iowa 819, 322; Glenn v. Statler, 42 Iowa 107; Davis v. Commonwealth, 76 Ky. 318, 319; Orr v. Risso, 3 Ra. Ann. 478; Richardson v. Reavitt, 1 Ra. Ann. 430, 431 [45 Am. Dec. 90]; Palmer v. Hixon, 74 Me. 449; Maryland Mut. Ben. Soc. v. Clendinen, 44 Md. 429, 432 [22 Am. Rep. 52]; Monitor Mut. F. Ins. Co. v. Buffum, 115 Mass. 343. 345; Morgan v. Butterfield, 3 Mich. 615, 623; State v. Foley, 15 N. W. Rep. 375 [30 Minn. 350, 353]; Weingartner v. Insurance Co., 32 Fed. Rep. 314, 315; State v. Carver, 39 Atl. Rep. 973, 974 [69 N. H. 216]; Cutter v. State, 36 N. J. R. 125, 128; Hellenburg v. Independent Order B’Nai Brith, 94 N. Y. 580, 584; Goodale v. Fennell, 27 Ohio St. 426, 431, 432 [22 Am. Rep. 321]; Union Cent. R. Ins. Co. v. Hook, 62 Ohio 'St. 256, 263 [56 N. F. Rep. 906]; Fahie v. Pressy, 2 Ore. 23, 26 [80 Am. Dec. 401]; Susquehanna Mutual F. Ins. Co. v. Swank, 192 Pa. St. 17; Rawrence v. Beaubien; 2 Bailey (S. C.) 641 [23 Am. Dec. 155]; Hannum v. Mclnturf, 65 Tenn. (6 Baxt.) 226; Van Hoffman v. Quincy, 71 U. S. (4 Wall.) 535; Smith v. Flliott, 39 Tex. 201, 212; Roberts v. Cocke, 69 Va. (28 Gratt.) 207, 216; Morrison v. Insurance Co., 6 S. W. Rep. 605 [69 Tex. 353; 5 Am. St. Rep. 63]; McCracken v. Hayward, 43 U. S. (2 How.) 608, 613, 619; McDaniels v. Bank, 29 Vt. 230 [70 Am. Dec. 406]; Greenhow v. Vashon, 81 Va. 353; Western U. Tel. Co. v. Reynolds, 77 Va. 178, 183, 184 [46 Am. Rep. 715]; Forqueran v. Donnally, 7 W. Va. 114; Von Baumbach v. Bade, 9 Wis. 559, 577 [76 Am. Dec. 283]; State v. University Rand (Comrs.), 4 Wis. 414.
    Affirmative defenses do not arise on an answer containing denials only, or on demurrer to the petition, but must be pleaded, if at all, in the defendant’s answer. Trumbull Co. Mut. Fire Ins. Co. v. Horner, 17 Ohio St. 407, .409; Hites v. Irvine, 13 Ohio St. 283; Miller v. Miller, 16 Ohio St. 527; Gill v. Sells, 17 Ohio St. 195: Knox Co. Bank v. Rloyd, 18 Ohio St. 353; Ewing v. McNairy, 20 Ohio St. 315; Covington & Cin. B. Co. v. Sargent, 27 Ohio St. 233, 238; Rarimore v. Wells, 29 Ohio St. 13; Fanning v. Insurance Co., 37 Ohio St. 344 [41 Am. Rep. 517]; Witte v. Rockwood, 39 Ohio St. 141 ;Pomeroy Code Remedies (3 ed.), Sec. 687; Phillips Code Pleadings, Sec. 235; 9 Enc. PI. & Pr. 684, 687.
    Policy holders are estopped from pleading any irregularity, misunderstanding, misrepresentation, defect or omission whatever as against a receiver or trustee who sues for assessments to pay liabilities incurred during the time defendants held their policies in force. Trumbull Co. Mutual F. Ins. Co. v. Horner, 17 Ohio 407, 409; Callender v. Railway Co., 11 Ohio St. 516, 527; Goodin v. Evans, 18 Ohio St. 150,168 [98 Am. Dec. 95];, Lucas v. Building & L. Assn., 22 Ohio St. 339; Union Mut. L. Ins. Co. v. McMillen, 24 Ohio St. 67; Hays v. Gas L. & C. Co., 29 Ohio St. 330, 340; Clarke v. Thomas, 34 Ohio St. 46, 62, 63; Ehrman v. Insurance Co., 35 Ohio St. 324, 337; Tone v. Columbus, 39 Ohio St. 281 [48 Am. Rep. 438]; Falkenbach v. Patterson, 43 Ohio St. 359, 369 [1 N. E- Rep. 757]; Mansfield v. Ice Co., 11 Re. 617 (28 Bull. 113); Dettra v. Kestner, 11 Re. 625 (28 Bull. 119) ; Mansfield v. Woods, 11 Re. 761 (29 Bull. Ill); Richards v. Swaim, 9 Dec. 70, 76 (7 N. P. 68); Chubb v. Upton, 95 U. S. 665, 669 ; Rundle v. Kennan, 48 N. W. Rep. 516 [79 Wis. 492]; Doane v. Marine & Fire Ins. Co., 11 Atl. Rep. 739 [43 1ST. J. Eq. 522]; Hitchcock v. Galveston, 96 U. S. 341; Oneida Bank v. Bank, 21 N. Y. 490, 495;. Matt v. Protective Soc., 30 N. W. Rep. 799 [70 Iowa 455]; 16 Am. & Eng. Enc. Law (1 ed.) 95; Kitzmiller v. Van Rensselaer, 10 Ohio St. 63, 64 ; Holt v. Lamb, 17 Ohio St. 374, 387, 388; Toledo Tie & Lumber Co. v. Thomas, 11 S. E. Rep. 1137 [33 W. Va. 566; 25 Am. St. Rep. 925].
    Charles C. Pavey and J. B. Kahle, for defendant in error, cited:
    To admit evidence of fraud when fraud is relied upon as a defense, there must be a statement of facts constituting the fraud, for in such a case it is new matter and must be specially pleaded. Bates Pleading, Parties and Forms 451; Kinkead Code Pleading, Sec. 607; Phillips Code Pleading, Sec. 271.
    To constitute a valid contract there must be a mutual assent of the parties thereto, and they must assent to the same and in the same sense. Bruner v. Wheaton, 46 Mo. 363.
    Essentials of a simple contract. Loaiza v. Superior Court, 24 Pac. Rep. 707 [85 Cal. 11; 9 L- R. A. 376; 20 Am. St. Rep. 197]; Morrill v. Nitingale, 28 Pac. Rep. 1068 [93 Cal. 455; 27 Am. St. Rep. 207]; Comyn Contracts 2; Story Contracts (5 ed.) 1; Beach Contracts, Sec. 1, note 111. Machine Co. v. Insurance Co., 50 Ohio St. 549, 555 [35 N. E. Rep. 1060].
    The office of a general denial is twofold. First, it casts upon the plaintiff the burden of proving all the material facts constituting his cause of action; and second, it authorizes the defendant to disprove those averments, and controvert the plaintiff’s evidence. Phillips Code Pleading, Sec, 383.
    Where the plaintiff, in an action of replevin, alleges his ownership of the goods in question, his right to the immediate possession of them, and their unlawful detention by the defendants, the latter may, under a general denial, prove that as an officer he levied upon the goods at the suit of a creditor of one from whom the plaintiff obtained them and that the transfer to the latter was fraudulent and void as against creditors. Bailey v. Swain, 45 Ohio St. 657 [16 N." E. Rep. 370].
    The defense of new matter. Phillips Code Pleading, Secs. 380, 384.
    A person who solicits insurance and procures the application therefor shall be held to be the agent of the party hereafter issuing a policy upon such application or a renewal thereof, anything in the application or policy to the contrary notwithstanding. Sec. 3644 Rev. Stat.; Guenther Insurance, Secs. 26, 42 43; Hilliard v. Insurance Co., 5 Dec. 576 (7 N. P. 561); Insurance Co. v. Williams, 39 Ohio St. 584 [48 Am. Rep. 474]; Amazon Ins. Co. v. Wall, 31 Ohio St. 628 [27 Am. Rep. 533].
    On Application for Rehearing:
    Section 3689 Rev. Stat.: “ In no instance shall the power to insure * * * be exercised to other than members of the association.” Necessarily if Hale did not become a member ot the association, in conformity to the requirements of the statute, his contract was an illegal contract. Courts always leave both parties to illegal contracts, and almost always to ultra vires contracts where they find them. Coppin v. Greenless, 38 Ohio St. 275 [43 Am. Rep. 425]; 1 Clark & Marshall Priv. Corp , Secs. 213, 214; Montgomery v. Montgomery, 31 Ala. 76 ; Central Trans. Co. v. Car Co., 139 U. S. 24 [11 Sup. Ct. Rep. 478]; Phoenix Life Assurance Co., In re, 2 Johns. & H. 441; Bath Gas Light Co. v. Chaffy, 45 N. E. Rep. 390 [151 N. Y. 24; 36 L. R. A. 664].
    Members of a mutual fire association are liable to be specifically assessed, from time to time, to pay losses which occur while they are such, but no member is liable to such assessment to pay losses occurring before he became a member, or which may occur after he ceases to be a member. State v. Fire Assn., 42 Ohio St. 555. If Hale had been a member when the Aetna. Fire Association went into the hands of the receiver it is likely that he and all the members would have gone into court with the association, but not being a member, he did not go into court, and not being brought into court, he is not bound by any decree which that court made. Wilhelm v. Parker, 9 Circ. Dec. 724 (17 R. 234); State v. Fire Assn., 42 Ohio St. 555; State v. Fire Assn., 50 Ohio St. 145 [33 N. E. Rep. 401; 24 L- R. A. 252]; Richards v. Swaim, 9 Dec. 70 (7 N. P. 68).
   WILSON, J.

The action in the court below was a suit brought by the receiver of the Aetna Fire Association of Cincinnati, Ohio, an insolvent mutual insurance company, to recover an assessment or assessments from the defendant, who is alleged to be a policy holder in the company, the assessments having been ordered by the court of common pleas of Hamilton county, as necessary to pay debts. The petition for that purpose is in the ordinary form. The answer denies that the defendant ever made application for or accepted any policy in the company or ever became a member thereof, and therefore denies that he is liable to such assessment. The reply is that the policy contained an express provision that he should be liable to assessment; that he accepted and held a policy in the company for the full term it was to be in force, and that there» fore he is estopped to deny liability. . In the progress of the trial in the court of common pleas, the plaintiff introduced a printed application in the usual form for a policy in the Aetna Fire Association of Cincinnati, Ohio, signed by the defendant with the terms of insurance written therein. The defendant admitted the signature to the application, and produced at the trial a policy in that company issued in accordance with its terms. He did not claim that the written terms in the application, as distinguished from the printed terms, were other than those agreed upon, but he claimed that as to them, he signed the application in blank. He was then permitted to testify over the objection of the plaintiff that at the time he signed the application he told the agent of the company who solicited the insurance that he did not want insurance in an assessment company, but wanted it placed in an old line company, and' that the agent represented to him that he was to have insurance in the Aetna Fire Insurance Company of Hartford, which had a branch office in Cincinnati.

In the absence of a plea of fraud or mistake, the evidence was incompetent. Its effect was to contradict and vary by parol evidence the terms of a written contract. The attitude of the defendant under the admitted facts was, not that there was no contract entered into, but that the contract signed was not the true contract, and he was estopped to deny the terms of the application he signed unless it could be impeached for fraud or mistake.

It appears that the policy in question was at the direction of the defendant delivered to the cashier of the City Bank of Findlay, Ohio, who, by his authorization, paid the premium therefor out of the funds of the defendant and held the policy as collateral security to secure a loan made by the bank to the defendant. The policy stipulated bj1- its terms at the request of the defendant that the loss, if any, should be paid to the bank as its interest might appear. The bank held the policy until it had subserved its purpose as collateral, and until some time in April, 1895, at which time the defendant received notice of the assessments sued upon. It was thereafter held by the defendant for the remainder of its term, which was a year from July 19, 1894, and up to the time of the trial in court below, he still held it in his possession.

Under such a state of facts, the defendant is estopped to say that he did not know its contents, and to deny, against the creditors of the company, as he would be against the bank while it held it as collateral, or against the company itself, that he entered into the contract.

It follows, therefore, that there was error in the admission of parol evidence to contradict and vary the terms of a written contract. The trial court seems to have admitted it upon the theory that the issues might be changed to conform to the facts. But they were not changed, and it would have been prejudicial error to so change them without notice in time for the plaintiff to prepare to meet such an issue.

There was error in the charge of the court, as touching the liability of the defendant upon a finding that he had received and held the policy. The charge of the court was':

“ If you find that defendant in this case became a member of this association by taking out a policy and holding it, knowing that it was a policy in a mutual association of this kind, then your verdict will be for the amount claimed in the petition against the defendant.”

The jury should have been instructed that if he did receive and hold the policy during the time it was in force by its terms, he was charged with knowledge of its contents, and would be bound by it. The verdict and judgment are against the weight of the evidence. Upon the evidence in the record they should have been for the plaintiff.

The judgment is reversed and the cause remanded for new trial.

ON MOTION FOR REHEARING.

The claim is now made for the first time in this court that the petition does not state a cause of action, for that it fails to aver the defendant signed the constitution of the association; also that the evidence does not prove the signing, and that,- therefore, the judgment should be affirmed.

We are of the opinion there is no such defect in the petition as can be complained of, alter issue joined, trial had, and judgment rendered. It is true the averment in the petition that the defendant was a member of said association, appears to be predicated upon the fact that he applied for and accepted insurance therein ; and that it is not averred, in terms, he had signed the constitution, as the statute seems to require. Bection 3690 Rev. Stat. But it is also true that the denial of membership in the answer is predicated upon the denial that he applied for or accepted insurance. The one is no broader than the other.

The plaintiff proved, and the defendant admitted, that the defendant had received, returned and had cancelled, a policy prior to the one sued upon, for which he paid a short rate premium. Both parties admit the validity of this returned policy, whatever may have been the reason for its return; the one claiming it was to redistribute the insurance, and the other that he wanted to change the character of the insurance. But the necessary inference from the transaction is that the defendant was a member of the association, because, under the statute, none but members can be insured. Section 3689 Rev. Stat. In the absence of a direct claim and proof that he had not signed the constitution the pre1sumption is that the defendant had conformed to the requirements of the statute; and- if he had not, the fact that he accepted insurance and received-the benefits, would estop him from denying that he had.

The policies sued upon were not void.

In an action by the receiver, to recover assessments to pay liabilities incurred during the time the policies were in force, mere irregularities in the proceedings to assess will not avail as a defense.

The motion for rehearing is overruled.  