Gloucester Mut. Fishing Ins. Co. v. Boyer

LUMMUS, Justice. The plaintiff company was incorporated by St. 1847, c. 36, extended by St. 1866, c. 7. It is engaged in the business of insuring fishing vessels and their cargoes. It does business on an annual basis, and its fiscal year begins and ends with the annual meeting on November 15. Shares are valued at $1,000 each, and for each share a stockholder must give a note for $200 with security satisfactory to the directors. Each share is assessable to the amount of $200. Only a stockholder may apply for insurance. In case of losses 'the directors may, whenever they think it necessary, cause the secretary to lay an assessment upon the stock notes of the company sufficient to cover any losses.' Profits and losses are divided each year according to 'the premiums earned by the insurance on the stock held by each stockholder.' The Fred L. Davis Company, a corporation owning and operating fishing vessels at Gloucester, made application in writing for and received insurance from the plaintiff, and subscribed for stock in the plaintiff, to the amount of $15,000, for the years beginning on November 15 in 1926, 1927 and 1928. On that day in each year it signed, by its proper officer, an instrument bearing the date and reading as follows: 'For value received we, Fred L. Davis Co. promise to pay to the Gloucester Mutual Fishing Insurance Company, or order, Three thousand dollars, in such sums, and at such times as may be required for its use, agreeably to its by-laws, together with all that may become due said company on any and all premium notes given by us during the years [here the calendar year of the date and the following year were named]. * * * This note is to be held by it as collateral security for such payment.' On the back was written 'Waiving demand and notice,' followed by the same date shown on the face of the instrument, and the signatures of the three defendants, who were substantially all the stockholders of the Fred L. Davis Company. The defendants sold their stock in that company in the summer of 1929, and that company became clearly insolvent in 1930. It owes the plaintiff, for premiums and assessments under the by-laws, $4,340.68, and the plaintiff contends that the defendants are liable for this upon the instruments just recited.