Williamson v. Liverpool, L. & G. Ins Co.

• Decision Date: 26 November 1900
• Docket Number: 2,495.
• Court: U.S. District Court — Western District of Missouri
• Parties: WILLIAMSON v. LIVERPOOL, L. & G. INS. CO.

105 F. 31

WILLIAMSON v. LIVERPOOL, L. & G. INS. CO.

No. 2,495.

United States Circuit Court, W.D. Missouri, Western Division.

November 26, 1900

At Law. On motion to strike out parts of the petition.

L. C Boyle, for plaintiff.

M. A Fyke, for defendant.

PHILIPS District Judge.

This an action, containing several counts, to recover losses based on certain fire insurance policies issued by defendant to plaintiff. On the first count, in addition to the judgment asked for to cover the loss, plaintiff asks for 10 per cent damages, amounting to $466.66 2/3, and a reasonable attorney's fee of $600; on the second county, in addition to the loss sustained on the property, plaintiff prays judgment for 10 per cent. damages, amounting to $533.33 1/3, and a reasonable attorney's fee of $700; on the third count, additional damages of 10 per cent. on the sum of the loss, amounting to $1,000, and a reasonable attorney's fee of $1,000; and on the fourth count, the sum of $2,000 as damages, and a reasonable attorney's fee of $2,300, are prayed for in addition to the amount of the loss. The defendant has filed a motion to strike out those parts of the petition praying judgment for said damages and attorney's fees, on the ground that the statute authorizing the same is unconstitutional and void, being in conflict with the provisions of both the state and federal constitutions.

The statute in question is found in section 8012, Rev. St. Mo. 1899, as follows:

'In any action against any insurance company to recover the amount of any loss under a policy of fire, life, marine or other insurance, if it appear from the evidence that such company has vexatiously refused to pay such loss, the court or jury may, in addition to the amount thereof and interest, allow the plaintiff damages not exceeding ten per cent. on the amount of the loss, and a reasonable attorney's fee; and the court shall enter judgment for the aggregate sum found in the verdict.'

The supreme court in Railway Co. v. Ellis, 165 U.S. 150, 17 Sup.Ct. 255, 41 L.Ed. 666, held that an act of the legislature of Texas, which provides, in effect, that any person in that state having a valid bona fide claim for personal services or labor, or for damages, or for overcharges on freight, or claims for stock killed or injured by any railroad company, provided such claim for stock killed or injured shall be presented to the agent to the company near by, etc., and if, at the expiration of 30 days after such presentation, such claim has not been paid or satisfied, he may institute suit therefor, and, if he prevail, 'he shall be entitled to recover the amount of such claim, and all costs of suit, and in addition thereto all reasonable attorney's fees, not to exceed $10, to be assessed and awarded by the court or jury trying the issue, ' is a violation of the fourteenth amendment of the federal constitution, as it deprives a railroad company of property without due process of law, and denies it the equal protection of the law, in that it singles out railroad companies among all its citizens, requiring them to pay, in certain cases, attorney's fees to the successful party suing them, while it gives to them no like corresponding benefit. The court said:

'It is simply a statute imposing a penalty upon railroad corporations for a failure to pay certain debts. No individuals are thus punished, and no other corporations. The act singles out a certain class of debtors, and punishes them, when for like delinquencies it punishes no others. They are not treated as other debtors, or equally with other debtors. They cannot appeal to the courts as other litigants under like conditions, and with like protection. If litigation terminates adversely to them, they are mulcted in the attorney's fee of the successful plaintiff; if it terminates in their favor, they recover no attorney's fee. It is no sufficient answer to say that they are punished only when adjudged to be in the wrong. They do not enter the courts upon equal terms. They must pay attorney's fees if wrong; they do not recover any if right; while their adversaries recover if right, and pay nothing if wrong. In the suits, therefore, to which they are parties they are discriminated against, and are not treated as others. They do not stand equal before the law. They do not receive its equal protection. All this is obvious from a mere inspection of the statute.'

The supreme court of this state, in Paddock v. Railway Co. (just reported) 56 S.W. 453, has followed this decision, and held that the statute of the state of Missouri which permits an attorney's fee to be taxed in favor of the plaintiff, on recovering judgment against a railroad company for injury to stock resulting from the negligence of the company, is void, as in conflict with the constitution.

The supreme court of Colorado, in the recent case of Davidson v. Jennings, 60 P. 354, has applied the same ruling to a statute of that state providing for the taxation of attorney's fees in mechanics' lien foreclosure suits, which is not allowed in other like proceedings.

A like ruling has been made by the supreme court of Michigan in Wilder v. Railway Co., 70 Mich. 382, 38 N.W. 289, in which the court says:

'This inequality and injustice cannot be sustained upon any principle known to the law. It is repugnant to our form of government, and out of harmony with the genius of our free institutions. The legislature cannot give to one party in litigation such privileges as will arm him with special and important pecuniary advantages over his antagonist.'

The supreme court of California, in the recent case of Johnson v. Mining Co., 59 P. 304, 47 L.R.A. 338, has declared an act of the legislature void and unconstitutional giving a lien for wages on all the property of the corporation in preference to all other liens, except duly recorded mortgages and deeds of trust, in case of failure of the corporation to pay its employes monthly, and an attorney's fee in case of an action to enforce the lien. The discussion of this and kindred statutes, in the latter case, is most elaborate and instructive. It asserts the doctrine, laid down in Wally's Heirs v. Kennedy, 2 Yerg. 554, 24 Am.Dec. 511, that:

'The rights of every individual must stand or fail by the same rule or law that governs every other member of the body politic, or land, under similar circumstances; and every partial or private law which directly proposes to destroy or affect individual rights, or does the same thing by affording remedies leading to similar consequences, is unconstitutional and void. Were it otherwise, odious individuals or corporations would be governed by one law, the mass of the community and those who made the law by another, whereas a like general law affecting the whole community equally could not have been passed.'

And as quite germane to the Missouri statute under consideration, the court observed:

'It is said that corporations being the creatures of the state, and deriving their powers from their charters, the same power that created them may alter or amend their charters, or deprive them of rights originally given them. This is true as to certain purposes, but the legislature cannot, after creating a corporation, and while it exists, deprive it of the rights guarantied to it by the federal constitution, nor deprive it of its right to resort to the courts of law, nor take its property without due process of law, nor subject it to unequal and oppressive burdens, nor deprive it of the equal protection of the laws. But the act in question applies, not only to the corporations existing under the laws of this state, but to all other corporations doing business in this state, and in no wise indebted to the state for their charters. Surely, the legislature of this state could not alter, amend, or repeal the charter of a corporation existing under the laws of another state.'

Why these rulings are not applicable to the statute in question respecting insurance companies, which is applied to no other suitors except as to an attorney's fee in the instance referred to of suits against railroad companies, is not apparent upon principles of equal right in the courts of all litigants and all citizens. The learned counsel for plaintiff undertakes to differentiate the case of an insurance company from all the other legislative acts imposing like penalties declared by the courts to be unconstitutional, on the ground that in modern commerce and trade insurance on life and property has become almost essential; that contracts between parties are largely dependent upon insurance; and, therefore, as the prompt payment of losses may be essential in the liquidation of these contractual liabilities, it touches the public policy of the state that the payment of losses should be coerced by this character of legislation. Under this idea, the legislature might undertake to declare that a citizen should not enter into certain classes of contracts, unless he holds a policy of insurance on his life or property, and giving the other party a lien on the policy as security. With much greater reason, it seems to me, if insurance has become so largely inseparable from commercial transactions as to be promotive of contracts by furnishing valuable credit and security, it should rather be a sound, rational policy of the state to burden and impede the issuance of such policies, with fewer discriminating penalties than other business or trading associations. The same specious arguments with which the astute counsel...