National Union Fire Ins Co v. Wanberg, 32

• Citation: 43 S.Ct. 32,67 L.Ed. 136,260 U.S. 71
• Decision Date: 13 November 1922
• Docket Number: No. 32,32
• Parties: NATIONAL UNION FIRE INS. CO. v. WANBERG
• Court: United States Supreme Court

260 U.S. 71

43 S.Ct. 32

67 L.Ed. 136

NATIONAL UNION FIRE INS. CO.

v WANBERG.

No. 32.

Submitted Oct. 6, 1922.

Decided Nov. 13, 1922.

Messrs. Nathan H. Chase, of Minneapolis, Minn., and Wm. H. Barnett, of Fargo, N. D., for plaintiff in error.

Messrs. W. B. Overson and Wm. G. Owens, both of Williston, N. D., for defendant in error.

Mr. Chief Justice TAFT delivered the opinion of the Court.

This is a writ of error to the Supreme Court of North Dakota, brought to reverse its judgment affirming one of the district court of Williams county of that state for $1,254.25, with interest and costs, upon a contract of hail insurance against the National Union Fire Insurance Company, a corporation of Pennsylvania. The judgment rests for its validity on section 4902 of the Compiled Laws of North Dakota of 1913, as follows:

'Every insurance company engaged in the business of insuring against loss by hail in this state, shall be bound, and the insurance shall take effect from and after twenty-four hours from the day and the hour the application for such insurance has been taken by the authorized local agent of said company, and if the company shall decline to write the insurance upon receipt of the application, it shall forthwith notify the applicant and agent who took the application, by telegram, and in that event, the insurance shall not become effective: Provided, that nothing in this article shall prevent the company from issuing a policy on such application and putting the insurance in force prior to the expiration of said twenty-four hours.'

The facts as stipulated were:

At 10 o'clock in the forenoon of July 12, 1917, Wanberg, on his farm at Tioga, in North Dakota, signed and delivered to Everson, the agent of the defendant company, an application on the blank furnished by the company for insurance on his crops in the sum of $1,400 against loss or damage by hail or any other cause, except fire, floods, winterkill, or failure of insured to use good husbandry. He also paid to Everson the premium of $140. Everson had authority as agent only to solicit and receive such applications and the premium therefor and to transmit them to the company's Western office at Waseca, Minn., where applications were acted upon and policies issued. The company was duly licensed under the laws of North Dakota to transact its business in the state. On the afternoon of July 13, 1917, Everson mailed the application with the premium, less commission, to the office at Waseca, where it arrived on Sunday, July 15th, and was delivered on Monday the 16th. In the meantime, at 6 o'clock in the evening of July 14th, a hail storm injured Wanberg's growing crops to the extent of the amount of the judgment. On Tuesday, July 17th, and without knowledge of the loss, the Waseca agency returned the application and premium to Everson, saying that at that late date it would not be accepted. The application contained a provision that it should take effect from the day it was received and accepted, as evidence by the issuance of a policy thereon at the Waseca, Minn., agency for the company.

The only error we can consider which was duly reserved is that section 4902 as applied to this case violates the Fourteenth Amendment, in that it operates to deprive the company of liberty of contract, and therefore of its property without due process of law, and of the equal protection of the laws.

The decision of this court in German Alliance v. Lewis, 233 U. S. 389, 34 Sup. Ct. 612, 58 L. Ed. 1011, L. R. A. 1915C, 1189, settled the right of a state Legislature to regulate the conduct by corporations, domestic and foreign, of insurance as a business affected with a public interest. This includes provision for 'unearned premium fund or reserve, the limitation of dividends, the publishing of accounts, valued policies, standards of policies, prescribing investment, requiring deposits in money or bonds, confining the business to corporations, limitation of risks, and other regulations equally restrictive.' 233 U. S. 412, 34 Sup. Ct. 619, 58 L. Ed. 1011, L. R. A. 1915C, 1189. It includes moreover the restrictions of defense to recovery on policies and the forbidding of stipulations to evade such restrictions. Orient Insurance Co. v. Daggs, 172 U. S. 557, 19 Sup. Ct. 281, 43 L. Ed. 552; Whitfield v. AEtna Life Insurance Co., 205 U. S. 489, 27 Sup. Ct. 578, 51 L. Ed. 895. But it is said the line of possible and valid regulation has here been passed by affirmatively imposing a contract on an insurance company before it has had a chance to consider the circumstances and decide that it wishes to make it; indeed, that it declares that to be an agreement with heavy obligation which is in fact no agreement at all. Thus it is argued that by this statute mandatory obligation is substituted for freedom of contract which is just that against which the Fourteenth Amendment was intended to secure persons. We agree that this legislation approaches closely the limit of legislative power, but not that it transcends it. The statute treats the business of hail insurance as affected with a public interest. In that...