Court Opinion

ID: 7916045
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:11:03.802179+00
Date Added: 2024-06-11T16:32:48.005767
License: Public Domain

Wedell, J.
(dissenting): I am convinced the decision in this case is wrong. With utmost deference to the views of the majority I desire to state frankly the principal reasons which impel this dissent.
Stripped to its bare essentials, the majority opinion means, first, that courts may substitute their own notions of public policy for a clearly defined public policy of the legislature, and second, that after courts have so substituted their own views, without authority or power to do so, they may write a different contract of insurance than that required by the legislature and substitute the new contract for a void contract in order to hold the insurance company liable rather than the warehouseman and his bondsman who’the lawmakers said should be liable for the loss. All of this the court has done in the instant case notwithstanding the plain mandate that the act which the legislature has deemed wise — “shall be liberally interpreted and construed to effectuate its general purpose.” (G. S. 1935, 34-2,103.) (Emphasis supplied.) 1 '
In order to give effect to the purpose of the act and the remedies provided therein it is necessary to ascertain the legislative intent *671as reflected by its act. That shall be my purpose. It is upon the legislative intent and purpose, as I conceive it to be, that the instant dissent is based.
At the outset I desire to state: It is, of course, conceded the business of a public warehouseman is affected with a public interest; Otherwise there would have been no occasion for the lawmakers to' legislate upon the subject as completely and exhaustively as they have, including the designation of the specific remedy for depositors of grain in the event the warehouseman breached his bond. I also agree it was the clear legislative intent and purpose that the warehouseman should obtain insurance on all the grain on deposit. The warehouseman was, however, required to do more than that. The legislature expressly required him to keep the grain insured and to keep it insured “for its full market value.” (G. S. 1935, 34-236.) I also agree the insurance policy, written solely in favor of the warehouseman and not required by any statute to be written otherwise, covered all the grain stored in the warehouse.
I definitely disagree that it was the public policy or intent of the legislature to make the insurance company liable to the depositors of grain in the event the warehouseman deliberately burned the grain for the purpose of collecting the insurance. There is nothing in the act which even remotely intimates such a legislative intent. No statute requires a policy of insurance which will protect the grain of all persons interested in case the insured invalidates the policy by his own unlawful or wrongful act or acts. To be sure, the legislature possessed full power and authority to require such insurance. Whether, however, it would require such insurance was a matter of public policy which rested solely and exclusively within its own province and discretion. It is not within the province or power of the courts to say the legislature should have required such insurance and therefore the court will arbitrarily write such a provision into the policy. In the legislature’s conception of public policy and adequate protection it did not require such insurance. (G. S. 1935, 34-236.) In its wisdom it, however, did see fit to make, and did make, definite provision for the protection of all persons interested in case the warehouseman in any manner violated his trust to'fully perform all his dutiés as a public warehouseman. That provision for the protection of all persons interested was expressly placed in', the bond which the legislature exacted from the warehouseman. (G. S. 1935, 34-229.) The bond was conditioned upon *672the warehouseman’s faithful performance of all his duties as a public warehouseman. (G. S. 1935, 34-229.) Manifestly one of those duties was to faithfully protect the grain on deposit. When he deliberately burned the warehouse and grain he clearly breached that duty and his bond. Another express statutory duty was to keep the grain insured “for its full market value against loss by fire.” (G. S. 1935, 34-236.) When he voided the policy by unlawfully burning the grain for the purpose of collecting the insurance he obviously did not keep the grain insured. He did precisely the op-, posite. He destroyed the insurance according to the plain terms of the policy, which policy in no manner contravened any statute and which in no particular was insufficient under the requirements of any statute. Just what statutory requirement is there then that the majority has in mind which was omitted from the policy and which must now be read into the policy. I know of no such requirement and find none mentioned in the majority opinion that requires a policy of insurance which will make the insurance company liable to third persons if the insured voids the policy.
Furthermore the legislature has affirmatively fixed the liability under this precise circumstance so why should we, or how can- we properly, ignore the legislative will? In the event the warehouseman failed to keep the grain insured for “its full market value” whom did the legislature, in its wisdom, see fit to make liable for the loss? The insurance company? Not at all. The legislature intended to make and in plain language specifically and expressly made the warehouseman liable on his bond for the “full market value” of the grain in that precise eventuality. (G. S'. 1935, 34-236.). That such was the legislative intent is too clearly reflected even under the insurance provision of the act to admit of debate. The pertinent provision of G. S. 1935, 34-236, reads: .
“Every local public warehouseman and every terminal public warehouseman shall at all times keep the grain stored in his warehouse insured in some reliable insurance company authorized to do business in the state of Kansas. Said grain is to be insured for its full market value against loss by fire, internal explosion, lightning and tornado and failure so to do shall make the public warehouseman liable for the same on his bond." (Emphasis supplied.)
As previously stated, the bond was expressly required to be given for the benefit of all persons interested. (G. S. 1935, 34-229.) As also previously stated, no such provision was contained in the insurance policy or required in the policy by any statute. The legis-: lative intent is therefore crystal clear. Upon' what valid theory *673then can the court substitute its own and a different public policy and remedy to recover the loss in case the warehouseman breaches his bond? I know of none when the legislature has so clearly and emphatically fixed the liability.
Now how does the majority seek to justify its conclusion that the grain warehouse act or that public policy requires the court to make the insurance company shoulder this loss? It does so, in part, upon the alleged theory that the bond required by the legislature is wholly ineffectual to provide adequate security for the loss. With that theory I am in complete disagreement. The majority view on that subject is not, to say the least, very complimentary to the good common sense and practicability of the law makers, many of whom were able lawyers, and conscientious public servants who were anxious to protect adequately all depositors of grain. Fortunately the act itself dispels any such impractical conception on the part of the lawmakers with respect to the statutory bond. While the first portions of the bond statute, G. S. 1935, 34-229, might at first blush lead one to believe the bond could be as low as $5,000, and the grain valued as low as ten cents per bushel, based on the capacity of the warehouse, and that the maximum amount of the bond was $50,000 upon a single warehouse, irrespective of the amount of grain deposited therein, the statute manifestly was not intended or designed to require a bond which did not adequately protect all the grain on deposit. The above provisions mentioned are 'followed with the words, “except as hereinafter provided, as shall be designated by said chief inspector,” and the proviso reads:
“Provided, That whenever said chief inspector shall determine that any bond given by any warehouseman is inadequate and insufficient security against any loss that might arise under the terms of such bonds then it shall be the duty of said chief inspector to require such additional bond or bonds as he shall deem necessary to provide adequate security; and in, any case where said chief inspector shall deem the surety upon any warehouseman and his bond to be of impaired financial condition, it shall be' his duty to require a substituted or additional bond as he shall deem necessary.” (Italics ours.)
■ ‘It seems to me the legislature must have intended that no more grain should be deposited in any one warehouse than the maximum $50,000 bond would adequately secure 'and that in all events it 'was made the duty of the chief inspector to see that the bond adequately protected all of the grain on deposit to the extent of its actual market value. This construction is in' harmony with all pertinent provisions of the act, including the section pertaining to *674terminal public warehouses, which latter section provides that- if a local public warehouseman does not have storage space to handle the grain tendered to him he may accept it for shipment to a terminal public warehouse. (G. S. 1935, 34-241.)
If, however, there could be any possible lingering doubt concerning the legislative intent, as evidenced by the bond statute, to require a bond which would afford adequate protection for the benefit of all persons interested that doubt is completely dispelled by the provision of the insurance section previously quoted. By that section, as noted, the legislature plainly made the public warehouseman liable on his bond for the “full market value” of the grain, if the warehouseman failed to keep the grain insured “for its full market value.” That provision also would be an utterly useless thing if the bond was not intended to provide adequate security. Undoubtedly the bond was intended to provide full security and it was expressly required to be written for the benefit of all persons interested. Any other interpretation renders the bond provisions a nullity and a useless gesture. Any other interpretation of the bond provisions certainly does not conform to the legislative mandate to liberally interpret and construe the act so as to effectuate the general purpose of the legislature.
The majority opinion appears to attach considerable weight to the fact the law requires that the storage fees of depositors shall include, among other things, the expense of insurance. Quite naturally it does. The legislature desired to make certain, insofar as it was able to do so, that the warehouseman would have no excuse for failing to keep adequate insurance on the grain he accepted. The legislature, of course, contemplated that in the event of a legitimate fire the insurance company would be liable for all loss to the warehouseman whom it had insured and that the depositors of grain should have the right to collect from the warehouseman out of the proceeds of insurance which he collected. The legislature therefore expressly provided the owner of grain, or the holder of a warehouse receipt-, should make demand, not upon the insurance company but upon the warehouseman, for the loss. (G. S. 1935, 34-236.) And in case the grain was not kept insured by the warehouseman as required by law then the warehouseman should be liable on his bond for the breach of the bond. It is therefore clear the legislature sensibly provided adequate protection under every contingency. It provided full protection out of the insurance in case of an accidental *675fire. It also provided full security on the bond, and to all -persons interested, in the event of a breach of the bond, which in the instant case was the warehouseman’s failure to keep the grain insured. The above remedies which the legislature prescribed are in nowise inconsistent with the requirement that the cost of insurance should be included in the storage fees. The very fact the legislature required depositors of grain to include the cost of insurance in the storage fees and that it did not require a type of insurance under which the loss would be payable to the depositors of grain as their interest might appear, in case the warehouseman voided the policy, is itself the strongest kind of evidence of the legislative intent not to make the insurance company liable under such circumstances. Under those precise circumstances the legislature preferred to make, and expressly made, the warehouseman liable on his bond to all persons interested. I know of no authority by which courts are empowered to thus ignore the legislative will.
The majority opinion also stresses the fact that the receipts for grain are negotiable in most instances and should therefore be protected. Some of them are negotiable (G. S. 1935, 34-244), and others are not (G. S. 1935, 34-243).. I agree fully, as above indicated, that all grain deposited was clearly intended to be secured against loss. The two adequate methods the legislature provided for such security have been indicated. If the act is properly administered according to the legislative intent there is no need for any depositor of grain to suffer any loss. But just why should the insurance company be made to suffer the loss in the instant case, contrary to the clear legislative will, by reason of dereliction of duty, if such there was, on the part of the chief inspector to require the necessary bond? Frankly, I do not know.
I am forced to conclude that the court has misinterpreted the legislative will and has superimposed its own concéption of public policy, which is contrary to that adopted by the legislature, in order to make the insurance company shoulder the loss. The United States of America, the principal intervenor so far as the amount of loss is concerned, or anyone else, 'knew, or should have known, that under the plain provisions of the act the warehouseman and his bondsman were the parties to whom they were required to look for recovery in case the warehouseman voided the policy by failure to keep the grain insured. They should be required to look to them now.
Furthermore let us examine the theory upon which appellants *676seek recovery from the insurance company. They contend that by virtue of the policy and the act under which the policy was written they have a valid contract with the insurance company which permits them to recover on the policy. The majority opinion concedes and plainly states the policy in question was written in compliance with the requirements of G. S. 1935, 34-236, the insurance statute. That fact should end all question concerning the sufficiency of the policy itself. I previously, however, have discussed the fact that the policy in question does not contravene that or any other statutory requirement and that the policy was in no particular insufficient under the requirements of any statute. It is not contended there is a provision in the policy, or that a provision is required by any statute, such as is now frequently written into modern insurance policies to 'the effect that no act or neglect of the insured shall invalidate the policy as to the interests of other persons designated therein. It is definitely established in this state and generally that courts cannot arbitrarily read such a provision into a policy. (Elmore v. Royal Ins. Co., 154 Kan. 93, 114 P. 2d 786, and numerous cases therein cited.) And in this case it will not do to say the above rule does not apply as a question of public policy is involved. Such a contention manifestly has no application here for the plain reason that here the legislature has preempted the field of public policy on the subject in question by adopting its own conception of what constitutes adequate protection of the public interest.
The instant policy does not by rider or otherwise even contain the provision that the policy protects the depositors of grain — to the extent that their interest may appear. What, however, is more important is the fact that no statute requires such a provision in the policy.
What about the contention then that appellants had a valid contract with the insurance company? They were neither named nor referred to in the policy in any manner whatsoever. Of course, they had no contract with the insurance company, valid or otherwise. The contract was made solely between the insurance company and the warehouseman in conformity with the insurance statute. But let us pursue appellants’ contention that they had a contract with the insurance company. If they did have such a contract they manifestly were bound by its terms. (Deruy Motor Co. v. Insurance Co., 146 Kan. 233, 235, 237, 69 P. 2d 677; Elmore v. Royal Ins. Co., supra, p. 97.) Under its terms the deliberate and admitted *677burning of the grain by the warehouseman for the purpose of collecting the insurance voided the policy. That ended appellants’ rights under the policy. That ended their rights under the only policy the legislature had required. Obviously when the legislature has spoken on the subject of public interest and has failed to give appellants rights under the policy superior to those of the insured, courts cannot on the theory of public policy give appellants greater rights in the policy than the insured.
The decision of the majority is based upon a new contract of insurance which the court has made and substituted for one which, to the legislature, was entirely satisfactory in view of the fact that it had specifically required additional and adequate protection for all depositors of grain in the form of a statutory bond. Under these circumstances I think the court is wholly without power or authority to so make and substitute its own contract of insurance for the void contract.
I deem it unnecessary to pursue various other aspects of this lawsuit. Appellants cite no case which even remotely supports their contention. In my opinion no case cited in the majority opinion is authority for the right of the court to read into this insurance policy terms which are not required by statute and which make the insurance company liable for the loss. The case of Dunn v. Jones, 143 Kan. 218, 53 P. 2d 918, cannot possibly aid appellants’ contention. That case is based upon the right and duty of courts to read into an indemnity policy certain provisions not contained in the policy but which were prescribed by statute. Certainly where such statutory requirements for a policy exist they must be read into the policy. The trouble here is no such statutory requirements exist with respect to the instant policy.
Considerable of the majority opinion is devoted to the view that the insurance policy was required by the legislature primarily for the protection of appellants. No statute required the policy to contain provisions which gave appellants any rights against the insurance company. Certainly they were given no greater rights by any statute or by the policy than the warehouseman had under the policy. But let us concede that the primary purpose of the insurance statute was to pro'tect the depositors of grain to the extent that the legislature required them to be protected by insurance. What does that fact settle in this lawsuit? The fact remains the warehouseman did not keep the grain insured. As previously indi*678cated the legislature clearly did not intend to make the insurance company liable on a void policy. In case the warehouseman failed to keep the policy in force the legislature provided the specific remedy for appellants. It made the warehouseman and his bondsman liable to them for the full market value of the grain.
But let us, however, assume for the moment that the bond was not intended to provide adequate security for the loss in case the warehouseman failed to keep the insurance alive. Clearly the insurance company still would not be liable for the loss to appellants unless some law required the warehouseman to provide an insurance policy which would make the insurance company liable to them in case the warehouseman voided the policy. There is no law which even intimates the requirement of such a provision in the policy.
As previously indicated, the legislature, in its wisdom, saw fit not to make such a requirement notwithstanding the fact it had required the depositors of grain to pay the cost of the insurance to the warehouseman. The majority opinion disposes of this case just as though the legislature had actually made such a requirement and as though the legislature had given appellants the right to make a demand directly on the insurance company for the payment of their loss. The fact, of course, is the legislature neither made such an insurance requirement nor did it require the insurance company to settle with appellants even in case the warehouseman was entitled to recover. On the contrary, if the warehouseman was actually entitled to recover the legislature expressly required the warehouseman to make settlement upon demand by appellants out of the insurance he had collected. (G. S. 1935, 34-236.)
Considered entirely upon the basis of public policy as reflected by the legislature’s own act and viewed entirely without regard to the purpose of the warehouseman’s bond, it follows appellants cannot recover upon this policy which the insured deliberately voided for the purpose of collecting the insurance.
It also should be noted the majority opinion means that if the warehouseman fails to take out the insurance required by law, or for any reason permits the insurance to lapse, the legislature did not intend to provide appellants with other adequate security for their loss. I do not think that constitutes a liberal construction of the bond provisions for the protection of the depositors of grain.
I think the decision of the trial court was correct and should be affirmed.