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(143 Md. 303, 122 Atl. 195.) $7,941.35; "taxes," $3,804.94; "heat manufactured product or goods on and light,” $361.74; "insurance,” hand was certainly not "fixed $1,500; "Bluefield office," $26.21. charges.” As the policy does not

In the receivers' schedule are define "fixed charges," what is found the following items, which do meant thereby is left to us to decide. not appear in the claimant's sched- Bassett on Accountancy, on page ule: "Power,” $528.58; “telephone 244, cited by the receivers in their and telegraph," $552.50; "salesmen's brief, defines "fixed charges" as salaries,” $7,100; “depreciation,” those "charges which spread over $3,954.50.

the entire establishment, such as And in the claimant's schedules rent, insurance, taxes, mortgage inare found these items, which do not terest, depreciation, and the like, appear in the receivers' schedule: according to whether the plant is "Interest," $1,598.13; "miscella- leased or owned.

'Fixed neous expenses,” $1,703.57; “post charges' arise out of the very being age," $422.91; "repairs," $660.28; of the plant, and continue whether "traveling expenses," $8,545.54. or not the business is operated."

The difference in the aggregate of The only case to which our attenthe two schedules is $1,383.50, and tion has been called, and the only the difference in the daily average one that we have been able to find is $9.32.

after diligent research, in which No doubt the "miscellaneous ex- "fixed charges" have been defined in penses" found in the claimant's an action brought upon an indemschedule include some of the items nity policy insured against loss of found in the receivers' schedule; as "fixed charges" caused by the strike, there is no item of “salesmen's sal- is the case of Buffalo Forge Co. v. aries" found in the claimant's sched- Mutual Security Co. 83 Conn. 393, ule, it is most probable that such 76 Atl. 995. In that case the court item is included in the item "travel

approved of and adopted the trial ing expenses" found in the claim- court's definition that by "fixed ant's schedule.

charges” were meant “those expensReference has been made to these es necessarily incurred in maintainschedules to show that the parties, ing the organization in such a state the claimant and receivers, did not of efficiency as would enable it to at that time differ so widely in what resume normal production without they regarded as "fixed charges," substantial delay after the strike and also to show that in the receiv- was ended, or as the strike might ers' schedule is found the item "de- be broken by a gradual return of preciation,” which under that name employees." is not found in the claimant's sched- It is a well-settled rule of law that ule, although now the claimant con- contracts of insurance, like all other tends that depreciation is a "fixed

contracts, are to be charge," while the receivers contend considered accord- -meaning of that it is not.

ing to the sense and

words. It is claimed by the claimant, and meaning of the terms which the it would so seem from the record parties have used, and if they are before us, that the item "deprecia

clear and unambiguous, these terms tion,” which was disallowed by the are to be taken and understood in court below, was understood by it their plain, ordinary, and popular to mean depreciation in the value of sense. Mutual L. Ins. Co. v. Murray, manufactured articles, and not the

111 Md. 600, 75 Atl. 348; Palatine

Ins. Co. v. O'Brien, 107 Md. 354, 16 -depreciation of depreciation of the product as fixed plant. If this be so, L.R.A.(N.S.) 1055, 68 Atl. 484; charge. the court was ab

First Nat. Bank v. Maryland Casualsolutely right in so holding. The ty Co. 142 Md. 454, 30 A.L.R. 618. depreciation in the value of the 121 Atl. 379. But it is also "a prin


ciple of universal application that, day, or the week, or by piecework, in order to arrive at the intention of whose services went into the actual the parties, the contract itself must production of the article produced or be read in the light of the circum- manufactured, and whose services stances under which it was entered could have been dispensed with into. General or indefinite terms without impairing the efficiency of employed in the contract may be the organization by rendering it unthus explained or restricted in their able to resume normal production meaning and application; and the without substantial delay, or to concontract must be so construed as to tinue the business through the pegive it such effect, and none other, riod of partial production, should as the parties intended at the time not, we think, be included among the it was made.” First Nat. Bank v. "fixed charges." Gerke, 68 Md. 456, 6 Am. St. Rep. The salaries of those mentioned, 453, 13 Atl. 358.

with other necessary expenses, inThe term "fixed charges" has, it curred in maintaining the efficiency seems, no well-defined meaning. Its of the insured's organization to the meaning is more or less general and extent we have stated, including the indefinite, depending somewhat up- charges specially mentioned in Bason the connection in which it is used, sett's definition of and the object and intention of the "fixed charges,” are

-what are fired

charges. parties by whom it is employed. the "fixed charges"

When used in a contract like the that were intended by the parties to one before us, it may have a differ- be covered by the policy. ent meaning from what it would The next question is: When does have if used in a different connec- the liability for loss end? The poltion, or with an entirely different icy fixes the end of each of three object or purpose.

The term was periods as a time at which the liahere used by the parties in a con- bility of the insurer under it ceases. tract whereby it was their object, First. For all loss suffered by the purpose, and intention to give to the insured after the strike has lasted insured indemnity against the loss 300 working days, within the time therein mentioned, caused by strike. for which the policy was issued. The insured was not insured against Second. When the maximum loss of the average daily net profits amount named in the policy as payalone, but also against loss of aver- able thereunder has been paid to age daily “fixed charges.”

the insured. The insured, no doubt, had in its Third. When, in case of total preemployment, at the time of the vention of production, the average strike, officers and employees whose daily production thereafter becomes term of office or employment was of equal to 80 per cent of the average much longer duration than the usual daily normal production; or, in case period of the strike, and whose serv- of partial prevention of production, ices the insured could not have dis- when the average daily production pensed with without loss to it, and

of that part which was interrupted without rendering it unable to re- by the strike thereafter equals 80 sume promptly normal production per cent of the proportion so interat the end of the strike, or to con

rupted. In this case, we are continue the business during the period

cerned only in the third of these culof partial production.

minating periods. The salaries of such officials and The question is first presented, employees should, we think, be in- How is the average daily normal

cluded in the "fixed production during the strike period charges.

charges” provided to be ascertained ? The answer to

for in the policy. this question is that such average But the compensation paid to other daily production for that time may employees who were hired by the be ascertained by the method that

-Wages as fixed

-how return to normal ascer

(143 Md. 303, 122 Atl. 195.) we have suggested should be em- the loss sustained by the policyhold

ployed in estimat- er under its policy, if such loss exing the


ceeds the amount owing by the poltained.

daily net profits icyholder upon the assessment; or, during the same period; the period if not, shall the policyholder be alof comparison to be the same.

lowed to set off such loss against the The next question asked is, How amount owing by it upon the assessmay it be ascertained when the ment. average daily production, at any It is said in 22 Cyc. page 1425: time during the strike, amounts to "The member [of a mutual insur80 per cent of the average normal ance company] cannot set off as daily production?

against his liability on a premium The liability of the insurer under note any claim he may have against the policy does not end when the the company for a loss under his daily production reaches 80 per cent policy.” of the average normal daily produc- In support of this declaration of tion, but when the average daily the law, the author cites Lawrence production reaches that point. Con- v. Nelson, 21 N. Y. 158. In that sequently the liability of the insurer case, as in this, the question was, does not end until a period is reached Could the defendants, policyholders where the average daily production of a mutual company, set off their of that period is equal to 80 per cent loss under the policy against their of the average daily normal produc- premium note? The court said if tion. The period should be of suf- they could, it was because it was ficient duration to indicate that the equitable and just to do so, and no strike in effect .was abating, and rights of third persons had interthat the business of the company vened. The court then proceeded to would not again be diminished be- say: "The party has entered voluncause of it.

tarily into engagements with others, The policy does not state the modifying, or entirely changing, as length of the period to be used in between themselves, the effect or ascertaining the average, but the application of the general rules of court below, as we understand its law or equity in regard to set-off. opinion, fixes the period at thirty In a company of mutual insurers, days. This, we think, upon the facts each sufferer is bound to make combefore us, was long enough to indi- pensation, as well as to receive it.

cate that there was, He occupies the double relation of -average daily production.

more or less, a per- debtor and creditor, and it would be

nianent revival of inequitable to allow him, when the business, and that in all probability funds of the company are not adethe average daily production would quate to pay all losses, to set off his not thereafter be diminished be- entire demand; thereby getting cause of the strike.

more than his share of, and decreasThe third question presented by ing, a common fund to which all the this appeal relates to the unpaid as- creditors, pro rata, are entitled. sessments made upon the policy. Each member is interested in the holder.

premiums, as well as losses, of all As stated by the parties, no ques- the others; and the premium paid tion is raised as to the validity of by each is saddled, as it were, with the assessments which were made its proportionate share of the claims pursuant to the policy, nor as to the of all others. The premium, whethinsured's liability for their payment. er paid or secured to be paid, is with

The only question relating there- drawn from his control in contemto is whether the policyholder shall plation of law, and placed in a combe permitted to pay and satisfy the mon fund, not subject to his claims amount owing upon the assessment, only, but those of all others in the by deducting the amount of it from company; he in turn, having a similar claim on the premiums of his ty Mut. Ins. Co. 3 Pa. St. 470, 45 associates. The members of the as- Am. Dec. 656; North Carolina Mut. sociation virtually agree to insure L. Ins. Co. v. Powell, 71 N. C. 389; each other, and provide a common Stone v. New Jersey & H. River R. fund to indemnify in case of loss. & Ferry Co. 75 N. J. L. 172, 66 Atl. As all have contributed to this fund 1072; Stone v. Old Colony Street R. they have a community of interest Co. 212 Mass. 459, 99 N. E. 218, and in it; and each member, having his other cases. proportionate share of the losses, is In Stone v. Old Colony Street R. entitled to his proportionate share Co. supra, the court said: “The of the profits, if any are realized. assessments, when collected, form a It may be that one member may fund for the benefit of all the policydraw from the premiums paid by holders, including the defendant, other members into the common

whose demands comprise a part of fund, if the association be prosper- the indebtedness which made the ous, not only the amount of his loss- assessment necessary. The defendes, but as large a proportional share ant received the benefit of the insurof profits as those whose transac- ance of the subsidiary companies as tions with the company created no a party insured, while it also became loss at all. In such a case, if insol- an insurer for the protection and vency eventually overtakes the as- benefit of the other members. A sociation, it would be highly unjust set-off would confer upon it a prefto allow him to set off a loss against erence to the disadvantage of othpremiums that happened to be un- er creditors and policyholders, and paid and that should be placed in permit it to appropriate exclusivethe common fund. Indeed, when the ly the amount claimed in partial assets of the company are inade- payment of its own demands against quate to the payment of the losses the insolvent, and to this extent the of all its members, the effect of per- defendant would be relieved from mitting a sufferer to set off his loss the obligations of an insurer." in full against his premium notes The policyholder's right of set-off (which are his contribution to the in cases against mutual companies means of the company) is not only has never been considered by this to confer a benefit without making court, so far as we are able to recompensation, but to take from the call. But the claimant contends that shares of his associate sufferers in this question has been practically the common fund; to which fund settled favorably to its contention he and they are ratably entitled. by this court in the two cases of ColUndoubtedly, a premium paid, or ton v. Drovers' Perpetual Bldg. & agreed to be paid, by a member of a L. Asso. 90 Md. 91, 46 L.R.A. 388, company formed on the mutual prin- 78 Am. St. Rep. 431, 45 Atl. 23, and ciple, must bear its proportionate Cahill v. Original Big Gun Beneficial share of the losses of the company, & Pleasure Asso. 94 Md. 353, 89 Am. and cannot be applied exclusively to St. Rep. 434, 50 Atl. 1044. the individual debt of the party ow- In the first of these cases in which ing or paying it. So long as the the opinion of the court was delivcompany be solvent no practical in- ered by Chief Judge Boyd, the apjury would result from setting off pellants were appointed receivers of a loss against the premium, as no the South Baltimore Bank. At the preference would be given to one time the bill asking for the appointmember or creditor over the others, ment of receivers was filed, the bank for all would be paid in full. But if held the appellee's promissory note the association were insolvent, to for $1,000, and the appellee had a permit the set-off to be made would deposit with the bank, amounting be to give an unjust preference to to $457.25. At the maturity of the one creditor over the others.”

note, the appellee tendered the reSee also Hillier v. Allegheny Coun- ceivers $642.75, the difference be(143 Md. 303, 122 Atl. 195.) tween the amount of the note and no valid reason, it seems to us, why the amount of its deposit, and de- a stockholder who is also a creditor manded the note; but the receivers should not be entitled as a matter of refused to receive the money and to equity to set up as an equitable desurrender the note, claiming that

fense the debt of the bank to him the appellee could not set off the against his own liability. Mr. Cook, amount of its deposits against the in his book on Corporations, vol. 1, note owed by it to the receivers. $ 225 (c), says that it has been held

The court held that the ordinary that where the statute creates a relation of debtor and creditor ex- fund out of which the creditors are isted between the appellant and the to be paid ratably, then the stockappellee. The appellee was indebted holder cannot set off an indebtedto the receivers of the insolvent ness of the corporation to him. He bank in the sum of $1,000 upon the must pay in what the statute renote, and the receivers were indebt- quires, and then prove his claim ed to the appellee to the extent of against the corpor

against the corporation like any othits deposit. The rights of others er creditor. But where the sharewere in no wise involved therein. holder's liability by statute is im

In Cahill v. Original Big Gun mediate and personal and several, Beneficial & Pleasure Asso. supra, and any creditor may sue any sharethe suit was brought by the appellee, holder, then the shareholder may a creditor of the South Baltimore set off a debt owing to him from the Bank (the bank involved in Colton corporation, when he is sued by a v. Drovers' Perpetual Bldg. & L. corporate creditor. In 1 Beach on Asso. supra), against the appellant, Private Corporations, § 727, it is who was both a stockholder and said: “But if the statute imposes creditor of that bank. The charter upon shareholders a personal liabilof the bank contained a provision ity to creditors, immediate and sevthat its stockholders and directors eral, so that any creditor may instishould be liable to the amount of tute an independent action against their respective shares of stock of any shareholder for the enforcethe bank, for its debts and liabil- ment of corporate debts, then a deities.

fendant shareholder may set off The question presented in that debts due from the company to himcase was whether the stockholder self.'" of the insolvent corporation could In the case just cited, Cahill was set off the indebtedness of the cor- not indebted to the bank, but to the poration to him against his liability creditors of the bank, of whom he under the charter. The court, was one; and it was because of that speaking through Judge Briscoe, fact that this court there held the said: “In the recent case of Colton defendant entitled “as a matter of v. Mayer, 90 Md. 711, 47 L.R.A. 617, equity to set up as an equitable de78 Am. St. Rep. 456, 45 Atl. 874, fense the debt of the bank to him this court held, in construing the against his own liability." provisions of the charter of the That this was the reason for the South Baltimore Bank, that the court so holding is shown by its statutory liability of its stockhold- quoting with approval what is said ers was directly to the creditors, and in Cook on Corporations: "That not to the receivers for the benefit where the statute for the policy, as of creditors, and that the fund aris- in the case before us] creates a fund ing from such liability is in no sense out of which the creditors are to be a corporate asset of the corporation, paid ratably, then the stockholders and the receivers have no interest in [or policyholders in a mutual comit. The liability of the stockholders, pany] cannot set off an indebtedness then, under the statute, having been of the corporation." settled as a debt due from the stock- The two cases in this court, relied holder to the creditor, there can be upon by the claimant in support of

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