Appeal from the Circuit Court of Washington county; the Hon.
QUINTEN SPIVEY, Judge, presiding. Judgment reversed.
JUDGE BARDENS DELIVERED THE OPINION OF THE COURT.
Defendant, a county mutual fire insurance company, appeals from a judgment of the Circuit Court of Washington county finding it liable on a policy of fire insurance for destruction of plaintiff's residence. Defendant contends on appeal, as it did below, (1) that the policy in question was suspended because of plaintiff's failure to pay a prior assessment, and (2) that the policy had been cancelled more than a year prior to the fire loss.
Defendant company was organized and has operated under "An Act relating to local mutual, district, county and township insurance companies," Ill. Rev. Stat. 1955, Ch. 73, Secs. 204.1-204.24. This Act, a part of our law since 1877, has provided the statutory authority for rural property owners joining together in a non-profit corporation to share fire losses. From time to time, under the current statute, assessments are made by the directors of such companies to pay losses and costs of operation.
On June 12, 1951, defendant executed and delivered to plaintiff a policy of insurance having a five-year term, which included coverage of residence property. On August 3, 1953, an assessment was made on all policy holders which plaintiff failed to pay. A further notice sent on October 15, 1953, reminding plaintiff of her failure to remit brought no response. Thereupon, on December 8, 1953, the following notice was sent to plaintiff:
"The Board of Directors of the Washington County Mutual Fire Insurance Company, of Washington County, Ill., at a special meeting Aug. 14, 1953, ordered to levy an assessment of twenty (20) cents on each $100.00 insurance in force. Notices were mailed on Sept. 1, 1953, and on Oct. 15, 1953.
You have failed to pay your assessment, and are hereby notified that your policy No. 400 has been cancelled and is null and void.
The above policy may be reinstated (in case of no loss) by paying the above assessment.
If you have paid one of our Directors, or any Bank, please advise me, and our records will be changed accordingly."
On December 21, 1954, a year after the cancellation notice was sent, the fire loss occurred and the company promptly denied liability.
The trial court's finding for plaintiff was based on the ground that the assessment and notice were illegal because not in accordance with statutory requirements, and that therefore the cancellation of the policy relying on plaintiff's failure to respond to such illegal assessment was likewise void.
The statutory provision regarding cancellation of policies of companies regulated thereunder is found in Sec. 204.20 and is as follows:
". . . the company shall have the power to cancel or terminate any policy by giving the insured notice to that effect, as provided for in the policy."
The policy contained the following standard fire policy provision covering cancellation:
"This policy shall be cancelled in whole or in part at any time at the request of the insured upon the return of this policy to the Home Office of this Company, . . . or may be cancelled by this ...