Opinion of the Court, per SELDEN, J. and binding. If, however, we assume the contrary, and suppose it to be indispensable that the mutual principle, as it is called, should be observed in all the policies issued by a mutual company, the result, I think, would not be different. It is somewhat difficult to ascertain with precision, in what this mutual principle, so strenuously contended for, is claimed to consist; as mutual companies have assumed a great variety of forms; but I will suppose, for the purposes of this case, that it involves all the requirements suggested on the part of the defendants. The most prominent among the requisites insisted upon, as constituting a mutual insurance, is, that the party who is insured should thereby be brought into mutual relation with the insurers, by becoming a member of the company issuing the policy. It seems to be supposed, that this was not the case with the party to whom the policy in question here was issued. An examination, however, of the charter of the company will clearly show the contrary; article V., among other things, provides as follows: "The directors shall be elected by the persons holding policies of insurance in this company, or their proxies, and one vote shall be allowed on every $100 insured." Thus, every person holding a policy issued by the company is made a member of the corporation, and entitled to a vote therein, entirely irrespective of the question whether the premium upon such policy was paid in money or by a premium note; and his interest is measured upon a principle which is perfectly equal and just, viz., by the aggregate amount insured. If it be said, that mutuality also requires that there should be some sort of ratable equality between those who pay their premiums in cash, and those who give notes, this is easily attained. When the present value of a life-annuity, or of a right of dower, is estimated upon principles which experience has established, the sum Opinion of the Court, per SELDEN, J. arrived at is, in the eye of the law, just *equal to the contingent interest which it represents. So, [ 64 when the chances of liability upon a premium note are calculated upon principles similar, if not as exact, a sum is found which may be regarded as equivalent to the contingent liability upon the note; indeed, all premiums for insurance are calculated upon this principle. That equality may thus be produced, is conceded; but two answers are suggested. In the first place, it is said, that it is not shown that the premium in this case was the result of any such calculation; and that the presumption is, that it was not. Now, I am unable to see upon what foundation such a presumption can rest. I have supposed that, where a transaction would be legal, if done in one way, and illegal, if done in another, and there was no evidence on the subject, it was to be presumed to have been done according to law. Here, however, a presumption is to be raised in favor of this company, that it was guilty of a violation of law, to enable it to escape from the obligation of a contract, the consideration for which it has received and still retains ; in my opinion, the presumption is directly opposite to that thus suggested. It was not necessary, that anything should appear in the charter or by-laws on this subject; it was a matter of calculation, to be adjusted upon fixing the premium. The provision in the charter, however, as it seems to me, does imply that the premium was to be calculated upon the precise principle which has been here suggested. The cash premium was to be "in lieu of," that is, was to take the place of a premium note. This implies, that it was to be made equal to such note, which, for all substantial purposes, it would be, if calculated in the mode here pointed out. The other answer given to this view of the case is, that the principles of mutual insurance require that every person insured upon that plan should be also himself an insurer; that is, that each person insured must also be an Opinion of the Court, per SELDEN, J. insurer of all his associates, as well as insured by them; and it is said, that an insured person who has paid a premium of a definite sum, in the language of the defendants' charter, "in full for said insurance," and who, therefore, is not responsible for anything more, *cannot * 65] be a mutual insurer, because he is not in any sense an insurer at all. This argument is based upon what I regard as an erroneous view of the true distinctinction between a mutual and a joint-stock company. Indeed, much of the difficulty on the subject has been produced, by attaching a meaning to the word mutual, in its connection with insurance, which does not belong to it. A mutual insurance company is simply a company whose fund for the payment of losses and expenses consists, not of a capital subscribed or furnished by outside parties, but of premiums mutually contributed by the parties insured. Angell says "A mutual insurance, in its origin, was a body of persons, each of whom was desirous of effecting an insurance; and he agreed with the rest of the members to contribute the premiums to a common fund, on the terms that he should be entitled to receive out of that fund." (Angell on Fire and Life Insurance, § 413.) There is not a word about the parties being insurers of each other, further than as they were made so by the payment of a cash premium; they made up a common fund, by means of their common or mutual contributions. upon which each had a claim for any loss in respect to the property insured; there was no responsibility beyond that, and this is all that is essential to a mutual company. The "mutual principle," as it is called, requires nothing more. Joint-stock companies have a subscribed capital; mutual companies do not, but depend upon their premiums; this is what distinguishes them; and whether the premiums are paid in cash, or by notes, has nothing to do with the distinction." 4 The makers of premium notes may be assessed for losses incurred by members who pay the premiums in cash. Jackson v. Roberts, 31 N. Y Opinion of the Court, per SELDEN, J. Granting it, however, to be necessary that all those whe are insured in a mutual company should also be insurers; the person who took this policy was so; he became, as has been shown, a member of the company, and interested in its funds in proportion to the amount of his policy; and to the extent of that interest, he was an insurer of all other members. It is no answer to this, to say that mutual companies contemplate only indemnity against loss, and not the accumulation of a fund to be divided among the corporators. This depends *upon the manner in which [* 66 they conduct their business; there is nothing to prevent a mutual company from carrying on its operations with a view to profit and dividends. Indeed, the act of 1849 plainly contemplates that they will, or, at least, that they may do so, when it provides in § 21, that they may allow to parties contributing a cash capital, a "participation in their (its) profits." But were this question not as clear upon principle, as I think it is, it may be regarded as settled by authority. What is claimed on the part of the defendants is, that issuing policies for premiums payable in money, is not appropriate business for a mutual insurance company, or, at all events, for one which also takes premium notes subject to assessment; that it assimilates such company to a joint-stock company, which the act of 1849 does not permit; and that there is a want of mutuality between those paying cash premiums, and those who give notes. 304; Schimpf v. Lehigh Valley Mutual Insurance Co., 86 Penn. St. 373. A contract with a "mutual" company, however, being an agreement that the company will insure, in consideration of the assured's agreement to contribute towards the payment of losses, no contract is binding upon the company until, the latter's liability has become fixed. Shaffer r. Mutual Fire Insurance Co., 7 W. N. C. 385. As to the preliminary negotiations, the parties deal at arm's length. Eilenberger v. Protective Mutual Fire Insurance Co., Ibid. 363. But the company may accept a promissory note for a cash premium. Farmers' Bank v. Maxwell, 32 N. Y. 579; Cary v. Nagel, 2 Biss. 244. Opinion of the Court, per SELDEN, J. These same questions received the deliberate examination of the Supreme Court of Ohio, in the case of The Ohio Mutual Insurance Company v. Marietta Woollen Factory (3 Ohio St. N. S. 348). The company, in that case, was incorporated in 1843; in 1844, an act was passed to amend the charter, which contained two sections; § 1 provided, in almost the same terms with the provision in the defendants' charter, that any person applying for insurance might elect to pay "a certain definite sum of money in full for such insurance," which sum was to be "in lieu and place of a premium note;" § 2 devoted the funds arising. from cash premiums and the premium notes, in general terms, to the payment of losses and expenses, saying nothing about assessments, but required the cash fund to be first exhausted. The directors there took ground precisely analogous to that taken here, viz., that this change in the business of the company changed its character from "a purely mutual joint company" to what they called "a mutual stock company." Hence, they disregarded the provisions in their charter, which subjected the premium notes to contribution for such losses only as should accrue while the *makers were members of the * 67 ] company; and treated the cash premiums and premium notes as joint capital, subject to be applied indiscriminately to all losses, except that the cash premiums were to be first exhausted. RANNEY, J., after stating this conclusion of the directors, said "In this we think they were most clearly wrong; no such radical change is or was intended to be effected by this act. It was still a mutual insurance company, with no power in the directors to control its assets as an independent company, or to divert them from the purposes to which the law and the contract of the parties had appropriated them. Every person insuring, whether by the payment of a cash premium, or the deposit of a premium note, still became a member of the company, and this act simply gave the election to him whether he become a member in the one way or the other." Again, |