Opinion ID: 739129
Heading Depth: 3
Heading Rank: 3

Heading: The Oregon Insurance Code

Text: 28 Oregon's Insurance Code, Or.Rev.Stat. chs. 731-35, 737, 743-44, 746, 748, 850-51, applies to all persons who transact insurance in this state or relative to a domestic risk.... Or.Rev.Stat. § 731.022. Insurance within the meaning of Oregon's insurance code includes a contract whereby one undertakes to pay either a specified or ascertainable sum of money to, or to confer a benefit upon, another, upon a determinable risk or contingency. Or.Rev.Stat. § 731.102(1). The performance bond in the present appeal in effect insured Plaintiff-Respondent Aqua-Marine against Michael Banks' failure to make proper redelivery of the subject oceangoing barge at Everett, Washington. Polaris did therefore make an insurance contract, thereby transacting insurance. Or.Rev.Stat. § 731.146(1)(a). 29 The risk covered by the performance bond was the risk that Banks would fail to redeliver the barge to Aqua-Marine at the termination of the charter period. Redelivery was to be made at Everett, Washington, the barge's home port. In default of proper and timely redelivery by Banks, Polaris obligated itself to make that redelivery. In no sense was the risk a domestic risk: An insurer transacts insurance relative to a domestic risk only where the subject of the insurance resides, is located, or will be performed in Oregon. Or.Rev.Stat. § 731.086. Here, the only subject of the performance bond was the redelivery of the barge at Everett, Washington. The Aqua 242 resides in Washington, and was at no relevant time located in Oregon. The subject of the insurance does not reside in Oregon. It was not located in Oregon. It was not to be performed in Oregon. Unless Polaris transacted insurance in Oregon, Oregon's insurance code does not apply to the performance bond. 30 Polaris undeniably made an insurance contract. See Or.Rev.Stat. § 731.146(1)(a). The question remains, however, whether it did so in Oregon; Polaris drew its policy in Costa Rica, issued it in Costa Rica, and mailed it to Michael Banks in California, whereupon Banks executed the policy and forwarded it to Aqua-Marine. Polaris did not take or receive any application for insurance in Oregon, collect any premium in Oregon, advertise in Oregon, or employ any Oregon agent. See Or.Rev.Stat. § 731.146(1). 31 But the performance bond was executed entirely for the benefit of an Oregon resident corporation; by its terms Polaris expressly bound itself to Aqua-Marine. The fact that the subject barge is home-ported in Washington, rather than in Oregon, is not dispositive, nor is the fact that Polaris did not technically issue or deliver any policy in Oregon. By underwriting a marine risk in favor of an Oregon resident, Polaris did in fact transact insurance business in Oregon. Any other determination would constitute a wholly unjustified and excessively formalistic reading of the statute which applies Oregon's insurance code to persons who transact insurance in this state or relative to a domestic risk. Or.Rev.Stat. § 731.022. 32 Oregon's insurance code prohibits the transaction of insurance except as authorized by a certificate of authority issued to the insurer by the state's Director of Insurance. Or.Rev.Stat. § 731.354. Polaris admits it obtained no such certificate; Polaris was therefore an unauthorized insurer under Oregon's insurance code. Or.Rev.Stat. § 731.066(2). In Oregon, before an unauthorized insurer may file any pleading in an action against it, the defendant insurer must either (1) procure a certificate of authority or (2) deposit with the clerk of the court cash, securities, or a bond, sufficient to secure the payment of any judgment which may be entered against the insurer in the action. Or.Rev.Stat. § 746.340(1). 33 This requirement, however, does not apply in an action against an unauthorized insurer arising out of any policy of ... wet marine and transportation insurance. Or.Rev.Stat. § 746.360(1). Polaris has argued, both in the lower court and in the present appeal, that the performance bond was a wet marine and transportation insurance policy as defined in Oregon's own insurance code. 34 Under Oregon's insurance statutes, wet marine and transportation insurance is a subset of general marine transportation insurance. Or.Rev.Stat. § 731.194. Therefore, it first must be determined whether the surety bond sued on herein can come within the statutory definition of general marine insurance. 35 Under the Oregon Insurance Code, marine and transportation insurance includes: 36
37 (a) Vessels, craft, aircraft, cars, automobiles and vehicles of every kind, as well as goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, bullion, precious stones, securities, choses in action, evidences of debt, valuable papers, bottomry and respondentia interests and all other kinds of property and interests therein, in respect to, appertaining to or in connection with any and all risks or perils of navigation, transit or transportation, including war risks, on or under any seas or other waters, on land or in the air, or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while awaiting the same or during any delays, storage, transshipment, or reshipment incident thereto, including marine builders' risks, and all personal property floater risks including bailees' customers risks; 38 (b) Person or to property in connection with or appertaining to a marine or inland marine, transit or transportation insurance, including liability for loss of or damage to either, arising out of or in connection with the construction, repair, operation, maintenance or use of the subject matter of such insurance (but not including life insurance or surety bonds nor insurance against loss by reason of bodily injury to the person arising out of the ownership, maintenance or use of automobiles);.... 39 (2) Marine protection and indemnity insurance meaning insurance against, or against legal liability of the insured for, loss, damage or expense arising out of, or incident to, the ownership, operation chartering, maintenance, use, repair or construction of any vessel, craft or instrumentality in use in ocean or inland waterways, including liability of the insured for personal injury, illness or death or for loss of or damage to the property of another person. 40 Or.Rev.Stat. § 731.174. 41 Unless the bond constitutes a contract of marine and transportation insurance under Section 174, it cannot be deemed a wet marine insurance contract under Section 194. 42 Subsection 1(a) of the general marine and transportation insurance statute enumerates no fewer than twenty specific categories of things, insurance against loss of or damage to which is marine insurance. These are, generally, modes of conveyance (boats, cars, planes), goods and cargo, media of exchange (cash, bullion), gems, financial documents (evidences of debt, securities), choses in action, and maritime hypothecations (respondentia and bottomry interests). The general term which follows the statutory enumeration of the foregoing categories of things is all other kinds of property and interests therein.To conclude that the bond meets the definitions in Section 174(1)(a) would violate the principle ejusdem generis. Where general words follow the enumeration of specific classes of things, the general words must be construed as restricted to things of the same type as those specifically enumerated. State v. Brantley, 201 Or. 637, 271 P.2d 668, 672 (1954); Skinner v. Keeley, 47 Or.App. 751, 615 P.2d 382, 385 (1980); 2A Norman J. Singer, Sutherland Statutory Construction § 47.17, at 188-90 (5th rev. ed.1992). The rule derives from the recognition that if the legislature had intended the general words to be used in their unrestricted sense they would have made no mention of the particular classes. Brantley, id. 43 The principle ejusdem generis requires the phrase all other kinds of property and interests therein to be interpreted to include only objects similar in nature to those objects enumerated by the preceding specific words. Id.; Sutherland, id. § 47.17. The subject of the surety bond at issue in the present appeal--timely redelivery of the barge at the conclusion of the charter period--is simply so unlike any of the things enumerated in subsection 1(a) that it cannot reasonably be said to be included in the catchall. In addition, surety bonds are explicitly excluded from the types of contracts defined as maritime insurance in subsection 1(b). 44 Subsection 2 of the statute includes, in its list of types of contracts declared to be marine and transportation insurance, insurance against ... legal liability of the insured for ... expense arising out of, or incident to ... operation chartering ... of any vessel.... Or.Rev.Stat. § 731.174(2). The language of the surety bond itself precludes a finding that the bond purchased by Mike Banks from Polaris Insurance insured Banks against his liability for failure to redeliver the barge. The bond only guarantees performance of Banks' obligations under the charter party in the event of a default by Banks; it does not, in the event of such a default, absolve Banks of any liability under the charter party. 8 And the clause in the charter party requiring Banks to obtain the guarantee bond explicitly provided that [t]his bond does not release Charterer from payment schedules as set forth elsewhere herein. 45 In sum, the surety bond is not marine and transportation insurance under any of the definitional subsections of Or.Rev.Stat. § 731.174. Wet marine and transportation insurance is a subset of marine and transportation insurance. Or.Rev.Stat. § 731.194. Because the bond is not marine and transportation insurance within the meaning of Section 174, it cannot be wet marine and transportation insurance under Section 194. Aqua-Marine's civil action against Polaris Insurance on the bond is thus not one arising out of any policy of ... wet marine and transportation insurance. Or.Rev.Stat. § 746.360(1). Polaris may not invoke Section 360's wet marine exemption from the litigation bond requirement contained in Or.Rev.Stat. § 746.340(1).