Shipley v. Columbia Mutual Insurance Co.

ROBERTSON, Judge,

dissenting.

I respectfully dissent.

There is little doubt but that the availability of a one-year statute of limitations for this respondent’s nonassessable fire insurance policies makes little sense. As the principal opinion correctly states, the policy behind that one-year limitation serves an appropriate purpose only to the extent that assessable policies are issued; members whose financial resources are at risk are entitled to a prompt assessment of their exposure. However, we are not empowered, in my opinion, to assess the wisdom of the General Assembly’s extension of that policy to nonassessable policies of insurance, in the absence of a violation of our Constitution.1 Nor can it be said that the laws affecting farmers mutual insurance companies are a model of clarity.

Because I believe that the relevant statutes provide that the one-year statute of limitations available to farmers mutual insurance companies was available to such companies issuing nonassessable policies to these policyholders, I must dissent.

The principal opinion proceeds from the premise that prior to the 1963 amendments to the farmers mutual insurance law, farmers mutual insurance companies could issue policies on a nonassessable premium basis *380without restriction. Specifically, the principal opinion assumes that a policy issued for a premium is one for which no further assessment is either required or permitted. Given the common understanding of the workings of “premium” payments for insurance coverage, this would be a reasonable assumption. Nor is this assumption contradicted by the first clause of § 9 of the 1953 act (Laws 1953, p. 252, 257), which states that

A company operating under this act may at the time the application for insurance is made or thereafter, collect such fee, initial charge and/or advance assessment or premiums as the directors may prescribe. .. .2

Id.

However, that clause must be read in context with the remainder of that sentence, as well as in context with the entire law. Doing so, it becomes clear that the payment of a premium does not avoid the policyholder’s ultimate liability for the payment of such assessments as may be necessary for the payment of losses and expenses during the relevant period. The clause following the one recited above states:

... and [a company operating under this act] shall collect sufficient assessments or premiums annually, or oftener, to enable it to pay losses and expenses, and, in accordance with the articles of incorporation or bylaws, to create and maintain a safety fund.

Id.

Furthermore, the same requirement that members remain liable for potential assessments exists in the other pertinent provisions of the 1953 act. Under that act, a farmers mutual insurance company was authorized to “insure buildings, personal property and other risks of its members.” § 5, Laws 1953 at 255 [§ 380.650, RSMo 1978 (repealed) ] (emphasis added). Section 10 provided that

Each member of any company operating under this act shall be liable in accordance with the terms of his insurance contract or policy for his pro rata share of the amount necessary to pay all losses and expenses incurred during the time for which his respective policy is in force, and to create and maintain such safety fund as may be deemed necessary by the directors of such company. * * * *

§ 10, Laws 1953 at 257 [§ 380.720, RSMo 1978 (repealed) ]. Read together, these sections mean that a policyholder could pay a premium and still bear responsibility for an assessment.

In 1963, the General Assembly amended § 380.710 in pertinent part to add the following:

[A] company which is qualified to write “miscellaneous”insurance as set out in section 380.620 subdivision 43 may charge and receive premiums on such of its policies as the board of directors may prescribe. Members holding policies issued on the premium basis shall pay the stipulated premium at or before the time when the policy is issued and shall not be liable to assessment....

§ 380.710, RSMo 1978 (emphasis added). Contrary to the principal opinion’s understanding, the 1963 amendment both created and limited the ability of farmers mutual insurance companies to issue nonassessable policies. That amendment, in apparent recognition of the broader risk undertaken by a company issuing nonassessable policies, provided that only companies of a certain financial stature could issue nonassessable policies. And just as important, the legisla*381ture for the first time provided that policies issued on a premium basis “shall not be liable for assessment.” Laws 1963, p. 499 (§ 380.710, RSMo 1969).

At the time of the 1963 amendments, the General Assembly did not alter the statute of limitations applicable to farmers mutual insurance companies to create an exception for policies issued on a nonassessable basis.4 As a result, the only conclusion which can be legitimately drawn is that the General Assembly intended the one-year statute of limitations to apply to nonassessable policies issued by farmers mutual insurance companies. To conclude, as does the principal opinion, that the one-year statute of limitations for nonassessable policies is “contrary to the precise rationale for which the shorter statute of limitations was enacted” is simply to ignore the overt acts of the legislature.

The principal opinion reads the phrase “a company which is qualified to write miscellaneous insurance” in § 380.710 as meaning “a company, with respect to miscellaneous insurance policies written by it, ... ”. Alternatively, the opinion reads the language “such of its policies of insurance as the board of directors may prescribe” to include an additional term, so as to read: “such of its miscellaneous policies as the board of directors may prescribe.” Neither variant on the wording of the statute is justified. The General Assembly’s language constitutes a grant of authority to certain farmers mutual insurance companies to issue nonassessable policies; it is not, as the principal opinion argues, a limitation on the types of insurance which can be issued on a nonassessable basis.

I am not pleased with the result which I feel compelled to reach. The policy choice of the legislature seems unfair to me. However, the choice of appropriate policy has been vested by the Constitution in the General Assembly; we cannot disturb that choice simply because we disagree.

I would affirm the judgments of the respective trial courts. I respectfully dissent.

. Appellants claim that the one-year statute of limitations constitutes a special law in violation of Mo. Const, art. Ill, § 40(6). That issue was decided against appellants’ position in Abney v. Farmers Mutual Insurance Co. of Sikeston, 608 S.W.2d 576 (Mo.App.1980).

. The word "premium" was defined to mean "a stipulated amount charged for a specified policy period, some portion of which amount the company is required by this act to charge as a liability and maintain as an unearned premium reserve until the end of the specified policy period." § 1(4), Laws of 1953 at 253.

. Section 380.620(4) provides that a company operating under §§ 380.840-860 may write "miscellaneous” insurance. A company is qualified to write miscellaneous insurance under § 380.630(4) if it has at least one hundred million dollars net insurance at risk under one or more of the other subdivisions of § 380.620 and a safety fund of at least two hundred thousand dollars.

. The General Assembly amended § 380.840 in 1984 to exclude nonassessable policies from the one-year statute of limitations. That amendment is not applicable to the policies of insurance at issue here.