Northern Assurance Company of England v. Borgelt

• Decision Date: 21 January 1903
• Docket Number: 12,563
• Citation: 93 N.W. 226,67 Neb. 282
• Parties: NORTHERN ASSURANCE COMPANY OF ENGLAND v. AUGUST D. BORGELT
• Court: Nebraska Supreme Court

93 N.W. 226

67 Neb. 282

NORTHERN ASSURANCE COMPANY OF ENGLAND v. AUGUST D. BORGELT

No. 12,563

Supreme Court of Nebraska

January 21, 1903

ERROR from the district court for Lancaster county. Action by a foreign insurance company upon the bond of an agent. The facts appear in the opinion. Tried below before FROST, J Judgment on demurrer to plaintiff's petition. Reversed.

REVERSED AND REMANDED.

Charles J. Greene, Ralph W. Breckenridge and J. C. Kinsler, for plaintiff in error.

Frank A. Boehmer, contra.

POUND C. BARNES and OLDHAM, CC. concur.

OPINION

POUND, C.

A firm of insurance agents furnished a bond to one of the companies which they represented, conditioned, among other things, that the agents should "in all respects observe and fulfill the instructions of the said company" and that they should "in all other respects well and faithfully perform their duties as such agents." The agents, it is alleged, neglected to cancel a policy when directed so to do and the company was afterwards compelled to pay a loss upon the policy. Thereupon the company brought an action upon the bond, alleging these facts. It appeared from the petition that the neglect to comply with the order to cancel the policy took place more than five years prior to the time when the cause was begun, but the action was brought within five years from the time when it was ascertained that the company was liable for a loss under the policy and was compelled to pay such loss. Demurrers were sustained in the district court, and the company brings the case here on error.

Two points are made in support of the demurrer,--that the plaintiff, as appears on the face of the petition, is a foreign insurance company, and does not allege that it has complied with the statutory prerequisites to transaction of business in this state, and that the cause of action is barred by the statute of limitations. In support of the first point, we are cited to Commonwealth Mutual Fire Ins. Co. v. Hayden, 60 Neb. 636, 83 Am. St. Rep. 545, 83 N.W. 922. But we think a manifest distinction is to be made between the two cases. Where the record discloses affirmatively that a plaintiff, a foreign insurance company, has been doing business in this state without complying with the conditions prescribed by the statutes, a demurrer is proper. Commonwealth Mutual Fire Ins. Co. v. Hayden was such a case. We have examined the record in that cause and find the petition alleged that the plaintiff had made contracts in Massachusetts, to be governed by the laws of that state, insuring property in Nebraska, and that copies of the policies were filed and inserted in the record. From the pleadings and instruments filed, it appeared affirmatively that the transactions involved were in violation of the statutes of this state. In the case at bar this is not true. There is an omission to allege that the statutory conditions had been observed, but there is nothing to show affirmatively that they were not in fact fully satisfied. The petition shows that the company had been doing business in the state in the ordinary manner by regular resident agents. The question is whether we shall presume that it was doing so unlawfully. On this point the authorities are numerous and uniform. Where it does not appear affirmatively that the plaintiff has done business in the state in contravention of the statutes, a demurrer will not lie because the petition fails to allege that the statutory conditions have been complied with. In such case non-compliance is a defense to be set up by answer. Smith v. Weed Sewing Machine Co. 26 Ohio St. 562; New England Fire & Marine Ins. Co. v. Robinson, 25 Ind. 536; Sprague v. Cutler & Savidge Lumber Co. 106 Ind. 242, 6 N.E. 335; Nickels v. People's Building, Loan & Savings Ass'n, 93 Va. 380, 25 S.E. 8; Nelms v. Edinburg American Land Mortgage Co. 92 Ala. 157, 9 So. 141; American Button Hole, Overseaming & Sewing Machine Co. v. Moore, 2 Dak. 280, 8 N.W. 131; New England Mortgage Security Co. v. Vader, 12 Sawy. 62, 28 F. 265. In Cassaday v. American Ins. Co. 72 Ind. 95, the court said (p. 98): "Where the complaint is silent on the subject, it can not be presumed that the appellee and its agent had not complied with the provisions of the statute at the time of the execution of the contract. In the absence of any showing to the contrary, it seems to us that we may fairly presume that both the appellee and its solicitor had complied with the requirements of the statute before and at the time the policy was issued and the note in suit was given therefor. At all events, we are of the opinion that the complaint ought not to be held insufficient on a mere presumption that the appellee and its agents may not have complied with the provisions of the statute." Counsel cite several cases where non-compliance with the statute was held a good defense. But those cases accord with the rule as above stated.

In order to determine whether the action is barred by the statute of limitations, it becomes necessary to ascertain when plaintiff's cause of action accrued,--whether at the time the agents failed to cancel the policy, as directed, or at the time when loss to the company ensued as a result of their neglect or violation of instructions. A clear distinction is made between bonds conditioned to pay a certain sum of money or to do a certain act, and bonds conditioned to indemnify. A cause of action accrues upon a bond conditioned to do a certain act as soon as there is a default in performance, whether the obligee has suffered damage or not. If, however, the bond is conditioned to indemnify, damage must be shown before the party indemnified is entitled to recover, so that a cause of action accrues not from the date of the act which causes damage, but from the time when pecuniary loss ensues therefrom. Wilson v. Stilwell, 9 Ohio St. 467, 75 Am. Dec. 477; American Building & Loan Ass'n v. Waleen, 52 Minn. 23, 53 N.W. 867; Gilbert v. Wiman, 1 N.Y. 550, 49 Am. Dec. 359; Wicker v. Hoppock, 73 U.S. 94, 6 Wall. 94, 18 L.Ed. 752; Hicks v. Hoos, 44 Mo.App. 571, 579; Terre Haute & I. R. Co. v. Peoria & N.E. U. R. Co. 81 Ill.App. 455. It follows that in the one class of cases the statute begins to run from the date of default, in the other it runs from the time when loss or damage is entailed upon the obligee. In the one class, if the act is done afterwards, or for other reasons, the damages may be nominal only, and at common law non damnificatus was not a proper plea. In the other, damage is the gist of the case; without it there is no cause of action, and non damnificatus might be pleaded at common law. Consequently, if...