Summary
In Wilkinson et al. v. Goza, 165 Miss. 38, 145 So. 91, 93, it was said: "In view of the provisions of this section, a partnership can be denied only by special plea, verified by oath, and none was filed in this case; consequently, the court committed no error in excluding evidence in denial of the partnership.
Summary of this case from Crosby v. KeenOpinion
No. 30233.
December 12, 1932. Suggestion of Error Overruled January 9, 1933.
1. PARTNERSHIP. Where no special plea, verified by oath, was filed, denying partnership set forth in declaration, excluding evidence in denial of partnership held not error ( Code 1930, section 1588).
Code 1930, section 1588, provides that it shall not be necessary in any case to prove the persons composing a partnership which may be set forth in the pleadings, unless the same be specially denied by a plea, verified by the oath of the party pleading it, and that this rule should apply to all pleas and legal proceedings to which it may apply.
2. INSURANCE. Defendants' acts in relation to fire policy held to bring them within statutory definition of insurance agents, making them personally liable upon policy, where insurance companies were unauthorized to do business in state ( Code 1930, sections 5196, 5197).
Defendants' acts in examining or inspecting the risk, transmitting the application for insurance, collecting and transmitting the premium, delivering the policy, and aiding in an attempted adjustment of the loss, brought them within the terms of Code 1930, section 5196, defining an insurance agent, and hence within section 5197, providing that an insurance agent shall be personally liable on all contracts of insurance unlawfuly made by or through him, directly or indirectly, in behalf of any company not authorized to do business in the state.
3. LIMITATION OF ACTIONS. Statute making insurance agent of company unauthorized to do business in state personally liable on policy held remedial, not penal, as regards insured, hence insured's suit thereunder was not within one-year limitation on actions for penalty ( Code 1930, sections 2301, 5196, 5197).
Code 1930, section 5197, providing for personal liability of insurance agent on all contracts of insurance unlawfully made by or through him for any company not authorized to do business in the state, while it may be penal in the sense that it must be strictly construed, is remedial as respects the insured, who has been led by an unlawful act of insurance agent to make a contract with a foreign insurance company not authorized to do business in the state; hence is not governed by section 2301, requiring all actions for any penalty under any penal statute to be commenced within one year after offense.
4. CONSTITUTIONAL LAW. Insurance.
Statute imposing personal liability on policy on agent of insurance company unauthorized to do business in state held not unconstitutional as abridging privilege of contract and depriving agent of defense of agency (Code 1930, section 5197; Const. U.S. Amend. 14; Const. Miss. 1890, sec. 14).
5. INSURANCE.
In suit on fire policy requiring insured to be unconditional and sole owner of property insured, evidence that he was not held insufficient for jury.
APPEAL from circuit court of Clay county. HON. J.I. STURDIVANT, J.
Thos. L. Haman, of Houston, for appellant.
Section 5197, Code of 1930 is a penal statute and creates a penalty or forfeiture given to the insured and the statute may be upheld only on that ground, especially considered in connection with the provision of section 5196 that whoever shall transmit any premium of insurance, or who shall receive or deliver a policy of insurance, or do or perform any other act or thing in the making or consummation of any contract of insurance with any Insurance Company "other than for himself" (which we read in effect, for another), whether any such acts shall be done at the instance or request, or by the employment of the Insurance Company, or of, or by any broker or other person, shall be held to be the agent of the company for which the act is done or the risk is taken as to all the liabilities imposed by law.
If we could isolate section 5197 from section 5196 and rest of the chapter on insurance and from section 1006 making the very act of assisting another in getting insurance from an unauthorized company unlawful, then section 5197 might be considered as merely remedial.
If there is by the statute, a mere substitution of the statutory agent for the insurance company in the contract, such operates to release the insurance company, and undertakes to impose a contract between two parties not in fact contracting. A liability by substitution imposed on the statutory agent under the contract with release of the insurance company, actual party to the contract, would certainly operate as a statutory forfeiture, if upheld, as valid, and action for recovery of which is barred by section 2301.
An escheat is in the nature of a forfeiture, but not in fact; rather a reversion.
Under our constitution there can be no forfeiture provided by a statute not penal.
If the liability imposed by the statute on the statutory agent is joint with that of the insurance company, and not several, the peremptory instructions requested for appellants should have been granted.
The court in the case of Cain v. State, 103 Miss. 701, construes these two sections together with the section making the act defined by these sections criminal, sections 1248, 2615 and 2616 of the 1906 Code, corresponding in numbers to sections 1006, 5196 and 5197 of the 1930 Code.
The action is for a penalty exacted by statute law by way of punishment for doing an unlawful and prohibited act; for the commission of an offense against the public. A penalty or forfeiture created by statute alone, inflicted for dereliction of duty and for the commission of acts prohibited and made unlawful by the statute for which but for the statute making the act unlawful, there would be no penalty and no cause of action.
37 C.J. 788-789-790; 25 C.J. 1183, 1181, 1179, 1189; Bank of Hickory v. May, 80 So. 704, 119 Miss. 239.
The mode in which penalties shall be enforced and the disposition of the amount of the penalty are matters of legislative direction.
Staten Island Rapid Transit Ry. Co. v. Phoenix Co., 281 U.S. 98, 74 L.Ed. 726.
Provision of penalty as punishment for violating statute does not invalidate statute as denying liberty of contract. The liberty of contract guaranteed by Federal Constitution is freedom from arbitrary restraint.
Liberty Warehouse Co. v. Burley Tobacco Growers Co-op Marketing Ass'n, 72 L.Ed. 473.
As an action for a penalty or forfeiture, the suit was barred by section 2301 of the Code.
Considered, however, as an act not creating a penalty or forfeiture, the act would be violative of the Fourteenth Amendment to the Federal Constitution and section 14 of the state constitution.
Hunnington v. New York, 118 Fed. 686, 193 U.S. 441, 48 L.Ed. 741; South Carolina v. U.S., 199 U.S. 449, 50 L.Ed. 261; Smith v. Alabama, 124 U.S. 465, 31 L.Ed. 508-512.
The statute, if not providing a penalty for doing an act prohibited by the statute, undertakes to abridge the privileges of citizens of the United States, and would deprive citizens of both the United States and of the State of liberty of contract, while all such constitutional prohibitions are subject to such restraints as the government of the state may prescribe for the general good of the whole.
Virginia v. Rives, 100 U.S. 373, 25 L.Ed. 667; Hodges v. U.S., 203 U.S. 1, 51 L.Ed. 65; The Slaughter House cases, 16 Wall. 36, 21 L.Ed. 394, 408; Lochner v. New York, 49 L.Ed. 937.
There was no liability under the contract of insurance. Right of recovery even against the insurance companies depended on sole ownership of the real estate as to the building.
Our proposition is that the statute imposing liability on the agent is invalid, unless it may be held as imposing a penalty; that if the statute is penal, the action is barred.
The suit is for an unlawful act, not by way of damages arising therefrom, but for a liability imposed by statute for a violation of law. One partner cannot charge his firm with such liability. The general issue was plead. The burden of proof was on appellee as against each of appellants. No proof was introduced even tending to connect W.A. Wilkinson, one of appellants, with the matter. The statute defines an actor in an unlawful enterprise to whom the penalty of sections 5197 and 1006 may apply. The court in the case of Cain v. State, 103 Miss. 701, 60 So. 731 in construing section 1006 (section 1248, Code of 1906) found it necessary to read and construe all three sections together.
Rush H. Knox, of Jackson, for appellant.
At the time of the contract E.F. White was not a member of the Houston Insurance Agency, neither was he an insurance agent. He did not begin to write insurance until March, 1929, and was not acting as an agent for any insurance company or agency at this time, and therefore, could not possibly have been interested in this matter further than trying to favor someone who felt that he had to have insurance, and therefore cannot be classed as an agent under section 5196 of the Mississippi Code of 1930.
It will be observed that all that was said and done with reference to securing these two insurance policies, was said and done in the office of the Houston Insurance Agency, the members of the firm being licensed agents, and engaged in the insurance business, and if section 5196 of the Code of 1930 applies to anyone who had any connection with these insurance policies, it applies to W.A. Wilkinson and J.A. Wilkinson and not to E.F. White.
Appellants W.A. Wilkinson and J.A. Wilkinson were insurance agents, being engaged in a general insurance business. Appellant E.F. White was not at this time an insurance agent, and was not engaged in the insurance business. He was a cotton buyer.
Whether or not this suit was barred by the statute of limitations was a question of fact to be determined by the jury, inasmuch as the Houston Insurance Agency, by J.A. Wilkinson had signed what appellee is pleased to call an extension or waiver as to the time of commencing suit.
It was also a question of fact to be determined by the jury as to whether or not the insured, or his son, Sam Goza owned the furniture that was said to have been destroyed by fire in this case, it appearing from the evidence in the case that very likely there was a change of ownership without notice to the insurance company or to either of the appellants herein.
An instruction assuming the existence of facts at issue, is erroneous.
Gilliespie v. Planters, etc., Mfg. Co., 18 So. 120; Coleman v. Adair, 75 Miss. 660, 23 So. 369; Godfrey v. Meridian Ry. Lt. Co., 101 Miss. 565, 58 So. 534; Jackson Light Tract Co. v. Taylor, 112 Miss. 60, 72 So. 856; King v. Rowan, 82 Miss. 1, 34 So. 325; Scalley v. Wardlaw, 123 Miss. 857, 86 So. 625; King v. King, 134 So. 830; Rhodes v. Fullilove, 134 So. 840. B.H. Loving and Frank A. Critz, both of West Point, for appellee.
A penal statute is one where the punishment is on account of a crime committed against the state, and where it provides a private individual may collect to recompense him for loss of suffering such a statute is not penal but is remedial.
Whatever may be said of the penal nature of these statutes, the cases are coming more and more to the proposition that they are not penal in the strict and proper sense applied to statutes imposing punishment for offenses against the state. This term has evidently arisen from the supposition that a penalty is imposed. With reference to their nature and construction, the better, and undoubtedly the correct, rule is that they are penal as to their construction and remedial as respects the creditors.
Metzger et al. v. Joseph, 111 Miss. 385, 71 So. 645; 2 Thompson on Corporations (2 Ed.), par. 1326; Huntington v. Attrill, 146 U.S. 657, 13 Sup. Ct. 224, 36 L.Ed. 1123.
It is clearly the law that section 5197 is a remedial statute, giving the insured a right to recover from an agent for the damages suffered, which damages are provided and agreed upon under the contract of insurance, and under said section the agent is liable only to the extent that the insurance company issuing the policy is liable, and if there should be only a partial loss under the policy, the agent is only liable for said partial loss.
The point was raised by appellant as to sole and unconditional ownership. This is a matter of proof, the burden of which is upon appellants to show as a matter of defense and the undisputed evidence in this case was that the appellee owned said property by virtue of deeds of conveyance to him, and by virtue of adverse possession claimed by him as against all the world covering a period of more than eighteen years, and there is no proof in the record of any kind establishing any cloud upon appellee's title to said property.
The sole and unconditional ownership clause in an insurance policy has not to do with nice questions of title to be precisely determined, but with the beneficial, practical and equitable ownership.
Liverpool Insurance Co. v. McGuire, 52 Miss. 227; Phoenix Insurance Co. v. Bowdre, 67 Miss. 620, 7 So. 596; Grace v. Phoenix Insurance Co., 48 So. 298.
It is distinctly and clearly averred in the declaration that these three appellants during the times in question, and during the performance of the acts in question, were copartners composing this partnership, and there was no denial by any of these appellants of the facts of such partnership by sworn plea as provided by the statute, and therefore, appellee did not have to prove such partnership.
The appellee, M.A. Goza, instituted this suit against the British Islands Insurance Company and the Midland General Insurance Company, foreign insurance corporations, and W.A. Wilkinson, J.A. Wilkinson, and E.F. White, alleged to be a copartnership doing business under the name and style of the Houston Insurance Agency, on a fire insurance policy issued by the said insurance companies. There was no legal process issued for, or served on, the defendant insurance companies, and the cause having proceeded to trial as against the members of the alleged copartnership, the court, at the conclusion of the evidence, peremptorily instructed the jury to return a verdict for the appellee for the full amount of the policy sued on. From that judgment entered in pursuance of this instruction of the court this appeal was prosecuted.
The declaration alleged that the said insurance companies, for a valuable consideration paid, issued and delivered to the appellee, through the agency of the appellants, W.A. Wilkinson, J.A. Wilkinson, and E.F. White, a copartnership doing business under the name and style of the Houston Insurance Agency, a certain policy of fire insurance covering a residence to the extent of four hundred dollars and the furniture contained therein to the extent of two hundred dollars; that while the policy was in full force and effect the said residence and furniture were totally destroyed by fire; that the said two defendant insurance companies were not, at the time of the making, issuance, and delivery of said insurance policy, authorized under the laws of the state of Mississippi to do business therein, and that such policy was not one authorized by virtue of section 5195, Code 1930, to be written by an insurance company not authorized to do business in the state of Mississippi, and that said policy or contract of insurance was made unlawfully through and by the said insurance agents, in behalf of said defendant insurance companies; and that, therefore, the said insurance agents, through whom said policy was made and issued, became and were personally liable thereon to the appellee for the amount of the policy. It was further alleged that after the loss of the said property by fire the appellee gave due notice of the loss to both the insurance companies and the said agents, and complied with all the requirements of the policy in that regard, and that payment of the amount of the policy had been refused by both the companies and the agents. Judgment was demanded against all the defendants.
To the declaration the appellants filed a plea of the general issue, and special pleas setting up the limitation provided by section 2301, Code 1930, as a bar to the suit, which was not filed within one year after the destruction of the insured property, and also alleging that the appellants were not, and had never been, agents of or for the defendant insurance companies; that the insurance policy sued on was not made through or by the appellants, or any one of them, either directly or indirectly, for or on behalf of said insurance companies, as agents or otherwise; that the interest of appellee in the insured property was other than sole and unconditional ownership at the time of the issuance of the policy and at the time it was destroyed by fire; and that after the issuance of the policy on January 18, 1929, the building was not occupied in accordance with the terms of occupancy contemplated by the policy.
To the defensive matter set up by the appellants by way of notice under the general issue and special pleas, the appellee filed proper replications. To the special plea setting up the limitation provided by section 2301, Code 1930, as a bar to the suit, the appellee replied that the suit was not one for a penalty or forfeiture within the meaning of that statute, but was a suit on an insurance contract as authorized and provided by section 5195, Code 1930.
The facts as shown by the evidence were substantially as follows: The appellee desired insurance on certain farm buildings owned by him, and discussed the matter with the appellant E.F. White, who testified that he was at that time a field man for the Houston Insurance Agency. Mr. White went to the home of the appellee and inspected his residence and saw, if he did not inspect, the other residence or building which was afterwards destroyed by fire. Thereafter the appellee went to the office of the Houston Insurance Agency and discussed the matter of insurance with Mr. White and J.A. Wilkinson, and was informed by Wilkinson that they did not represent a company that would write the insurance, but that they could furnish him application blanks which might enable him to secure the insurance through certain brokers. The application blanks were then furnished the appellee and were filled out by an employee of the Houston Insurance Agency, signed by the appellee, and mailed from the office of said agency. The appellee thereupon delivered to White a check for the premium, payable to the Houston Insurance Agency, and this check was cashed for the agency by Mr. Wilkinson. A few days thereafter the Houston Insurance Agency received the policy applied for and indorsed thereon, "Paid, January 21, 1929, Houston Insurance Agency by E.F. White," and then mailed it to appellee with a letter, signed by E.F. White, thanking the appellee for the business and requesting his assistance in securing other insurance business.
After the insured property was destroyed by fire, the appellee notified the appellants of the loss, and they wrote him as follows: "We received your notice about your loss and have notified the company and they will send a man down to inspect same. Not necessary for you to come to Houston. Yours very truly. Houston Insurance Agency, E.F. White." The appellee also received a letter from the general agent who countersigned the policy acknowledging receipt of notice of the loss and inclosing blanks for proof of loss, a copy of this letter being forwarded to the Houston Insurance Agency. The blanks for proof of loss were filled out by the appellee and forwarded by registered mail to the said general agent.
It was agreed by the attorneys for the appellants and the appellee that neither the defendant insurance companies, nor the general agent representing them, was, at the time the policy sued on was written, authorized to do business in the state of Mississippi, as provided by the chapter on Insurance in the Mississippi Code of 1930 (Section 5114 et seq.).
On behalf of the appellants, and particularly the appellant E.F. White, it is contended that the court below erred in excluding certain evidence tending to show that White was not a member of the copartnership at the time of his acts in connection with the issuance of the policy. It is expressly provided by section 1588, Code 1930, that: "It shall not be necessary in any case to prove the persons composing a partnership which may be set forth in the pleadings, unless the same be specially denied by a plea, verified by the oath of the party pleading the same; and this rule shall apply to all pleas and legal proceedings to which the same may apply." In view of the provisions of this section, a partnership can be denied only by special plea, verified by oath, and none was filed in this case; consequently, the court committed no error in excluding evidence in denial of the partnership. Hirsch v. Shafer, 66 Miss. 439, 6 So. 229; Walker Bros. v. Nix, 115 Miss. 199, 76 So. 143; Id. (Miss.), 76 So. 563.
The appellants next contend that this suit, which was not filed until more than one year had elapsed after the fire, is barred under section 2301, Code 1930, providing that: "All actions and suits for any penalty or forfeiture on any penal statute, brought by any person to whom the penalty or forfeiture is given, in whole or in part, shall be commenced within one year next after the offense was committed, and not after."
The liability that is sought to be established against the appellants is predicated upon section 5197, Code of 1930, which provides that: "An insurance agent shall be personally liable on all contracts of insurance unlawfully made by or through him, directly or indirectly, for or in behalf of any company not authorized to do business in the state."
Section 5196, Code 1930, defining an insurance agent, provides that: "Every person who solicits insurance on behalf of any insurance company, or who takes or transmits, other than for himself, an application for insurance, or a policy of insurance, or who advertises or otherwise gives notice that he will receive or transmit the same, or who shall receive or deliver a policy of insurance of any such company, or who shall examine or inspect any risk, or receive, collect or transmit any premium of insurance, or make or forward a diagram of any building, or do or perform any other act or thing in the making or consummation of any contract of insurance, for or with any such insurance company, other than for himself, or who shall examine into or adjust or aid in adjusting any loss for or on behalf of any such insurance company, whether any of such acts shall be done at the instance, or request, or by the employment of the insurance company, or of, or by any broker or other person, shall be held to be the agent of the company for which the act is done or the risk is taken as to all the duties and liabilities imposed by law, whatever conditions or stipulations may be contained in the policy or contract."
The acts done by these insurance agents in examining or inspecting the risk, transmitting the application for insurance, collecting and transmitting the premium, and delivering the policy, and aiding in an attempted adjustment of the loss, clearly bring them within the terms of this statute defining insurance agents, and, by virtue of the provisions of this act, they must be held to be the agents of the companies issuing the policy. And since it is admitted that these companies were not authorized to do business in this state, section 5197, Code 1930, fixes a personal liability upon them on the contract of insurance so unlawfully made by or through them, which must be met, unless it can be avoided upon some one of the grounds of defense pleaded.
In an attempted avoidance of this statutory liability, the first contention of the appellants is that the liability sought to be imposed by this statute is penal, and therefore is barred by section 2301, Code 1930, which requires all actions and suits for the recovery of a penalty to be brought within one year after the cause of action accrues. As said by this court in the case of Cain v. State, 103 Miss. 701, 60 So. 731, it is the policy of this state, as manifested by its statutory enactments, to prohibit wildcat insurance companies, or companies not complying with our laws, from doing business in this state both for the protection of the citizens of the state and the insurance companies authorized to do business in the state. In pursuance of this policy there was enacted section 1006, Code 1930, which is strictly a penal statute, making it a misdemeanor punishable by fine and imprisonment for any person to do or perform any act which would, under section 5196, constitute him the agent of any insurance company not authorized to do business in the state. Section 5197 is, however, intended for the protection of the individual citizen who may contract for insurance through any such agent of a company not authorized to do business in this state. While this statute may be penal in the sense that it must be strictly construed, it is remedial as respects the insured who has been led by the unlawful act of such agent to make a contract with a foreign insurance company not authorized to do business in this state. The personal liability imposed by this statute upon the agent who acted unlawfully in procuring the execution of the contract is in the nature of that of a surety, and is designed not only to prevent the execution of such unauthorized contracts, but to protect the insured against loss occasioned by the unlawful acts of the agent of the insurer. In the case of Metzger v. Joseph, 111 Miss. 385, 71 So. 645, the court had under consideration the personal liability of bank directors, as imposed by statute, for the illegal payment of dividends, and held that such liability was not a penal one, such as is embraced within the terms of the statute providing a limitation of one year for the recovery of penalties. We think that case is decisive of the point presented in the case at bar, and in support of this view we again call attention to, and cite the language of, the supreme court of the United States in the case of Huntington v. Attrill, 146 U.S. 657, 13 S.Ct. 224, 36 L.Ed. 1123, which is cited and quoted from in the Metzger case, supra.
The appellants further suggest that to hold that the liability imposed by this statute is not penal, as respects the rights of the insured thereunder, would render it violative of the Fourteenth Amendment of the Constitution of the United States and section 14 of the state Constitution of 1890; but their contention in this regard seems to be limited to the view that it abridges the privilege of contract and deprives the agent of the defense that he was acting solely as the agent of the insured. No authority is cited which supports the view that this act is unconstitutional, and upon reason we see no ground to so hold.
The policy provides that it shall be void if the interest of the insured be other than unconditional and sole ownership, or if the subject of insurance be a building on ground not owned by the insured in fee simple, and the appellants contend that the evidence shows that the insured was not the sole and unconditional owner of the insured property, or at least that the evidence on that point raised an issue of fact to be decided by the jury. It has been repeatedly held by this court that the clause of insurance policies in reference to sole and unconditional ownership of the insured property has to do, "not with nice questions of title, to be precisely determined, but with beneficial, practical and equitable ownership," and that it was competent for the insured to testify that he was the sole and exclusive owner of the insured property. Groce v. Phoenix Ins. Co., 94 Miss. 201, 48 So. 298, 22 L.R.A. (N.S.) 732, and authorities there cited. The appellee herein testified that he was the sole and exclusive owner of the insured building and the land on which it was situated, and detailed the manner by which he acquired the title. He also testified that he had been in the actual, open, continuous, adverse possession of the land for more than eighteen years. In support of their plea setting up as a defense that the insured was not the sole and unconditional owner of the insured property, the appellants offered the will of appellee's father, which was probated in Clay county more than forty years ago, and which purported to devise to the testator's children certain lands therein described by governmental subdivisions, and an effort was made to show that certain of these devisees had died in the state of Texas leaving descendants which might have an interest in the land upon which said building was located. This testimony was too indefinite to raise an issue of fact as to the ownership of the tract of land upon which the insured building was located, a particular description of which nowhere appears in this record. We do not think there is any reversible error in this record, and, therefore, the judgment of the court below will be affirmed.
Affirmed.