Appeal
from Common Pleas Circuit Court of Richland County; M. S
Whaley, Judge.
Suit by
the State against the Firemen's Insurance Company of
Newark, N. J. From an order of nonsuit, plaintiff appeals.
Reversed
and remanded for a new trial.
CARTER
J.
This
suit, instituted by the state of South Carolina against the
defendant, Firemen's Insurance Company of Newark, N. J.,
in the county court for Richland county, August 2, 1928, has
for its purpose the recovery of the sum of $500 as a penalty
under the provisions of sections 4090 and 4092 of volume 3 of
the Code of 1922. The case was brought to trial in the said
court for Richland county January 8, 1930, before Hon. M. S.
Whaley, presiding judge, resulting in an order of nonsuit,
from which order the plaintiff has appealed to this court.
For a clear understanding of the issues involved we quote
herewith the complaint in the case:
Complaint.
"The
plaintiff, complaining of the defendant, alleges:
"1.
The defendant, above named, is a corporation engaged in the
business of writing fire insurance, duly chartered and
organized, and licensed as a foreign insurance company to
do business in this State; subject, however, to the laws of
the State and to the penalties prescribed for the
violations thereof.
"2.
On or about the 31st day of May, 1928, the defendant
willfully violated, and failed to observe and comply with,
the provisions of section 4090, Code of 1922, vol. 3; the
said violation being in manner and form as follows: to-wit:
The defendant, having full knowledge of the fact that the
insurance agency licenses issued to the members of the H.
C. Hicks Agency, Spartanburg, S. C., had
expired on March 31st, 1928, and had not thereafter been
renewed by the Insurance Commissioner, nevertheless
continued, in deliberate and willful violation of the
statutory
requirements relating to the operations of insurance
agencies, to do business and to write, or cause to be
written, policies or contracts of insurance, and to have
the policies counter-signed and issued, by and through the
said H. C. Hicks Agency, although knowing the said agency
and the members thereof, to be unlicensed and not regularly
commissioned to transact the business of insurance in this
State. The defendant, acting by and through the H. C. Hicks
Agency as aforesaid, issued, as of the date mentioned, a
policy of insurance to B. R. Littlejohn, on property
located in Spartanburg County, in the State of South
Carolina.
"3.
By reason of its willful violation of the laws of this
State, as above set forth, the defendant has become subject
to, and is liable to pay, under the provisions of section
4092, Code of 1922, vol. 3, a penalty of Five Hundred and
no/100 ($500.00) Dollars, to be collected and recovered in
an action brought in the name of the State.
"Wherefore,
the State of South Carolina prays judgment against the
defendant, Firemen's Insurance Company of Newark, New
Jersey, for the sum of Five Hundred and no/100 ($500.00)
Dollars, and for the costs and disbursements of this
action."
The
defendant, by its answer, denied the allegations of the
complaint.
The
section 4090 of the Code of 1922, referred to in the
complaint, reads as follows: "(4090) § 37. All
Policies to be Issued Through Resident Agents--
Exceptions.--No fire insurance company or association
not incorporated under the laws of this State, authorized to
transact business here, shall make, write, place, or cause to
be made, written or placed, any policy, duplicate policy, or
contract of insurance of any kind or character, or any
general or floating policy, upon property
situated or located in this State, except after the said risk
has been approved, in writing, by an agent who is a resident
of this State, regularly commissioned by the company doing
business in this State, who shall countersign all policies so
issued, and receive the commission therein when the premium
is paid, and the State shall receive the license fees
required by law to be paid on the premiums collected for
insurance on all property located in this State. Nothing in
this Chapter shall be construed to prevent any insurance
company or association, authorized to transact business in
this State, from issuing policies at its principal or
department offices, covering property in this State:
Provided, That such policies are issued upon application
procured and submitted to such company by agents who are
residents of this State, regularly commissioned to transact
the business of insurance herein, and who shall countersign
all policies so issued and receive the commission thereon
when paid. No provision of this Section is intended to or
shall apply to direct insurance covering the rolling stock of
railroad corporations or property in transit while in the
possession and custody of railroad corporations or other
common carriers."
Section
4092, vol. 3, of the Code of 1922, referred to in the
complaint, reads as follows:
"(4092)
§ 39. Penalty for Violation of Provisions.--Any
insurance company or association willfully violating or
failing to observe and comply with any of the provisions of
Sections 36, 37 and 38 applicable thereto, shall be subject
to and liable to pay a penalty of five hundred dollars for
each violation thereof; and for each failure to observe and
comply with any provisions of the said Sections, such
penalty may be collected and recovered in an action brought
in the name of the State, in any Court having jurisdiction
thereof. Any insurance company or association which shall
neglect and refuse for thirty days after judgment in any
such action to pay and discharge the amount of such
judgment, shall have its authority to transact business in
this State revoked by the Insurance Commissioner, and such
revocation shall continue for at least one
year from the date thereof; nor shall any insurance company
or association, whose authority to transact business in
this State shall have been so revoked, be again authorized
or permitted to transact business herein, until it shall
have paid the amount of such judgment, and shall have filed
in the office of the Insurance Commissioner a certificate,
signed by its president or other chief officer, to the
effect that the terms and obligations of the provisions of
this Article are accepted by it as a part of the conditions
of its right and authority to transact business in this
State."
For the
purpose of showing the proceedings in the trial of the case,
we quote from the transcript of record the following:
"Testimony
was offered by the plaintiff, in substance, as follows:
"The
defendant admitted its issuance of the policy in question
through the H. C. Hicks Agency in Spartanburg, South
Carolina; and that the policy was countersigned by A. R.
Coleman, as agent.
"It
is admitted by plaintiff that Coleman was a resident of
the State of South Carolina; and also that the defendant,
Firemen's Insurance Company, as far as they were able
to do so, had commissioned him as agent to write
insurance. In this connection, the plaintiff's
position was stated to the effect that Coleman was not
authorized to act as agent under the State laws and, on
that account, was not duly commissioned to write
insurance.
"Sam
B. King, Insurance Commissioner, was called as a witness
for plaintiff. He testified that he had assumed office as
Insurance
Commissioner on April 2, 1928, succeeding Mr. John J.
McMahon, and that he did not commission the H. C. Hicks
Agency or any member of that agency; that he did not issue a
license either to H. C. Hicks or A. R. Coleman.
"On
objection by defendant to testimony concerning the issuance
of the license by the Insurance Commissioner, the positions of the defendant and plaintiff were stated,
respectively, as follows:
"Mr.
Shand (for the defendant): We object on the ground that
this is a suit for penalty under section 4090, vol. 3, of
the Civil Code 1922. The violation charged in the complaint
is, that the defendant, having full knowledge of the fact
that the insurance agency licenses issued to the members of
the H. C. Hicks Agency, Spartanburg, S. C., had expired on
March 31, 1928, and had not thereafter been renewed by the
Insurance Commissioner, nevertheless continued, in
deliberate and willful violation of the statutory
requirements relating to the operations of insurance
agencies, to do business and to write, or cause to be
written, policies or contracts of insurance, and to have
the policies countersigned and issued by and through the
said H. C. Hicks Agency, although knowing the said agency,
and the members thereof, to be unlicensed and not regularly
commissioned to transact business of insurance in this
State. And the complaint goes on and states that the agency
issued this policy.
"Now,
it is admitted by the defendant that the policy described
in the complaint was issued by the defendant through the H.
C. Hicks Agency of Spartanburg, on May 31st, 1928, and
countersigned by A. R. Coleman, a resident of South
Carolina.
"It
is admitted by the plaintiff that the agent countersigning
this policy was a resident of South Carolina, and
commissioned by the defendant, Firemen's Insurance
Company.
"The
section with which this defendant is charged with
violating, section 4090, provides that no fire insurance
company shall write any policy on property in this State
except after the risk has been approved by an agent who is
a
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