Washington County Insurance v. Colton

Hinman, J. Charles A. Colton, one of the defendants, was the plaintiffs’ agent, and the bond in suit was given to secure the faithful discharge of the duties of his agency. He received more money in the business of his agency, which he has not accounted for or paid over to his principals, than the full amount of the penalty in the bond; but it is claimed that in consequence of the illegal character of the agency he was not bound in law to pay it over, and consequently that his sureties in the bond are not responsible for his default; and this raises the principal question for our consideration. The plaintiffs are an insurance company-incorporated by the [47] laws of New York, and it was the understanding of the parties that the business of this agent was to be transacted in the state of Pennsylvania, where he accordingly acted as such agent, and received the money sought to be recovered in this action. By the laws of Pennsylvania, foreign insurance companies are only permitted to transact business in that state upon certain conditions, which were not complied with in respect to the business done by this agent, and on this ground it is insisted that the business was illegal, and the agent under no obligation to account for the moneys received by him in it. It is provided by the statutes of Pennsylvania that mutual fire insurance companies chartered by the laws of an adjoining state, for the purpose of insuring detached buildings and their contents, whose capital is composed of moneys paid and premium notes taken at the time application shall be made for insurance, can or may have an agency or agencies, and can or may become insurers in any case whatever, except within the limits of any city, borough, or corporated district within the commonwealth, and the counties of Bucks, Lancaster, York, and Delaware, legitimately appertaining to their business, and not contrary to the laws of the commonwealth; provided that every agent of such association or company, before transacting any business whatever for such company, shall file in the office of the secretary of the commonwealth, a duplicate copy of his appointment, under the common or corporate seal of such company; and provided further, that every such association or company shall publish their annual report three months in each year, in a newspaper published in Philadelphia, Harrisburg, or Pittsburgh, such report to contain the number of members, the amount insured, the amount of premium notes, the amount paid out for losses and expenses, the amount of money in the treasury, and the amount of claims against said company; and provided further, that any law or laws inconsistent herewith be and the same are hereby repealed; and provided further, that no insurance shall be effected under this act except upon the strict mutual principle, and no policy [48] shall be issued to any person who shall not become a partner in such corporation. The plaintiffs are such a mutual insurance company, chartered by the laws of an adjoining state, as was contemplated by this act, and as all the risks taken by this agent were upon detached buildings and their contents, and in such localities as not to be prohibited by the statute, the only question in respect to the legality of the agent’s acts, arises from the fact that he did not file a duplicate copy of his appointment in the office of the secretary of state, and the company did not publish its annual report for three months in each year, in a newspaper published in Philadelphia, Harrisburg, or Pittsburgh, as is required by the act. In regard to the neglect of the agent to file a copy of his appointment in the office of the secretary of state, this, by the law of Pennsylvania, appears to be the duty of the agent himself, and it is quite obvious that it would be unjust to suffer him, or the persons who have become bound for the faithful discharge of all his duties, to take advantage of this neglect, so as to protect him from all accountability for moneys received as such agent. If he could do this, he could not only take advantage of his own wrongful neglect of duty, but he would be allowed to say that the bond which he has given to secure his faithful discharge of duty, is rendered inoperative by the very neglect which it was the object to provide security against when it was given. We are satisfied that he ought not to be permitted to do this, ana that there is therefore no error, in this respect, in the judgment of the superior court. That portion of the statute of Pennsylvania which made it the duty of the plaintiffs to publish their annual report in certain newspapers three months in each year, does not provide that the publication shall be made before the company commences the transaction of business in the state, or even that it shall be made at the commencement of the year, or as soon after the commencement of business as may be conveniently done. But the time of publication is left entirely at the option of the company, provided'only it is done within [49] the year. It must have contemplated therefore, that business would be done before the publication, which is wholly inconsistent with the claim that the previous publication was required as a condition precedent to the transaction of business in the state by such foreign insurance company. The statute requiring such publication appears to us therefore to be directory merely, and not designed to render any business transacted before such publication illegal. The defendant’s bond is dated the 25th of September, 1849, but was not delivered until the 27th of September, and as it is stated in the condition “that the above bounden Charles A. Colton has been appointed an agent of the said company,” and provides that if he shall faithfully account for and pay over to the said company all money that shall be paid to him, belonging to said company, and shall in all things honestly discharge his duties, then the obligation shall be void; and as it is found by the court that he received his appointment on the 27th day of September, when the bond was delivered, and not on or before the 25th of September, as might be inferred from the expression used in the condition, it is claimed that although the bond takes effect from the delivery, yet its legal effect is only to secure the faithful discharge of the duties of an agency under an appointment made on or before the 25th of September, on the ground that the expression that the agent had been appointed, refers to the date of the instrument, and not to the time of its delivery; and cases are cited in which it is held that if an instrument has a sensible date, reference to it in other parts of the instrument must be understood to mean the day of the date, and not the day of the delivery; and the claim is therefore made that as the bond states that the agent had been appointed, it must be understood that he was appointed on or before the 25th of September, and can not therefore be intended to secure any moneys received by him under an appointment on the 27th of September, when the court finds this agent was appointed. It appears to us however, that although it is found that the appointment was made on the 27th of September, yet as there is no pretense that there [50] was more than one appointment in point of fact, the finding of the court must be taken subject to any legal objection there may be to proof of an appointment which contradicts the terms of the bond. If there be a condition to perform the covenants of an indenture, the obligor is estopped to say there is no sue'h indenture, ido if in the condition of a bond it is recited that certain premises were demised at a specified rent, the obligor is estopped from saying that the rent reserved was less than the amount specified. Lainson v. Tremere, 1 A. & E., 792. Now in this bond it is recited in the condition, that the said Colton had been appointed agent of the plaintiffs, The defendants can not contradict this by showing that the appointment was, in fact, subsequent to the date, or even to the delivery of the bond. And as the bond estops them from contradicting this recital, the finding of the court should be treated as directly contrary to the only propar evidence on the subject, which was the bond itself; and as by this it appears that Colton had been appointed agent, this must be considered conclusive, and consequently the superior court was correct in disregarding this objection to a recovery. The allowance of interest on the penalty, which was less than the amount actually due, from the time of the neglect of Colton to pay oyer the amount received by him, was in conformity to our practice. Carter v. Carter, 4 Day, 30. Upon the whole case therefore, we find no error in the judgment of the superior court. In this opinion the other judges concurred. Judgment affirmed.