Court Opinion

ID: 8856091
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:30:46.084082+00
Date Added: 2024-06-11T17:05:39.676362
License: Public Domain

PARDEE, Circuit Judge
(dissenting). The contract of indemnity sued on in this case contains, among others, this stipulation;
‘‘That no suit or proceedings at law or in equity sliall be brought or arbitration required to recover any amount hereby insured, unless the same is commenced and the process served within the term of twelve months next after the first discovery of any such fraud or dishonesty.”
That this was a valid stipulation, binding upon the parties, ought not to be disputed in this court.
The supreme court of the United States says:
*366“Contracts of insurance are contracts of indemnity upon the terms and conditions specified in the policy or policies embodying the agreement of the parties. For a comparatively small consideration, the insurer undertakes to guaranty the insured against loss or damage, upon the terms and conditions agreed upon, and upon no other; and, when called upon to pay in case of loss, the insurer, therefore, may justly insist upon the fulfillment of these terms. If the insured cannot bring himself within the conditions of the policy, he is not entitled to recover for the loss. The terms of the policy1 constitute the measure of the insurer’s liability, and, in order to recover, the assured must show himself within those terms; and if it appears that the contract has been terminated by the violation, on the part of the assured, of its conditions, then there can be no right of recovery. The compliance of the assured with the terms of the contx-aet is a condition precedent to the right of recovery. If the assured has violated or failed to perform the conditions of the contract, and such violation or want of performance has not been waived by the insurer, then the assxn-ed cannot recover. It is immaterial to consider the reasons for the conditions or provisions on which the contract is made to terminate, or any other provision of the policy which has been accepted or agreed upon. It is enough that the pax-ties have made certain terms conditions on which their contract shall continue or terminate. The courts may not make a contract for the parties. Their function and duty consist simply in enforcing and carrying out the one actually made.” Imperial Fire Ins. Co. v. Coos Co., 151 U. S. 462, 14 Sup. Ct. 379.
The declaration admits that the first discovery of fraud and dishonesty of the official whose honesty was guarantied by the contract was in August, 1893. The suit was not brought until February 21, 1895, more than 18 months after the first discovery of the dishonesty and fraud. This delay in bringing the suit is the main ground for sustaining the demurrer in the court below, but it has received scant, if any, attention in the opinion of the majority. The contention of the plaintiff in error, which is indirectly, if not directly, sustained by the opinion of the court, is that because of the appointment of a receiver by the comptroller of the currency, August 14, 1893, who took possession of the bank, its books and papers, and retained possession until May 21, 1894, the bank during that time was in a quasi state of suspension and incapacity, without agents through which to act, and unable to perform any corporate function. If this were true as a matter of law, it is difficult to see wherein it would affect the indemnity company, unless, indeed, the indemnity company was chargeable with the suspended animation of the corporation. In connection with other matters discussed in the opinion of the majority, it is said that the indemnity company, as security for the defaulting officials, was more in fault'than the bank; but I taire it that, although this is in the opinion of the court, it is not the serious opinion of the judges, but rather an argumentative suggestion. It is to be further noticed that the suspended animation for want of agents and corporate capacity, on account of the receivership, was ended May 21, 1894, leaving full three months within the year stipulated for the resurrected corporation to begin suit within the stipulated limitation. As a matter of law, however, the appointment of the receiver by the comptroller of the currency in no wise suspended the corporate capacity and power to act of the corporation. The appointment of the receiver operated merely for the corporation a change of agency from the president and directors elected by the stockholders to the receiver. The law providing for the incorporation, management, *367liquidation, and settlement of national banking associations writes into ilie charter of every national bank the provision that in certain contingencies the comptroller of the currency may oust the agents chosen by the stockholders, and substitute therefor an agent appointed by himself, who thereafter fully represents the corporation.
The supreme court of the United States has settled that the receiver is a proper party to institute all suits for the association, represents both the creditors and the association, and that the bank does not cease to exist on the appointment of a receiver. Kennedy v. Gibson, 8 Wall. 506; Bank of Bethel v. Pahquioque Bank, 14 Wall. 383; Bank v. Kennedy, 17 Wall. 19; Rosenblatt v. Johnston, 104 U. S. 462. It has never been contended that the appointment of a receiver stops the running of the statutes of limitations of debts and obligations due the hank. Why it should under a contract of indemnity, I cannot: see.
In Surety Co. v. Pauly, 38 U. S. App. 283, 18 C. C. A. 657, and 72 Fed. 484, it is said that:
“The first notification to tlie surety company in this case, as in the other, was sent May 23, 1892, and the proofs of loss transmitted June 24, 1892. There was a similar conflict, of evidence as to the date when the receiver acquired knowledge of Collins’ acts of fraud or dishonesty, and the question whether notice and proofs of loss were sent with reasonable promptness was left to the jury under a charge more favorable even to the defendant below than was the charge in the O’Brien Case [18 O. O. A. 044, 72 Fed. 470]. In view of the evidence and of the instructions given by the court, plaintiff may fairly be given the benefit of the presumption that tlie jury found discovery to have been made as late as *a few days before May 23, 1892.’ It is contended that this was more than six months from the death, dismissal, or retirement of the employe. The receiver qualified and took possession December 29, 1891, and Collins died March 3, 1892. Plaintiff in error relies upon the fact that on November 12, 1891, the bank examiner took possession of the assets of the bank, which had suspended payment That act, however, did not operate as a 'dismissal or retirement of the employé from the service of the employer,’ which is the phraseology of the bond. Collins, on that date, suspended the transaction oí a banking business; but the bank still existed as a national bank corporation, and Collins was still its president. Jf, at any time before the receiver took possession, the parties interested in the bank had made good its deficit, and the bank examiner hacl restored tlie assets, no new appointment would ha ve been necessary to put him in the service of his employer. The assignments of error covering this point are unsound.”
In that case, in order to hold the surety company liable, it was necessary to decide that the appointment and possession of a receiver in no wise suspended the corporation, at least to any such extent as to operate the discharge of the employed. In the case under consideration, in order to hold the surety company, the reverse is necessary; and this court holds that an entire incapacity seized the corporation' the moment the statutory receiver took possession. There is too much tendency on the part of judges to construe away valid provisions in contracts of insurance and indemnity, and thus reach some more equitable conclusion. The result is much “hard case” law, which is mostly bad law, and always variable law. A distinguished judge said in regard to setting aside salvage contracts on slight grounds:
“If a solemn contract, made under the most serious circumstances, like the one under consideration, could be repudiated at pleasure by one of the par*368ties to it, on suck a ground as that insisted upon here, no contract could be relied upon as binding; and all the law of contracts, affecting so largely the affairs of mankind as that law does, would have to be treated as an idle jargon.”
The applicability of this to rulings in insurance cases is apparent. In my opinion, the trial judge ruled correctly on the demurrer to the declaration, and his judgment should be affirmed.
As the opinion of the court disposes of three cases between the same parties, involving the same questions, so this dissenting opinion is intended to apply in the three cases. •