Young v. State Life Insurance Company

• Decision Date: 24 February 1908
• Citation: 45 So. 706,91 Miss. 710
• Court: Mississippi Supreme Court
• Parties: WASHINGTON B. YOUNG v. STATE LIFE INSURANCE COMPANY

45 So. 706

91 Miss. 710

WASHINGTON B. YOUNG v. STATE LIFE INSURANCE COMPANY

Supreme Court of Mississippi

February 24, 1908

October 1907

FROM the circuit court of Harrison county, HON. WILLIAM H. HARDY Judge.

The State Life Insurance Company, appellee, was plaintiff in the court below; Young, appellant, was defendant there. From a judgment in plaintiff's favor defendant appealed to the supreme court.

The suit was on a promissory note given for a premium on a life insurance policy. The opinion of the court states the facts of the case.

Affirmed.

L. W Saucier, for appellant.

As the State Life Insurance Company had not paid the privilege tax required by law, the contract sued on was made in violation of law and was void. 15 Am. & Eng. Ency. Law (2d ed.), 935.

Code 1906, § 3894, provides that any person or corporation exercising any of the privileges taxed by law shall be subject to a fine and imprisonment, making the violation of the law in such instance a misdemeanor. Where the statute expressly provides that a violation thereof shall be a misedemeanor, it seems clear that the legislative intent was to render illegal all contracts which violate the statute. 15 Am. & Eng. Ency. Law (2d ed.), 939; Buckley v Humason, 16 L. R. A., 423; Randall v. Tuell, 38 L. R. A., 143.

In the case of Buka v. Woodward, 73 Cal. 31, it was held that where a statute provides a penalty for an act, a contract founded on such act is void, even though the statute does not pronounce it void nor expressly prohibit it.

Code 1906, § 3894, pronounces a penalty for the doing of any act whereon a privilege tax is imposed, unless the tax is first paid. The appellee violated this statute in making the contract here sued on, and is accordingly liable to criminal prosecution, and the contract itself is void although the statute may not say in express words that the contract in such case is void.

In Buckley v. Humason, 50 Minn. 195; s.c., 36 Am. St. Rep., 637; s.c., 16 L. R. A., 423, a case clearly in point with the case at bar, it was held that where the statute prohibits unlicensed persons from transacting business, any contract made in pursuance of such business is void, the payment of a privilege tax being a prerequisite to its validity. Where a statute makes a particular business unlawful generally, or for unlicensed persons, any contract in such business by one not authorized by law is void. See Bishop on Contracts, §§ 471, 474.

It seems clear that the intention of the Legislature in enacting Code 1906, § 3894, was not to change the general law, but only to prescribe the penalty.

J. I. Ballenger and Wilburn & Gillespie, for appellee.

Opposing counsel contends that the contract in this case is void because appellee failed to comply with the requirements of Code 1906, § 3894, providing a penalty to be inflicted upon any person or corporate body exercising any of the privileges taxed by law in this state, without first paying the tax and procuring the license required. An inspection of the Code section will show that a violation of the same will not invalidate the contract. Previous to the Code of 1906 the privilege tax statutes contained a clause making all contracts of unlicensed persons in reference to the business upon which a privilege tax was required, absolutely null and void; but Code 1906 simply prescribes a penalty by fine or imprisonment in case a person carries on such business in violation of the privilege tax laws, nothing being said in regard to the invalidity of the contracts made in such business. Can this court read into a penal statute a meaning clearly not intended by the Legislature? Code 1880, § 589, and Code 1892, § 3401, explicitly set forth that contracts made in violation of the privilege tax law shall be null and void. But this is changed in the Code of 1906, it simply imposes a penalty by fine or imprisonment or both, the Legislature manifested an intent that the validity of contracts should not be impaired.

The case of Insurance Co. v. Pollard, 63 Miss. 641, speaks of the statute (Code 1880, § 589) as a disability. Code 1906, § 3894, repeals this statute (Code 1880, § 589, same as Code 1892, § 3401) and removed the disability. The contract now under consideration was made after the Code 1906 had gone into effect (as regards privilege tax laws), hence this disability was, at the time of its execution, removed.

The earlier privilege tax laws were severely penal in their nature, and made contracts void in certain cases when the contracting party failed to pay the requisite privilege tax. Anding v. Levy, 57 Miss. 51; Decell v. Lewenthal, 57 Miss. 331. Such statutes were very oppressive, and often worked great hardships on innocent persons. Code 1880 said that "no suit shall be maintainable in favor of such person on any contract." Subsequently Code 1892, § 3401, very beneficently modified this, and provided instead that a "suit shall not be maintained in favor of any such person on any such contract," referring to the contracts only in reference to the business to be taxed. Code 1906, § 3894, following along this line of amelioration, has very wisely and justly omitted this clause, thereby showing the intent of the Legislature to render such contracts valid.

Under the construction of the privilege tax law, set forth in Insurance Co. v. Pollard, supra, this court stated that it was competent for the state through the Legislature to remove the disability it had imposed and to permit contracts not before enforceable because of the disability prescribed by the privilege tax law to be enforced. The court stated that "the power which created the barrier may remove it at any time before it has...