Massachusetts Bonding & Insurance Company v. Home Life & Accident Company

• Decision Date: 31 May 1915
• Docket Number: 24105
• Citation: 178 S.W. 314,119 Ark. 102
• Parties: MASSACHUSETTS BONDING & INSURANCE COMPANY v. HOME LIFE & ACCIDENT COMPANY
• Court: Arkansas Supreme Court

178 S.W. 314

119 Ark. 102

MASSACHUSETTS BONDING & INSURANCE COMPANY v. HOME LIFE & ACCIDENT COMPANY

No. 24105

Supreme Court of Arkansas

May 31, 1915

Appeal from Pulaski Chancery Court; John E. Martineau, Chancellor affirmed.

Decree affirmed.

Bradshaw Rhoton & Helm, for appellant.

1. The policy issued in Alabama on property in Arkansas, is void as to the surety, being in violation of Kirby's Digest §§ 4363, 4364, and Acts 1905, p. 780. 29 Ark. 386; 47 Id. 378; 34 Id. 762; 81 Id 599. Where an illegal contract has been made, no court will grant relief, but leaves the parties where it finds them, if they have been cognizant of the illegality. 67 Ark. 480; 81 Id. 41; 98 S.W. 711; 95 Ark. 552; 129 S.W. 797. Contracts contrary to the laws of a State will not be enforced. 126 Wisc. 281; 105 N.W. 801; 110 Am. St. 919; 27 L. R. A. 556.

2. If the policy is a valid liability, the Home Life & Accident Company is liable. The loss occurred on March 1, 1913, whereas the bond of appellant expired February 28, 1913. March 1 is the beginning of the insurance year. Year means calendar year (Kirby's Digest, § 7814), or twelve calendar months. 40 Cyc. 2876; 38 Id. 310. The year had expired when the loss occurred. The last day should be excluded. Part of a day is not reckoned in law. The renewal of the bond terminated all liability of appellant. 49 S.W. 415; 16 L. R. A. 542. This court has settled the question. 76 Ark. 410; 168 S.W. 1062. See, also, 76 S.E. 1036; 126 S.W. 313.

3. Cotton to the value of $ 10,000 was not destroyed by the fire. No penalty nor attorneys' fee should have been allowed. 88 Ark. 474.

Rose, Hemingway, Cantrell, Loughborouqh & Miles, for Hanson, Receiver.

1. The policy was not void. It was valid in Alabama, where issued, and hence valid here. 216 F. 642-9; 61 Ark. 1; 66 Id. 472; 234 U.S. 542. Where an act is forbidden and a penalty prescribed, the penalty is exclusive. 61 Ark. 1; 77 Id. 203.

2. The fire was on March 1, 1913. The appellant's bond was for a year ending that day. The latter day was included, the day of the execution excluded. The first bond covered all liability occurring on March 1, 1913. 101 Ark. 353; 23 A. 198; 142 N.W. 437, 35 P. 878.

3. The penalty and attorneys' fee should have been allowed. 2 Sto. Eq., § 1326; Pom. Eq. § 458; 108 U.S. 436; 13 So. 39; 56 Id. 792; 86 Ark. 489; 223 U.S. 261-2.

McRae & Tompkins, for Home Life & Accident Company.

1. No more than $ 20,000 can be adjudged against the surety company on its bond. 80 Ark. 49; 75 S.W. 1076; 49 L. R. A. 193. This was settled on the former appeal.

2. The penalty and attorney's fees should not have been allowed. Acts 1905, 308; 86 Ark. 115; 104 Id. 423; 88 Id. 473; 95 Ark. 390. A receiver had been appointed before the loss. See 22 Cyc. 1316; 28 L. R. A. 231; 111 U.S. 784.

Cockrill & Armistead, for appellees.

1. The term of the bonds includes the last day named and excludes the first. 76 Ark. 410; 117 Ark. 372; 49 L. R. A. 193 and note, 208; 53 P. 433; 38 Cyc. 320; 108 S.W. 778.

HART J. MCCULLOCH, C. J., dissenting.

OPINION

HART, J.

This is the second appeal in this case. For the opinion on the former appeal, see Massachusetts Bonding & Ins. Co. v. Home Life & Accident Co., 113 Ark. 576, 168 S.W. 1062. The issues raised by the present appeal are different from those involved in the former appeal, and on that account it will be necessary for a particular statement of the facts pertinent to the issues raised by the present appeal.

The American Union Fire Ins. Co. of Philadelphia, Penn., was engaged in the fire insurance business in the State of Arkansas during the years 1911, 1912 and 1913. The Southwestern Surety & Insurance Company signed as surety the bond of said fire insurance company to the State of Arkansas for the period of one year ending March 1, 1912. The Massachusetts Bonding & Insurance Company signed as surety the bond of said insurance company to the State of Arkansas "for the period of one year ending March 1, 1913." The bond was conditioned that the American Union Fire Insurance Company should promptly pay all claims arising and accruing to any person or persons by virtue of any policy issued by said company during the term of the bond, upon any property situated in the State of Arkansas when the same should become due. This bond was filed in the auditor's office and approved February 29, 1912. The Home Life & Accident Company executed a similar bond as surety of said fire insurance company for the period of one year, ending March 1, 1914.

C. C. Hanson, as receiver of the Gulf Compress Company, an insolvent domestic corporation, procured a policy of insurance in said fire insurance company for $ 10,000 on 168 bales of cotton. On March 1, 1913, about daylight, a period of time during the life of the policy, a fire occurred which destroyed the 168 bales of cotton. The policy of fire insurance was executed in the State of Alabama.

The American Union Fire Insurance Company became insolvent, and on March 27, 1913, a receiver was appointed to take charge of its assets. On the 29th day of March, 1913, proof of loss duly made out and signed by the receiver in accordance with the terms of the policy was mailed to the insurance company. On June 19, 1913, C. C. Hanson, as receiver of the Gulf Compress Company, instituted an action in the circuit court against the Massachusetts Bonding & Insurance Company to recover the amount of loss covered by said policy of fire insurance. On July 14, 1913, the present action was instituted in the chancery court by the Massachusetts Bonding & Insurance Company against The Home Life & Accident Company, C. C. Hanson, receiver of the Gulf Compress Company, and other parties having claims against the American Union Fire Insurance Company. The plaintiff prayed for an order enjoining defendants from prosecuting any suits against it in the law courts of the State of Arkansas, and requiring them to file their claims for adjudication in the chancery court where an ancilliary receiver had been appointed to take charge of and wind up the assets of the said insurance company. An injunction was granted as prayed for.

The Home Life & Accident Company filed an answer in which it denied liability on the bond which it had signed as surety. Subsequently, Hanson, as receiver of the Gulf Compress Company, filed an intervention and asked judgment against the Massachusetts Bonding & Insurance Company for $ 10,000, the amount of the policy above referred to. Other claims to the amount of $ 18,000 were filed.

On the former appeal we held that though loss occur upon policies written while the earlier bond was in force, only the surety upon the bond at the time of the loss is liable, the provision for renewal contemplating that there should be only one bond in force at one time. The other claims above mentioned, amounting to $ 18,000, under our ruling in the former appeal, accrued during the life of the bond of the Home Life & Accident Company, and on that account were claims for which its bond was liable. There was a contest between the Massachusetts Bonding & Insurance Company and the Home Life & Accident Company as to which would be liable upon the $ 10,000 policy issued to Hanson, as receiver of the Gulf Compress Company. The chancellor held that the Massachusetts Bonding & Insurance Company was liable for that claim and rendered judgment against it for the sum of $ 10,000 and the accrued interest, but refused to allow statutory penalty and attorney's fee. The case is here on appeal.

Act 327 of the Acts of 1905 is amendatory of sections 4371-2-3-4 of Kirby's Digest. See Acts 1905, p. 780.

Section 2 of the act amends section 4372 of Kirby's Digest, and provides that any person licensed by the auditor to act as agent for any fire insurance company is prohibited from paying, directly or indirectly, any commission, brokerage or other valuable consideration on account of any policy or policies covering any property in the State of Arkansas to any person, agent, firm or corporation who is a nonresident of the State.

Section 3, which amends section 4373 of Kirby's Digest, provides that when the auditor shall have received notice or information of any violation of any of the provisions of the act, he shall investigate such violation, and further provides for a revocation of the license of the insurance company for a certain period of time for a violation of the provisions of the act.

Section 1 of the act is amendatory of section 4371 of Kirby's Digest, and in effect provides that the companies named in the act are prohibited from authorizing or allowing any agent who is a nonresident of the State to issue or cause to be issued its own policy or policies of insurance or reinsurance on property located in this State. A comparison of these sections of the act of 1905 with the sections of the Digest which they amend, shows that the amendment consists in bringing other companies than fire insurance companies within the terms of the act.

Counsel for appellant Massachusetts Bonding & Insurance Company insist that because the contract of insurance in question was issued in the State of Alabama, it is void. They further contend that under the rule laid down in Crawford v. Ozark Insurance Company, 97 Ark. 549, 134 S.W. 951, we must presume that it was the intention of the surety company to execute the bond in compliance with the requirements of the statute, and because the insurance company failed to comply with the provisions of the act of 1905, above referred to, the surety company is not liable on the bond. It is true that the contract of insurance was an Alabama contract, but, being valid under the laws of that State, it is valid here. State Mutual Fire Ins. Assn. v. Brinkley Stave and Heading...