Case ID: wis_177/html/0068-01.html
Source: Caselaw Access Project
Author: {"author": "Owen, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Cordy and others, Plaintiffs, vs. Hale and others, Defenddants. [Two appeals.]
    
      March 17
    
    April 11, 1922.
    
    
      Insurance: Regulatory statutes: Purpose: Property situated without the state: Agents: Corporations: Acting as agents for company not qualified in state.
    
    1. Even though provisions in the statutes regulating fire insurance, such as secs. 1941 — 64, 1941 — 65, Stats., are restricted to insurance on property within the state, the general legislative purpose was to protect the citizen securing such insurance within the state wherever the property might be located.
    2. An agent who wrote a fire insurance policy in a company not authorized to do business within the state is liable for the amount of a loss not paid by such company, under sec. 1919/, Stats., even though the property insured was located outside of the state.
    3. The fact that a corporation could not lawfully act as agent of an insurance company under sub. 6, sec. 1976, Stats., does not relieve it of liability if it acted as such agent and wrote a policy in a company not authorized to do business within the state.
    4. The liability created by sec. 1919/, Stats., on the part of an insurance agent who writes insurance in a company not authorized to do business in the state is not limited to agents who may be lawfully licensed to transact business in the state, but applies to any one who does in fact solicit or place insurance.
    Appeals from orders of the circuit, court for Ashland county: G. N. Risjord, Circuit Judge.
    
      Affirmed on appeal of defendants Hale and Deniston; reversed on that of plaintiffs.
    
    This action was brought by the plaintiffs against the defendants Hale, Deniston, and Northern Security Company to enforce a personal liability under sec. 1919/, Stats., for soliciting and placing fire insurance with defendant Guaranty Fund Fire Underwriters, a fire insurance company not authorized to do business in this state.
    The complaint, alleges that the plaintiffs are associated together and jointly interested in a logging and lumber business in the state of Wisconsin and adjoining parts of the state of Michigan, with their principal office located at Mellon, Wisconsin; that the defendant Northern Security Company is a corporation duly organized and doing business under and by virtue of the laws of the state of Wisconsin, with its principal office in the city of Ashland, Wisconsin, and, among others, its purpose and business is declared in its articles of incorporation to be “to act as an insurance agent for insurance — companies of all kinds — and as such generally to do a general insurance businessthat the defendants Hale, Deniston, and Northern Security Company, in the spring of 1920, solicited plaintiffs for fire insurance on various products owned by them and situated in the state of Michigan, and that on April 1, 1920, said defendants Hale, Deniston, and Northern Security Company delivered to plaintiffs one certain policy issued by said Guaranty Fund Fire Underwriters through its said agents Northern Security Company, Hale, and Deniston, insuring said forest products so located in the state of Michigan against fire loss for the term of one year thereafter in the sum of $5,000, the plaintiffs paying to the said agents a premium of $250 for said insurance policy; that the forest products covered by said insurance policy were destroyed by fire, and that the Guaranty Fund Fire Underwriters has failed to adjust or pay the loss. Judgment was demanded against said defendants for the amount due plaintiffs under the terms of said insurance policy. The defendant Guaranty Fund Fire Underwriters made no appearance. The other defendants separately demurred to the complaint on the ground that it did not state facts sufficient to constitute a cause of action. The trial court overruled the demurrer interposed by .defendants Hale and Deniston and sustained the demurrer interposed by defendant Northern Security Company. The defendants Hale and Deniston appeal from the order overruling their demurrers, and the plaintiffs appeal from the order sustaining the demurrer of the Northern Security Company.
    
    
      E. R. Hicks of Oshkosh, for the plaintiffs.
    For the defendants there was a brief by Lamoreux & Cate of Ashland, and oral argument by C. A. Lamoreux.
    
   Owen, J.

While the defendant Guaranty Fund Fire Underwriters corporation is joined as a defendant, it has not appeared in the action, and we are concerned only with considerations affecting the liability of the other defendants who solicited and placed the insurance. Their liability, if any, is referable to sec. 1919/, Stats., which provides:

“Any company or person who shall solicit or place insurance in a fire insurance company not authorized to do business in this state shall, in the event of the failure of such unauthorized company to pay any claim or loss within the policy issued, be liable to the insured for the amount thereof to the extent that such company would have been liable.”

The complaint alleges that the Guaranty Fund Fire Underwriters is a Texas corporation organized for the purpose of writing fire insurance and that it is not and was not at the time of the issuance of the policy authorized to do business in this state. It is further alleged that the defendants Northern Security Company, Hale, and Deniston solicited and placed insurance in the Guaranty Fund Fire Underwriters. The provisions of sec. 1919/ clearly embrace the transaction here under consideration, unless it be construed in accordance with defendants’ contention that it applies only to insurance written on property located in this state. Their contention, tersely stated, is that the purpose of our laws regulating the business of fire insurance is h> protect our citizens in insurance contracts affecting property located in this state, and attention is called to numerous sections regulating contracts of insurance upon property in this state, such as secs. 1941 — 64, 1941 — 65, and perhaps others, where the regulatory provision applies to policies of insur-' anee written on property in this state. However, .we do not think it can be said as a general proposition that the legislative purpose in regulating the business of fire insurance was to protect alone the citizen securing fire insurance upon property located in this state. We think the purpose is broader and more inclusive. We think it was the legislative intent to protect the citizens of this state from loss in dealing with unsound insurance companies, whether their contracts related to property located within or without the state; and this purpose is manifest by a consideration of numerous sections of the statutes: for instance, sec. 1915 provides that “no company incorporated under the laws of any other state or of any territory or of any foreign government or other insurer having its home office outside of this state shall, directly or indirectly, take risks or transact any business of insurance in this state except upon compliance with and maintenance of the following requirements,” naming them, and sec. 1916 provides that “the commissioner of insurance shall, upon being satisfied that any such insurance corporation has fully complied with all provisions of law applicable thereto, and that the interests of the people of the state are not jeopardized by dealing with such corporation, deliver to such corporation a license to transact business in this state as prescribed in these statutes.” It is to be noticed that the company is to be licensed to do business in this state if the commissioner of insurance is satisfied “that the interests of the people of the state are not jeopardized by dealing with such corporation.” The license issued by the commissioner of insurance to a foreign corporation to transact business in this state is accepted by the citizen as an assurance from the state that it is solvent and financially sound, and that he is safe in transacting business with any such company whether it relate to insurance on property located within or without the state. While the fact that a number of the provisions of the statutes relating to the fire insurance business by their terms relate to insurance contracts written upon property in this state lends force to the contention that all statutory regulations should be so limited in their interpretation, we are of the opinion that the legislative intent will be more certainly enforced by giving to each section of the statutes the scope indicated by the language used.

The provision of the statutes which gives rise to the liability sought to be enforced in this case includes the transaction set out in the complaint. The defendants solicited and placed insurance in a fire insurance company not authorized to do business in this state. The unauthorized company in which the insurance was written has failed to pay the loss which the policy indemnified. The section plainly provides that under such circumstances the person so soliciting or placing the insurance shall be liable to the insured for the amount of such loss to the extent that the company would have been liable. We are not inclined to construe this as referring only to contracts of insurance written upon property located in this state. To do so would constitute an unreasonable restriction upon the language used. A contrary legislative purpose is not so plain as to'justify it. Considerations of public policy do not require it. The duty which the state owes to its citizens in the matter of assuring them safety in the financial responsibility of insurance companies with whom they do business is scarcely less in principle where the property is located outside of the state than where it is located within the state. We therefore hold that the complaint states a good cause of action against the defendants, so far as the question thus far considered is concerned.

. A little different question is raised by the demurrer of the Northern Security Company. This defendant is a corporation. Under our statutes (sub. 6, sec. 1976) “no corporation or stock company shall be licensed as agent of any insurance company.” It is contended that because under the laws of this state the defendant Northern Security Com- pony could not be licensed as an insurance agent, with knowledge of which the plaintiffs must be charged, as they are presumed to know the law of the state, the Northern Security Company cannot be held liable to them under the statutory provision quoted. We must confess that the reasoning justifying this conclusion is obscure, and we shall not attempt to state it. Sec. 1977 defines the term “agent” to be “every person or member of a firm or corporation who solicits insurance on behalf of any insurance corporation or person desiring insurance of any kind,” etc. The definition excludes the idea that the corporation itself can be an agent. However, that defines a lawful agent, that is, one who may be permitted under our laws to act as an agent. It is an elementary principle of law that one corporation may act as an agent of another, and where, as in this case, one of the purposes of a corporation, as defined in its articles of incorporation, is declared to be “to act as insurance agent for insurance companies of all kinds and as such agent to do a general insurance business,” such a corporation may act as such agent and, when authorized, will bind its principal. The mere fact that the Northern Security Company could not be licensed to act as insurance agent under the laws of this state by no means implies that by so acting in defiance of the laws of the state its acts are not binding upon its principal and that its contracts are void and unenforceable. The statute does not so provide. It recognizes that one may unlawfully act as the agent of an insurance company, and provides a penalty to be visited upon the one thus offending, but there is no provision declaring the contracts engendered by it for and on behalf of its principal void. Furthermore, the liability created by sec. 1919/ is not limited to those who are or may be lawfully licensed to transact insurance business in this state, but it applies to any company or person who does in fact solicit or place insurance in a fire insurance company not authorized to do business. This section is broad enough to include all persons or companies who in fact solicit or place insurance in a fire insurance company not authorized to do business in this state, even though under the laws of the state they could not be licensed to act as an insurance agent.

Our conclusion is that the court properly overruled the demurrer of the defendants Hale and Deniston, and erroneously sustained the demurrer of the' Northern Security Company. „

By the Court. — Upon the appeal of H. C. Hale and G. W. Deniston the orders are affirmed. Upon the appeal of the plaintiffs the order is reversed, and cause remanded with instructions to overrule the demurrer.