Court Opinion

ID: 3682592
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:28:06.949655+00
Date Added: 2024-06-11T15:29:49.967182
License: Public Domain

The purpose of statutes, like § 4959, Comp. Laws, 1913, is discussed in the petition for the rehearing. It is there said that it is primarily a penal statute providing a punishment for agents of insurance companies who do not procure certificates of authority; that "Chapter 112 of the Laws of 1903 of which this section is a part was a law providing for the licensing of insurance agents." It is then sought to distinguish this statute from the statute referred to in the Wisconsin case cited in the opinion, on the ground that the purpose of the Wisconsin statute is entirely different, namely, "to protect the public against unauthorized insurance agents." It is not easy to follow counsel. What is the purpose of regulating the business of insurance and of licensing insurance agents other than the protection of the public? The penal provisions do not constitute the primary purpose, rather the protection of the public who must deal with representatives of insurance companies whose residence is beyond the borders of the state. It is not very material what the language of the title is. The titles of the North Dakota Act, chapter 112, Session Laws 1903, and of the Wisconsin statute could be exchanged with entire propriety. The purpose *Page 928 
of the statutes and the means by which it is sought to be realized, are essentially and fundamentally the same. The penal provision is incidental — that the purpose to protect the public may be more certainly attained. It is said in 32 C.J. 1057: "For the purpose of protecting the insuring public, it is provided by statute in many jurisdictions that persons who solicit or contract for insurance shall be deemed to be the agents of the company. Under such a provision any person who acts with reference to the procuring of insurance is an agent of the company in which the insurance is procured, in all matters relating to the application and the issuance of the policy, although he is not otherwise recognized as its agent." See also Ætna Ins. Co. v. Kramer, 65 Okla. 165, 165 P. 179.
The purpose of the statute is very fully stated in several decisions. In Continental Ins. Co. v. Ruckman, 127 Ill. 364, 11 Am. St. Rep. 121, 20 N.E. 77, the court says: "The manifest intentions was to make such companies responsible for the acts not only of its acknowledged agents, etc., but also of all other persons who in any manner aid in the transaction of their insurance business." In Norris v. Hartford F. Ins. Co.57 S.C. 358, 35 S.E. p. 574, the court say:
"There is nothing in the policy issued by this insurance company which names any agent as such who can bind the company. This insurance company must remember that its contracts, made within our state limits, under our statute, are taken with section 1481, hereinbefore quoted, as a part of such contracts, and that this section 1481 does not in its use of the word `agent' place any limitations upon his powers, so as to deprive anyone who deals with such agent with respect to a contract of insurance, made by such a one with the agent's insurance company, as to the principle of the right to impute knowledge of such agent as the knowledge of the principal."
The language of the statute referred to in the opinion, after reciting acts which may be done, is that a person performing any of the enumerated acts "shall be held to be acting as the agent of the company for which the act is done or the risk taken." In St. Paul F.  M. Ins. Co. v. Shaver, 76 Iowa, 282, 41 N.W. 20, the court say, speaking of a statute similar to 4959:
"The purpose of the statute was to settle, as between the parties to the contract of insurance, the relation of the agents through whom the *Page 929 
negotiations were conducted. Many insurance companies provided in their applications and policies that the agent by whom the application was procured should be regarded as the agent of the insured. Under that provision they were able to avail themselves, in many cases of loss, of defenses which would not have been available if the solicitor had been regarded as their agent, and many cases of apparent hardship and injustice arose under its enforcement, and that is the evil which was intended to be remedied by the statute, and it ought to be so interpreted as to accomplish that result."
It seems unnecessary to elaborate upon the purpose the legislature had in view in enacting §§ 4959 and 4926, with reference to resident agents of foreign insurance companies. The legislature did not provide for the licensing of insurance agents simply as a pastime; nor did it do so for revenue purposes. It was done unquestionably for the purpose of protecting the public against the various devices and diverse practices of foreign insurance concerns in framing applications and contracts of insurance so as to facilitate escape from liability by limiting the power and authority of agents or solicitors. It seems to have been the universal holding of the courts that such was the legislative intention. In the case at bar, the evidence shows that about the first of January, 1923, approximately two months before the policy was to expire, the defendant called the attention of its local agent to the fact that this policy would expire and apparently suggested that he commence renewal negotiations with the insured. Whether the agent was on the premises of the plaintiff primarily for the purpose of negotiating a renewal is quite immaterial; when there he discussed the renewal of the policy with the plaintiff, although he must have known that it had expired, agreed that it be renewed for another term of three years, and that the premium be paid the following June. It does not appear whether the agent Kavanaugh had renewal receipts in his possession, but it may be inferred that, inasmuch as he had authority to enter into renewal negotiations, he had the authority to collect the premium and to give an appropriate receipt therefor.
Reference is made to the fact that the application signed by plaintiff three years before contained limitations upon the authority of Kavanaugh. Under the statute, however, Kavanaugh "could not by any act of his shake off the character of agent for the company. Nor *Page 930 
could the company by any provision in the application or policy convert him into an agent of the insured." Continental L. Ins. Co. v. Chamberlain, 132 U.S. 304, 310, 33 L. ed. 341, p. 344, 10 Sup. Ct. Rep. 87. It will scarcely be contended that the company could, by stipulation in the policy, or the application, divest Kavanaugh of the character of an agent, to all intents and purposes, with which he was invested by the statute if he performed certain acts. Such, however, seems to be the contention, at least the intimation, of counsel for the respondent. There is, moreover, no express limitation in the application on the authority of Kavanaugh to renew the policy.
It is contended that section 4926, providing that no insurance company shall do business except through its authorized agents, who must have offices in the state, and that all policies not written in accordance with this section shall be void, was superseded by § 4961, and that the court overlooked this fact in the opinion written. Section 4961 was enacted as a part of chapter 100, Session Laws, 1901, and it is clear that that section does not supersede 4926. The two statutes are harmonious. It is intended by § 4961 to permit a foreign insurance company to issue policies of fire insurance at its offices outside the state, provided the policies are issued upon applications throughlocal agents, who are licensed to do business in the state, and who countersign the policies. It is significant, furthermore, that § 4959 was enacted at the next session of the legislature, as chapter 112 of the Session Laws of 1903. It is not improbable that confusion arose in the minds of the public as a result of section 4961, enacted two years before, as to the status and authority of local agents who merely countersigned policies or took applications for fire insurance, and that the legislature determined to set this matter at rest by declaring all such persons agents of the insurance company to all intents and purposes. This statute was not overlooked, but it was not considered, and it is not now considered, of controlling importance in this case. It certainly is not in conflict with § 4959. Section 4961 does not, as counsel argues, give foreign insurance companies the power to enter into binding contracts of insurance otherwise than through the agency of residents licensed by the state. The title of the act is "An Act in Relation to the Transaction of Business By Fire Insurance Companies or Associations Otherwise Than Through Resident Agents." It is not an act to authorize the *Page 931 completion of fire insurance contracts otherwise than through resident agents. The prohibition of 4926 remained in force, to the effect that no binding contract, except through the agency ofresidents of the state, could be made.
It is said, in the petition, that it appears, in McCabe v. Ætna Ins. Co. 9 N.D. 19, 47 L.R.A. 641, 81 N.W. 426, that the agent McBride had the power to issue and reissue policies. This is not a correct interpretation of the facts in that case, although a hasty reading of the second paragraph of the syllabus lands some color to the claim. The authority of McBride is set out in the first opinion in the case at bar and appears on page 21 of the official report. McBride did not have the power to issue policies; they were issued by the home office and countersigned by McBride. Otherwise, as stated in the opinion, the acts enumerated in the statute, which result in agency, are the acts which McBride had express authority to do and the court held that he was a general agent. It is not open to question any longer that a general agent may enter into a valid contract of insurance binding upon his principal.
Counsel says: "Is it just, and are insurance companies being given due protection of the law . . . to hold by judicial legislation that an insurance company may not assume that its liability under a policy has ceased when that policy has expired, and to place them in a position where they must fear that that liability will be revived without notice to them by a so called renewal, when concededly a new original policy could not have been issued, except by their home office?"
We do not understand it to be "judicial legislation" to apply statutes, the meaning of which can not be misunderstood. If the condition assumed arises because of the conduct of their licensed agent, it is not perceived that they have ground for complaint against any one but their own representative. Moreover, it is not conceded that a renewal could not have been effected without a new policy. The policy is silent as to the necessity of issuing a new policy on renewal of the old, or a new application, as the basis for a renewal. It would seem that we would be justified in taking notice of the universal custom of business men and of insurance companies in this state to renew policies of fire insurance year after year without new policies and without new applications. It is well known that the agent customarily renews the policies *Page 932 
and sends the statement for the premium to the insured, frequently not until after the policy has expired. There seems little doubt in this case, had the premium been paid in June, pursuant to the alleged agreement between the plaintiff and Kavanaugh, that, but for the intervening fire, it would have been accepted and the policy would have been deemed renewed by both parties, the renewal dating from February 25, 1923.
Complaint is made in the petition that cases cited by the respondent are not considered or distinguished in the opinion. A desire to compress an opinion within reasonable limits sometimes compels this court to refrain from commenting on cases cited, especially if deemed not in point on any question in the case. In view of the ability and zeal with which counsel contend that our conclusion is erroneous, we may be justified in departing from this rule. One of the cases cited is Pacific Mut. L. Ins. Co. v. Carter, 92 Ark. 378, 123 S.W. 384, 124 S.W. 764. No statute is referred to and apparently Arkansas does not have a statute similar or analogous to §§ 4926 and 4959, Comp. Laws 1913. The facts tended to show that the agent was a soliciting agent only. It has been held, under statutes analogous to 4959 that the fact that the agent is merely a soliciting agent, that is, one who has power to take applications only, is immaterial and that he would nevertheless be an agent of the insurance company. St. Paul, F. M. Ins. Co. v. Shaver, 76 Iowa, 286, 41 N.W. 20. In Wright v. Great Eastern Casualty Co. ___ Mo. App. ___, 229 S.W. 440, the agent Miller had no authority to collect a renewal premium from the insured and it was held that, having no such authority, his knowledge of the fact that the insured was paying such renewal premium would not be binding on or imputed to the company. The authority of Miller in that case was to solicit new insurance and send the applications to the company for its approval or disapproval. In the case at bar, the record shows that Kavanaugh received notice from the company to enter into negotiations for the renewal of this policy — substantial evidence of authority to renew. The Alabama case of Insurance Co. of N.A. v. Thornton,130 Ala. 222, 55 L.R.A. 547, 89 Am. St. Rep. 30, 30 So. 614, does not throw any light upon any issue in this case. The opinion is by a divided court. The majority opinion held that the insurance company was not bound by the acts of its duly authorized agent in territory outside of that limited *Page 933 
in his appointment, although the insured had no knowledge of such limitations. From this conclusion, Justice Tyson dissents. The majority opinion makes no reference to the statutes of Alabama. In Pickett v. German F. Ins. Co. 39 Kan. 697, 18 P. 903, the Supreme Court of Kansas held that where, after an application for fire insurance had been taken by an agent, the application reciting that there would be no insurance until its approval by the home office, and before such approval the property is destroyed by fire, there is no liability. Manifestly, here was a mere proposal, or offer, for insurance which was not accepted before the fire occurred. Whether the agent was a general agent or a soliciting agent was not material because the application expressly recited that no liability should attach until the application was approved by the home office. This clause appeared just before the signature of the plaintiff. In the Arkansas case of National U.F. Ins. Co. v. School Dist. 122 Ark. 179, L.R.A. 1916D, 238, 182 S.W. 547, the situation was practically the same as in the Pickett Case, supra. In this case there was an application which recited that there should be no contract of insurance until the policy was issued and delivered. When the property is destroyed before the policy is issued, there of course is no protection. Mere delay, it was held, whether caused by negligence or otherwise, in passing upon the application could not be construed as acceptance thereof, or as constituting a cause of action for negligence grounded upon such delay. Moreover, there appears to be no statute in Arkansas similar or analogous to 4959, supra. The application signed by the plaintiff expressly provided that it should not be construed as a contract of insurance until approved by officers of the company. The Nebraska case of St. Paul F.  M. Ins. Co. v. Kelly, 2 Neb. (Unof.) 720, 89 N.W. 997, involves the same facts and principles — an application for fire insurance reciting expressly that there should be no liability until the policy was issued and the application approved, with destruction of the property before the approval of the application. There was no liability. It was held that there was no duty, in the circumstances, to accept or reject the application immediately upon its receipt at the home office. In this case the agent had no authority to make contracts of insurance for the company. His authority was limited to receiving applications and collecting premiums. In the case at bar, Kavanaugh evidently *Page 934 
had the authority to enter into renewal negotiations. Renewing the policy was apparently within the scope of its powers. In Lowe v. St. Paul F.  M. Ins. Co. 80 Neb. 499, 114 N.W. 586, also a Nebraska case, there was no liability because the property was destroyed before the application had been approved. No reference is made to the Nebraska statutes. This case was a hail insurance case. The New York case of Carter v. Brooklyn L. Ins. Co.110 N.Y. 15, 17 N.E. 396, does not assist defendant. It is there held, under facts not at all analogous to those in the case at bar, that the word "renew" in a statute may be construed to apply to a policy that has not expired, as well as a policy that has expired or has been forfeited for nonpayment of the premium. By inference the court recognizes the fact that, from the standpoint of etymology, "renew" is more appropriate with reference to an instrument that has ceased to exist than it is to one still in force. It may be argued with some force that it is more appropriate to speak of extending an instrument that has not expired than of renewing it. Francis v. Mutual L. Ins. Co. 55 Or. 280, 106 P. 323, is a life insurance case decided by the Supreme Court of Oregon. It is difficult to see wherein that case aids the defendant. The court say, in distinguishing the authorities cited: "The cases cited by counsel for plaintiff are cases arising out of claims for fire insurance, where, by custom, local agents are permitted to issue temporary policies and assume temporary risks, even without policies." The agent clearly had no authority in that case to enter into a contract binding on the company for the insurance of the applicant until his application was approved. In Sharman v. Continental Ins. Co. 167 Cal. 117, 52 L.R.A.(N.S.) 670, 138 P. 708, the court held that one Wade, who had never been appointed agent of the defendant, but was an insurance broker, did not have authority to waive a stipulation in the policy that the same should be void unless the insured was the sole and unconditional owner of the property. California does not have a statute similar to § 4959. It is expressly stated in the opinion that "those declared by a statute of a state to be general agents" may have the power to make such a waiver.
It is strenuously contended that the case of Prichard v. Connecticut F. Ins. Co. ___ Mo. App. ___, 203 S.W. 223, is not in point because the Missouri statute is different from ours. We have called attention to *Page 935 
the history of legislation in this state as to the doing of business by foreign insurance companies. By § 4926, it is provided that no insurance company "shall do business in this state except through its authorized agents" who must be residents. The Missouri statute, § 6315, Rev. Stat. 1919, provides that foreign insurance companies "shall make contracts of insurance upon property or interests therein only by lawfully constituted and licensed resident agents who shall countersign all policies so issued." The effect of the two statutory provisions, despite slight differences in phraseology, is the same; in neither state may a foreign company do business except through duly authorized local resident agents. In 901, § 4961 was enacted, which authorized foreign companies to issue policies at their own offices, provided they were issued upon applications taken by local agents and the policies when issued countersigned by local agents. This enactment might be considered as a relaxation of the strict prohibition of § 4926, only to the extent that certain steps in the execution of the contract might be taken in the offices of the insurer outside the state. In 1903, the legislature, intending to remove all doubts upon the subject, enacted § 4959, making such local agents representatives of the insurance company "to all intents and purposes." The Supreme Court of Missouri, construing their § 6315, supra, held, in the Prichard case, that an agent who had the power to solicit applications — a soliciting agent — could bind his principal by an oral contract to insure. The court say that "it is no longer a question but that agents of a foreign fire insurance company, who have power to solicit and take applications, collect premiums, and countersign and deliver policies, may bind their principal by an oral contract of insurance." The court cites, in support of this doctrine, Sheets v. Iowa State Ins. Co. 153 Mo. App. 633, 135 S.W. 84, and Bealmer v. Hartford F. Ins. Co. ___ Mo. App. ___, 193 S.W. 847. In Ferguson v. Home Ins. Co. 208 Mo. App. 422, 236 S.W. 402, speaking of the powers of a local agent under § 6315, supra, the court say:
"Defendant being a foreign corporation, licensed to do business in this state, accepts such license under the provisions of the statute and any rules, requirements, or provisions in its policies in its policies that may run contrary to the statutes are of no force and effect on policies written in this state." *Page 936 
After quoting from the Sheets Case, supra, the court continued:
"The legislature, in a further attempt to discourage such aggressions, required all contracts of insurance to be made by regularly constituted and lawfully licensed resident agents, who shall countersign the policies, so that when the insured receive his policy he would know that the local agent who signed it possesses power to make contracts for the company and to bind it,as a general agent." (Emphasis is ours.)
In Missouri, there is no express statute like § 4959. The holding of the court, therefore, in the Prichard and other analogous cases, is based upon § 6315, supra, on the theory that, inasmuch as the company is absolutely prohibited from transacting business in the state, except through an agent, such agent must be held to be the company's alter ego. In our state, the legislature has expressly said, in § 4959, not merely leaving it to implication, that persons in this state doing certain acts in behalf of foreign insurance companies shall be their agents to all intents and purposes.
If, under the facts in the record or in the offers of proof, it may not be said that a case for the jury was presented, we confess we are entirely at a loss to understand what meaning should be given to section 4959, making Kavanaugh the agent of the defendant to all intents and purposes.
The petition for rehearing is denied.
BRONSON, Ch. J., and BIRDZELL, NUESSLE, and CHRISTIANSON, JJ., concur.