185 Ga. 287 | Ga. | 1937
Lead Opinion
Sidney Weiss, proceeding as an informer, instituted an action in the superior court of Hall County, Georgia, against Pacolet Manufacturing Company, a South Carolina corporation doing business in the State of Georgia. The object of the suit was to recover a statutory penalty of ten per cent, on sums alleged to have been paid to the defendant by insurers for windstorm damage suffered by the defendant at its manufacturing plant at Gainesville, Georgia, on April 6, 1936. The alleged ground of liability was that the policies of insurance on which the defendant collected for such damage were issued by non-admitted insurance companies, in violation of the act of the General Assembly approved March 28, 1935, and that the defendant accepted such policies without thereafter complying with duties imposed upon it by the same statute, in' such ease. Ga. L. 1935, p. 139. After several amendments by the plaintiff, general and special demurrers filed by the defendant were overruled, and the defendant excepted. The petition as amended alleged that the policies aggregated over $3,000,000, that the defendant was paid the sum of $851,108.64, and that the plaintiff is entitled to recover ten per cent, of the latter sum. The plaintiff being a citizen of Georgia and the defendant a non-resident corporation, the defendant first applied for an order removing the case to the Federal court. This application was refused, and the propriety of this ruling is one of the questions presented by the bill of exceptions. The defendant has also drawn into question both the construction and the validity of the act of 1935, on which the plaintiff’s claim is founded. The material portions of this act are contained in the caption and section 2, reading as follows:
(Caption.) “An act to amend chapter 56-5, entitled ‘Agents
“Sec. 2. Be it further enacted that there shall be added to the said chapter 56-5, relating to ‘Agents and Solicitors,’ of title 56— Insurance, of the Georgia Code, after section 56-522 thereof, the following new sections:
“(1) No corporation, individual, firm, or association not licensed in Georgia to transact the business of a fire and casualty insurance, or the writing and issue of fidelity and surety bonds, shall so engage in such business within the limits of this State; nor shall any person act as agent for any company, individual, firm, or association engaged in the writing of such business, unless such person has himself first received a license from the Insurance Department to represent a company duly authorized in the State. Penalty for the violation of this provision on the part of the corporation, individual, firm, or association illegally engaged in the writing of business in this State as herein provided, shall be $1,000 for the first offense and $2,000 for each additional offense. It shall be deemed a misdemeanor for any person to act as agent for any such company without such person having first received a license as provided herein.
“(2) No individual, firm, corporation, or association residing or doing business in this State shall accept a policy of fire or casualty insurance, or fidelity or surety bond, issued by a non-admitted company, individual, firm, or association in violation of the preceding section, unless such individual, firm, corporation, or association shall immediately report the fact to the Insurance Commissioner, giving the name of the company issuing the policy or contract, stating its amount and the premium paid thereon, and shall there
The petition as amended alleged substantially the following: The defendant is a non-resident corporation engaged in the cotton textile manufacturing business with its home office at Pacolet, South Carolina, but owning and operating a manufacturing plant and store at New Holland, Georgia, which is a village adjacent to the City of Gainesville, in Hall County, Georgia. In April, 1935, the defendant accepted specified policies of fire and casualty insurance on its property at New Holland, Georgia, which were issued in violation of section 2, paragraph 1, of the aforesaid act, in that the companies issuing them were not admitted and authorized to do an insurance business in the State of Georgia. The policies were issued on April 23, 1935. They were issued and accepted with the intent and purpose on the part of the insurers and the insured that the insurers would transact the business of fire and casualty insurance with respect to such property located in Georgia, and that inspections, appraisals, and adjustments would be done in this State, in the performance of such contracts. After accepting the policies and paying the premiums, the defendant did not immediately report the fact to the insurance commissioner of the State of Georgia by giving the names of the companies issuing the policies, stating their amounts and the premiums paid thereon,
The petition further alleged that the insurers actually elected to exercise their option to make settlement by replacing and rebuilding the property, and did execute such settlement according to a method agreed upon between them and the insured, as follows: Invoices for the cost of replacement and reconstruction were paid by the Pacolet Company, the insured, which in turn was reimbursed by the insurers, after credits for salvage. The sums thus paid by the insurers amounted to $551,108.64. The insurers also paid the sum of $300,000 for loss of use and occupancy, making a total
The demurrers filed by the defendant contained the following grounds: (1) The petition fails to allege a cause of action, because it does not show a violation of the act of 1935. (2) The petition fails to show where any of the policies were issued, accepted, or paid for, and does not allege that any of these acts were done in the State of Georgia. (3) The allegations that inspections, appraisals, and adjustments were performed in the State of Georgia, and that such performance was contemplated by the parties at the time of the issuance and acceptance of the policies, are irrelevant and immaterial. (4) The act of 1935 is unconstitutional and void, for the following reasons: (a) It violates the due-process and equal-protection clauses.both of the Federal and the State constitutions, (b) It refers to more than one subject-matter and contains matter different from what is expressed in its title, violating in these particulars the constitution of Georgia. (5) Additional grounds which are subordinate to the above, and need not be stated.
The judge did not erf in refusing the defendant’s application to remove the case to the Federal court. If the action could not have been properly brought in the Federal court, it could not be removed to that court from the State court in which it was instituted. Pullman Co. v. Sutherlin, 150 Ga. 652 (104 S. E. 782). This being an action by an informer to recover a penalty under a State statute, the district court of the United States would not have had jurisdiction of the case if it had been originally filed in that court. The act of 1935 declares that such a penalty may be collected “in a civil suit” by an informer, and the Federal statutes on jurisdiction and removal refer to suits of “a civil nature at law or in equity.” U. S. C. A., title 28, §§ 41-71. The Fed
For convenience the ease will be discussed hereinafter as if only one policy and one insurer were involved. Briefly summarized, the main contentions are as follows: The defendant contends that the act of 1935, so far as it imposes a penalty upon an insured, does not by its terms apply in any case unless the policy was issued and accepted within the limits of this State. Accordingly, the defendant demurred to the petition both generally and specially, because there is no allegation that the policy was issued or accepted in the State of Georgia. On the other hand, the plaintiff contends, that, under the language of the act, it is immaterial where the policy is accepted, provided it covers property situated in this State, is issued to a person residing or doing business in the State, and contemplates the performance of acts by the insurer which will amount to the transaction of an insurance business therein. Claiming that such are the facts of the present case, the plaintiff further insists that he was not required to allege where the policy was issued or accepted, whether in the State of Georgia or elsewhere. The defendant further contends that if the statute should be construed as applying by its language to the acceptance of a policy without the State of Georgia, the statute is
The questions thus presented have all received our careful consideration; but the conclusion we have reached as to one of them renders it unnecessary to discuss the others, and makes it actually improper to give any decision on the constitutional questions. It is our opinion that the act of 1935, so far as it penalizes an insurer, has no application where the policy was issued and accepted without the limits of this State. In this view, the petition did not state a cause of action, for the reason that it failed to allege that the policy was either issued or accepted in the State of Georgia. This conclusion will dispose of the entire case, without reference to other questions; and it is a settled rule that the constitutionality of a statute will not be determined unless it is positively necessary
The most important rule, however, is to ascertain the intention of the legislature; and these are the only two rules of construction which we deem it necessary to apply in the present ease. We expressly exclude from consideration the rule that if a statute is reasonably susceptible of two constructions, one harmonizing it with the constitution and the other rendering it unconstitutional, the former construction is generally to be preferred. Smith v. Evans, 125 Ga. 109, 112 (53 S. E. 589); Fordham v. Sikes, 141 Ga. 469 (81 S. E. 208). An application of this rule would imply a conclusion or conclusions as to constitutional questions; whereas we do not consider it necessary to pass upon any such question, even by inference, in this ease. Our decision therefore will relate only to what the legislature has actually done, with no reference to its power in regard to the general subject. With these observations, we will now examine the statute for the purpose of determining its meaning in relation to the case under consideration. As shown in the preceding statement, section 2 of the act contains several numbered paragraphs or subsections which are referred to as "new sections.” The phrase ".the preceding section” as contained in subsection 2 therefore refers to the preceding subsection, and both of these paragraphs or subsections will be hereafter designated as sections. With irrelevant matter eliminated, section 1 is as follows: “No corporation . . not licensed in Georgia to transact the business of . . casualty insurance, or the writing and issue of fidelity and surety bonds, shall so engage in such business within the limits of this State; nor shall any person act as agent for any company . . engaged in the writing of such business, unless such person has himself first received a license from the insurance department to represent a company duly authorized in the State. Penalty for the violation of this provision on the part of the corporation . . illegally engaged in the writing of business in this State as herein provided shall be $1,000 for the first
Is a policy issued “in violation of the preceding section” unless it is issued within the limits of the State of Georgia? It would seem to be clear that the mere issuance of an insurance policy in another State would not within itself amount to the transaction of insurance business within the State of Georgia, although the policy may contain stipulations which in the event of a loss will require the transaction of such business within the limits of this State. Knights Templars Indemnity Co. v. Jarman, 187 U. S. 197, 204 (23 Sup. Ct. 108, 47 L. ed. 139); Pennsylvania Lumbermen’s Mutual Fire Ins. Co. v. Meyer, supra. The policy here necessarily contemplated that in the event of a loss certain acts would be done by the insurer in this State, and it appears that these acts were so done by the insurer in the performance of its obligation. Even if these acts amounted to the transaction of insurance business within the State, they were all subsequent to the issuance and acceptance of the policy; and consequently the fact that they were so performed did not make it true that the policy “was issued in violation of the preceding section.” We do not overlook the fact that the policy was based upon a plat which was made in the year 1932, but this fact should be excluded because of its occurrence before the passage of the act of 1935, on which the instant suit was predicated. Section 1 refers to the transaction of the business of casualty insurance, the writing and issue of stated classes of bonds,
If the policy was not “issued in violation of the preceding section/5 there is no penalty against the insured for accepting it, no matter what else the insured may have done or failed to do, and regardless of whether the insurer may otherwise have violated “the preceding section/5 either before or after the issuance of the policy. The insurance company, after the issuance of this policy and in the performance of it as a contract, may have transacted the business of insurance within the State, so as to become itself subject to penalty as a non-admitted insurer; but there is no penalty against the insured, unless it appears, among other things, that the initial act of issuing the policy was prohibited by the law. Let us suppose, for the moment, that this policy, with all of the stipulations noted, was issued and delivered without the State of Georgia, but that no loss occurred, and that the insurer was never required to perform any act in pursuance of its obligations, and performed none. Could it be said in such case that the mere issuance of the policy in another State would be contrary to this statute? Clearly, we think, this question should be answered in the negative. The term “issued55 in the. phrase “issued . . in violation of the preceding section55 manifestly refers to the delivery and acceptance of the policy in such manner that it becomes a binding and effective contract between the parties. Sisk v. Citizens' Ins. Co., 16 Ind. App. 565 (45 N. E. 804); Spencer v. Myers, 73
Judgment reversed.
Rehearing
ON REHEARING.
A rehearing was granted in this case, in order that the statute might be re-examined lest an erroneous construe
In the original opinion we rather assumed that in certain provisions of the policy in relation to appraisal, adjustment, and settlement, the parties may have contemplated that the insurer would
Dissenting Opinion
dissenting. Section 1 of the act of March 38, 1935, provides: “No corporation . . not licensed in Georgia to transact the business of . . casualty insurance . . shall so engage in such business within the limits of this State.” Section 3 provides: “No . . corporation . . doing business in this State shall accept a policy of . . casualty insurance. . . issued'by a non-admitted company . . in violation of the preceding section, unless . . [it], shall . . report the fact to the insurance commissioner,” etc. The only question dealt with by the majority opinion and the only question considered here is, as stated in the majority opinion, “Is a policy issued cin violation of the preceding section ’ (that is sec. 1), unless it is issued within the limits of the State of Georgia?” The majority opinion appears to limit the prohibition of and penalty upon the acceptance of a policy issued contrary to the terms of section 1 to the one naked question as to whether the prohibited written instrument was delivered and accepted in this State. Since the policy covering property in this State was issued by an unlicensed non-resident corporation and delivered in another State to a non-resident corporation doing business in this State, the opinion holds that the policy was not “issued” in violation of section 1, and there is no penalty against the insured for accepting it, “regardless of whether
In Jalonick v. Greene County Cotton-Oil Co., 7 Ga. App. 309 (66 S. E. 815), it appeared that an insurance association not authorized to do business in Georgia issued in Texas a policy of insurance covering property in this State, and mailed the policy to the owner in Georgia. The insurer afterwards brought suit against the insured, to recover the premium. The Court of Appeals held that the plaintiff could not recover, because it was not authorized to do business in this State. In its decision the court said: The law “prescribes certain prerequisites to the doing of any insurance business in this State. Plaintiff has not complied with any of these prerequisites, and immunity is claimed because the contract of insurance was made in Texas. It can not be supposed that the purpose of the law was to prevent the act of making the contract in this State. The object is to protect the people of this State against irresponsible companies or individuals, and to prevent all unauthorized companies or individuals from writing insurance on
Any other construction would leave this statute open to the easiest sort of evasion, in that any non-admitted company and any prospective insured could merely step across the State line and there with perfect immunity execute an insurance contract which would be clearly in violation of this statute if delivered and accepted within the borders of this State. The majority opinion has given recognition to the rule that statutes of penal nature shall be most strongly construed against the State. It has also given recognition to the more important and more controlling rule that “ Penal laws should be construed strictly, but they should not be so construed as to defeat the obvious intention of the General Assembly. In construing an act, whether of a civil or penal nature, the intention of the General Assembly should be sought for, keeping in view the evil and the remedy.” Atlantic Coast Line R. Co. v. State, 135 Ga. 545 (69 S. E. 725, 32 L. R. A. (N. S.) 20). See also Mathis v. Fulton Industrial Cor., 168 Ga. 719 (149 S. E. 35); Singer Mfg. Co. v. Wright, 97 Ga. 114 (25 S. E. 249, 35 L. R. A. 497); Wellmaker v. Terrell, 3 Ga. App. 791 (60 S. E. 464). It may be also suggested that if the construction here given be not the correct one, then the act of 1935 with reference to these matters was a vain, a futile thing.
The act in question is not a new departure. It appears to be an effort to correct what must have been abuses not covered by previous enactments. Before the act of 1935 the legislature had provided that no insurance company could operate in Georgia until it had been duly qualified; no agent could represent such a company until he had been duly qualified; and no qualified agent could represent an unqualified company. As was quoted by Justice Lumpkin in Gillis v. Gillis, 96 Ga. 1, 8 (23 S. E. 107, 30 L. R. A. 143, 51 Am. St. R. 121), “The presumption against absurdity in .the provision of a legislative enactment is probably a more powerful guide to its construction than even the presumption against unreason, inconvenience, or injustice. The legislature may be supposed to intend all of these; but it can scarcely be supposed to intend its own stultification.” (Endlich on Statutes, §§ 264, 295.) The construction of the statute given by the majority opinion would defeat each of what would seem to be the manifest purposes