Court Opinion

ID: 8298990
Source: CourtListenerOpinion
Date Created: 2022-10-17 11:10:27.540586+00
Date Added: 2024-06-11T16:44:13.066112
License: Public Domain

OPINION ON REHEARING.
Allen, Sp. J.
Upon the petition to rehear, it is earnestly insisted that, inasmuch as the agency *715contract was made with defendants prior to the passage of the Act of 1891, by which they agreed to be responsible, and account for all premiums on policies issued through them as agents, that this makes the note given for uncollected premiums legal and binding, notwithstanding the note was given for uncollected premiums on policies issued in violation of a statute enacted after said contract was made, inasmuch as no fraud, accident, or mistake was alleged or proved.
This is not a suit upon the contract of agency referred to, but upon the note given to cover uncollected premiums on policies issued in violation of said Act passed after said contract of agency was made. Defendants had a right to assume that said company would, so long as said agency continued, comply with every legal requirement to authorize it to conduct its business legally in the city of Memphis, and the fact that said company failed and refused to comply with the statute, and withdrew from the State rather than comply with the statute of the State, leaving policies outstanding, and policy holders unwilling to pay the premiums, because said company had refused to comply with the statute, and had withdrawn from the State, might have been grounds sufficient for defendants to have refused to stand responsible for uncollected premiums. If defendants had collected these premiums as the agents of said company, then they would be estopped to deny their liability. But the record shows these *716premiums for which this note was given were never collected, and the premiums were illegal, and could not be collected on account of the failure of said company to comply with the statutory requirements of the State, without any fault or neglect on the part of these defendants.
This is a different case from one where the agent actually collects the money of his principal, and embezzles it, and undertakes to defend his action on the grounds that the business from which the money was derived was unlawful, which was the case in State v. O'Brien, 10 Pickle, 79, which is relied on by plaintiff in error as authority in this case. In that case the agent had received the money of his principal, and embezzled it. Judge Beard, delivering the opinion of this Court, said: “Upon the plainest principles, having assumed to receive this money for his nonresident principal, he is concluded, both civilly and criminally, by this assumption.”
As stated, if the defendants had received the money of said company in the course of its business conducted in Memphis, and suit had been brought to recover of defendants the money so collected, defendants would be concluded and estopped by their assumption to defend such a suit on the ground that the business of the principal out of which they received the money, as agents of the principal, was prohibited by law.
But such is not this case. Here the money was not received by the agents, and these contracts to *717pay premiums having been made illegal and void, by reason of the principal’s failure and refusal to comply with the statute, so that the premiums could not be collected, there was no moral or legal obligation resting on defendants as a reason why they should be held liable for said uncollected premiums. And, although defendants gave their notes to cover the uncollected premiums, they are not concluded from making the defense that the consideration for said note was illegal. In the case of Bates v. Watson, 1 Sneed, 379, the Court say: “We take it to be a principle of law too well established to be now called in question, that no liability can be created by a subsequent promise where no legal obligation ever existed previously, unless supported by a new and sufficient consideration. It is unquestionably true that a new contract may be created which, if wholly unconnected with the illegal transaction, and founded on a new consideration, will be valid, although in relation to a matter respecting which there may have been prior unlawful transactions between the parties. 11 Whart., 207. But if the promise, though it purports to be a new contract, grows immediately out of, or be connected with, the illegal transaction, it will be utterly void.”
These well-settled principles of law are applicable to this case, and they show conclusively that, plaintiff in error is not entitled to invoke the aid of the Courts to enable it to collect said note.
The petition to rehear is dismissed.