Southern Cas. Co. v. Hughes

• Decision Date: 30 January 1928
• Docket Number: Civil 2644
• Citation: 33 Ariz. 206,263 P. 584
• Parties: THE SOUTHERN CASUALTY COMPANY, a Corporation, Appellant, v. WILLIAM H. HUGHES, Appellee
• Court: Arizona Supreme Court

263 P. 584

33 Ariz. 206

THE SOUTHERN CASUALTY COMPANY, a Corporation, Appellant, v. WILLIAM H. HUGHES, Appellee

Civil No. 2644

Supreme Court of Arizona

January 30, 1928

APPEAL from a judgment of the Superior Court of the County of Cochise. John J. Sweeney, Judge. Judgment reversed and cause remanded, with instructions.

Messrs Sutter & Roche, for Appellant.

Mr. C T. Reddington and Mr. Edwin F. Jones, for Appellee.

OPINION

LOCKWOOD, J.

William H. Hughes, hereinafter called plaintiff, brought suit against the Southern Casualty Company, a corporation, hereinafter called defendant, in the superior court of Cochise county. The complaint, after setting up certain formal matters, reads as follows:

"That on or about the 23d day of August, 1923, the plaintiff and defendant for a valuable consideration then expressed as hereinafter stated, entered into an oral agreement or contract for the insurance of the plaintiff from that date for the period of 1 year, and as evidence of said insurance thereby the defendant agreed with the plaintiff to issue to him an accident policy in writing and therein and thereby to protect him to the extent of $5,000 against death or any accident or injury to his person while engaged in the business of operating and working in a certain mine at or near the city of Bisbee, Cochise county, Arizona, as foreman of and working in such mine, as expressed and agreed to in said oral agreement or contract. That the plaintiff relying upon said oral agreement or contract of insurance, and the defendant did insure and intended to insure the plaintiff, and the plaintiff thereupon paid to the defendant one hundred dollars in cash as demanded by the defendant and as he had agreed to do, and also paid to the defendant an additional sum, being a premium assessment of 6 per cent. per month as theretofore agreed, on a basis of $5 per day, being the daily wages as agreed by the plaintiff and defendant in said oral agreement or contract; that the plaintiff, relying upon said oral agreement or contract immediately entered upon the permance (performance) of the said work and continued therein working in said mine, and also continued to pay the defendant said assessment of 6 per cent. per month on said wages in accordance with the terms of said oral agreement or contract. That the defendant has wholly failed to issue plaintiff said policy or any policy as it has so agreed as aforesaid. That thereafter, to wit, on the 14th day of November, 1923, the plaintiff, while in the performance of his work in such capacity, and while working in said mine, and while said oral agreement or contract was in full force and effect, the plaintiff met with an accident resulting in the loss of both eyes and the permanent vision thereof, and that such accident, causing the loss of both eyes, was unforeseen by the plaintiff and would have been unforeseen by any man of ordinary intelligence in the exercise of ordinary care under like or similar circumstances; that the said accident was not due to any negligence on the part of the plaintiff, and that prior and at the time of said injury, as aforesaid, plaintiff was in the exercise of due care and caution for his own safety and the safety of all others connected therewith."

Thereafter there were allegations of the earning capacity of plaintiff and the damage thereto by reason of the accident, and a prayer for judgment in the sum of $5,000.

Defendant moved to make the complaint more definite and certain, demurred on the ground that it did not state facts sufficient to constitute a cause of action, entered a general denial of the allegations of the complaint, and then set up a separate answer, which raised several defenses: First, that the contract of insurance set forth in the complaint was ultra vires; second, that no such contract of insurance was made; and third, that if defendant's agent, through whom application for the policy was made, did enter into any such contract of insurance as set forth in the complaint, it was made without any authority from defendant, and without its knowledge or subsequent ratification, and was beyond the scope of authority of such agent. To this a reply was filed, setting up, in substance, that the contract was not ultra vires, or that if it was, defendant had represented that it was fully authorized and empowered to make such contract of insurance, and that plaintiff, relying upon its representations, entered into the contract and paid the premium thereon which was charged by defendant therefor, and that defendant, having received the full benefit of such contract of insurance was not permitted to plead that it was ultra vires. Plaintiff further denied all the other affirmative defenses of the answer. The motions to make more definite and certain were denied and the demurrer overruled, and the case was tried before a jury, which returned a verdict in favor of plaintiff for the full amount. Thereafter a new trial was granted and the case was a second time presented to a jury, which also returned a verdict in favor of plaintiff for the full amount, and judgment was entered thereon. After the usual motion for new trial was made and overruled, the matter was brought before us for review.

There are some 27 assignments of error, many of which contain numerous subdivisions. There are not, however, that many questions of law involved in the assignments, and we shall therefore discuss the case rather in accordance with the legal propositions presented than the individual assignments. The first question is as to the sufficiency of the complaint. It is claimed by defendant that the action is based upon an oral contract of insurance, and that such agreement is contrary to the provisions of paragraphs 3457 and 3458, Revised Statutes of Arizona of 1913, Civil Code. These paragraphs provide that no insurance policy shall be issued until a copy of the form thereof has been filed at least thirty days with the corporation commission, and that it shall contain certain provisions and shall not contain certain others. There is no doubt that such provisions, if violated by the insurer, will subject it to a fine. It does not necessarily follow, however, that a policy issued which does not comply with the statute will be void. We have discussed the effect of a failure to comply with the standard form of policy in the case of Scottish Union Nat. Ins. Co. v. Phoenix T. & T. Co., 28, Ariz. 22, 235 P. 137.

In that case we said:

"Were it to be held that the effect of a condition contrary to the statute was to compel the insured to accept the condition or waive the policy, the insurer would have accomplished exactly what the law forbids, viz., limited his liability in a manner prohibited by law. In our opinion the true rule is that the policy is enforceable as it stands, with the forbidden clause struck out."

Following the line of reasoning expressed by the foregoing quotation, a failure of the insurer to comply with the provisions of paragraphs 3457 and 3458, supra, does not invalidate the policy it actually issues, but subjects it to a penalty, leaving the policy as issued enforceable by the insured. Nor do we think it necessary to allege in the complaint that the defendant was authorized to enter into contracts of insurance against accident or of the nature set up in the complaint. While there are authorities to the contrary, we think it the better rule that a corporation, when sued for damages on a contract made by it, which has been performed fully by the other party, may not set up in defense that it was not authorized by law to make such contract. 14a C.J. 326. The other objections to the sufficiency of the complaint we need not discuss. They are not well taken, and the court did not err in overruling the general demurrer.

Nor can we say that it was reversible error to refuse to grant the motion to make more definite and certain. Motions of this nature are to a great extent within the discretion of the trial court. The particular points to which they were addressed were shown at the trial to have been fully within the cognizance of defendant at all times after the action was started, so that it could not have been injured by the action of the court.

The real merits of the case itself were raised on the motion made by defendant for an instructed verdict. In order that we may discuss this question intelligently, it is necessary that we review the evidence briefly. On a motion of this nature it must, of course, be taken in the most favorable light in which it can be construed reasonably in favor of plaintiff. Taken so, the facts appear from the testimony as follows:

Plaintiff and William Shields had been partners in the operation of a certain mining lease in the Warren district, and had carried an insurance policy...