Am. Motorists' Ins. Co. v. Cent. Garage

Decision Date07 November 1933
PartiesAMERICAN MOTORISTS' INS. CO. v. CENTRAL GARAGE.
CourtNew Hampshire Supreme Court

Transferred from Superior Court, Grafton County; Woodbury, Judge.

Petition for declaratory judgment by the American Motorists' Insurance Company against the Central Garage. After a preliminary hearing upon the pleadings and agreed facts, certain questions were transferred toy the superior court without ruling. Case discharged.

Petition for a declaratory judgment under chapter 86 of the Laws of 1929. Facts agreed. The two questions of law which are hereinafter stated were transferred without ruling by Woodbury, J.

The plaintiff is a corporation established under the laws of Illinois and having its home office in the city of Chicago. The defendants are Donald C. Lamson and Harland L. Goodhue, both of Bristol in the county of Grafton, partners doing business under the firm name of Central Garage. On or about March 6,

1931, the plaintiff, through its local agent, Lawrence Blake, of said Bristol, issued two insurance policies to the defendants, one for workmen's compensation and employers' liability, and the other for automobile liability. On July 31 and August 1, 1931, respectively, cancellation notices were sent to the defendants directly by the plaintiff company from its home office in Chicago.

On November 20, 1931, a collision occurred in Boscawen, N. H., between an automobile claimed to have been owned and used by the defendants and a truck owned and driven by one Charles W. Auger. Upon learning of the casualties resulting from the accident, the plaintiff disclaimed liability on the ground of cancellation. The defendants then complained to the insurance commissioner and requested a hearing to the end that their insurance might be reinstated and their rights protected. Hearings upon this complaint were held January 14 and March 11, 1932. On March 29, 1932, the commissioner notified the parties of his findings, which were in substance that the plaintiff's policies were still in effect at the time of the accident. Thereafter three suits for personal injuries against the defendants were entered in the superior court, one by a person alleged to have been a passenger in their car, the second by one of their employees and the third by the said Auger. The present petition was entered at the September, 1932, term of the superior court for the county of Grafton, and the first prayer reads as follows: "Wherefore the plaintiff prays—(1) That this Court take jurisdiction in the premises under chapter 86 of the Laws of 1929 and render a declaratory judgment adjudging and decreeing (a) that the Commissioner's report or opinion of March 29,

1932, has not the effect of a binding judgment and is neither conclusive nor admissible in evidence, in any litigation between the defendants and the plaintiff, upon the question whether the 1931 policies were legally cancelled or remained in force subsequent to August 1, 1931; and (b) that said policies were terminated by cancellation and ceased to be effective on that date, and that the plaintiff is therefore not obligated by said policies to defend the pending Anderson, Buswell and Auger suits, or to defend any other proceedings or pay any judgments that may result from casualties thereafter occurring."

After a preliminary hearing upon the pleadings and agreed facts, the following questions were transferred by the superior court without ruling in advance of trial:

"1. Whether or not under the law of the State of New Hampshire an insurance company can from its home office outside of the State of New Hampshire, cancel an insurance policy by sending notice direct to the insured instead of through a resident licensed agent.

"2. Whether or not the Insurance Commissioner's report, decision and findings made by authority of P. L. c. 271 as amended by chapter 167 of the Laws of 1931, have the effect of a binding judgment, and conclusively determines that the said insurance policies remained in force to March 6, 1932, the expiration date, and whether or not said report or decision is admissible in any litigation between the plaintiff and the defendant upon the question of whether or not the insurance policies were legally cancelled or remained in force to March 6, 1932."

Other facts appear in the opinion.

Demond, Woodworth, Sulloway & Rogers, of Concord, for plaintiff.

Donald Knowlton, of Concord, for defendant.

BRANCH, Justice.

The course pursued by the plaintiff in attempting to secure a decision upon the question of its duty to defend the suits which have been brought against the defendants in advance of their trial is undoubtedly correct. "Ordinarily, and in the absence of agreement of the parties, the issue is one calling for preliminary presentation, so that the insurer's right or duty to defend the action for negligence may be first determined." Sauriolle v. O'Gorman, 86 N. H. 39, 19, 163 A. 717, 723. The Declaratory Judgment Act (Laws 1929, c. 86) provides a convenient procedure for determining such a question, and the present petition is properly brought thereunder.

The first question transferred by the superior court reads as follows: "1. Whether or not under the law of the State of New Hampshire an insurance company can from its home office outside of the State of New Hampshire, cancel an insurance policy by sending notice direct to the insured instead of through a resident licensed agent." This question arises by reason of the following provisions of the statute relating to foreign insurance companies and their agents: "Licenses. If the foregoing provisions are complied with and the commissioner is satisfied that the company has the requisite capital and assets and is a safe, reliable company, entitled to confidence, he shall grant a license to it to do insurance business by authorized agents within the state, subject to the laws of the state, until April first thereafter. * * *" P. L. c. 275, § 11,

The position of the defendants with reference to the effect of the foregoing provision is thus stated in their brief: "This is plainly a condition imposed by the legislature that the foreign insurance company shall be granted a license in this state to do business only by its authorized agents within the state * * * . In sending out its notices of cancellation directly from the home office to the defendants, the company was not doing business 'by its authorized agents within the state' * * *. The plaintiff's act then was unlawful and the courts only afford relief out of lawful transactions."

Both of the policies in question contained provisions that notice of cancellation mailed to the address of the assured should be a sufficient notice on the part of the company. The defendants argue that these provisions are in conflict with statute and for that reason nugatory.

The section of the statute above quoted had its origin in Laws of 1870, c. 1, § 3, which provided: First, that no foreign insurance company should "transact any insurance business in this State" unless it should first obtain a license from the insurance commissioner; second, that after the insurance commissioner was satisfied that the requirements of the statute had been complied with by a foreign insurance company, he should issue a license "authorizing such company to do insurance business by authorized agents, subject to the laws of this State." This language was retained without change in G. L. 1878, c. 174, § 2, and Laws of 1889, c. 86, § 1. Obviously the purpose of the Legislature was to permit the transaction, under a license, of the business which foreign insurance companies were forbidden to do without a license, viz., "insurance business in this state."

In the revision of 1891, the statutory provisions relating to foreign insurance companies were rearranged and the long sections of the General Laws were replaced by a larger number of comparatively shorter sections in chapter 169 of the Public Statutes. The first provision of Laws of 1870, c. 1, § 3, above referred to, became section 1 of P. S. c. 169, in the following form: "Section 1. No insurance company not organized under the laws of this state shall do insurance business within the state unless it has obtained a license from the insurance commissioner authorizing it to do so."

The second provision above referred to, concerning the issuance of licenses, became section 6 of the same chapter, which provides that if the provisions of the preceding sections have been complied with and the insurance commissioner is satisfied that the company is entitled to confidence, "he shall grant a license to it to do insurance business by authorized agents within the state, subject to the laws of the state." (Italics ours.) All the language of the Public Statutes above quoted was retained in the revision of 1926. P. L. c. 275, §§ 1 and 11.

The prohibition against the transaction of "any insurance business in this state" having been separated in the Public Statutes from the provision authorizing the issuance of a license by four intermediate sections, the words "within the state" were apparently inserted after the word "agent" in the sixth section above referred to, not for the purpose of changing the existing law, but to avoid the seeming absurdity of directing the insurance commissioner to grant licenses to foreign Insurance companies "to do insurance business by authorized agents" which it must be assumed they were already authorized to do by the laws of the states in which they were incorporated. The conclusion that no material change in the law was intended is supported by the notation in the margin of the Commissioner's Report of 1891, indicating that only verbal changes were suggested in section 6. Corns. Rep. 1891, 546-48. The meaning of this section, like that of the statute of 1870, is that the company shall be licensed to do insurance business within the state, by authorized agents.

It is true that subsequent sections of the...

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