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holders have paid their assessments, in whole or in part, and the funds collected from the assessments will be applied pro rata to the payment of claimant's demand.

[See note on this question beginning on page 1281.] Insurance against loss from strike strike, or continue business during the

- period for determining profits. period of partial production, but not

2. In determining the loss of net the wages of short-term hands whose profits due to a strike, for the purpose services can be dispensed with withof fixing liability under a policy of out impairing the efficiency of the strike insurance, the court may refuse organization. to select as the standard the months

- what are fixed charges. immediately preceding the strike, 6. The average daily fixed charges, which were a period of marked depress against the loss of which, by a strike, sion in business, and also an extended an employer is insured, include rent, period before that time, so as to in- insurance, taxes, mortgage interest, clude a period of marked expansion, depreciation, and other expenses necbut may take a twelve months' period

essary to maintenance of the efficiency immediately before the strike, if that

of the employer's organization. will best serve as a basis for estimat

how return to normal ascertained. ing the loss.

7. In ascertaining the time for terdepreciation of product as fixed

mination of liability under a policy charge.

insuring against strike losses, which 3. Depreciation in the value of

is to be when production reaches 80 manufactured product is not within per cent of normal, a period of one a policy insuring a manufacturer year prior to the strike may be adopted against the direct actual loss of

as fixing normal production, where average daily fixed charges because

the production for a few months imof a strike of employees.

mediately preceding the strike was construction - meaning of words. abnormally low, and for the months 4. Contracts of insurance are to be immediately preceding the year so construed according to the sense and adopted it was abnormally high. meaning of the terms which the par- - average daily production. ties have used, and, if they are clear 8. Under a policy insuring against and unambiguous, these terms are to strike losses, under which the liability be taken and understood in their plain, is to terminate when the daily average ordinary, and popular sense.

production equals 80 per cent of norSee 14 R. C. L. 925; 4 R. C. L. Supp.

mal, a period of thirty days may be 930.]

adopted for ascertaining the daily prowages as fixed charges.

duction. 5. The average daily fixed charges, - right to unpaid premium. against the loss of which, by a strike, 9. Upon the insolvency of a mutual an employer is insured, will include insurance company and cancelation of the salaries of officers and employees its policies, the unearned premium on whose term is of longer duration than a policy cannot be added to a claim the usual period of a strike, and whose for loss under it, but the whole services cannot be dispensed with premium note will be applied to paywithout loss and without rendering ment of losses. the employer unable to resume normal [See 14 R. C. L. 854; 3 R. C. L. Supp. production promptly at the end of the 301. See also note in 1 A.L.R. 598.]

APPEAL by the receivers from an order of the Circuit Court No. 2 of Baltimore City (Stein, J.), sustaining exceptions to the auditor's report in a receivership proceeding as to adjustment of claims for strike losses and for unearned premiums alleged to be due by reason of the cancelation of strike insurance policies; and cross appeal to protect interests of policyholders. Affirmed in part.

The facts are stated in the opinion of the court.

Messrs. Walter L. Clark, Stuart S. Wright, and George S. Jones for reJanney, Morris A. Soper, J. Purdon ceivers, appellants.

(143 Md. 303, 122 Atl. 195.) Messrs. Sylvan Hayes Lauchheimer erally called "strike insurance," beand Malcolm H. Lauchheimer, for gan to issue policies in August, 1920, claimant:

but operated for a period less than The four months immediately pre

a year, when its activities were cripceding the strike is too short a period,

pled by a series of strikes and labor and is not a fair period upon which to estimate the profits to be gained

difficulties, appearing in different inby a company during the year 1921

dustries throughout the United had the strike not occurred.

States, but chiefly in the printing Manning v. Grinstead, 121 Ky. 802, industry. 90 S. W. 553; Buffalo Forge Co. v. It was a mutual company, and its Mutual Security Co. 83 Conn. 393, 76 policyholders and members were Atl. 995; Dickinson v. Hart, 142 N. Y. subject to an assessment equal to 183, 36 N. E. 801; Nelson Theatre Co.

the deposit premium, if such assessv. Nelson, 216 Mass. 30, 102 N. E. 926;

ment was required for the payment Kyd v. Cook, 56 Neb. 71, 71 Am. St. Rep. 661, 76 N. W. 524; Chicago Bond

of losses. And because of losses, ing & Ins. Co. v. Oliner, 139 Md. 408,

and the many claims filed against 18 A.L.R. 1081, 115 Atl. 502; McCau- the company, the board of directors sey v. Hoek, 159 Mich. 570, 124 N. W. found it necessary to levy and did 570, 18 Ann. Cas. 945; Chapman v. levy an assessment of 100 per cent Kirby, 49 Ill. 211; Pennsylvania Steel of the deposit premium upon each Co. v. New York City R. Co. 117 C. C. of its policyholders. But only a A. 503, 198 Fed. 721.

small number of them paid their asTo interpret the phrase "fixed

sessment, either in full or in part, charge" as covering all losses sustained in good faith because of a

leaving unpaid thereon, in the agstrike is entirely reasonable.

gregate, approximately $500,000. To 1 Joyce, Ins. 581; McEvoy v. Secu- prevent further loss, the outstandrity F. Ins. Co. 110 Md. 275, 22 L.R.A. ing policies were, in the last days of (N.S.) 964, 132 Am. St. Rep. 428, 73 October, 1921, canceled, and, as a Atl. 157; 14 R. C. L. 926; Worrell v. result thereof, claims were filed for Kinnear Mfg. Co. 103 Va. 719, 49 S. unearned premiums claimed to be E. .988, 2 Ann. Cas. 997.

due by reason of such cancelation. Coverage is only to stop when the

On the 9th day of November of average daily sales reach and main

the last-named year, while the comtain an average of 80 per cent over an appreciable period of either two pany was in the condition. menor three months, and, in the event of

tioned, receivers were appointed for ambiguity, "that construction should it upon the application of the insurbe adopted which will be favorable" ance commissioner of Maryland. At to the assured.

that time the assets of the company McEvoy v. Security F. Ins. Co. 110

consisted of $500,000 in cash and Md. 279, 22 L.R.A. (N.S.) 964, 132 Am.

$1,000,000 owing to it by the policySt. Rep. 428, 73 Atl. 157.

holders on the assessments levied The claim for the assessment can be offset by the assured against his against them, and by The Lloyds of claim for losses under the policy.

London and the Excess Reinsurance Baltimore Ins. Co. v. M'Fadon, 4

Company of London as reinsurance, Harr. & J. 31; Colton v. Drovers' Per- making the total assets of the competual Bldg. & L. Asso. 90 Md. 85, 46 pany approximately $1,500,000. L.R.A. 388, 78 Am. St. Rep. 431, 45 Against this sum have been filed Atl. 23; Cahill v. Original Big Gun with the receivers, claims aggregatBeneficial & Pleasure Asso. 94 Md. ing about $7,000,000. 353, 89 Am. St. Rep. 434, 50 Atl. 1044.

Upon their appointment, the rePattison, J., delivered the opinion ceivers proceeded with their task of of the court:

winding up the affairs of the comThe Employers' Mutual Insurance pany, and to this end an auditor was & Service Company of Maryland, appointed by the court, authorized which was incorporated under the to take testimony in connection with laws of this state for the purpose the proof of various claims of its of writing a class of insurance gen- policyholders. Accountants were also employed by the receivers, un

"Indemity. der the order of the court, to ex

"In consideration of the stateamine the books of the various com

ments set forth in the declarations panies and persons insured to obtain

hereto attached, and hereby made a the necessary information regard

part hereof, and of the premium ing fixed charges and net profits and

deposit specified herein (which de other matters in connection with the

posit is subject to adjustment), and claims.

that the assured, by acceptance of In making these investigations, and in the hearings had in connec

this policy, does also bind himself,

his executors or administrators, to tion therewith, a number of ques

pay all such further sums as may tions arose involving the construc

from time to time be assessed on tion of certain provisions of the pol

this policy by the directors of said icies, affecting alike the rights of all

company, in conformity with the the claimants thereunder, and it was

articles of incorporation and bythought best by the receivers that

laws of this company and the laws they should receive directions from

of the state of Maryland; provided the court as to such questions.

that such further sums shall not in Therefore two claims were selected as test cases upon which appropri

any case be more in any one policy

year than an amount equal to the ate proceedings were instituted, in

premium deposit for such policy which the views and directions of the court in respect to such ques

year, does hereby agree to indemni

fy the individual, firm, or corporations were sought to guide the re

tion named in statement 1 of the ceivers in their dealing with all the

declarations

for the period claimants.

of one year The two claims selected were the

against the di

rect, actual loss of average daily Standard Printing & Publishing

fixed charges and/or net profits, as Company and the Fleet-McGinley

hereinafter defined, caused by a Company.

strike of all or part of the employees The case of the Standard Printing

of the assured,

and sus& Publishing Company, the one now

tained during the period of such before us, was submitted to the court

strike, said strike beginning while upon an agreed statement of facts, which contains the policy of insur

this policy is in force (except during

the first fifteen days as hereinafter

; the by-laws of that company; and provided) and continuing for a pe

riod not exceeding the 300 next sucits profit and loss

loss statements, first, for the year ending December

ceeding working days, at a rate not

exceeding three hundred dollars 31, 1920; second, for the four months preceding the strike; third,

($300) per diem, and not exceeding for the period of the strike com

an aggregate total indemnity of

ninety thousand dollars ($90,000) mencing with May and ending with

during any policy year.” September, 1921. It also contains schedules of

“Company's Liability. "fixed charges" filed by the receiv- "B. If a strike occurs during the ers and claimant respectively, com- term of this policy so as to cause a mencing the 1st day of May, and partial or a total prevention of proending September 30, 1921, both in- duction, the company shall be liable clusive, and also statements show- for 80 per cent of the direct actual ing monthly sales made by the in- loss of fixed charges and/or net sured between May 1, 1920, and No- profits sustained not exceeding in vember 1, 1921.

either case the per diem indemnity The provisions of the policy which or the total indemnity herein statare important in passing upon the ed; but the company shall not be questions presented are the follow- liable for any consequential loss ing:

whatever; nor shall the company in

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(143 Md. 303, 122 Atl. 195.) any case be liable for further loss occurred is impossible of exact hereunder, when, after a strike at ascertainment; consequently the the plant of the assured covered by amount of loss caused by the strike this policy, causing a total preven- is more or less speculative. tion of production, the average daily The loss of net profits may be, and production at said plant becomes at times is, estimated by selecting equal to eighty (80%) per cent of some other period of time in which the average daily normal produc- the insured has been engaged in tion, nor shall the company be liable business, most nearly approaching for further loss hereunder when, the strike period in similarity of after a strike at said plant causing conditions, and by ascertaining the a partial prevention of production, average daily net profits of that pethe average daily production of that riod; and if it be found that the part which was interrupted by the average daily net profits of the sestrike equals eighty (80%) per cent lected period are greater than those of the proportion so interrupted." earned during the strike period, be"Payment of Indemnity.

cause of the strike, the difference

therein is the loss of average daily "I. This contract is one of indem

net profits during the period of the nity only, and there shall be no lia

strike, subject, of course, to any bility unless there has been actual

special facts affecting the business loss. If the industry in which the

of one and not the other of said peplant herein described is engaged riods, indicating with reasonable becomes materially and generally certainty that the average daily net affected by increase or decrease in profits of the period selected would business activity during the period

be increased or diminished during of a strike at said plant, it is the in- the period of the strike by those tent of this policy that, in the ab- facts. sence of direct proof of the actual,

No unvarying general rule can be direct laws caused by enduring the established as to the period of time period of such strike, ascertainment

to be selected as a basis upon which of the actual loss shall be arrived at

the loss of profits during the strike through due consideration of what period may be estimated, applicable such increase or decrease shows

to all cases, because of the varying might reasonably have been expect circumstances and conditions incied during the period of such strike; dent thereto. It is only in those but liability hereunder shall in no

cases of like character and condievent exceed the per diem indem- tions that any general rule can be nity, or the total indemnity herein

established applicable to all. stated.”

The claims filed against the reThere were four questions pre- ceivers in this case are very similar. sented to the court below, all of The policies under which the claims which are presented to this court on were filed are practically the same appeal.

in form, and 90 per cent of them The first question is, How is the were issued to those engaged in the actual loss of average daily fixed printing business, who were alike charges and/or net profits insured affected by the printers' strike of against to be ascertained?

1921. It was because of their great The consideration of this question similarity that the court below was may very properly be divided in two asked, in passing upon the excepsubdivisions: First, the period to be tions filed to the claim of the Standused in calculating "the average;" ard Printing & Publishing Company, and, second, the element which to lay down some general rules apmakes up "fixed charges."

plicable to all the cases, by which the What would have been the actual receivers may be guided and connet profits of the business during trolled in distributing the funds in the strike period had the strike not their hands.

The counsel for the receivers con- of the contentions made by the partend that the first four months of ties, and fixed the year commencing the year 1921 should be selected and May 1, 1920, and ending with the used in estimating what would have 30th day of April, 1921, as the pebeen the average daily net profits riod to be used as a basis in estiduring the strike period had there mating the loss of the average daily been no strike, the reason given "fixed charges" and/or average therefor being that this, the nearest daily net profits during the period period to the strike, showed a falling of the strike. off of business, the sales being The court, in selecting the period largest in January, and smallest in mentioned, largely avoided the apApril, the month immediately pre- prehended unfair result which the ceding the strike. That such falling parties said would follow if the peoff of business started in the latter riod suggested by the other were part of 1920, and continued through adopted. the first four months of 1921, which It refused to accept the fourthey claim indicated that the period month period immediately preceding suggested by them approached as the strike, because of the extremely near as any other time what would low average of daily profits that have been the business conditions would have resulted therefrom, and of the strike period immediately also declined to accept the sixteenfollowing, in the absence of a strike. month period, as it would have made There was nothing, at least, to in- the daily average profits too high dicate that it would be more.

because of the inclusion within that The claimant, however, meets this period of six or eight months of contention by saying that the four greatly abnormal profits. months named by the receivers were In the period selected by the court not only too short a period upon were included not only the months which to estimate the profits of the of low profits, but several months of strike period with fairness to it, but very large profits. This, we think, such period was at a time of great had the effect of increasing the fluctuation and depression in busi- average daily net profits of the peness, and when the sales of the riod selected, to an amount sufficient claimant were at their lowest ebb. to meet any well-founded, contem

The counsel of the claimant con- plated increased profits of the strike tends that, in addition to the first period that immediately followed. four months of 1921, the twelve The period selected by the court months of the year 1920 should be below meets with our approval, as it included in the period to be used, will, in our opinion, because, as stated by them, it would based upon the rec

against loss from include the fiscal year of the Stand- ord before us, best strike-period

serve as a basis for profits.

for determining ard Printing & Publishing Company, ending with the 31st day of Decem- estimating the loss ber, 1920, and the parties would of average daily profits and "fixed thereby have the benefit of the charges." known net profits of that year.

We will now consider the question In reply to claimant's contention

as to what are "fixed charges" withthat the sixteen-month period im- in the meaning of the policy. mediately preceding the strike The receivers and the claimant should be used, the receivers state each filed a a schedule of "fixed that the first and major part of the charges," which, it seems, they year 1920 was abnormally good, and, thought should be paid or allowed if that year was included within the under the policy. period, it would produce a result un- In each of the schedules are found fair to the insurance company. the following items: “Rent," $1,

The court refused to accept either 741; "office and officers' salaries,"

Insurance

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