Beeber v. Walton

12 Del. 471

• Court: Superior Court of Delaware
• Decided: April 15, 1887
• Status: Published

Opinion

Ignatius C. Grubb, J.:

The corporation plaintiff has offered to put in evidence three several applications made by the defendants to the plaintiff for insurance, and also three several premium notes given by defendants to the plaintiff for three several policies of insurance on property of defendants situated within this State, given by the plaintiff when, as the plaintiff alleges in narr as amended at the trial of this cause, the said plaintiff was lawfully authorized to transact insurance business within the limits of the State of Delaware. The defendants have objected to the admission of said applications and notes as evidence in this cause on the grounds that these show on their face that the insurance business to which they relate was transacted during a time when, in fact, said plaintiff was not lawfully authorized to transact any insurance business within this State, and therefore that said applications and notes, if so admitted, would be evidence, not of a lawful, but of an unlawful insurance transaction within this State. The certificate issued by the insurance commissioner of this State to the plaintiff, already put in evidence, bears date November 28, 1879; and among other things shows its agents in Delaware to be L. P. Buck & Co., residing at Wilmington, in this State. The said applications and notes on their face show that they were made prior to the date of said insurance certificate, and at Wilmington, Delaware, and that the defendants as well as the plaintiff’s said agent, through whom the entire insurance transaction appears to have been effected, all resided at that time in Delaware; while the notes import that they were given in consideration of the receipt of the said policies on the property in Delaware described in said applications.

The objection made by defendants to the admissibility of the applications and notes in question raises two inquiries:

First, Was the plaintiff at the time of the said transaction lawfully authorized to transact said insurance business within the State of Delaware ?

Second, If not so authorized can the plaintiff recover in this action on the said premium notes any of the assessments sought to be recovered in this suit ?

In the determination of the first inquiry it is unnecessary to consider whether or not the said plaintiff, being a corporation created exclusively under the laws of the State of Pennsylvania, could have lawfully transacted the said insurance business within this State, in case no statute of this State had been then in force forbidding its enjoyment of our comity for that purpose, unless it had first obtained authority therefor agreeably to the provisions of such statute. For in fact such a statute was then in force, having been passed March 24, 1879, and which expressly provided that its provisions in that behalf should go into effect and operation on July 1, 1879. Unless, therefore, the plaintiff is able to show that it had duly complied with the provisions of said statute it could not lawfully have transacted the said insurance business within this State. The principal object of this statute was to protect the citizens of this State who might seek to become holders of insurance policies against the fraudulent devices of spurious and insolvent ■companies. It therefore provided that there should be an insurance department to be administered by a State Insurance Commissioner, charged and clothed with all the duties and powers essential to the due fulfilment of the object of the statute. Among other things the said statute provided that every insurance company doing the business of insurance within this State should on or before the first day of July, 1879, and annually thereafter, on or before the first day of February, deliver to the insurance commissioner a full detailed statement of the condition and business of such company for the year ending on the previous thirty-first day of December, which statement should be verified by oath or affirmation and set forth the particular matters prescribed by the act. It further provided that every insurance company not incorporated under the laws of this State shall, before doing any insurance business within this State, deliver to the insurance commissioner a certified copy of its charter or declaration of organization, and also a certificate of the name and residence of some person or agent within this State upon whom service of process against such company may be made. And it also provided that if it shall appear by such statement and report or reports that such company is incorporated under the laws of any other State or foreign government, and is in good condition, and has assets to the amount of $150,000 over all liabilities and claims, then the insurance commissioner shall issue a certificate authorizing said company to transact the business of insurance, and establish agencies in this State. The statute also expressly provides that “ no insurance company or corporation shall be engaged in, prosecute, or transact any insurance business within the limits of this State without having first obtained authority therefor agreeable to the provisions of this Act; ” and the Act further declares that every violation of this provision shall be a misdemeanor punishable by fine and imprisonment. It also prescribes that “ all certificates and other official papers shall be accompanied with an impression of the insurance commissioner’s seal of office,” and further that “ any instrument lawfully executed by the insurance commissioner of this State, and authenticated by his seal of office, shall be received in evidence in the courts of this State, and copies of papers and records in his office so authenticated, shall be received as evidence with the same effect as the originals.” The said certificate issued by the said insurance commissioner, to the corporation plaintiff, bearing date November 28, 1879, on its face authorizes the plaintiff to transact the business of insurance and establish agencies in this State for and during the year ending January 31,1880, and recites that the plaintiff had filed the detailed statement prescribed by the statute, containing the particulars therein required, together with a certified copy of its charter and the prescribed certificate of the name and residence of his agent within this State upon whom service of process may be made. The plaintiff therefore contends, in view of the foregoing provisions of the said act, and in accordance with the plaintiff’s interpretation of the meaning and intent of the statute that the said certificate on its face implies, and. warrants the presumption first, that the plaintiff’s said statement was delivered to the said insurance commissioner on or before July 1, 1879, and prior to the transaction of any of the insurance business, in consideration of which said premium notes were given; and second, that by reason of such alleged delivery on or before said July 1, 1879, the said plaintiff was authorized to transact the business of insurance in this State from said date until January 31, 1880.

In the opinion of the Court this view is untenable. In the first place it assumes as fact what has not been established by any evidence as yet presented in this cause, viz : That the plaintiff was actually doing the business of insurance within this State before or on July 1, 1879. Until this be first proven it cannot be presumed from anything now actually found in said insurance certificate that said statement was delivered to said insurance commissioner on or before said date. On the contrary it must be presumed that it was delivered to said commissioner on or about November 28, 1879, the day of the date of said certificate. For it is unreasonable to suppose or presume that said public officer would have disregarded his duty by delaying nearly five months to examine and determine the sufficiency of a statement when such duty might reasonably be discharged in less than that number of days. In the second place we find nothing in the statute to warrant the view that when the prescribed certificate is issued, the authority thereby conferred to transact insurance business relates back to the delivery of the said statement to the commissioner and legalizes all insurance transactions which may have occurred, despite the express prohibition of the statute, between the day of such delivery and the day of issuing such certificate. On the contrary, according to the corrct interpretation of the statute, the said authority is not granted, nor is it either begun or obtained until the commissioner has examined and found sufficient the statement prescribed by the act, and thereupon issued the necessary certificate; and until the commissioner also has received the certified copy of the charter and the certificate of the name and residence of the agent, as required by the statute. Any other construction would lead to uncertainty and confusion in the administration of the law, and afford easy opportunity for the commission of the dishonest and fraudulent practices which the statute was designed to prevent. We are therefore of the opinion that the plaintiff, at the time of the aforesaid transaction, comprising the making of the said applications and notes now offered for admission, as part of the plaintiff’s evidence in this cause, was not authorized to transact said insurance business in this State. We are further of the opinion that, not being so authorized, the plaintiff cannot recover in this action, on the said premium notes any of the assessments sought to be recovered in this suit. The plaintiff was, as has been shown, expressly prohibited by said statute from engaging in, prosecuting or transacting any insurance business within the limits of this State without having first obtained authority therefor agreeably to the provisions of said act. Having transacted the insurance business in clear violation of the prohibitory provisions of the said statute, the contract made in reference thereto is illegal and void, and consequently no action can be maintained upon said contract, or upon the said premium notes. And this is so notwithstanding the statute did not declare that a contract made contrary to the provisions of it should be void. “ For," to quote the language of this Court in the case of Cook v. Pierce, 2 Houston, 503, “a contract prohibited and made unlawful by statute is a void contract, although the statute does not expressly provide that it should be so.” This principle, as enunciated in that case, has never been questioned by any subsequent adjudication in this State, while it has been recognized and affirmed by high authority elsewhere. We therefore feel constrained to adhere to it in this case, and to announce that, in our judgment, the said insurance applications and premium notes are not now admissible for the purpose of showing that the said notes were given by the defendants as a consideration for the lawful insurance by the corporation plaintiff of their said property situated in the State of Delaware. If this ruling shall prove fatal to the maintenance of the plaintiff’s present action in this Court, it is, nevertheless, unavoidable. For, whether the plaintiff’s violation of the plain letter of our statute has been occasioned by ignorance or willful transgression, it is in either case culpable. Our insurance act was a matter of public knowledge and general interest long prior to July 1,1879, and was similar to those which had long been in operation in other states, and, therefore, the plaintiff and its agents should have taken notice of its existence, which could readily have been ascertained by the most ordinary diligence. The Court cannot sanction the plaintiff’s interpretation of this act and hold that a foreign insurance corporation can transact insurance business in this State before it obtains the requisite authority, when the statute itself expressly forbids this, and then by subsequently obtaining the commissioner’s certificate, render that lawful which the act had already made unlawful The obtaining the certificate showing a proper compliance with the statutory requirements is a condition precedent to the lawful transaction of any insurance business in this State, and our Courts must of necessity hold that all premium notes given for such unlawful insurance cannot be enforced by the judicial tribunals of Delaware. Such is manifestly the intent and meaning of the statute, otherwise such foreign corporations as might escape its other penalties would be furnished the opportunity for first defrauding our citizens, and then in many cases evading our jurisdiction and escaping with impunity. Any other construction of our statute would tend to defeat the very object for which it was enacted, and leave our citizens unprotected against the fraudulent devices of those who might then with virtual impunity seek to make this State a convenient resort for the prosecution of dishonest insurance transactions.

Plaintiff took a non-suit.