Ocean Acc. & Guarantee Corp. v. Milford Bank

• Decision Date: 09 December 1930
• Citation: 236 Ky. 457,33 S.W.2d 312
• Parties: OCEAN ACCIDENT & GUARANTEE CORPORATION v. MILFORD BANK et al.
• Court: Kentucky Court of Appeals

33 S.W.2d 312

236 Ky. 457

OCEAN ACCIDENT & GUARANTEE CORPORATION v. MILFORD BANK et al.

Court of Appeals of Kentucky

December 9, 1930

Appeal from Circuit Court, Bracken County.

Suit by the Milford Bank and another against the Ocean Accident &amp Guarantee Corporation and another. From a judgment for plaintiffs, defendant named appeals.

Affirmed.

Hanson Peterson, of Cynthiana, for appellant.

B. S Grannis, of Flemingsburg, Silas Jacobs, of Brooksville, and M. Hargett, of Maysville, for appellees.

STANLEY C.

This suit was filed by the Midland Bank, an insolvent institution and the banking commissioner, against J. H. Hieatt, former cashier, and the appellant, Ocean Accident & Guarantee Corporation, to recover $10,000 on a bond indemnifying the bank against loss by reason of Hieatt's dishonesty. Judgment went for the plaintiffs, and the defendant insurance company appeals.

1. It is contended that the Bracken circuit court was without jurisdiction in the case. By the pleading and proof it was shown that the home office of the company was in New York and its principal office in Kentucky was in Jefferson county, where its chief agent in the state also resided. Process was served on that agent in that county and also on the insurance commissioner, as is provided by section 631 of the Statutes. Hieatt was summoned in Mason county. The contract was made several years previously in this manner: The bank by mail requested of the agent that he issue the bond; it was prepared in New York and sent to the agent, who mailed it at Louisville to the bank in Bracken county, which accepted it and in due course remitted the premium; annually thereafter a renewal certificate was sent by mail from Louisville to the bank and remittances duly made. It may well be doubted whether there was a transaction had with an agent of the company in Bracken county, but it is certain that the contract was to be performed there.

Jurisdiction could not have been acquired under section 78 of the Civil Code of Practice covering transitory actions, for neither defendant was served in the county where the action was brought. It must have been under the provisions of section 72, the construction of which, in connection with section 71, is not free of doubt. For convenient consideration, we quote them:

"Sec. 71. Excepting the actions mentioned in sections 62 to 66, both inclusive, and in sections 70 and 75, an action against an incorporated bank or insurance company may be brought in the county in which its principal office or place of business is situated; or, if it arise out of a transaction with an agent of such corporation, it may be brought in the county in which such transaction took place.

Sec. 72. Excepting the actions mentioned in sections 62 to 66, both inclusive, and in sections 68, 70, 71, 73, 75 and 77, an action against a corporation which has an office or place of business in this State, or a chief officer or agent residing in this State, must be brought in the county in which such office or place of business is situated or in which such officer or agent resides; or, if it be upon a contract, in the above-named county, or in the county in which the contract is made or to be performed; or, if it be for a tort, in the first-named county, or the county in which the tort is committed."

We are not concerned with the excepted sections other than the reference to section 71. The conditions localizing actions against corporations in section 72 are: (1) Where its office or place of business is situated; (2) where its chief office or agent resides; (3) where the contract out of which the action arose is made; (4) where such contract is to be performed; (5) where the tort giving rise to the action was committed. The conditions localizing venue of actions against banks and insurance companies in section 71 are only two, viz.: (1) Where its principal office or place of business is situated; and (2), if the action arises out of a transaction with an agent, in the county where such transaction took place. The question is, Are these two provisions exclusive or cumulative? The answer may depend upon the way the two sections are read. In applying them to an action and situation like the instant case, they may thus be read together: "An action against a corporation on a contract must be brought in the county where made or where it is to be performed, or in the county where it has an office or its chief officer or agent resides, except if it be an insurance company and arise out of a transaction with an agent it may be brought in the county where such transaction arose." As so read, it is clear that the provisions of the two sections are cumulative. However, the two sections may be read together thus: "Excepting actions against an insurance company, an action on a contract must be brought in the county where made or to be performed." This would make the provisions of section 71 exclusive of those of section 72. Neither reading would be illogical. By reason of the ambiguity, we are called upon to ascertain the legislative intent.

The history of legislation is of value in determining the construction to be placed on the current law. Trustees of Baptist Female College v. Barren County Board of Education, 190 Ky. 565, 228 S.W. 19. The original Code of Practice, adopted by the General Assembly in 1851 provided, as section 127, that: "An action, other than one of those mentioned in sections one hundred and nineteen and twenty, against a corporation created by the laws of this state, may be brought in the county in which it is situated or has its principal office or place of business, or in which its chief officer resides; but if such corporation is a bank or insurance company, the action may be brought in the county in which there is a...