Hartford Fire Ins. Co. v. Galveston, H. & S. A. Ry. Co.

• Decision Date: 05 April 1922
• Docket Number: (No. 280-3518.)
• Citation: 239 S.W. 919
• Parties: HARTFORD FIRE INS. CO. v. GALVESTON, H. & S. A. RY. CO.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Supreme Court

239 S.W. 919

HARTFORD FIRE INS. CO. v. GALVESTON, H. & S. A. RY. CO.^*

(No. 280-3518.)

Commission of Appeals of Texas. Section A.

April 5, 1922.

COPYRIGHT MATERIAL OMITTED

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Suit by the Hartford Fire Insurance Company against the Galveston, Harrisburg & San Antonio Railway Company. A judgment for plaintiff was reversed by the Court of Civil Appeals (220 S. W. 781), and judgment rendered for the defendant, and both parties bring error. Judgment of the District Court and of the Court of Civil Appeals reversed, and cause remanded for new trial.

P. A. Wells, of Chicago, Ill., and J. A. Templeton, of Fort Worth, and J. F. Sutton, of Alpine, for plaintiff in error.

Baker, Botts, Parker & Garwood, of Houston, W. B. Teagarden, of San Antonio, and Wigfall Van Sickle, of Alpine, for defendant in error.

GALLAGHER, J.

J. L. Borroum & Co. owned certain cattle in Brewster and Terrell counties, Tex. They shipped them over the Galveston, Harrisburg & San Antonio Railway and its connecting lines to points in Oklahoma. The Hartford Fire Insurance Company insured the owners of said cattle against certain hazards incident to their transportation, with the agreement that, upon the payment of the loss or damage, if any, so insured against, the claims of the owners against the carrier for such loss or damage should be transferred and assigned to it, and that it should be subrogated to all their rights in the premises. Losses were sustained, the insurance company paid such losses to the owners, and they transferred their claims against the carriers to it in accordance with their contract. This action was brought by the insurance company against the said railway company as initial carrier to recover such damages.

The railway company filed a plea in abatement as follows:

"Plaintiff is a foreign corporation chartered under and by virtue of the laws of the state of Connecticut, and it has no power or authority under its charter or permit to do business in this state, or under the laws of this state to make contracts such as formed the basis of this suit and has no power or authority to acquire and prosecute such causes of action as it asserts in this case against defendant."

The insurance company excepted to this plea on the ground that it constituted no defense to the cause of action, and on the further ground that such want of authority, if any, could be questioned only by the state. Those exceptions were sustained.

The insurance company introduced in evidence its charter from the state of Connecticut and various amendments thereto, showing that it had been granted authority to insure, among other things, against loss or damage caused by fire and the hazards of inland transportation. It also introduced in evidence a certificate from the Commissioner of Insurance and Banking of Texas authorizing it to pursue the business of fire, lightning, tornado, inland, marine, sprinkler, leakage, explosion, and war risk insurance within the state the year ending February 28, 1918. This certificate was dated June 25 1917. It also introduced certificates from said Commissioner authorizing it to pursue such business for the years ending February 28, 1917, and February 28, 1919, respectively.

The contracts of insurance were made, the cattle covered thereby shipped, the losses thereon adjusted and paid to the owners and the claims assigned by them to the Insurance Company, and such claims presented to the railway company for payment between the 28th day of February and the 25th day of June, 1917.

The case was tried before a jury, verdict rendered in favor of the insurance company for $10,257, and judgment entered accordingly. The railway company appealed, and the Court of Civil Appeals for the Eighth District reversed the judgment of the trial court and rendered judgment for the railway company. 220 S. W. 781. Each of the parties applied for a writ of error, and both applications were granted and placed on the docket of the Supreme Court in the name of the insurance company as plaintiff in error and the railway company as defendant in error, and the parties will be so designated.

The Court of Civil Appeals held that the trial court erred in refusing a requested peremptory charge to find in favor of defendant in error. It based this holding on its finding that plaintiff in error, at the time the insurance which was the basis of the acquisition of the claim sued on was written, had no permit to do business of any kind in this state, and that in so writing such insurance, and so acquiring such claims without first obtaining such permit, it violated the statutes prescribing the terms on which foreign insurance companies are permitted to do business in this state, and that such claims, having been acquired in violation of such statutes, cannot be enforced in any of the courts of this state.

Our statutes prescribe procedure by which a foreign insurance company may be authorized to pursue its business in this state. Article 4497 of the Revised Statutes requires a company applying for such certificate of authority to satisfy the Commissioner of Insurance and Banking that it has complied with the law, that its capital stock has been fully paid up, and that it has the required amount of capital and surplus to policy holders. On such showing it is made the duty of the Commissioner to issue a certificate of authority authorizing such company to transact such insurance business, but it is expressly provided that such certificate shall not authorize the transaction of business beyond the 28th day of February following. Article 4964 provides that before any such certificate shall issue the Commissioner, in addition to the other requirements provided by law, shall require an affidavit that the applicant has not violated any provision of article 4963 prohibiting foreign insurance companies authorized to do business in this state from writing insurance on property in this state, except through regularly commissioned and licensed agents in this state. Article 4943 makes it the duty of every insurance company to publish annually, within 30 days after its issuance, its certificate of authority. Article 4862 provides that it shall be lawful for any insurance company doing business under a proper certificate of authority (except life or health insurance companies) to insure all kinds of property against loss or damage by fire, and to take all kinds of insurance on goods, merchandise, or other property in the course of transportation, whether on land or water.

Article 644 of the Penal Code enumerates the acts which shall constitute any one doing the same the agent of the insurance company for which such acts are done, and article 645 declares that any person who shall so act as agent for any insurance company which has not complied with the laws and received a certificate of authority to do business in this state shall be guilty of a misdemeanor, and punished by a heavy fine and penalty, and imprisoned in the county jail for a period of three months unless such fine and penalty are sooner paid. Article 643 provides that any person who shall violate any of the provisions of the insurance laws of this state shall be punished by fine. Article 642 of the Penal Code and articles 4960 and 4961 of the Revised Civil Statutes are of similar import.

We have no statute providing in express terms that fire insurance companies shall not transact any business except under a certificate of authority from the Commissioner of Insurance and Banking, and that such certificate of authority shall be renewed annually on the same terms and conditions as the original certificate, as is provided in case of life, health, and accident insurance companies by section 46 of the act of 1909, which section now constitutes article 4761 of the Revised Statutes. We think, however, that the statutes applicable to fire insurance companies above quoted, properly construed, by necessary implication require fire insurance companies to procure the proper renewal of their certificates of authority annually, and that they are not authorized to transact any insurance business within this state without such certificate.

There is nothing in our statutes on insurance declaring that insurance written without a certificate of authority shall be void, nor prohibiting any one from procuring or accepting such insurance, or penalizing any one for doing so. Therefore it does not necessarily follow that the insurance policies issued to the owners of the cattle in this case were void. It has been held that statutes requiring foreign insurance companies before doing business in a state to comply with the requirements of the laws thereof are intended for the protection of its citizens who may deal with them, and that such statutes do not impose upon the insured the duty of seeing that the company and its agents have complied with the requirements of law. While such insurance companies and their agents are subject to the penalties imposed, and while it is generally held that they cannot in such cases enforce the collection of premiums by suit, when they have collected such premiums and delivered their policies, according to the great weight of authority the insured is entitled to recover on the policy in event of loss. 9 Fletcher, Ency. Corp. § 5953, p. 10064; 14 R. C. L. p. 866; Home Forum Benefit Order v. Jones, 20 Tex. Civ. App. 68, 48 S. W. 219, 222 (writ refused); Swan v. Ins. Co., 96 Pa. 37; Insurance Co. v. Simons, 96 Pa. 520; Ganser v. Ins. Co., 34 Minn. 372, 25 N. W. 943; Insurance Co. v. Pennsylvania Co., 134 Ind. 215, 33 N. E. 970, 20 L. R. A. 405, 411; Insurance Co. v. Curran, 8 Kan. 9; Berry v. Life Indemnity Co. (C. C.) 46 Fed. 439, affirmed, 50 Fed. 511, 1 C. C. A. 561; Diamond Plate Glass Co. v. Fire Ins. Co. (C. C.) 55 Fed. 27; Marshall v. Ins. Co., 78 Hun, 83, 29 N. Y. Supp. 334; Hoge v. Insurance Co., 138 Pa. 66, 20 Atl. 939;...