Jones v. Benson

THOMPSON, J.

The plaintiffs have appealed from a judgment which was rendered against them in a suit for damages against the directors of Lake County Farmers Mutual Fire Insurance Company as a penalty for failure to levy an assessment to pay the loss sustained on account of a fire, pursuant to section 7018 of the Insurance Code of California.

The complaint alleges and the court found that the Lake County Farmers Mutual Fire Insurance Company was organized pursuant to law (Stats. 1897, p. 439 [Deering’s Gen. Laws 1931, Act 3729]), and was engaged in business in Lake County prior to May, 1936; that the defendants were directors of the company; that on November 25, 1932, plaintiffs were members of the company which carried upon the

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property of plaintiffs insurance against fire in the aggregate sum of $4,676, upon which they paid a premium of $50.35 for three years; that on the last-mentioned date the company had outstanding policies in full force in favor of various other members in the aggregate sum of $714,906, but that all of these policies had expired prior to January 1, 1936, after which time no policies were issued, and the company conducted no further business; that the board of directors never thereafter held a meeting for any purpose whatever; that on November 29, 1932, plaintiffs’ insured property was entirely destroyed by fire and they promptly made a claim to the company for compensation on that account, which was denied; that suit was thereupon filed against the company for compensation under their policies, which suit was regularly tried and judgment was rendered for plaintiffs May 10, 1936, for the full sum of $4,676. From that judgment no appeal was taken, and it became final; that execution was thereafter issued and returned by the sheriff unsatisfied.

This suit was filed against the directors of the insurance company, under section 7018 of the Insurance Code of California, April 24, 1939, for damages, in the nature of a penalty, for wilful failure to levy an assessment “upon all of the property insured” by the company as provided by section 7010 and 7011 of the Insurance Code. After a demurrer to the complaint had been overruled, the defendants answered, denying the material allegations of the complaint. The cause was tried by the court which adopted findings as above stated, including a determination that :