Yeats v. Dodson

• Citation: 127 S.W.2d 652,345 Mo. 196
• Decision Date: 03 November 1939
• Docket Number: 35597
• Parties: Rhoda L. Yeats, Executrix of the Estate of Edward C. Yeats, v. Bruce Dodson and Ralph Dodson, Attorneys in Fact for Subscribers to Casualty Reciprocal Exchange, and as Representing all of the Subscribers to said Exchange, and Casualty Reciprocal Exchange, an Unincorporated Association, Appellants
• Court: United States State Supreme Court of Missouri

127 S.W.2d 652

345 Mo. 196

Rhoda L. Yeats, Executrix of the Estate of Edward C. Yeats, v. Bruce Dodson and Ralph Dodson, Attorneys in Fact for Subscribers to Casualty Reciprocal Exchange, and as Representing all of the Subscribers to said Exchange, and Casualty Reciprocal Exchange, an Unincorporated Association, Appellants

No. 35597

Supreme Court of Missouri

November 3, 1939

Rehearing Granted, Reported at 345 Mo. 196 at 207.

Appeal from Jackson Circuit Court; Hon. Thomas J. Seehorn Judge; Opinion filed at September Term, 1938, April 1, 1939 motion for rehearing and to transfer to Court en Banc filed motion overruled at May Term, 1939, May 2, 1939; motion to modify, opinion filed; motion overruled; opinion modified on Court's own motion in opinion filed at September Term 1939, November 3, 1939.

Affirmed.

J. Francis O'Sullivan, Maurice J. O'Sullivan and John M. P. Miller for appellant; O. H. Stevens of counsel.

(1) The insurance contract in question was an Oklahoma contract. The court erred in holding it to be a Missouri contract and in rendering judgment against the defendants. Defendants' demurrer to the evidence should have been sustained. (a) The policy by its terms was an Oklahoma contract. The undisputed evidence discloses the fact that the policy was ordered in Oklahoma, paid for and made effective there, and under the general rule of law, these facts fix the lexi loci contractus as Oklahoma. New York Life Ins. Co. v. Fletcher, 117 U.S. 519, 29 L.Ed. 934; Allgeyer v. Louisiana, 165 U.S. 578, 41 L.Ed. 832; New York Life Ins. Co. v. Dodge, 246 U.S. 357, 62 L.Ed. 772; Northwestern Mut. Life Ins. Co. v. McCue, 223 U.S. 234, 56 L.Ed. 419; Equitable Life Assur. Soc. v. Clements, 140 U.S. 226, 35 L.Ed. 497; 1 Couch on Insurance, secs. 196, 199, 201, pp. 437, 442, 444; Schott v. Continental Auto Ins. Underwriters, 326 Mo. 92, 31 S.W.2d 7; Casualty Recip. Exch. v. Bounds, 191 Ark. 934, 88 S.W.2d 836; State ex rel. v. Douglas, 339 Mo. 187, 95 S.W.2d 1179. (b) The policy in question is an Oklahoma contract by reason of the fact that the Statutes of Oklahoma make all insurance contracts on property, lives and interests in Oklahoma contracts of that State, and the Oklahoma Courts have construed policies issued under circumstances such as those in question to be Oklahoma contracts. Sec. 10452, Chap. 51, Art. I, Okla. Statutes, 1931; Winston-Norris Co. v. King, 119 Okla. 109, 249 P. 319; Continental Cas. Co. v. Owen, 38 Okla. 107, 131 P. 1084; Pendleton v. Great So. Life Ins. Co., 135 Okla. 40, 273 P. 1007. (c) The fact that the policy in question was issued by a reciprocal insurance company in no way alters the general rule of law. Reciprocal policies are governed by the laws of the State where finally made effective, which fixes the lex loci contractus. Art. XI, Chap. 37, R. S. 1929, secs. 5966, 5967; Wysong v. Automobile Underwriters, 204 Ind. 493, 184 N.E. 783; State v. Alley, 96 Miss. 720, 51 So. 467; Fishback v. Lewis, 170 Wash. 39, 15 P.2d 658; Casualty Reciprocal Exch. of Kansas City, Mo. v. Bounds, 191 Ark. 934, 88 S.W.2d 839; Pickering v. Allyea-Nichols Co., 21 F.2d 506, certiorari denied, 276 U.S. 617; Hardware Underwriters v. United States, 65 Ct. of Claims, 282, certiorari denied; 278 U.S. 645; Amer. Exch. Underwriters v. United States, 68 Ct. of Claims, 41; State ex rel. Inter-Insur. Auxiliary as Agent for Merchants Recip. Underwriters v. Revelle, 257 Mo. 526, 165 S.W. 1084; Gaunt v. Lloyd's of Texas, 11 F.Supp. 787; Manufacturing Recip. Assn. v. Holmes, 137 N.E. 337; Thomas Canning Co. v. Canners Exch. Subscribers, 219 Mich. 214, 189 N.W. 214; Artificial Ice Co. v. Reciprocal Exch., 184 N.W. 756; Mountain Timber Co. v. Mfg. Woodworkers Underwriters, 167 P. 93; In re Minn. Ins. Underwriters, 37 F.2d 371; In re Lloyd's of Texas, 43 F.2d 384; In re Poland Union, 77 F.2d 855; Equitable Life Assur. Soc. v. Pettus, 140 U.S. 226, 35 L.Ed. 497; New York Life Ins. Co. v. Dodge, 246 U.S. 357, 62 L.Ed. 772; New York Life Ins. Co. v. Fletcher, 117 U.S. 519, 29 L.Ed. 934; Allgeyer v. La., 165 U.S. 578, 41 L.Ed. 832; State ex rel. v. Douglas, 339 Mo. 187, 95 S.W.2d 1179; Schott v. Continental Auto Ins. Underwriters, 326 Mo. 92, 31 S.W.2d 7; Casualty Reciprocal Exchange v. Bounds, 191 Ark. 934, 88 S.W.2d 836; Lewelling v. Mfg. Wood Workers Underwriters, 140 Ark. 124, 215 S.W. 258; Scott v. Devine, 129 Kan. 808, 284 P. 594; Supreme Council of the Royal Arcanum v. Green, 237 U.S. 531, 59 L.Ed. 1089; Modern Woodmen of America v. Mixer, 267 U.S. 544, 69 L.Ed. 783. (2) The court erred in failing to hold the policy in question to be an Oklahoma contract and in failing to interpret the contract in accordance with the decisions of the Oklahoma courts which hold contracts of this type to be contracts of indemnity against loss and not contracts of indemnity against liability. Chap. 51, Art. XVII, Okla. Statutes 1931; Bolling v. Asbridge, 111 Okla. 66, 238 P. 421; Curtis & Gartside Co. v. Aetna Life Ins. Co., 58 Okla. 470, 160 P. 465; Maryland Cas. Co. v. Peppard, 53 Okla. 515, 157 P. 106. (3) The judgment of the court violated defendants' constitutional rights of freedom of contract, equal protection of the law, due process of law and full faith and credit by reason of its failure to recognize the Oklahoma statutes and decisions and the general rule of contract law with reference to lex loci contractus, and thereby enlarged the obligation of the contract, and deprived defendants of their property without due process of law. U.S. Const., Sec. 1, Art. IV, Sec. 10 of Art. I, Fifth Amend. Fourteenth Amend.; Mo. Const., Sec. 30, Art. II; Hancock Mutual Life Ins. Co. v. Yates, 299 U.S. 178, 81 L.Ed. 106; Aetna Life Ins. Co. v. Dunken, 266 U.S. 389, 69 L.Ed. 342; Hartford Acc. & Indem. Co. v. Delta & Pine Lbr. Co., 292 U.S. 143, 78 L.Ed. 1718; State ex rel. v. Douglas, 339 Mo. 187, 95 S.W.2d 1179; Schott v. Continental Auto Insur. Underwriters, 326 Mo. 92, 31 S.W.2d 7; Casualty Reciprocal Exch. of Kansas City v. Bounds, 191 Ark. 934, 88 S.W.2d 836; State ex rel. Western Auto Ins. Co. v. Trimble, 297 Mo. 659, 249 S.W. 902; Coderre v. Travelers Ins. Co., 48 R. I. 152, 136 A. 305; Riding v. Travelers Ins. Co., 48 R. I. 433, 138 A. 186; Stanley v. Wabash & St. L. & Pac. Ry. Co., 100 Mo. 435, 13 S.W. 709; Atwaters v. Edwards & Sons Brok. Co., 147 Mo.App. 436, 126 S.W. 823; Bartlett v. Tinsley, 175 Mo. 319, 75 S.W. 143.

E. J. Keating and Mosman, Rogers & Bell for respondent.

(1) By the power of attorney the parties agreed that the insurance would be exchanged in Kansas City, Missouri, and it is the law of the place where the parties agree that a contract is to be made which governs the interpretation of the contract. Green v. Security Mut. Life Ins. Co., 159 Mo.App 277, 140 S.W. 325; Brotherhood of Ry. Trainmen v. Adams, 5 S.W.2d 96; State of Kansas ex rel. v. United States F. & G. Co., 14 S.W.2d 576; Pickett v. Equitable Life Assur. Soc., 27 S.W.2d 452; Liebing v. Mutual Life Ins. Co., 207 S.W. 230; Head v. N. Y. Life Ins. Co., 43 F.2d 517; Daggett v. K. C. Struc. Steel Co., 65 S.W.2d 1039; New York Life Ins. Co. v. Dodge, 246 U.S. 357. (a) The Casualty Reciprocal Exchange is a creature of the legislative enactments of Missouri, which define and limit its power. Art. XI, Chap. 37, R. S. 1929. The transactions had in Oklahoma were between the Ice Company and its attorneys-in-fact. Thereafter, the attorneys-in-fact acted for the Ice Company and made the contract of insurance in Missouri. (2) The contract of insurance involving the mutual relations of subscribers at the Exchange necessarily requires the interpretation of such contracts by the law of one State, and inasmuch as the insurance could be exchanged only at one place, it is the law of the State where the insurance was exchanged which applies in the interpretation of the contract. Supreme Council of the Royal Arcanum v. Green, 237 U.S. 531; Modern Woodmen of America v. Mixer, 267 U.S. 544; Ellerbe v. United Masonic Ben. Assn., 114 Mo. 501, 21 S.W. 843. (a) The Oklahoma statute does not apply because the contract was not made in Oklahoma. Hartford Acc. & Indem. Co. v. Delta & Pine Land Co., 292 U.S. 143, 54 S.Ct. 634; New York Life Ins. Co. v. Head, 234 U.S. 149, 34 S.Ct. 879; Aetna Life Ins. Co. v. Dunken, 266 U.S. 389, 399, 45 S.Ct. 129. (3) The public policy of Missouri in respect to contracts of insurance which give to the insurer the sole and exclusive right to control, manage, defend and settle lawsuits or actions against the insured and covered by the policy, has been declared by the legislative and judicial branches of Missouri, and where the provision of a contract is contrary to the public policy of the forum, it will not be enforced either as basis of recovery or in defense to the action. Canada So. Ry. Co. v. Gebhard, 109 U.S. 537; Brucker v. Georgia Cas. Co., 326 Mo. 885, 32 S.W.2d 1088; Goerss, v. Indemnity Co., 3 S.W.2d 272; State ex rel. v. Daues, 13 S.W.2d 1059; Wehrhahn v. Fort Dearborn Cas. Underwriters, 1 S.W.2d 242; Drumm v. Fort Dearborn Cas. Underwriters, 5 S.W.2d 648; Jedlicka v. Mo. Mut. Cas. Co., 14 S.W.2d 535; Ornellas v. Moynihan, 16 S.W.2d 1007; Kurre v. Amer. Indemnity Co., 17 S.W.2d 685; Graff v. Continental Auto Ins. Underwriters, 35 S.W.2d 926; Miller v. Collins, 40 S.W.2d 1062; 5 R. C. L., p. 911; Parker-Harris Co. v. Stephens, 205 Mo.App. 373, 224 S.W. 1036; Fox v. Postal Tel. Cable Co., 138 Wis. 648, 120 N.W. 399, 28 L. R. A. (N. S.) 490. (4) The provisions of the policy and the act of the exchange in defending the New Jersey case constitute a waiver of the "No Action" clause. Brucker v. Georgia Cas. Co., 326 Mo. 885, 32 S.W.2d 1088. (5) The suit is properly maintained. The judgment creditor may enforce payment against the insurer in this case. Lomax & Stanley Bank v....