82 Md. 535 | Md. | 1896
delivered the opinion of the Court.
There are twenty appeals in the record now before us. The cases were elaborately and ably argued during the last October term of this Court and the preparation of the opinion was then assigned to the late Chief Judge Robinson. His lamented death occurring shortly afterwards without his having done more.than hurriedly sketch an incomplete outline of some of the many questions involved delayed a decision till now. We have had the benefit of Judge Robinson’s notes and will avail of them in this opinion.
The American Casualty Insurance and Security Company of Baltimore City was incorporated under the laws of Maryland in January, eighteen hundred and ninety, and began operations with a paid up capital stock of one million dollars. Its business embraced many and divers lines of insurance and indemnity. It was authorized to write and did write policies of insurance against accidents,- against losses by railroads and street railways, arising from injuries to property and persons, whether passengers, employees or strangers; and it engaged in various other kinds of indemnities. In a little less than four years its whole paid up capital, with the large sums which it had received in premiums —except, however, the funds in Court for distribution — has been swept away by losses, and there are now outstanding liabilities due by it in a very large aggregate amount and to many thousand creditors. Becoming hopelessly insolvent a bill was filed against it by some of its creditors and an order was passed thereon on November the twenty-third, eighteen hundred and ninety-three, appointing receivers to take charge of its assets. The receivers now have in hand certain funds of the insolvent company and the questions before us relate to the method of distributing the same. A portion of these funds is invested in certain securities which
After determining by this order what was the special and what the general funds, and after directing how the commissions, costs and auditor’s fees were to be paid, the Circuit Court ordered that the taxes claimed to be due to the Mayor and City Council of Baltimore were not properly chargeable upon the assets in the hands of the receivers, and further that there were three classes of creditors. The order then proceeded to define each of these classes, and prescribed rules for ascertaining the different values of the several policies held by them. Following, with a single exception, the paragraphs of the order appealed from we come, first, to the question relating to the division of the funds into a special and a general fund.
At the time of the appointment of the receivers there was standing in the name of the Honorable Spencer C. Jones, Treasurer of Maryland, Baltimore City stock of the par value of two hundred thousand dollars, which had been deposited with him by the company as a guarantee for the payment of the policies issued by it. On December the second, eighteen hundred and ninety-three, the receivers filed their petition in the Circuit Court setting forth the facts in reference to the deposit of these securities, and praying the Court to require Mr. Jones to transfer and deliver’ them to the petitioners, to the end that the same might be administered under the order and direction of the Court. To this peti
In determining whether or not a trust has been created Courts will take into consideration the situation and relations of the parties, the character of the property and the purpose which the settlor had in view in making the declaration. No technical terms or expressions are needed. It is sufficient if the language used shows that the settlor intended to create a trust, and clearly points out the property, the beneficiary and the disposition to be made of the property. 27 Am. & Eng. Ency. of Law, 26, and the citations in notes 1, 2 and 3. In this case the trust is alleged to have been created by an accident insurance and security company doing business in all parts of the country and having its home office in this State. In many States of the Union insurance companies of every kind doing business in such States are required to deposit with some one of the State’s officers a certain named sum of money or approved securities of a designated value, as a guarantee for the payment of losses ■ sustained by the policy-holders. And in this State every life insurance company is required to deposit with the Treasurer of the State public securities of the value of one hun
For the reasons we have given we agree with the Court below that the funds arising from the sale of the city stock and the interest accrued and accruing on that stock until sold must be treated as impressed with a trust and must be applied solely to the payment of the claims of the policyholders, subject, however, to such prior or paramount liens upon it as will be hereinafter alluded to.
We have just said that we agree with the Court below in that part of the order appealed from which defines the special and the general funds; but we cannot concur in that portion which provides that the general fund shall be set apart for the payment of all creditors “ other than the claims of the policy-holders.” The policy-holders after they have exhausted the special fund are entitled to participate along with all other creditors in the general fund.
Passing by, for the moment, the intervening provisions of the order relative to the costs and commissions and which will be disposed of later on, we come now to the claim filed, by the Mayor and City Council of Baltimore for taxes. This appeal presents two questions: First. Whether the tax levied by the municipality for the year eighteen hundred and ninety-three upon the shares of stock of the company held by residents and non-residents is a debt due and payable by the company or only collectible from the. shareholders ; and secondly, if the tax be a debt due and payable by the company, is it a prior lien over the claims of all other creditors ? These taxes cannot, of course, be considered a debt due by the company unless they are made so by statute, because the' shares of stock are the property of the share-holder and under the Code must be valued to him. But the Code further provides that the shares of stock of
This brings us to that part of the order of August the 8th, which classifies the various creditors, numbering in the vicinity of four thousand. The order divides these creditors into three groups. First: Clerks, servants and employes to the extent of their salaries or wages due and unpaid for not exceeding three months prior to the appointment of the receivers. These creditors are allowed their claims for salaries and wages due and unpaid for not exceeding three months prior to November the twenty-third, 1893, as preferred claims under Art. 47, sec. 15 of the Code, and such allowance is free from objection, but is, in no contingency, payable out of the special fund. Second: Policy-holders of the company, and, thirdly, all other creditors.
First. Who are included within the terms clerks, servants and employees? By the section of the Code to which reference has just above been made, it is provided that “whenever any person or body corporate shall make an assignment * * or shall be adjudicated insolvent * * or shall have his, her or its property or estate taken possession of by a receiver * * in the distribution of the property
In the case of Lewis v. Fisher et al., 80 Md. 139, we held that an attorney at law was not a clerk, servant or employee; and we have now to determine whether an insurance adjuster is within these terms. What is the precise nature of the duties of an adjuster the record does not disclose. But an adjuster was not, as we understand it, a person in the continuous employment of the company; that is, one who devoted his whole time and service uninterruptedly to the company. In his petition Mr. Phelps says he was employed as an adjuster in the State of Alabama at a salary of one thousand dollars and expenses. It was his duty and the duty of other adjusters when an accident occurred to ascertain all the facts and circumstances in connection with such accident — how it happened, whether it was through the fault of the insured corporation, the nature and extent of the injury, and to make report thereof to the company. All this involved the exercise of judgment and discretion and required some familiarity with the principles of law relating to the legal liability of the insured. Now, it is clear, we think; that the word “ employee ” as used in the statute was intended to have a limited meaning, and that it cannot be applied in its broadest sense, or as including every one in the service or employment of a corporation or indi
But it was .insisted that the conclusions reached by this Court in Lewis v. Fisher et al., supra, are in conflict with the decision in Moore v. Heaney, 14 Md. 558. Such is not, however, the fact. Two entirely different statutes, relating to different subjects, were construed in the two cases. In Moore’s case the Act of 1854, ch. 23, relating to the exemption of the wages or hire of “ a laborer or other employee ” from attachment, was interpreted] whilst in Lewis’s case the identical statute now involved — the Act of 1888, ch. 383, Art. 47, sec. 15 of the Code — was before us. In Moore's case this Court gave a wide and liberal meaning to the word “ employee,” so as to bring as large a class of persons as possible within the provision which created an exemption in favor of laborers and other employees from the stringent terms of the attachment law and from the equally harsh effects of an attachment levied by way of execution on wages. The Act of 1854, creating an exemption in favor of a class of persons least able to protect themselves and largely dependent on their wages for support, was given a
We come now to the rules laid down in the order of August the eighth for ascertaining the values of the various policies ; and it will be necessary for the sake of clearness to make some general reference to the nature and character of these contracts of insurance or indemnity. No useful purpose Gould be served, but this opinion would be protracted far beyond all reasonable limits, if the provisions and stipulations contained in the various policies were set forth at large. We may say, however, that with suitable modifications and changes to adapt them to the particular character of loss designed to be covered in each case, and to adjust them to the sort of business in which the insured was engaged, all the policies purport to be either individual accident insurance policies, employee’s indemnity bonds or contracts under which, for a designated and agreed consideration, the company stipulated to indemnify the assured against liability for damages (not exceeding a specified amount) which might arise out of injuries to property, or
Now, the insolvency of the company cancelled all outstanding policies of insurance for the future. Doane v. M. I. Co., 43 N. J. Eq. 522. It is apparent that all casualties for which the various insured corporations and individuals holding the insolvent company’s policies might be responsible must have happened either before or after the date of
What has been said above is sufficient to indicate that we also dissent from the third rule laid down by the Circuit Court for ascertaining the value of the class of policies in that rule referred to. When the liability became fixed prior to November the 23rd, 1893, the insolvency on that date did not extinguish the assured’s claim upon the assets and did not put an end to the assured’s right to indemnity. To the return premium in the cases described in this rule must be added what would have been payable under the policy” after November the twenty-third had no insolvency supervened.
If by the fourth rule laid down in the order of August the 8th it is meant that no loss arising from occurrences which happened after November the 23rd gives rise to a claim against the assets, we see no error in the rule; but if it means that no such claims exist if the accident or casualty occurred before November the 23rd and the amount was not ascertained until after that date, then, for the reasons we have heretofore given, we regard this fourth rule as erroneous.
There must of necessity be many outstanding and unascertained claims pending against holders of the company’s policies, which claims may require some time for adjustment ; but it is of great importance that the company’s assets should be distributed at as early a date as practicable, and hence the settlement of its affairs ought not to be postponed to await the determination of every contingency on which its policy engagements are suspended. Carr v. Hamilton, 129 U. S. 256. To obviate all unreasonable delay and yet to afford an opportunity to each policy-holder, who may be entitled to prove against the company’s assets, it will be the duty of the Circuit Court to prescribe by an order that all claims be filed on or before the second Monday of June next, or otherwise be barred from participation in the distribution. This may result in cutting out some
By a prior clause of the order of August the eighth it was provided “that each owner and holder of or person having any lawful claim upon any of said classes of insurance policies or any similar policy of the defendant corporation, issued prior to November 23rd, 1893, for a period to extend beyond said date, who duly paid the premium thereon for the entire period or any portion of it extending after November 23rd, 1893, as agreed between the policyholders and the said company, is entitled to claim upon the value thereof on November 23rd, 1893, and to receive dividends upon such value out of the net special fund.” If the design of this provision was to exclude all policies which did not cover a period of time extending beyond November the 23rd, 1893, the provision is obviously erroneous. Such an exclusion would cut out a claim matured and perfected during the life of the policy whose limit of duration terminated the day before the appointment of the receivers, and under which nothing remained to be done by the insurance company but to reimburse the insured.
In respect to that part of the order which charges the special fund with the payment of costs and expenses that the general fund may be insufficient to meet, it is only necessary to say this special fund being a trust fund devoted to a particular and special purpose, cannot be diverted therefrom or applied to any other or different object; and except in so far as it is liable for the payment of the taxes which are paramount to all other claims, it must be distributed to the policy-holders for whom it was set apart and can be charged with no portion of the costs and commissions incurred in administering a totally distinct fund.
It is obvious that a carrier of passengers cannot by contract restrict, diminish or limit that obligation to the public, or that duty to the passenger, which requires the exercise of the highest degree of care and diligence on his part. A contract which stipulates for or agrees to such relaxation, and therefore contemplates immunity from the carrier’s own negligence, would be utterly void ; precisely as would a contract purporting to relieve a carrier of goods from liability for losses occasioned by his own or his servant’s negligence. But the policies before us are not contracts of that character. Neither in express terms nor by implication do they profess or purport to abridge, in any way, the carrier’s common law liability for injuries to passengers, employees or strangers. These policies leave that liability precisely where and as complete as it was before they were written. They contain no provision impugning or questioning in the slightest degree the full measure of that responsibility. It is perfectly manifest, therefore, that they are not in terms contracts restricting or attempting to restrict the carrier’s conceded liability; and if they contravene public policy at all, it must and can only be incidentally and indirectly. This is all that can be imputed to them. But they are all, it is alleged, repugnant to public policy because by furnishing the carrier with a fund with
If in the development and progress of the law the ancient rules have been relaxed, in the case of a carrier of goods so as to enable him to insure against his own negligence when the result of that insurance is to furnish him the means to make compensation to the owner or shipper of goods, we see no valid reason for holding that the law in its advance to conform to the “ habits,” capacities and opportunities of the public has not reached the stage of allowing a carried of passengers not to contract for a restriction of his original liability, but to purchase from a third party an indemnity fund with which to make more certain his ability to respond in damages for personal injuries caused by his carelessness and neglect. As public policy is a varying quantity, changing with the habits of the people, there is nothing in it as it exists at this day to warrant us in saying these policies infringe it. But how can an insurance or indemnity of this kind be contrary to that vague, indefinite and “variable quantity” called public policy; when no restriction is placed on the carrier’s liability or duty to the public or to the individual, and no attempt is made in the contract of indemnity to interfere with the relations between the carrier and the public, or the carrier and' the individual as those relations existed under the law prior to the writing of the policy? We have said the only suggestion in answer to this inquiry is that a tendency to relax the carrier’s vigilance necessarily results from the fact that under the policy a fund is provided out of which he may be reimbursed the sums he may be obliged to pay as penalties occasioned by his own' negligence. But this not only does not meet the objection that no such relaxation of care and diligenee is stipulated for in the contract of insurance or in any contract between ’
As remarked by Mr. Justice Story in The Ocean Ins. Co. v. Polleys, 13 Pet. 164: “We all know that there are cases
We see no reason to hold that these policies are void because against public policy.
There is but one other question to be considered and that relates to the claim of the West End Street Railway, one of the appellants. A policy was taken out by this company for a year, expiring August the first, 1892. It coatained a provision allowing the insured to renew; at its option, the same policy for three years from the above date. The insured gave notice of its intention to claim and it did claim an extension or renewal of the policy under the option ; but the insurer refused to renew. The West End Company claims that the policy is still in force. To this we do not assent. If the insured intended to rely on the contract it was its duty to have paid the premium or at least to have tendered the premium and demanded a renewal. Dungan v. Mut. B. L. I. Co., 46 Md. 469. It did neither, and the policy thereupon ceased to be effective.
We think no interest should be allowed on the claim for taxes or on any of the other claims filed against the insolvent company. Whilst not precisely analogous, the case of Hutchinson v. Liverpool & Lon. & Gl. Ins. Co., 153 Mass. 143, supports this conclusion. It is not easy, if indeed it be possible, to place upon a consistent basis many of the decisions in which interest has been allowed or disallowed. Perhaps some of the numerous claims might in strictness be entitled to an allowance of interest under ordinary circumstances ; but it does not appear that the amounts asserted to be due have been wrongfully withheld by the Casualty Company. The failure to pay, as far as we can see, has been the result of the company’s insolvency, A penalty or damages in the way of interest ought not, therefore, to be added to'the sums actually due.
It results from what we have said that the order of Au
Order offirmed in part and reversed ■ in part, and causes remanded to the end that another order may be passed in conformity to this opin- ■ ion; one-half the costs in all the cases to be paid out of the general fund, the other half to be paid out of the special fund.