Court Opinion

ID: 7807724
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:08:37.264831+00
Date Added: 2024-06-11T16:30:22.007955
License: Public Domain

McCulloch, C. J., 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.