Thorne v. Travellers Insurance

Mr. Justice Mercur delivered the opinion of the court, Although twenty-seven errors were assigned, eight only were urged on the argument. The main contention in the case arises under the 4th, 5th, 6th, 7th and 8th assignments. They will be considered together. They raise the question of the effect upon the rights of the defendants in error, on their failing to comply with the requirements of the Act of 11th April 1868, Purd. Dig. 796, pl. 28. The defendants in error are a foreign life and accident insurance company, organized under the laws of the state of Connecticut. Thorne had been acting as an agent for the company, in the western part of Pennsylvania. This action was on a bond, executed by himself and sureties conditioned, inter alia, that he should pay over to the company the premiums or money received by him, for it, from any source. The claim was to recover premi [27] urns received and retained by him. The bond is dated 25th of July 1870. lie ceased to actas agent the 5th of November of the same year. He is sought to be charged with money received by him as agent for the company during the intervening time. ’ ’ The Act of 11th April 1868 is designed to establish a complete system, under which alone such a company, incorporated in another state, can transact business in this state. Sect. 2, requires the company shall first appoint an agent resident within this state, and file in the office of the auditor-general a certified copy of the resolution appointing him. Sect. 5, requires the agent to give a bond with sureties in the sum of five thousand dollars, conditioned for the faithful discharge of all the duties enjoined on him by the act. The bond shall be duly approved and recorded, and then be deposited in the office of the auditor-general. Sect. 10, gives such agent power to transact business in every county of the Commonwealth, either in person or by subordinate agents appointed by him, and he “ may from time to time appoint as many subordinate agents as he may deem proper, and certify the names and residences of the same to the auditor-general, who thereupon shall issue to each of said subordinate agents, upon payment of the usual fee of his office, a certificate showing that........, the agent, has full power and authority to transact business in any part of this Commonwealth, and that he has designated such person as his subordinate agent; and no person shall act as a subordinate agent until he has received such certificate.” Thus it appears a subordinate agent cannot be appointed otherwise than through and by this certificate of the auditor-general. Without such certificate he is absolutely forbidden to act by the most positive and imperative language. Sect. 12, prescribes the punishment which shall be inflicted on any person who shall receive premiums, forward applications, or in any way transact business for the company, without having received authority so to do, agreeably to the provisions of the act. It declares “ he shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be fined five hundred dollars for each offence.” The penalties given by this section are not limited to those illegally acting as agents, but extend to the company thus suffering them to act. It declares any party receiving applications from, or sending policies to, any person not duly authorized to act as agent, shall be fined in a like sum of five hundred dollars for each offence and be prohibited from doing business in this state until the fine is fully paid. Sect. 13, enjoins upon the district attorneys of the several counties the duties of examining every licensed agent transacting business in their respective counties; and the books of said agency, “ once in each and every year,” and to enforce this act and all of [28] its penalties against such agents, persons and companies as may offend against its provisions. If Thorne was not duly qualified under the statute to actas agent, but did so act under instructions from the company, both he and the company were acting in violation of the express commands of the statute. If so acting, can the company sustain this suit, based on such an illegal transaction ? There can be no doubt of the constitutional power of the legislature to prescribe the conditions under which a foreign corporation shall transact business in this state, and the manner in which its agents shall be qualified, before entering on their duties. It has often been held that an action founded on a transaction prohibited by statute cannot be maintained, although a penalty be imposed for violating the law, and it be not expressly declared that the contract be void: Mitchell v. Smith, 1 Binn. 118; Seidenbender et al. v. Charles’ Administrators, 4 S. & R. 151; Swan v. Scott, 11 S. & R. 155; Columbia Bridge Co. v. Haldeman, 7 W. & S. 233; Thomas v. Brady, 10 Barr 164; Scott v. Duffy, 2 Harris 20; Holt v. Green, 23 P. F. Smith 198. In this last case it was said, the objection may often sound very ill in the mouth of defendant; but it is not for his sake the objection is allowed. It is founded on general principles of policy which he shall have the advantage of, contrary to the real justice between the parties. That principle of public policy is, that no court will lend its aid to a party who grounds his action upon an immoral or an illegal act. It is claimed, however, that conceding the rule that an illegal contract will not be enforced by a court, yet when it has been executed by the parties themselves, and the illegal object of it has been -accomplished, the money or thing which was the price of it may be a legal consideration between the parties for a promise express or implied; and the court will not unravel the transaction to discover its origin. We may concede this view of the law to be correct, as an abstract proposition ; yet it by no means controls this case. This is not an action against Thorne alone, for money had and received. It is against him and his sureties jointly, on their bond, for his alleged breach of duty as a duly appointed agent of the corporation. That he had been “ duly appointed” is recited in the bond to which they subscribed their names as sureties. They had no knowledge of the illegal conduct of Thorne or of the corporation. They were no party to any fraud. They had violated no provision of the statute. They have done nothing to estop their showing the whole character of the consideration on which the bond rests. Still further, the defendants in error did not seek to recover by giving the bond alone in evidence. They went further and opened up the whole transaction between themselves and Thorne. Without the aid of that transaction the company had no case. If the transaction was illegal, then the corpo [29] ration itself showed it had broken the law, and that it could not recover without the aid of the illegal consideration — of one prohibited by statute. The sureties might undoubtedly invoke the protection of the law to relieve them from an obligation based on an illegal consideration, and entered into on a false representation of a substantial and controlling fact: Horbach v. Gray, 8 Watts 497; Miles v. Stevens, 3 Barr 21. The next question which arises is, was the evidence offered and rejected admissible? On the 13th of August 1866, Thorne was employed as an agent for the company, by an agreement in writing. He continued to act as agent until November 1870. He served in the same general manner after the passage of the Act of 11th April 1868, as before. It is now claimed by the company that Thorne was serving in 1870 as a subordinate agent under this Act of April 1868, although it is conceded that he never received any certificate of his license so to serve from the auditor-general. The company further contends that the certificates of the auditor-general and insurance commissioner furnish conclusive evidence of such appointment. Let us then consider what those certificates show. The auditor-general’s is dated the 28th June 1871. It contains no averment of any power or authority in Thorne to act on or after its date ; but of a power or authority as having existed during the year 1870. It is not a license authorizing the doing of any act; but an assertion, made long after he had ceased to act as agent, that he had formerly been duly qualified as a subordinate agent. It does not profess to state the time when the general agent certified to him the appointment of Thorne as such agent. It furnishes no copy of any paper filed, or of any record made in 1870. We know no authority which makes the certificate of the auditor-general conclusive evidence of a previously existing, but terminated agency. The statute requires not only that the facts shall justify the issuing of the license, but that the certificate shall be delivered to or received by the person before he can act as a subordinate agent. It gives no authority to the auditor-general of a subsequent year to issue a license for a year which has already expired. The insurance commissioner (to whose office all the records w'ere transferred) certifies on the 2d of May 1874, to a copy of a paper then found in his office and attaches it to*his certificate. It is headed “List of agents who held the appointments of the Travellers Insurance Company to transact its business within the Commonwealth of Pennsylvania during the year 1870.” It will be observed that this language does not indicate an intention to nominate or designate any persons for appointment, or to perform any other services, but rather to declare that the persons in the list named had acted in that capacity. The name of Thorne is found [30] on that list. A further examination of that list shows that it was signed, dated and sworn to by the general agent, on the 21st April 1871. There is nothing on either the list or the records indicating that the paper was filed before that day. If the list bore date in 1870, or if it was without date, there would be some force in the suggestion that it was deposited in the office in 1870; but the specific dates east great discredit on any such presumption. It cannot be said that either of the official certificates proves conclusively that the list was in the office of the auditor-general in 1870. The offers are not to contradict the record; but to rebut a presumption sought to be deduced from the certificates, and to explain where the record is silent. Parol evidence is admissible for this purpose: Carmony v. Hoober, 5 Barr 305; Stark et al. v. Fuller, 6 Wright 320. It is proposed, substantially, to prove not only that the name of Thorne was not certified to the auditor-general while he (Thorne) was acting as agent, but that the list containing his name was surreptitiously placed in the office, so as to deceive the auditor-general, and thereby his certificate was fraudulently procured. It is true, a record is entitled to great sanctity, in law; but it must be an honest record. If fraudulently made, it may be impeached by parol: Lowry v. McMillan, 8 Barr 157. It was strongly urged that the failure of Thorne to take out his license from the auditor-general constituted no defence. If his name had been certified to the auditor-general in 1870, this argument would be entitled to consideration, but the offer is to prove that it was not then certified. His license could not be taken out of the office until his name had first been certified in. Hence (excepting the declarations of Rodney Dennis), we think the evidence covered by these several assignments should have been received. The first assignment is to permitting the itemized account appended to the claim of the defendants in error to be given in evidence without proof. This account purported to contain a statement of the several premiums received by Thorne, and of the names of the persons who had paid the same. In the affidavit of defence each and every item in this account had been distinctly denied by Thorne. This affidavit then cast the burden of proof on the defendants in error, and the learned judge erred in permitting the account to be given.’ in evidence without some proof having first been given to sustain it. We discover no merit in the remaining assignments. Judgment reversed, and a venire facias de novo awarded.