119 Ark. 102 | Ark. | 1915
Lead Opinion
This is the second appeal in this case. For the opinion on the former appeal, see Massachusetts Bonding & Ins. Co. v. Home Life & Accident Co., 113 Ark. 576, 168 S. W. 1062. The issues raised by the present appeal are different from those involved in the former appeal, -and on that account it will be uecessar^ for a particular statement of the facts pertinent to the issues raised by the present appeal.
The American Union Fire Ins. Co. of Philadelphia, Penn., was engaged in the fire insurance business in the State of Arkansas during the years 1911, 1912 and 1913. The Southwestern Surety & Insurance Company signed as surety the bond of said fire insurance company to the State of Arkansas for the period of one year ending March 1,1912. The Massachusetts Bonding & Insurance Company signed as surety the bond of said insurance company to the State of Arkansas “for the period of one year ending -March 1, 1913. ’ ’ The bond -was conditioned that the American Union Fire Insurance Company should promptly pay all claims arising and accruing to any person or persons by virtue of any policy issued by said company during the term of the bond, upon any property situated in the State of Arkansas when the same should become due. This bond was filed in the auditor ’s office and approved February 29,1912. The Home Life & Accident Company executed a similar bond as surety of said fire insurance company for the period of one year, ending March 1,1914.
C. C. Hanson, as receiver of the Gulf Compress Company, an insolvent domestic corporation, procured a policy of insurance in -said fire insurance company for $10,-000 on 168 hales of cotton. On March 1, 1913, about daylight, a period of time during the life of the policy, a fire occurred which destroyed the 168 bales of cotton. The policy of fire insurance was executed in the State of Alabama.
The American Union Fire Insurance Company became insolvent, and on March 27, 1913, a receiver was appointed to take charge of its assets. On the 29th day of. March, 1913, proof of loss duly made out and signed by the receiver in accordance with the terms of the policy was mailed to the insurance company. On June 19,1913, C. C. Hanson, as receiver of the'Gulf Compress Company, instituted an action in the circuit court against the Maissa-chusetts Bonding & Insurance Company to recover the amount of loss covered by said policy of fire insurance. On July 14, 1913, the present action was 'instituted in the chancery court by the Massachusetts Bonding & Insurance Company against The Home Life & Accident Com-. pany, C. C. Hanson, receiver of the Gulf Compress Company, and other parties having claims against the American Union Fire Insurance Company. The plaintiff prayed for 'an order enjoining' defendants from prosecuting .any suits against it in the law courts of the 'State of Arkansas, and requiring them to file their claims for adjudication in the chancery court where ian ancilliary receiver had been appointed to take charge of and wind up the assets of the said insurance company. An injunction was granted as prayed for.
The Home Life & Accident Company filed an .answer in which it denied liability on the bo ad which it had signed as surety. Subsequently, Hanson, as receiver of the G-ulf Compress Company, filed an intervention and asked judgment against the Massachusetts Bonding & Insurance Company for $10,000, the amount of the policy above referred to. Other claims to the amount of $18,000 were filed.
Act 327 of the Acts of 1905 is amendatory of sections 4371-2-3-4 of Kirby’s Digest. See Acts 1905, p. 780.
Section 2 of the act amends section 4372 of Kirby’s Digest, and provides that any person licensed by the auditor to act as .agent for any fire insurance company is prohibited from paying, directly or indirectly, any commission, brokerage or other valuable consideration on account of any policy or policies covering any property in the State of Arkansas to any person, agent, firm or corporation who is a nonresident of the State.
Section 3, which amends section 4373 of Kirby’s Digest, provides that when the auditor shall have received notice or information of any violation of any of the provisions of the act, he shall investigate such violation, and further provides for a revocation of the license of the insurance company for a certain period of time for a violation of the provisions of the act.
Section 1 of the act is amendatoiy of section 4371 of Kirby’s Digest, and in effect provides that the companies named in the act .are prohibited from authorizing or allowing any agent who is a nonresident of the State to issue or cause to be issued its own policy or policies of insurance or reinsurance on property located in this State. A comparison of these sections of the act of 1905 with the sections of the Digeist which they amend, shows that the amendment consists in bringing other companies than fire insurance companies within the terms of the act.
In short, we think the purpose to be accomplished by the act of 1905 .and sections 4371-4374 of the Digest, which it amends, is collateral to that sought to be accomplished by the enactment of section 4339 of the Digest, and for that reason we are unwilling to engraft upon the latter section a consequence, so inequitable as that contended for by counsel for the surety company.
This brings ns to the question as to whether or not the loss accrued during the term, of the bond of .appellant company or during the term of the bond of the Home Life & Accident Company. Claims amounting to $18,000 have already been adjudged against the Home Life & Accident Company. The claim of Hanson, as receiver of the G-ulf Compress Company, is for $10,000. On the former appeal, we held that under our statute, which provides for a renewal of the bond annually, a bond for only $20,000 was in force at any one period of time. If the $10,000 claim under consideration is added to the $18,000 claim already adjudged .against the Home Life & Accident Company, the aggregate amount will be $28,000 against that company, and the amount of the bond would be pro rated among all the claimants. It is, therefore, apparent that ■all persons having claims against the insurance company, as well as the Home Life & Accident Company are interested in casting the liability for the $10,000 claim under consideration against the appellant company, and briefs in support of their contention have been filed in this court by .all these parties.
It is the contention of counsel for appellant that the •bond of its compan}^ became effective on March 1, 1912, and that its liability terminated on February 28,1913; and that, inasmuch as the fire occurred about daybreak on the first of March, 1913, it is not liable. Evidence was adduced by them tending to show that it was the custom of the auditor to approve the bond on or before the 1st day of March, land to consider it effective on that day.
On the other'hand, it is contended by counsel for the claimants and for the Home Life & Accident 'Company that the bond of the appellant company was in force on March 1, 1913, when the loss occurred. As we have already seen, we must presume that it was the intention of the surety to execute the 'bond in compliance with the requirements of the statute, and unless it would be doing violence to the language of the bond itself, we must so hold. See Crawford v. Ozark Insurance Company, supra.
We have followed this general rule in the case of taking appeals, iand in construing the statute of limitations. See Connerly v. Dickinson, 81 Ark. 258; Peay v. Pulaski County, 103 Ark. 601.
By section 4337 of Kirby’s Digest, every insurance company is required, within sixty days after the 1st of January, to file with the auditor a statement of its business for the preceding year. By section 4338 each company is likewise required to file with the auditor at the same time a ¿statement showing its net receipts for the year ending December 31, preceding, and is required to pay info the State treasury “on or before the 1st day of March a tax of 2 per cent of such net receipts.”
Then when the bond was required to (be renewed, all of the 1st day of March would .be given the companies to file their renewal bond, .and on this day the old bond would be in force and the liability of the new surety would commence on the succeeding day. The ¡surety to the bond in question seems to have thought this a proper construction of the statute for the term of the bond was “for a period of one year ending March 1, 1913.”
The fire in question occurred about daybreak on the 1st day of March, 1913, and we are of the opinion that the appellant company is liable for the loss.
It is next contended by counsel for appellant that the proof does not sustain the finding of the chancellor as to the amount of cotton destroyed by the fire; but we do not agree with them in this contention. A detailed statement of the evidence on this point and a specific review of it would 'be without .any value. The proof of loss sent in on the 29th day of March, 1913, contained a specific and detailed statement of ¡all the cotton lost. Evidence of witnesses was adduced at the trial which tended to show .that all of these 168 bales of cotton -were destroyed by the fire, and that their value exceeded the sum of $10,000, the amount of the policy. The chancellor rendered judgment against appellant for $10,000. We are of the opinion .that his finding is not against the preponderance of the evidence, and will be upheld.
The chancellor refused to allow a penalty or attorney’s fee provided by Act 115 of the Acts of 1905. Section 1 of that act provides that in .all cases where loss occurs and the fire insurance company liable therefor shall fail to pay the same within the time specified in the policy after demand thereon, shall be liable to the holder of such policy in addition to the amount of such loss for 12 per cent damages upon the amount of such loss, together with iall reasonable attorney’s fees for the prosecution and collection of said loss.
It follows that the decree will be affirmed.
Dissenting Opinion
dissenting. The first section of the act of Mjay 'll, 1905, is an amendment of section 4371 of Kirby’s Digest, which is a part of the act of May 23, 1901, the amendment being a provision adding other kinds of insurance companies. Notwithstanding the provision of that statute, the contract of insurance is valid and enforceable so far as the company itself is concerned. The contract was enforceable against the company, not because it was one authorized by the laws oi the ¡State of Arkansas, but because it was valid in the State of Alabama where it was entered into, and would, upon the doctrine of comity, be enforced in this State.
The question of the liability of the sureties on the bond, is, however, quite another thing. The contract may be valid and enforceable against the insurance company, and yet not fall within the terms of the surety bond, and such is, I think, clearly the state of this case. The bond was furnished ,by the insurance company pursuant to the laws of this State, which provided a scheme whereby foreign insurance companies might be permitted to do business here. Our first statute creating an insurance bureau, and outlining the scheme for permitting insurance companies to do business in the State, was passed April 25, 1873, but it contained no provision with respect to the requirement for giving bond. The first statute on that subject was the act of March 6, 1891, the first section of which provided that ‘tall fire, life or accident insurance companies, individuals or corporations now or hereafter doing business in this .State, shall, in addition to the duties and requirements now prescribed by law, give a bond to the State of Arkansas with not less than three good and sufficient sureties to be approved by the Secretary of State, in the sum of twenty thousand dollars, conditioned for the prompt payment of all claims arising and accruing to any person by virtue of any policy issued by any such company, individual or corporation. ’ ’ The act has been amended several times, but not in any particular which is important in the present inquiry. The auditor has been ¡substituted for the Secretary of State as the official to receive and approve the bond. Other sections of that act remain unamended. Kirby’s Digest, sections 4340-41-42-43. The statute requires that the 'bond executed shall toe “in addition to the duties 'and requirements now prescribed by law,” which shows that the intention of the law-makers was to insert the requirements concerning the giving of bond as a part of the scheme under which the company is permitted to do business.
In dealing with the matter of giving the bond in the case of United States Fidelity & Guaranty Co. v. Fultz, 76 Ark. 410, we said: ‘ ‘ The bond was executed pursuant to the requirement of the statute, and the obligors are presumed to have known the terms of the statute, and to have bound themselves with reference thereto.”
Now, is it to be presumed that the sureties, knowing the law contemplated liability for an unlawful or unauthorized act of the company? I think not. Even compensated sureties ought to toe protected toy the presumption that they meant to become liable only on transactions which could reasonably be anticipated, and that unauthorized .and unlawful .acts of the principal are not to be deemed within the contemplation of the parties. Nor would the surety toe liable under the doctrine of ultra vires, as laid down in the case of Minneapolis Fire & Marine Mutual Ins. Co. v. Norman, 74 Ark. 190, for the reason .already given, that the sureties were not parties to the contract made outside of the 'State, 'and are not deemed to have had that in contemplation as a part of their sure-tyship.
The statute not only prohibits a company .doing business in this State from authorizing contracts to toe made out of the State, tout it requires the auditor to investigate the condition of insurance companies, and when found to have violated .that provision to revoke the license of the company. That provision emphasizes the force of the presumption that the sureties did not contract with reference to such unlawful acts, and that the statute was not intended to 'bind them to the extent of making them liable for contracts executed contrary to the provisions of the statute. The fact that the company itself is liable on the contract because it was valid under the laws of the place where it was executed, does not affect the liability of the sureties, for they did not contract with reference to the laws of Alabama or any other State save those of the State of "Arkansas. It is true that the language of the statute is that it shall be a bond for payment of iall claims arising (by virtue of any policy “upon any property situated in the State.” But that language was inserted to exclude liability on the loss of property in another State, and not for the purpose of enlarging liability so as to extend to 'any contract made contrary to the statutes of the State. When the statute is considered as a whole in its relation to our scheme of laws on the subject of foreign insurance companies, it is obvious that the lawmakers had in mind legislation with reference to the business of the company done in this State, and not business done elsewhere. The bond was given to enable the insurance company to do business in this State, 'and there is no reason to suppose that they meant to protect policy holders on contracts entered into elsewhere, for the statutes have no extraterritorial effect, and could not for that reason have been intended to cover anything else except transactions occurring in this State. A contract of suretyship must, says a text writer on the subject, “have ia reasonable interpretation according to the intent of the parties, as disclosed by the instrument read in the light of surrounding circumstances and purpose for which it was made. ’ ’ Pin-grey on Suretyship, .section 67. It was not within the power of the law-makers to regulate a contract made by a foreign insurance company in another State. Therefore, they are not presumed to have intended to impose a liability on the sureties with reference to such a contract.
I .am also of the opinion that the majority .are wrong in holding that the appellant’s bond is the one liable for the loss in this case, if there is any liability at 'all on the part of the sureties. I think the bond executed by appellant expired with the last day of February, and that the bond executed by the Home Life & Accident 'Company on March 1, 1913, is the bond upon which liability rests, if any, for losses which occurred after that time. Our statute Bas carved out a period o£ time 'which, may he termed •an. insurance year, -and begins on March 1 and ends on the last day of February. The bond executed by the company is intended to cover that period, .and, even when executed after the first day of the period, may have a retroactive effect so as .to cover all losses occurring during the period. United States Fidelity & Guaranty Co. v. Fultz, supra. I attach no importance to the fact that in other decisions we have mentioned March the 1st as the date of the commencement of the bond, for that precise question was not involved in those cases, the liabilities not arising on that day. But I am convinced now, upon consideration of the statute, that the law-makers intended to make the first day of March ias the 'beginning of the insurance year. The companies are given the whole of that day for the execution of the bond, filing the 'annual statement, and paying the tax required by the statute, but that does not necessarily mean that the period begins the next day. The companies are, in other words, given the whole of the first day of the period within which to make the bond, and, inasmuch as the law does not take .account of parts off days, the bond given during that day covers all of that day’s transactions. It may be conceded that the ordinary rule of interpretation is that where a given period is mentioned, .the last date is included .and the first excluded. But that rule is not .an inflexible one, and does not apply where the context showis that the contrary was intended. In the very nature of this transaction, it is necessarily contemplated that the bond executed on the 1st day of March would cover the transactions of that day, otherwise a new comp.any coming into the State and executing a bond on the last day mentioned could not do business until the following day without executing .another bond. To be more explicit, suppose a new company .should file with the Auditor its bond on the 1st day of March, would that bond cover transactions on that day, or would the company be bound to w^ait until the next day to begin business? Applying that test, it is conclusive that the Legislature meant to start the insurance year on March the 1st, and to give the whole of that day to execute bonds which would cover transactions of that day. Of course, if the hond took effect on March 1, and ran for one year, it necessarily expired with the last day of the month of February of the next year.
My conclusion, therefore, is that there is no liability on the part of appellant for this loss. This is so on both the grounds which I have attempted to maintain.
