Dugger v. Mechanics' & Traders' Ins. Co. of New Orleans

• Decision Date: 22 June 1895
• Parties: DUGGER et al. v. MECHANICS' & TRADERS' INS. CO. OF NEW ORLEANS.
• Court: Tennessee Supreme Court

32 S.W. 5

95 Tenn. 245

DUGGER et al. v. MECHANICS' & TRADERS' INS. CO. OF NEW ORLEANS.

Supreme Court of Tennessee.

June 22, 1895

Appeal from chancery court, Madison county; A. G. Hawkins Chancellor.

Suit by Sallie T. Dugger and another for the use of the Second National Bank of Jackson against Mechanics' & Traders' Insurance Company of New Orleans on a policy of insurance. From a decree for complainants, defendant appeals. Affirmed.

Stokes & Stokes, Thomas Steele, and Sam Holding, for appellant.

Haynes & Hays, Lynn & Lynn, and E. H. Hatcher, for appellees.

BEARD J.

The defendant is a foreign insurance company which, having complied with the requirements of chapter 122 of the Acts of the Legislature of 1891, and doing business in this state delivered in 1894 to the complainant in Tennessee the fire insurance policy in controversy. The property covered by this policy was burned while it was in operation, and the insurer declining to pay the full amount of the loss, as claimed, the assured filed the bill in this cause. The defendant company admitted its liability for three-fourths of this loss, and with its answer tendered and paid into the lower court the amount conceded to be due; but it insisted that it was under no other or further obligation, on account of a clause in the policy which is as follows: "It is a part of the consideration of this policy, and the basis upon which the rate of premium is fixed, that in the event of loss this company shall not be liable for an amount greater than three-fourths of the actual cash value of the property covered by this policy at the time of such loss; and in case of other insurance, whether policies are concurrent or not then for its pro rata proportion of such three-fourths value." On the other hand, the complainant contended that this stipulation was inoperative and void, by reason of section 1, chapter 107, of the Acts of the General Assembly of Tennessee passed at the session of 1893, and which is in words and figures as follows: "Be it enacted by the general assembly of the state of Tennessee, that insurance companies shall pay their policy holders the full amount of loss sustained upon property insured by them; provided, said amount of loss does not exceed the amount of insurance expressed in the policy; and all stipulations in such policies to the contrary are, and shall be null and void provided, however, that insurance policies upon cotton in bales shall not be subject to the provisions of this act." This act was assailed by the defendant company in the court below as unconstitutional. The chancellor, however, held that the act was constitutionally passed, and that its legal effect was to make null and void the clause in the policy set out above. He therefore gave complainant a decree for the full amount of the loss, less the sum admitted and paid into the registry of the court below. The case has been brought to this court by appeal, and two questions have been presented for our determination, as follows: First. Is the act in question constitutional? Second. Conceding it to be constitutional, has not the complainant waived the benefit of it, by accepting the policy with this stipulation embodied in it? We will consider these in the order in which they have been stated.

It is contended by the defendant's counsel that it is a retrospective act in its terms, impairing the obligation of contracts, and therefore void. The rule is so well settled it is hardly worth while at this late day to cite authorities in support of it, that in construing an act of the legislature, the courts will always give it prospective and not retrospective force, unless the purpose that it should have the latter effect is expressed by clear and positive command, or it is to be inferred by necessary or unequivocal and unavoidable implication. Potter, Dwar. St. note 9, p. 162; End. Interp. St. § 271; Dash v. Van Kleeck, 7 Johns. 478; 3 King, Dig. 4801. The contention of defendant that this statute is retrospective rests alone upon the use of the verb "are" in the clause, "all stipulations in such policies to the contrary are and shall be null and void." We think, to adopt the view of defendant the court would depart from the well-established rule of construction above stated, and would impose upon the act as a whole a strained and unnatural meaning. In addition, we would have to overlook another rule, equally well settled, that when an act or any other instrument of writing is susceptible of two constructions, one of which will maintain and the other destroy it, the courts will always adopt the former. Without further citation of authorities to illustrate our view, or an analysis of the statute, we have no hesitancy in holding at least that it is not obnoxious to this objection.

Again, it is said to be violative of the last clause of section 1 of the fourteenth amendment to the constitution of the United States, which provides that no state shall "deny to any person within its jurisdiction the equal protection of the laws." It may be conceded the supreme court of the United States has settled beyond controversy that a corporation is a "person" within this amendment. Railway Co. v. Mackey, 127 U.S. 205, 8 S.Ct. 1161; Santa Clara Co. v. Southern Pac. R. Co., 118 U.S. 394, 6 S.Ct. 1132. Yet it is equally true there is nothing in the federal constitution which prevents this state from prescribing the terms on which foreign corporations shall come within its borders and carry on business with its citizens, or from excluding them altogether. Paul v. Virginia, 8 Wall. 168; Philadelphia Fire Ass'n v. People, 119 U.S. 110, 7 S.Ct. 108; Doyle v. Insurance Co., 94 U.S. 535; State v. Phoenix Ins. Co., 92 Tenn. 420, 21 S.W. 893. And, at most, in passing the act in question the legislature, in so far as its general words embrace foreign corporations, has only supplemented the act of 1891, by imposing an additional term or condition upon them, on compliance with which they are authorized to enter into insurance contracts with citizens of the state. Nor can we see in what respect it infringes this clause of the fourteenth amendment requiring "equal protection of the laws," when it operates alike on all companies issuing policies of insurance on property, whether they be foreign or domestic. "Such legislation is not obnoxious to the last clause of the fourteenth amendment, if all persons subject to it are treated alike under similar circumstances and conditions in respect both of the privileges conferred and the liabilities imposed." Railway Co. v. Mackey, supra.

But again, it is urged that this act violates so much of section 8 of article 1 of the constitution of this state as provides "that no man shall be disseized of his *** privileges *** or deprived of his life, liberty or property but by the judgment of his peers or the law of the land," as well as that part of section 1 of the fourteenth amendment to the federal constitution which is as follows: "Nor shall any state deprive any person of *** property without due process of law." This objection rests on the theory that the legislature, in thus interfering with the right of insurance companies, and of the citizens of the state to make agreements for indemnity against loss by fire, such as are mutually satisfactory, is guilty of impertinent intermeddling with private contracts, with which the public has no concern, and over which it has no control, and in so doing it has disseised or deprived the parties in interest of a valuable property right, within the terms of these constitutional provisions. "The right to acquire and possess property necessarily includes the right to contract." Leep v. Railway Co., 58 Ark. 407, 25 S.W. 75. This right of contract inheres in property, and, in connection with its possession and use, forms its chief element of value. It is only by contract that its ownership can be acquired or transferred. And it is certainly true that if the legislature should undertake to provide that a man or any class of men, however general, should neither alienate property already acquired nor make contracts looking to the acquisition of more or other kinds of property, or that the citizens of the state, in whole or in part, should not have the capacity to enter into any agreements with regard to their own services or employment, such an act would "transcend the due bands of legislative power, even though no express constitutional provision could be pointed out with which it would come in conflict." Cooley, Const. Lim. (6th Ed.) 484. While this is unquestionably true, yet it is also certain that this right is not unlimited. The right of contracting with regard to one's own is subject to legislative control and conditions. The Reports of our own state, as well as of our sister states and of the supreme court of the United States, furnish cases in abundance illustrative of this last proposition. Without stopping to point out statutes like these forbidding the owner to sell his "unwholesome fish or flesh," or "bread made from unwholesome flour," or "adulterated spirituous liquors," or from delivering to a purchaser a poisonous drug without first labeling it as "poison" (Mill. & V. Code, § 5632), all of which are maintained upon the ground of being within the limit of the police powers of the state, we call attention to the clear recognition by this court of the right to place limitations in personal contracts, as found, among others, in the cases of Transportation Co. v. Block, 86 Tenn. 392, 6 S.W. 881, and Marr v. Telegraph Co., 85 Tenn. 529, 3 S.W. 496, where it was held that these corporations could not contract for exemption from liability for the negligence of their employés. It is true these decisions rested upon the theory that upon the...