delivered the opinion of the Court.
This suit was commenced before a Justice, on a premium note, made by the defendant, Maxey, to the “Mutual Protection Insurance Company of Nashville.”
On- the 14th of March, 1851, the Company issued a life-policy to Maxey, for the benefit of his wife and children, in the amount of five thousand dollars, for the term of seven years, from the date of the policy, in consideration of the annual ^premium of $103 50, to be paid on or before the 14th day of March, each year, during the continuance of the policy.
The Company was constituted by a charter of incorporation granted in 1847. In the early part of the year 1856, the Company became embarrassed by heavy losses; in consequence of which, a dissolution of the Company, and liquidation of its affairs, was determined upon; and for the accomplishment of this end an assignment of its effects was made to a trustee.
On the 30th of January, 1856, the Company issued a statement of the business and condition of the institution for the year ending last of December, 1855, showing a net balance of the profits for the year of $941 00; and therein giving notice to holders of unexpired policies “ that the liability of the Company will cease, from and after this date, and (the holders of unexpired policies) are advised to obtain insurances elsewhere, should their interest demand it. Premiums will be refunded for such unexpired term.”
By the 13th section of the charter, the Company is authorized, for the better security of its dealers, to receive premium notes in advance, of persons intending to receive its policies; and to negotiate such notes for the purpose of paying claims, or otherwise, in the course of its business; and on such portions of said notes as may exceed the amount of premiums paid by the respective signers thereof, at the successive periods when the Company shall make up its E^nnual statement, to make a compensation to the makers of such notes, not exceeding five per cent, per annum. There is no evidence whatever to repel the inference that the defendant, as well
Nor is there any evidence that any losses remain unsatisfied, or that any liability whatever existed against the Company, at the time of the issuance of the notice of dissolution. On the contrary, the statement of the condition and affairs of the Company, accompanying the notice, and made in conformity with the requirement of the charter, shows that after payment of all losses and expenses, there remained a net balance on hand of nearly one thousand dollars; and furthermore, in the notice issued, the Company proposes to refund all premiums for Unexpired terms: of course this would not have been done, if there had remained any liabilities to be met by 'the Company. On the foregoing facts, it was held, on appeal from the justice’s judgment to the Circuit Court, that the plaintiff was not entitled to recover, and judgment was rendered accordingly. Was this judgment erroneous? The liability of the defendant to pay the note, prior to the rescission of the contract, is not questioned, nor could it be. The Company was constituted upon what is known as the mutual principle of insurance, according to which all the persons assured become thereby members of the Company, and are mutual insurers: the whole body become reciprocally bound for all losses, and share between themselves the whole
The contract of insurance is one of indemnity, and is subject, generally speaking, to the rules applicable to other contracts. The risk assumed by the insurer, on the one side, and the premium paid by the assured on the other, are the essential elements,. The premium, is the consideration ‘for the risk;; and if the insurer do not in fact run the> risk, or if -he be discharged from it, the consideration fails; consequently.- if the premium, in whole or part, remains unpaid, it cannot be demanded; and if paid, may be recovered updn an implied promise. It is correctly argued that the Company could not, by
The judgment will be affirmed.