
    Philip J. Warner, Resp’t, v. The Schoharie & Schenectady Mutual Fire Ins. Association, App’lt.
    
      (Supreme Court, General Term,, Third Department,
    
    
      Filed July 11, 1891.)
    
    Insurance (pike)—Conditions precedent to action on policy.
    The charter of the defendant provides that the mode of ascertaining the amount of loss shall be as specified in § 6 of chap. 739, Laws 1857, which provides that in case of disagreement the claimant may appeal to the county judge. Meld, that in case of disagreement as to the amount of loss such appeal was a condition precedent to a right of action on the certificate.
    Appeal from a judgment entered upon the verdict of a jury, and from an order denying a motion for a new trial upon the minutes of the judge at the circuit.
    The action was upon an insurance certificate issued by the defendant to the plaintiff for $450 on hay and grain and $125 on farming utensils, to run from September 2, 1889, to September 7, 1894. On the 11th of December, 1889, the property was destroyed by fire. This action was brought to recover the loss. At the conclusion of the testimony the defendant moved upon several grounds to dismiss the complaint, for a nonsuit, and that a verdict be directed for the defendant, all of which were denied by the court, and the case was given to the jury, who returned a verdict for the plaintiff for $462.50. The defendant moved to set aside' the verdict upon the minutes, upon the exceptions taken, and as against and contrary to law, which was denied by the court
    
      Hobart Krum, for app’lt; George B. White, for resp’t.
   Mayham, J.

—The appellant is a co-operative fire insurance association, incorporated under and by virtue of chap. 155 of the Laws of 1868, for the purpose of insuring farm buildings and property in the counties of Schoharie and Schenectady. On the 7th of September, 1889, the respondent applied in writing for an insurance certificate upon the property described in his application, and on that day a certificate of insurance was issued to him on the same. The signing of an application for insurance was, by the by-laws, construed to be a signing of the constitution and by-laws within the meaning of § 6 of chap. 155 of the Laws of 1868, under which the company was incorporated, and constituted the applicant a member of the company. On the same day a certificate or policy of insurance was issued to the applicant on the property for the alleged destruction of which by fire this action was brought On the 11th of December, 1889, the property was destroyed by fire.

The respondent by his application, signed by him, and by virtue of which he became a member of the association, agreed to be bound by the constitution and by-laws of the same, and obligated himself, his heirs and assigns to pay his pro rata share to the company o£ all loss by fire which might be sustained by any member thereof. On the next dav after the loss the respondent notified appellant’s agent of the same, and requested him to notify the company’s secretary, which he did on the 13th of the same month, and on Monday, the 16th, the appellant’s secretary and agent, both of whom were directors of the association, met at the place where the loss-occurred, and informally examined the property and discussed the subject of the loss, but reached no agreement in relation to the same; the secretary then informing respondent that he would have to make proofs of loss and have them at the next regular meeting of the association. On the 7th of January, at the regular monthly meeting of the board of directors, which was also the annual meeting for making assessments, the plaintiff presented his proofs of loss, which were objected to as informal, and plaintiff was requested to take them back and present them at the meeting in February, which he did, with the apparent acquiescence of the company or its officers.

It is quite apparent that any irregularity which may have existed in the proofs of loss was waived by the association. But it is insisted by the appellant that the plaintiff has not adopted the proper method for ascertaining the amount of loss, and that no action will lie on this certificate until the plaintiff has adopted the methods prescribed by the by-laws, the act of incorporation, and § 6 of chapter 739 of the Laws of 1857, which is made applicable to this association for the purpose or adjusting losses. Section 9 of chapter 155 of the Laws of 1868, by which this association is created, provides that ‘‘The mode of proceeding, in case of a loss by fire by the corporation hereby created, to ascertain the amount of loss sustained, shall be as specified in §§ 6 and 7 of chapter 739 of the Laws of 1857. Section 6 of that act provides that the directors shall appoint a committee of not less than three or more than five members of such company to ascertain "the amount of such loss, and in case of the inability of the parties to agree upon the amount of such damage, the claimant may appeal to( the county judge of such county, whose duty it shall be to appoint three disinterested persons a committee of reference who shall have full authority to examine witnesses, to determine all matters, who shall make their award in writing to the president or in his absence to the secretary of the company, which award thereon shall be final.” This section further provides the manner of the payment of the expenses of such appeal. And section 7 provides the method of assessing and collecting the same from the'members of the association. This case discloses that the association at its meeting on the 7th of January appointed a committee of five members of the association who assumed to act and make their estimate of the loss, and a resolution was adopted by them fixing the amount of the loss at $250, which was reported to the directors and by them directed to be communicated to the plaintiff and the same was communicated to him, and at a subsequent meeting of the directors plaintiff informed them that he declined to accept that amount. These facts were reported at the next meeting. It is insisted by the appellant that, upon these facts, it was the duty of the plaintiff, if he was dissatisfied with the amount reported by the committee of five, to appeal to the county judge of Schenectady county for the appointment of a committee of reference as provided in § 6 of chapter 739 of Laws of 1857.

There was no express agreement in the certificate or policy by the association to pay this loss or any loss. The obligation of the company to pay losses arises out of the act under which it was incorporated, the articles of incorporation, the constitution and by-laws adopted by it, the application for insurance and the certificate. All of these must be read and construed together and, they as a whole constitute the contract and create the obligation of the association to pay losses. The plaintiff being a member of this association, he and the association are alike bound by the law of its being, and the constitution and by-laws established for its government; and its liability to its members, and between it and them, must arise out of the charter, constitution, by-laws, application and policy.

By its charter, chap. 155 of the Laws of 1868, the association is required to pursue the method prescribed by § 6 of chap. 739 of the Laws of 1857. This provision of the charter is binding upon the assured as a member of the association as well as upon the association, and prescribes the course of procedure in case of disagreement as to the amount of loss.

The association pursued substantially the prescribed course, by the appointment of a committee of five members to ascertain the loss. The plaintiff disagreed with the committee as to the amount and refused to accept their award. It is true that that award was not binding upon the plaintiff, but on his refusal or failure to agree to that amount the statute above referred to provided a method of appeal to the county judge, and this appeal constituted a tribunal agreed upon by the parties and forming a part of the contract itself for the settlement of this difference." If the association had consented to any other method of adjustment their act and agrdement would have been ultra vires and would not have bound the members of the association or authorized any assessment upon the members for the collection of the assessment for the payment of the loss.

A corporation is bound by its charter, and can act only as authorized by it. Jemison v. Citizen’s Savings Bank, 122 N. Y., 135 ; 33 N. Y. State Rep., 335 ; Abbott, Administratrix, v. Johnstown, Gloversville, etc., R. R. Co., 80 N. Y., 27. Nor could the plaintiff ignore or disregard this provision of the statute. He was a party to this contract of insurance, and as such was required to follow its requirements and be governed by its provisions. He was bound by the provisions of § 6 of chap. 739 of the Laws of 1857, which, when he became a member of the association, was a part of the contract, by which he had consented to be governed. He was bound by the provisions of the charter and the by-laws to which-he had subscribed as a member of the association. In Jemison v. Savings Bank, supra, the court says: “ Corporations are artificial creations existing by virtue of some statute and organized for the purposes designed in their charter. A person dealing with a corporation is chargeable with notice of its. powers and the purposes for which it was formed. A corporation necessarily carries its charter wherever it goes, for that is the law of its existence. It follows that the plaintiff must have known or is chargeable with knowledge of the corporate powers of the defendant.”

This rule applies with peculiar force to a case like the one at bar. Here the plaintiff was a member of the corporation and as such had obligated himself to be governed by its rules and bylaws and to seek indemnity for his loss in accordance with their provisions.

In Poultney v. Bachman, 31 Hun, 54, it was held that where the charter and by-laws provided for an appeal from the decision of a lodge of Odd Fellow's to the grand lodge of the same order, in determining a liability of the lodge to a member for benefits, that no action would lie until the member had adopted that remedy ; and although the grand lodge was not a tribunal known to the law, nor one invested with power to enforce its orders or decisions, yet the court held that the plaintiff must resort to it before he could claim that the lodge had violated its duty to pay.

In other words, it was in the nature of a condition precedent to his right to maintain an action, and the court, in that case, says: “Without discussing the question whether or not the decision of the highest appellate tribunal of the society is conclusive, we are of the opinion that the contract into which the plaintiff entered requires him to seek redress within the society itself, by carrying the question to the highest tribunal; for it is evident that every part of the constitution and by-laws entered into his contract and are to be considered therewith." In that case it is true that the appellate tribunal was not one established by law and was only created by the contract; while in this the legislature, by the acts of incorporation, created the tribunal to which the plaintiff might appeal and made the decision of that tribunal final as to the amount of the loss.

It seems, therefore, that the plaintiff having prosecuted this action without first resorting to the appeal given by the charter, his action is prematurely brought and the defendant having raised this question on the trial in his motion for nonsuit, it was error for the learned trial judge to deny the defendant’s motion and allow the case to go to the jury, and for that reason the judgment should be reversed.

Judgment reversed and a new trial ordered, costs to abide the event.

Learned, P. J., concurs; Landon, J., not acting.  