or judgment debtors against whom execution should be returned unsatisfied is a contract of insurance.16 So in another case in that state a guaranty as to insolvency of debtors is considered as a contract of indemnity, although there is no discussion upon the point of analogy to insurance.17 And under a Missouri decision a bond of indemnity or credit guaranty contract to indemnify against loss of claims is held one of indemnity against loss of property.18 Again, in North Carolina a contract indemnifying a merchant against a credit loss is construed against the insurer as the application, bond and a schedule to which the bond refers are held to constitute a contract of insurance although a new branch of underwriting.19 In Ohio an indemnity contract against losses from debts which are not collectable constitutes an insurance contract and is construed against the insurer in case of ambiguities.20 So under a Wisconsin decision a contract to indemnify against loss for insolvency of cus tomers is a contract of insurance, as the peril of loss to a merchant or manufacturer is as definite and real a peril as that of loss by fire, lightning, tornado or accident and may occur more frequently.1

§ 3391. Loss of crops: guarantee of realty revenue constitutes insurance. A contract guarantying a fixed revenue per acre from farming land and which for a certain consideration agrees to pay a fixed amount per acre for the crop grown upon such land, without regard to its value, if the owner chooses to sell it constitutes an insurance contract very like that of a valued policy. When the contingency happens which creates the liability then the amount of the policy must be paid and it cannot be distinguished in principle from a contract to purchase bad accounts and judgments at a fixed price, irrespective of value, which contracts constitute insurance.2

16 Clafflin v. United States Credit Co. v. Littleford Bros. 18 Cir. Ct. System Co. 165 Mass. 501, 52 Am. Rep. (42 Wkly. L. Bull.) 889. St. Rep. 528, 43 N. E. 293, quoting definition in Commonwealth Weatherbee, 105 Mass. 149, 160.

V.

17 Rice v. National Credit Co. 164 Mass. 285, 41 N. E. 276, cited in American Credit Indemnity Co. v. Champion Coated Paper Co. 103 Fed. 609, 614, 43 C. C. A. 270 (no discussion, but bonds of this character declared to be essentially insurance contracts. Id. p. 614).

18 State v. Phelan, 66 Mo. App. 548, 549, 558.

19 Lexington Grocery Co. v. Philadelphia Casualty Co. 157 N. Car. 116, 72 S. E. 870.

1 Shakman v. United States Credit System Co. 92 Wis. 366, 374, 32 L.R.A. 383, 53 Am. St. Rep. 920, 66 N. W. 528, cited in People v. Rose, 174 Ill. 310, 314, 44 L.R.A. 124, 51

N. E. 246.

2

Hogan, In re, 8 N. Dak. 301, 45 N. W. 1051, 28 Ins. L. J. 520, under L.R.A. 166, 73 Am. St. Rep. 759, 78 Rev. Codes, secs. 4441, 4445, regulating insurance. Citing Claflin V. United States Credit System Co. 165 Mass. 501, 52 Am. St. Rep. 528, 43 N. E. 293; Shakman v. United States Credit Systems Co. 92 Wis. 366, 32 L.R.A. 383, 53 Am. St. Rep. 920, 66 N. W. 528, both considered under

20 Mercantile Credit & Guaranty § 339h herein.

CHAPTER XVII.

PARTIES-MUTUAL COMPANIES, BENEFIT, ETC., SOCIETIES.

§ 340. Mutual insurance benefit, etc. companies or associations defined. § 341. Mutual and benefit, etc. companies or associations: capital stock: funds for payment of losses: guaranty or reserve funds.

§ 341a. Same subject.

§ 342.

Kinds of mutual insurance companies or associations.

§ 343. Plans of mutual insurance.

§ 344.

When mutual, etc. societies or associations are and are not insurance companies.

§ 344a. Same subject: pecuniary profit as a factor.

§ 344b. Same subject: pecuniary profit as a factor: lodge systems.

§ 344c. Same subject: lodge system continued.

§ 344d. Same subject: pecuniary profit as a factor: masonic benevolent or relief associations.

§ 344e. Same subject: rules of construction as a factor.

§ 344f. Same subject: attachment of copy of application or by-laws.

§ 344g. Same subject: other insurance as a factor.

§ 344h. Same subject: liability as a factor.

§ 344i. Same subject: applicability of insurance laws: statuory exemptions.

§ 344j. Applicability of insurance laws continued: right to do business as a factor.

§ 344k. Applicability of insurance laws: live stock association.

§ 340. Mutual insurance benefit, etc. companies or associations defined. A mutual insurance company is one in which the members mutually contribute to the payment of losses and expenses, where the benefit to accrue or indemnity is conditioned in any manner upon persons holding similar contracts. Such companies differ essentially from stock insurance companies. The former need many by-laws and conditions that are not required in stock companies, and each person who insures therein becomes a member of the association.3 A mutual company is also defined as one wherein

3 Baxter v. Chelsea Mutual Fire Corporation Law of New York, Laws Ins. Co. 1 Allen (83 Mass.) 294, 79 1892, c. 687, sec. 2, a membership Am. Dec. 730; under the General corporation includes benevolent

the members constitute both insurer and insured, where the members all contribute by a system of assessments, to the creation of a fund from which all losses and liabilities are paid, and wherein the profits are divided among themselves in proportion to their interests. And a benevolent association is defined as a corporation society or voluntary association conducted not for profit but for the sole benefit of its members and their beneficiaries.5

under N. Y. act, April 10, 1849);
Modern Woodmen of America v.
Tevis, 117 Fed. 369, 372, 54 C. C.
A. 293 (fraternal); National Union

orders. Jones' Business and Corporation Laws, 87; N. Y. Ins. L. c. 28, Consol. L. c. 33 of L. 1909, sec. 1 (Parker's Ins. L. [ed. 1915] p. 3) the term "Insurance Law" is declared v. Marlow, 74 Fed. 775, 21 C. C. A. "applicable to all corpo- 89, 40 U. S. App. 95 ("fraternal societies beneficial society").

rations, associations and authorized by law

to make

Colorado.-Spruance v. Farmers insurances." & Merchants' Ins. Co. 9 Colo. 73, 77, As to stockholders and members, 10 Pac. 285, 287 (mutual). see § 341 herein.

Although the distinction between stock and mutual companies is now clear, nevertheless it was declared at an early date that: "There has been much controversy between 'stock' and 'mutual' companies, most of which is a mere war of words. Insurance, as an average contributionship, is fundamentally mutual in its structure. Whether a premium shall be anticipated as absolute or contingent, is a question of administration." Pamphlet on Progress of American Life Insurance (Review Pub. Co. Philadelphia, 1877).

* State v. Willett, 171 Ind. 296, 23 L.R.A. (N.S.) 197, 86 N. E. 68.

5 Thompson v. Royal Neighbors of America, 154 Mo. App. 109, 133 S. W. 146, Rev. Stat. 1909, sec. 7109. Mutual companies defined, see Burt on Life Assurance (1849) p. 53.

Connecticut.-Examine

Miles & Co. v. Odd Fellows Mutual Aid Assoc. 76 Conn. 132, 134, 55 Atl. 607, under Pub. acts 1895, p. 592, c. 255, sec. 1 (fraternal).

Illinois. Examine Love v. Modern Woodmen of America, 259 Ill. 102, 106, 107, 102 N. E. 183 (fraternal).

Indiana.-Muller v. State Life Ins. Co. 27 Ind. App. 45, 51, 60 N. E. 958, 960.

Maire. Adams V. Mutual Fire Ins. Co. 16 Shep. (29 Me.) 292, 294. Michigan.-Walker V. Giddings, Commr. 103 Mich. 344, 347, 348, 61 N. W. 512 (fraternal).

Protective

Minnesota.-National Legion v. O'Brien, 102 Minn. 15, 16, 17, 112 N. W. 1050 (beneficial and fraternal).

Missouri. Rodgers v. National Council Junior Order United American Mechanics, 172 Mo. App. 719, "Where two or more persons 155 S. W. 874 (fraternal beneficimutually agree to insure each other ary societies included in "insurance against marine losses there is said to companies," under Rev. Stat. 1909, be a mutual insurance." Earl of Halsbury's Laws of England, vol. 17, p. 505 and note.

secs. 7109, 7112, 7114); Umberger v. Modern Brotherhood of America, 162 Mo. App. 141, 143, 144, 144 S. W.

For other definitions see the 898 (fraternal, Rev. Stat. 1909, sec. following cases:

United States.-Union Ins. Co. v. Hoge, 21 How. (62 U. S.) 35, 64, 65, 16 L. ed. 61 (mutual, organized

7109).

New York.-Mygatt v. New York Protection Ins. Co. 21 N. Y. 52, 65. North Dakota.-J. P. Lamb & Co.

The statutes of some of the states define mutual insurance companies, mutual benefit associations, fraternal beneficiary orders and like associations.

v. Merchants' National Mutual Fire Ins. Co. 18 N. Dak. 253, 259, 119 N. W. 1048 (mutual fire).

Pennsylvania.-Given v. Rettew, 162 Pa. 638, 640, 29 Atl. 703.

Teras.-Examine Splawn v. Chew, 60 Tex. 532, 535 (benefit association).

Becomes member Boeck v. Modern Woodmen of America, 162 Iowa, 159, 143 N. W. 999; J. P. Lamb & Co. v. Merchants' National Mutual Fire Ins. Co. 18 N. Dak. 253, 119 S. W. 1048; Bixler v. Modern Woodmen of America, 112 Va. 678, 38 L.R.A. (N.S.) 571n, 72 S. E. 704, 41 Ins. L. J. 89. See § 317 herein.

6 California.-Cal. Stat. 1891. c. 116, p. 126, secs, 1, 14, pp. 126-130. Colorado.-1 Mill's Ann. Stat. sec. 638 (what associations not insurance companies).

Connecticut.-Public acts 1895, p. 592, c. 255, sec. 1, construed in Miles & Co. v. Odd Fellows Mutual Aid Assoc. 76 Conn. 132, 55 Atl. 607 (fraternal).

15 Am. & Eng. Ann. Cas. 96, 91 N. E. 466, 39 Ins. L. J. 817.

Iowa.-Acts 21st Gen. Assembly, c. 65, sec. 20 (what deemed a mutual association).

Kentucky. Ky. Stat. secs. 641, 664 (insurance company or insurance corporation defined; societies with lodge system, etc.), construed in Sims v. Commonwealth, 114 Ky. 827, 71 S. W. 929 (as to unlicensed agents and incorporation); also in Grand Lodge Ancient Order United Workmen v. Edwards, 27 Ky. L. Rep. 469, 85 S. W. 701 (as to attachment of application to policy).

Louisiana.-Acts La. 1912, p. 565, No. 256.

Maine. Rev. Stat. 1903, p. 497, c. 49, sec. 134 (fraternal).

Michigan.-Pub. acts 1893, No. 119 (fraternal beneficiary societies); construed in McMorran v. Great Hive of the Ladies of the Maccabees, 117 Mich. 398, 5 Det. Leg. N. 266, 75 N. W. 743 (title of act not unconstitutional).

Georgia.-Ga. Code 1911 (Civ.) Missouri. Rev. Stat. 1909, sec. sec. 2529 (sec. 2134) p. 660 (mutual 7109, p. 371: Rev. Stat. 1909, sec. insurance); Civ. Code 1910, secs. 6896; Rev. Stat. 1899, secs. 1408, 2866-2877, construed in Puryear v. 7853 (benevolent association; fraFarmers Mutual Ins. Assoc. 137 Ga. ternal, with lodge system; mutual 579, 73 S. E. 851 (fraternal). Laws companies), construed in National 1900, p. 71 (fraternal beneficial order Union v. Marlow, 74 Fed. 775, 778, defined as a corporation, society, or 21 C. C. A. 89; Toomey v. Supreme voluntary association having no Lodge Knights of Pythias, 147 Mo. capital stock and having a repre- 129, 136, 48 S. W. 936; Jacobs v. sentative form of government and a Omaha Life Assoc. 146 Mo. 523, 48 lodge system, etc.), construed in S. W. 462 (Rev. Stat. 1889, sec. 5860, Graham v. Eminent Household of "assessment companies"); Umberger Columbian Woodmen, 135 Ga. 777, v. Modern Brotherhood of America, 70 S. E. 649, 40 Ins. L. J. 1098 162 Mo. App. 141, 144 S. W. 898; (constituent members and powers of "supreme bodies").

Thompson v. Royal Neighbors of America, 154 Mo. App. 109, 133 S. Illinois. Hurd's Rev. Stat. 1908, W. 146; Tice v. Supreme Lodge c. 73, sec. 258 (fraternal beneficiary Knights of Pythias, 123 Mo. App. society defined, societies on lodge 85, 100 S. W. 519, aff'd 204 Mo. 349, system), construed in Peterson v. 102 S. W. 1013. For history of Manhattan Life Ins. Co. 244 Ill. 329, state legislature as to same, see State

Other statutes exempt certain mutual benefit or fraternal organizations from the insurance laws, although such societies or associations might otherwise come within their operation.7

(ex rel. Supreme Lodge K. of P.) v. Vandiver, 213 Mo. 187, 204 et seq. 111 S. W. 911; Kern v. Supreme Council American Legion of Honor, 167 Mo. 471, 479 et seq., 67 S. W. 252.

Nevada. Rev. Laws 1912, p. 379, sec. 1310 (mutual companies), Comp. L. 1900, sec. 942.

New Hampshire.-Pub. Stat. 1901, p. 578, c. 86, sec. 1 (fraternal).

Missouri.-Laws 1881, p. 87; Laws 1897, p. 132, construed in Westerman v. Supreme Lodge Knights of Pythias, 196 Mo. 670, 94 S. W. 470 (fraternal beneficiary associations); acts 1887, construed in Aloe v. Fidelity Mutual Life Ins. Co. 164 Mo. 675, 55 S. W. 993, 29 Ins. L. J. 679 (assessment companies); Jacobs v. Omaha Life Assoc. 142 Mo. 49, 43 S. W. 375 (what is not contract on assessment plan under Rev. Stat. 1889, sec. 5849); Ordelheide v. Modern Brotherhood of America, 158 Mo. App. 677, 139 S. W. 269, 40 Ins. L.

New York. Ins. Law. .. 28, Consol. Laws, c. 33 of L. 1909; (Parker's Ins. Law, N. Y. [ed. 1915] p. 342) sec. 230 (fraternal). also sec. 1 of the same Law con- J. 1845 (fraternal association noi sidered in first note to this section.

See

North Carolina.-N. C. Revisal 1905, sec. 4795 (fraternal), construed in State v. Arlington, 157 N. C. 640, 73 S. E. 122, 41 Ins. L. J. 319.

within general insurance laws); Missey v. Supreme Lodge Knights & Ladies of Honor, 147 Mo. App. 137, 126 S. W. 559 (benevolent or mutual benefit plan: not subject to general insurance laws); City of Trenton v.

Oklahoma.—Okla. Rev. Stat. 1903, Humel, 134 Mo. App. 595, 114 S. W. sec. 3236 (fraternal).

Teras.-Tex. Rev. Stat. 1899, sec. 1408, Ann. Stat. 1906, p. 1111.

Washington.-2 Rem. & Ball. Ann. Codes & Stats. sec. 6166, p. 1012 (fraternal).

1131, Rev. Stat. 1899, sec. 1408, Ann. Stat. 1906, p. 1111 (fraternal beneficiary association); Tice v. Supreme Lodge Knights of Pythias, 123 Mo. App. 85, 100 S. W. 519, aff'd 204 Mo. 349, 102 S. W. 1013 (as to nonPorto Rico. Rev. Codes (Civ.) exclusion from operation of Rev. 1902, sec. 1694 (mutual insurance). Stat. 1899, sec. 1423, Ann. Stat. p. 7 Arkansas.-Ark. Stat. (Sand & 1118, Laws 1897, p. 132, relating to H. Dig.) sec. 4133 (mutual insurance fraternal beneficiary association and company on assessment plan), con- specifying lodges or orders excludstrued in Ingle v. Batesville Grocery ed); Shotliff v. Modern Woodmen Co. 89 Ark. 378, 117 S. W. 241. of America, 100 Mo. App. 138, 73 S. California. Stat. 1891, c. 116, p. W. 326, Rev. Stat. 1899, sec. 1408 126, sec. 14, p. 130.

Illinois. Stat. 1885, c. 32, sec. 31. Kentucky. Stat. 1903, sec. 641 (fraternal).

Massachusetts.-Pub. acts 1882, c. 115, secs. 8-10, amdt. 1882, c. 195, sec. 2.

Michigan.-Pub. acts 1893, p. 186, No. 119; acts 1907, p. 243, No. 180, construed in Knights of the Modern Maccabees v. Barry, 155 Mich. 693, 118 N. W. 585 (fraternal).

(fraternal); Missouri statutes are also construed in National Union v. Marlow, 74 Fed. 775, 21 C. C. A. 89, 40 U. S. App. 95 ("fraternal beneficial society"); Grand Lodge Ancient Order United Workmen V. Grand Lodge A. O. U. W. 83 Conn. 241, 76 Atl. 533 (fraternal).

New York.-See Parker's Ins. Law (ed. 1915) p. 343.

Ohio. Rev. Stat. 1880, sec. 3630; Rev. Stat. secs. 3631-11, construed in