Winston-Norris Co. v. King

• Decision Date: 20 April 1926
• Docket Number: Case Number: 15358
• Parties: WINSTON-NORRIS CO. v. KING et al.
• Court: Oklahoma Supreme Court

1926 OK 401

249 P. 319

119 Okla. 109

WINSTON-NORRIS CO. v. KING et al.

Case Number: 15358

Supreme Court of Oklahoma

Decided: April 20, 1926

Syllabus

¶0 1. Insurance--Statutory Provisions Applicable to Contracts with Residents on Property Outside State.

Section 6665, C. S. 1921, providing that it shall be unlawful for a company to make a contract of insurance upon or relative to any property or interests or lives in this state, or with any resident thereof, except as authorized by the laws of this state, applies to contracts of insurance made with parties residing in this state on property within or without this state.

2. Insurance--Purpose of Statutory Regulation.

The insurance statute of Oklahoma was enacted for the protection of the insuring public and to regulate the transacting of insurance business within this state. Section 6665, C. S. 1921.

3. Same--Policy not Invalidated by Failure of Foreign Company to Comply with Statutes.

The failure of a foreign insurance company to comply with a statute in order to entitle it to do business within the state, will not render a policy void and unenforceable by a resident of the state to whom the policy was issued.

4. Same--Liability of Insurance Agents on Contracts Illegally Made--Time for Suit Governed by Policy.

Under section 6693, C. S. 1921, providing that every agent shall be personally liable on all contracts of insurance unlawfully made by any insurance company, not authorized to do business in this state, such agent becomes liable on the policy or contract of insurance to the same extent as the company; and, to maintain an action against the agent, it is necessary that the same be commenced within the period prescribed by the policy.

Commissioners' Opinion, Division No. 2.

Error from District Court, Carter County; W. F. Freeman, Judge.

Action by Winston-Norris Company, a copartnership, against J. C. King and J. C. King Company. Judgment for defendants, and plaintiff brings error. Affirmed in part and reversed in part, and remanded.

Brett & Brett and McGown & McGown, for plaintiff in error.

Sigler & Jackson and Cruce & Potter, for defendants in error.

JARMAN, C.

¶1 The parties occupy the same position here as in the court below. The plaintiffs and the defendants are all residents of Oklahoma. The plaintiffs were engaged in a retail grocery business in Caddo, Tex., under the firm name of Winston-Norris Company, a copartnership. Winston and Norris made application in Oklahoma to the defendants for insurance on the stock of goods at Caddo, Tex., and the defendants procured four policies of insurance from four separate foreign insurance companies, which had never complied with the laws of Oklahoma, authorizing them to do business therein. The stock of goods was destroyed by fire and the plaintiffs commenced this action against the defendants as agents of such foreign insurance companies, on the theory that the policies or contracts of insurance issued by such companies were unlawful, and that the defendants as agents of such companies were individually liable on such contracts of insurance by virtue of section 6693, C. S. 1921, which is as follows:

"Every agent or other person shall be personally liable on all contracts of insurance unlawfully made by or through him, directly or indirectly, for or on behalf of any insurance company not authorized to do business in this state."

¶2 The trial court sustained a demurrer to the evidence of the plaintiffs, and rendered judgment for the defendants, from which the plaintiffs have appealed. The defendants contend that the insurance laws apply only to cases where the property insured is located within this state; and that since the property insured in the instant case was located in the state of Texas, there can be no liability on the part of the defendants for writing the insurance thereon.

¶3 It is conceded that the companies, which the defendants represented as agents, were foreign insurance companies, and that they were not authorized to do business in this state. It is also conceded that Winston and Norris were residents of this state. Section 6665, C. S. 1921, provides that:

"It shall be unlawful for a company to make a contract of insurance upon or relative to any property or interests or lives in this state, or with any resident thereof, * * * except as authorized by the laws of this state."

¶4 Section 6693 provides that every agent shall be liable on all contracts of insurance unlawfully made by or through him for or on behalf of any insurance company not authorized to do business in this state. If the foreign insurance companies in question could, under the circumstances, make a lawful contract with the plaintiffs to insure their property located in the state of Texas, then clearly the defendants would not be personally liable on the contracts of insurance under the terms and provisions of section 6693. Section 6665 is not susceptible of the construction placed thereon by the defendants. Said section not only provides that it shall be unlawful for any insurance company, which has not complied with the laws of this state, to make any contract of insurance upon or relative to any property, interests or lives within this state, but that it shall be unlawful for such companies to make any contract of insurance with any resident of this state without complying with the laws thereof. This section is broad enough to cover cases where the property is within this state, regardless of where the owner lives, and also to include contracts made with residents of this state relative to their property, regardless of where it is located.

¶5 Defendants, in their brief, summarize their contention as follows:

"We take the position that the law of this state regulating insurance companies was made to protect property located in Oklahoma and not property located in Texas."

¶6 Defendants mistake the mission of the insurance laws--it is not to protect property, for the contract of insurance is for that purpose, but to regulate the transacting or the carrying on of the insurance business within the state.

¶7 Defendants contend that, if they are liable to the plaintiffs at all, their liability is based on the contracts of insurance, and that, under the contracts of insurance, the plaintiffs cannot maintain this action for the reason that the same was not commenced within 12 months next after the fire. In answer to this proposition, the plaintiffs contend: First, that the contracts of insurance, being prohibited by statute, are void, and, being void, neither party thereto can invoke any of the terms of such contracts in aid of his cause of action or his defense, and, therefore, the provisions of the contracts that suit thereon must be commenced within 12 months next after the fire are unenforceable and cannot be pleaded as a bar to plaintiffs' action; and, second, that the defendants' liability is not based upon the contracts of insurance, but upon their wrongful acts in violating the law by writing such unlawful contracts of insurance.

¶8 As a general rule, a contract prohibited by law is void; but, where the statute prohibiting such contract was enacted for the protection of one class of citizens from another class, the parties to such contract are not in pari delicto, and the party for whose protection the statute was enacted may enforce or recover on the prohibited contract. Latham Merc. & Com. Co. v. Harrod (Kan.) 81 P. 214. The insurance laws were enacted for the protection of citizens owning property in this state and citizens residing in this state owning property elsewhere, and, therefore, the rule contended for by plaintiffs is not applicable.

"The rule governing cases in which the parties are not in pari delicto is frequently applied where the transaction is in violation of law made for the protection of one party against the other. As they are not equally guilty, the party protected may recover. A statute may declare a contract void, and still but one of the parties may be guilty of its violation. Enactments of this character are often made for the purpose of protecting one class of men from the oppression and imposition of another class of men; and in such cases the really guilty party is never allowed any relief under the statute, or permitted to set up the statute as a defense to relief sought by the other party." 6 R.C.L. 833.

"The complaining party is especially protected by law where the agreement is not illegal per se, but is merely prohibited, and the prohibition was intended for his protection, and in such cases, not being in pari delicto, he is entitled to relief. The fact that the penalty is imposed on one of the parties alone shows clearly that the law does not consider them in pari delicto." 13 C. J. 449.

¶9 This principle was adhered to in the case of Phenix Ins. Co. v. Pennsylvania Co., 134 Ind. 215, 20 L.R.A. 405, 33 N.E. 970...