Fidelity & Cas. Co. of New York v. Dorough

• Decision Date: 19 March 1901
• Docket Number: 922.
• Citation: 107 F. 389
• Parties: FIDELITY & CASUALTY CO. OF NEW YORK v. DOROUGH.
• Court: U.S. Court of Appeals — Fifth Circuit

107 F. 389

FIDELITY & CASUALTY CO. OF NEW YORK v. DOROUGH.

No. 922.

United States Court of Appeals, Fifth Circuit.

March 19, 1901

[Copyrighted Material Omitted]

P. B Trafford, W. Frank Knox, F. M. Etheridge, and Ben B. Cain for plaintiff in error.

H. B. Marsh, A. G. McIllwaine, and J. M. Fitzgerald, for defendant in error.

Before PARDEE, McCORMICK, and SHELBY, Circuit Judges.

PARDEE Circuit Judge (after stating the facts as above).

It is conceded there is no law in the state of Texas authorizing the damages and attorney's fees awarded in the verdict and judgment in this case, unless it be found in article 3071, Rev. St. Tex., adopted in 1895, as follows:

'Art. 3071. In all cases where a loss occurs and the life or health insurance company liable therefor shall fail to pay the same within the time specified in the policy, after demand made therefor, such company shall be liable to pay the holder of such policy, in addition to the amount of the loss, 12 per cent. damages on the amount of such loss, together with all reasonable attorney's fees for the prosecution and collection of such loss.'

This section was a part of an act originally passed on May 2, 1874, prior to which time there were no statutes in the state of Texas regulating insurance companies. Other sections of the act of 1874, and afterwards incorporated in the Revised Statutes, are as follows:

'Art. 39073. It shall be unlawful for any life or health insurance company to take any kind of risks or issue any policies of insurance except those of life or health, nor shall the business of life or health insurance companies in this state be in any wise conducted or transacted by any company which in this, or any other state or country, is engaged or concerned in the business of marine, fire, inland or other insurance.'

'Art. 3061. It shall not be lawful for any person to act within this state as a agent or otherwise in soliciting or receiving applications for insurance of any kind whatever or in any manner to aid in the transaction of the business of any insurance company incorporated in this state or out of it, without first procuring a certificate of authority from the commissioner of agriculture, insurance statistics and history.'

In February, 1875, another act was passed regulating the business of fire, marine, and inland insurance companies. See Rev. St. Tex. arts. 3074, 3085. And in April, 1895, an act was passed which, among other things, defined and distinguished life and accident insurance companies as follows:

'Art. 3096a. A life insurance company shall be deemed to be a corporation doing business under any charter involving the payment of money or other thing of value to families or representatives of policy-holders, conditioned upon the continuance or cessation of human life, or involving an insurance guarantee, contract or pledge, for the payment of endowments or annuities. An accident insurance company shall be deemed to be a corporation doing business under any charter involving the payment of money or other thing of value to families or representatives of policy-holders. conditioned upon the injury, displacement or death of persons resulting from traveling or general accident by land or water.'

Chapter 55 of the Laws of 1895 provides as follows:

'That there is hereby imposed upon and shall be collected from each and every person or firm acting as general agents of life, fire, marine and accident insurance companies who may transact any business as such in this state, an annual occupation tax of fifty dollars.'

In Association v. Yoakum, 39 C.C.A. 56, 98 F. 251, followed in Insurance Co. v. Ross, 42 C.C.A. 601, 102 F. 722 this court held that article 3071, above quoted, being in force at the time the contract of life insurance was made, became as much a part and parcel of the contract as if it had been expressly incorporated in the policy, and that as against life insurance companies doing business in the state of Texas after article 3071 became a law, and issuing policies thereunder, said article was not in violation of the constitution of the United States. The question presented here, however, is not necessarily one of constitutionality of the said article in respect to the constitution of the United States, but, rather, of its applicability to accident insurance companies, as distinguished from life and health insurance companies. The contention was made below, and evidently allowed by the circuit court, and is renewed here, that an accident insurance company is a life or health insurance company, and therefore the state applies. We have quoted the sections of the statute of Texas bearing upon insurance companies, and we think it plainly appears therefrom that accident insurance, in the legislative mind, was distinct from life and health insurance. The definitions of a life insurance company and of an accident insurance company, as given in the statutes above quoted, show this distinction. One is conditioned upon the continuance or cessation of human life; the other is conditioned upon injuries resulting from traveling, or general accident by land or water. Outside of the defining statute quoted, it is common knowledge that the one insures against the inevitable, with the intent that eventually the amount of the policy shall be paid to the beneficiary; the other insures against the accidental, with the intent that the liability of the insurance company to pay the amount or amounts stipulated shall attach only on the occurrence of bodily injuries to the insured, sustained through external, violate, and accidental causes. The distinction between accident insurance and health insurance is equally clear. Accidental injury may happen; sickness and infirm health may be considered as inevitable. In the one the amount of indemnity stipulated may never become due; in the other, if the policy is kept in force the indemnity stipulated is certain to become due. There is little doubt that the statute in question, imposing penalties upon life and health insurance companies which are so combative as to contend for their supposed rights under written contracts containing resolutory and suspensive conditions, and based on warranties, in the courts of the state of Texas, when the right to so contest is denied no other class of suitors, is penal in its character; and, we take it, there is no doubt of the proposition that statutes penal in their nature are to be construed strictly, and not extended by implication, intendments, analogies, or equitable considerations. Black, Interp. Law, 286; Potter, Dwar. St. 245 et seq.; Suth St. Const. Secs. 358, 366; Railway Co. v. Dwyer, 84 Tex. 194, 19 S.W. 470; Schloss v. Railway Co., 85 Tex. 601, 22 S.W. 1014; U.S. v. Harris, 177...