U.S. Shipping Board Emergency Fleet Corporation v. Sherman & Ellis, Inc.

• Citation: 93 So. 834,208 Ala. 83
• Decision Date: 18 May 1922
• Docket Number: 1 Div. 193.
• Parties: UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION v. SHERMAN & ELLIS, INC.
• Court: Supreme Court of Alabama

93 So. 834

208 Ala. 83

UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION v. SHERMAN & ELLIS, INC.

1 Div. 193.

Supreme Court of Alabama

May 18, 1922

Rehearing Denied June 30, 1922.

Appeal from Circuit Court, Mobile County; Saffold Berney, Judge.

Action on account by Sherman & Ellis, Incorporated, against the Mobile Shipbuilding Company and United States Shipping Board Emergency Fleet Corporation to recover premiums on policy of liability insurance. From a judgment for plaintiff, the United States Shipping Board Emergency Fleet Corporation appeals. Reversed and remanded.

Harry M. Daugherty, Atty. Gen., A. D. Pitts, U.S. Atty., of Selma J. O. Middleton, Asst. U.S. Atty., of Mobile, Elmer Schlesinger, Gen. Counsel, of Washington, D. C., Chauncey G Parker, Special Counsel, of Newark, N. J., Geoffrey Goldsmith, Asst. Counsel, of Washington, D. C., U.S. Shipping Board Emergency Fleet Corporation, for appellant.

Inge &amp Kilborn, of Mobile, and Gallagher, Kohlsaat, Rinaker &amp Wilkinson and Newman, Poppenhusen, Stern & Johnston, all of Chicago, Ill., for appellee.

GARDNER J.

This suit was brought by Sherman & Ellis, Inc., against the Mobile Shipbuilding Company (hereinafter referred to as the Mobile Company), and the United States Shipping Board Emergency Fleet Corporation (hereinafter referred to as the Fleet Corporation), for the recovery of premiums due under a policy to indemnify against legal liability imposed by the Workmen's Compensation Act of Alabama (Acts 1919, p. 206). This policy was issued by the plaintiff on December 18, 1919, to cover a period from January 1, 1920, to January 1, 1921. In the policy the name of the assured is given as "Mobile Shipbuilding Company and [or] United States Shipping Board Emergency Fleet Corporation, as their interests may appear."

The first count of the complaint was the common count claiming the sum due by account; and the cause was submitted to the jury upon this count of the complaint and the general issue thereto. The Fleet Corporation filed a special plea to the jurisdiction of the court, setting up in substance that it was a corporation organized under the laws of Congress enacted for the District of Columbia, and was incorporated in pursuance of the Shipping Act of September 7, 1916 (U. S. Comp. St. §§ 8146a-8146r); that all of its capital stock has been paid, and is now owned and held by the United States of America. The plea contains other averments to the effect that the corporation was acting under direction of the President of the United States, as authorized by the act of Congress, and that, in fact, its acts were the acts of the United States, and that therefore this suit was in effect a suit against the United States, and that this court is without jurisdiction.

This question has recently been considered and determined by the Supreme Court of the United States in the cases of Sloan Shipyards Corporation et al. v. United States Shipping Board Emergency Fleet Corporation and the United States (No. 308), Astoria Marine Iron Wks. v. U.S. Shipping Board Emergency Fleet Corporation (No. 376). U.S. Shipping Board Emergency Fleet Corporation, etc., v. Roger B. Wood, Trustee (526), 258 U.S. ---, 42 S.Ct. 386, 66 L.Ed. 762, October term, 1921. The decision in those cases is conclusive adversely to the contention of the corporation, and the court below therefore ruled correctly in sustaining the demurrer to this special plea.

The other questions presented largely turn upon questions of fact, and need no elaborate discussion. It is first insisted that plaintiff should not recover for the reason that it is not shown to be the party of real interest in the subject matter of this litigation. In policies of insurance, of the character issued by Sherman & Ellis, Inc., the assured was a subscriber to what is known as Associated Employers' Reciprocal Exchange, referred to as the Reciprocal Exchange. This exchange was composed of some 6,000 employers, and the amount of premium to be paid was determined upon the pay roll of the assured as to the wage classification of labor. In the policy it is stated, where the word "exchange" occurs it should be construed to mean the subscribers collectively, but that no liability shall be imposed upon the subscribers other than severally, and that in no event shall a subscriber be made liable with the others. Sherman & Ellis, Inc., were constituted the attorney in fact for each subscriber under a separate instrument, providing the issuance of the policies. They were given authority to collect all moneys, and to make all disbursements and settlements, and defend all suits; the power of attorney stating the purpose of the instrument is to clothe the attorney with the power necessary to enable the assured through the attorney in fact to exchange contracts of insurance and indemnity with other subscribers, provided, however, that said attorney should have no power to bind the insured jointly with any other subscriber. As compensation for its services, as well as in consideration of the attorney defraying all necessary expenses incident to conducting the exchange of contracts of insurance and indemnity, with certain exceptions and expenses of handling and investigating accidents, adjusting and defending claims, the said attorney was authorized to deduct 30 per cent. of all receipts, and the subscriber receive nothing except from a surplus fund, if any remained after the disbursement provided for. If there is no surplus fund after a collection of the premiums from the subscribers, the attorney has the right to call upon the subscribers to pay in addition to the specified premiums an additional amount equal to the amount of said premiums. The services were performed by the plaintiff, as attorney in fact, pursuant to the stipulation of the power of attorney, and the policy of insurance, and we are of the opinion that the plaintiff was the real party in interest, and the party entitled under section 2490 of the Code to bring this action for the recovery of premiums due thereunder.

It is most strenuously urged that the Fleet Corporation was entitled to the affirmative charge; but whether or not it in fact entered into a contract of insurance or otherwise with the plaintiff, or did, indeed, have an insurable interest in the subject-matter of the policy, were questions which were submitted by the court for the jury's determination, and we think correctly so. True, the power of an attorney was...