Court Opinion

ID: 7807723
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:08:37.261738+00
Date Added: 2024-06-11T16:30:21.912901
License: Public Domain

Hart, J. This is the second appeal in this case. For the opinion on the former appeal, see Massachusetts Bonding & Ins. Co. v. Home Life & Accident Co., 113 Ark. 576, 168 S. W. 1062. The issues raised by the present appeal are different from those involved in the former appeal, -and on that account it will be uecessar^ for a particular statement of the facts pertinent to the issues raised by the present appeal. The American Union Fire Ins. Co. of Philadelphia, Penn., was engaged in the fire insurance business in the State of Arkansas during the years 1911, 1912 and 1913. The Southwestern Surety & Insurance Company signed as surety the bond of said fire insurance company to the State of Arkansas for the period of one year ending March 1,1912. The Massachusetts Bonding & Insurance Company signed as surety the bond of said insurance company to the State of Arkansas “for the period of one year ending -March 1, 1913. ’ ’ The bond -was conditioned that the American Union Fire Insurance Company should promptly pay all claims arising and accruing to any person or persons by virtue of any policy issued by said company during the term of the bond, upon any property situated in the State of Arkansas when the same should become due. This bond was filed in the auditor ’s office and approved February 29,1912. The Home Life & Accident Company executed a similar bond as surety of said fire insurance company for the period of one year, ending March 1,1914. C. C. Hanson, as receiver of the Gulf Compress Company, an insolvent domestic corporation, procured a policy of insurance in -said fire insurance company for $10,-000 on 168 hales of cotton. On March 1, 1913, about daylight, a period of time during the life of the policy, a fire occurred which destroyed the 168 bales of cotton. The policy of fire insurance was executed in the State of Alabama. The American Union Fire Insurance Company became insolvent, and on March 27, 1913, a receiver was appointed to take charge of its assets. On the 29th day of. March, 1913, proof of loss duly made out and signed by the receiver in accordance with the terms of the policy was mailed to the insurance company. On June 19,1913, C. C. Hanson, as receiver of the'Gulf Compress Company, instituted an action in the circuit court against the Maissa-chusetts Bonding & Insurance Company to recover the amount of loss covered by said policy of fire insurance. On July 14, 1913, the present action was 'instituted in the chancery court by the Massachusetts Bonding & Insurance Company against The Home Life & Accident Com-. pany, C. C. Hanson, receiver of the Gulf Compress Company, and other parties having claims against the American Union Fire Insurance Company. The plaintiff prayed for 'an order enjoining' defendants from prosecuting .any suits against it in the law courts of the 'State of Arkansas, and requiring them to file their claims for adjudication in the chancery court where ian ancilliary receiver had been appointed to take charge of and wind up the assets of the said insurance company. An injunction was granted as prayed for. The Home Life & Accident Company filed an .answer in which it denied liability on the bo ad which it had signed as surety. Subsequently, Hanson, as receiver of the G-ulf Compress Company, filed an intervention and asked judgment against the Massachusetts Bonding & Insurance Company for $10,000, the amount of the policy above referred to. Other claims to the amount of $18,000 were filed.  (1) On the former appeal we held that though loss occur upon policies written while the earlier bond was in force, only the surety upon the bond at the time of the loss is Ustible, the provision for renewal contemplating that there should be only one bond in force at one time. The other claims ialbove mentioned, amounting to $18,000, under our ruling in the former appeal, accrued during the life of the bond of the Home Life & Accident Company, and on that account were claims for which its bond was liable. There was a contest between the Massachusetts Bonding & Insurance Company and the Home Life & Accident Company as to which would be fiable upon the $10,-000 policy issued to Hanson, as receiver of the G-ulf Compress Company. The chancellor held that the Massachusetts Bonding & Insurance Company was liable for that claim .and rendered judgment against it for the sum of $10,000 and the accrued interest, but refused to allow statutory penalty and attorney’s fee. The case is here on appeal. Act 327 of the Acts of 1905 is amendatory of sections 4371-2-3-4 of Kirby’s Digest. See Acts 1905, p. 780. Section 2 of the act amends section 4372 of Kirby’s Digest, and provides that any person licensed by the auditor to act as .agent for any fire insurance company is prohibited from paying, directly or indirectly, any commission, brokerage or other valuable consideration on account of any policy or policies covering any property in the State of Arkansas to any person, agent, firm or corporation who is a nonresident of the State. Section 3, which amends section 4373 of Kirby’s Digest, provides that when the auditor shall have received notice or information of any violation of any of the provisions of the act, he shall investigate such violation, and further provides for a revocation of the license of the insurance company for a certain period of time for a violation of the provisions of the act. Section 1 of the act is amendatoiy of section 4371 of Kirby’s Digest, and in effect provides that the companies named in the act .are prohibited from authorizing or allowing any agent who is a nonresident of the State to issue or cause to be issued its own policy or policies of insurance or reinsurance on property located in this State. A comparison of these sections of the act of 1905 with the sections of the Digeist which they amend, shows that the amendment consists in bringing other companies than fire insurance companies within the terms of the act.  (2) Counsel for .appellant Massachusetts Bonding & Insurance Company insist that because the contract of insurance in .question was issued in the State of Alabama, it is void. They further contend that under the rule laid down in Crawford v. Ozark Insurance Company, 97 Ark. 549, we must presume that it was the intention of the surety company to execute the bond in compliance with the requirements of the statute, and because the insurance company failed to comply with the provisions of the act of 1906, .above referred to, the surety company is not liable on the bond. It is true that the contract of insurance was an Alabama contract, 'but, being valid under the laws of that State, it is valid here. State Mutual Fire Ins. Assn. v. Brinkley Stave and Heading Co., 61 Ark. 1.  (3) It will be observed that although penalties are imposed by the act of 1905 upon companies and their agents not complying with the provisions of the act, the act does not make void the contract made by the insurance company without such compliance, either as to the corporations named therein, or the policy holders in said company. In other words, the statute does not assume to forbid the making of contracts of insurance made in ■another State upon property situated in this State, nor does it assume to invalidate such agreements. The contract of insurance was innocent in itself, and in its consequences. Such contracts are valid and enforceable for the reason that by annexing a penalty, the Legislature manifested its purpose that the penalty should be exclusive of all the consequences of noncompliance.  (4) The bond sued on was executed in compliance with the provisions of section 4339 of Kirby’s Digest. The section in effect provides that fire insurance companies shall give a bond to the State with sureties to be approved by the auditor in the sum of $20,000, conditioned for the prompt payment of all claims arising ,and accruing to any person during the terms of said bond by virtue of any policy issued by any such company upon any property situated in this State. The language of the statute is sufficiently broad and comprehensive to include any valid contract of insurance issued to any person upon property situated in this State. The sections of the act of 1905 above referred to, which provide penalties for a violation of any of its provisions, are upon a collateral subject, and in our opinion do not have the effect to limit or restrict the liability of the surety of the insurance company on its bond. To hold otherwise would be to say that the surety might be released from the performance of its contract according to its terms for the reason that the insurance company had failed to perform a duty that it OAved to the State at large, but the nonperformance of which could result in no prejudice to the surety company. In short, we think the purpose to be accomplished by the act of 1905 .and sections 4371-4374 of the Digest, which it amends, is collateral to that sought to be accomplished by the enactment of section 4339 of the Digest, and for that reason we are unwilling to engraft upon the latter section a consequence, so inequitable as that contended for by counsel for the surety company. This brings ns to the question as to whether or not the loss accrued during the term, of the bond of .appellant company or during the term of the bond of the Home Life & Accident Company. Claims amounting to $18,000 have already been adjudged against the Home Life & Accident Company. The claim of Hanson, as receiver of the G-ulf Compress Company, is for $10,000. On the former appeal, we held that under our statute, which provides for a renewal of the bond annually, a bond for only $20,000 was in force at any one period of time. If the $10,000 claim under consideration is added to the $18,000 claim already adjudged .against the Home Life & Accident Company, the aggregate amount will be $28,000 against that company, and the amount of the bond would be pro rated among all the claimants. It is, therefore, apparent that ■all persons having claims against the insurance company, as well as the Home Life & Accident Company are interested in casting the liability for the $10,000 claim under consideration against the appellant company, and briefs in support of their contention have been filed in this court by .all these parties. It is the contention of counsel for appellant that the •bond of its compan}^ became effective on March 1, 1912, and that its liability terminated on February 28,1913; and that, inasmuch as the fire occurred about daybreak on the first of March, 1913, it is not liable. Evidence was adduced by them tending to show that it was the custom of the auditor to approve the bond on or before the 1st day of March, land to consider it effective on that day. On the other'hand, it is contended by counsel for the claimants and for the Home Life & Accident 'Company that the bond of the appellant company was in force on March 1, 1913, when the loss occurred. As we have already seen, we must presume that it was the intention of the surety to execute the 'bond in compliance with the requirements of the statute, and unless it would be doing violence to the language of the bond itself, we must so hold. See Crawford v. Ozark Insurance Company, supra.  (5) The general rule now is that in computing the time, whether- from the date or the day of the date, or fromia certain act or event the day of the date of the event is to he excluded. That is to say, the general rule is that in .computing ithe time, the first day is to he excluded, and. the last day is to be included. The reason for the rule that, in the computation of time, the first day will be excluded is that the law takes no notice of fractions of a day except in certain oases where the hour itself becomes material ; iand time is not, therefore, computed from the hour of the day on which the event happens to the corresponding hour of the day of performance, but the computation is from the day when the act wias done. -Such day is regarded as ¡a point of time, and the computation begins from the expiration of such day, as if counted it would fail to give the party affected the whole of that day, but would give only a fractional part of it. See case note to Halbert et al. v. San Saba Springs Land & Live Stock Ass’n, 49 L. R. A. 193; see, also, note to 15 L. R. A. (N. S.) 686; 38 Cyc. 317, et seq. We have followed this general rule in the case of taking appeals, iand in construing the statute of limitations. See Connerly v. Dickinson, 81 Ark. 258; Peay v. Pulaski County, 103 Ark. 601. By section 4337 of Kirby’s Digest, every insurance company is required, within sixty days after the 1st of January, to file with the auditor a statement of its business for the preceding year. By section 4338 each company is likewise required to file with the auditor at the same time a ¿statement showing its net receipts for the year ending December 31, preceding, and is required to pay info the State treasury “on or before the 1st day of March a tax of 2 per cent of such net receipts.”  (6) Section 4339 provides for the giving of the bond and that it shall be renewed annually. There is nothing in any of these sections of the statute that indicates that the law-makers intended that the period of time constituting the term of the bond should be contrary to the general rule -above announced. Therefore, we are of the opinion that the first day should be excluded and the last day included in compliance with the general rule on the subject. This would give the auditor all of the first day of March in which to perform 'all the duties required of him by the statute. The companies then that desired to do business in the State could all be ready to proceed on the second day of March. Then when the bond was required to (be renewed, all of the 1st day of March would .be given the companies to file their renewal bond, .and on this day the old bond would be in force and the liability of the new surety would commence on the succeeding day. The ¡surety to the bond in question seems to have thought this a proper construction of the statute for the term of the bond was “for a period of one year ending March 1, 1913.” The fire in question occurred about daybreak on the 1st day of March, 1913, and we are of the opinion that the appellant company is liable for the loss. It is next contended by counsel for appellant that the proof does not sustain the finding of the chancellor as to the amount of cotton destroyed by the fire; but we do not agree with them in this contention. A detailed statement of the evidence on this point and a specific review of it would 'be without .any value. The proof of loss sent in on the 29th day of March, 1913, contained a specific and detailed statement of ¡all the cotton lost. Evidence of witnesses was adduced at the trial which tended to show .that all of these 168 bales of cotton -were destroyed by the fire, and that their value exceeded the sum of $10,000, the amount of the policy. The chancellor rendered judgment against appellant for $10,000. We are of the opinion .that his finding is not against the preponderance of the evidence, and will be upheld. The chancellor refused to allow a penalty or attorney’s fee provided by Act 115 of the Acts of 1905. Section 1 of that act provides that in .all cases where loss occurs and the fire insurance company liable therefor shall fail to pay the same within the time specified in the policy after demand thereon, shall be liable to the holder of such policy in addition to the amount of such loss for 12 per cent damages upon the amount of such loss, together with iall reasonable attorney’s fees for the prosecution and collection of said loss.  (7) The insurance company became insolvent and a receiver was appointed for it on the 27th day of March, 1913. The proof of loss was not made out and sent in to the company until March 29,1913. The appointment of a receiver suspended the corporate functions of the insurance company and its officers and agents ceased to have any authority over its property and effects. After the receiver was appointed, the corporation’s officers and agents had no right to collect any indebtedness due to the corporation, to pay claims against it or dispose of any of its assets. The receiver succeeded to all the rights of the corporation and the authority to control its property and collect its assets could only be exercised by him under the direction of the chancery court. Buchanan v. Hicks, 98 Ark. 370. So, it will be seen that at the time the demand was made for the amount of the policy, the company could not legally pay same to the ¡assured.  (8-9-10) Under the act in question, the company is liable for the penalty and attorney’s fee where it fails to pay a loss within the time specified in the policy after demand is made therefor, but in this case no demand was made within the time specified in the policy for the payment of the loss until after the receiver was appointed. As we have already seen, the officers and agents could exercise no ¡authority over the affairs of the company ¡after the receiver was ¡appointed, and on that ¡account the company was not in fault in not paying the debt within the time specified in the policy. The fact that the law interfered and. released the insurance company from the payment of the penalty and lawyer’s fees operated in favor of the appellant company. If the principal was not liable for the penalty 'and attorney’s fees, it certainly could not be said that its surety would be liable therefor. We think this reasoning is recognized in the case of North State Fire Insurance Co. v. Dillard, 88 Ark. 473. As bearing on the question, see also Federal Union Surety Co. v. Flemister, 95 Ark. 389. Therefore, we are of the opinion that the chancellor was right in refusing to allow the penalty and attorney’s fee. It follows that the decree will be affirmed.