Hacheny & Beno v. Leary

Lokd, J. This was an action upon a promissory note made at Seattle, Washington Territory, to one A. B. Covalt, and assigned after due to tbe plaintiff. Tbe defense set lip is that the note was made in payment of a premium on a life insurance held by tbe defendant Tesler in a Kansas life insurance company; that tbe company bad an agent at Seattle, Washington Territory, who solicited tbe insurance in January, 1876, and tbe note in question was given in August, 1876, at Seattle, in payment of tbe second semi-annual premium on tbe policy, and that the note was void, for tbe reason that tbe said insurance company was a foreign insurance company, and bad not complied with tbe laws of Washington Territory in regard to foreign insurance companies doing business in tbe Territory. It appears by tbe bill of exceptions that tbe said Covalt, mentioned in tbe note, and one Guión, were agents of Alliance Mutual Life Assurance Society, a corporation organized and existing under tbe laws of tbe State of Kansas, and were engaged in soliciting life insurance for said company at Seattle, Washington Territory, and in making and taking applications therefor, and in 'collecting and receipting for premiums thereon. That in January, 1876, at Seattle, in said Territory, tbe said Guión, as agent of said company, received tbe application of the defend — 42 — ant Yesler, together with $671, the amount of the first premium, for which he gave the said Yesler a receipt, and then turned over said application, and the money so received, to the said Covalt, as agent of the said company, who forwarded the same to Leavenworth, Kansas, for examination and acceptance by the company. That the said company áccepted the same, and thereupon issued a policy, which was sent by mail; whether to the defendant Yesler, or to their agent Covalt, to deliver to Yesler, the evidence is conflicting. That when the second semiannual premium of $671 became due and payable on the said policy, in August, 1876, the said Covalt called upon the said Yesler for the payment of said premium, who, not having the requisite funds on hand at that time to pay the same, thereupon executed and delivered to the said Covalt the promissory note in question. That the said note was sent to the company, and retained by them until it became due and payable, and then forwarded to Seattle for collection; and upon default of payment being made, the company charged the amount of the same to the account of the said Covalt. Upon this state of facts the court below instructed the jury that the taking of this note was doing insurance business within the Territory, and the result was a verdict and judgment for the defendant. The contention of the plaintiff is that the taking of a promissory note in payment of a premium on an insurance policy is not “ doing insurance business.^ Upon tké facts as presented by this record, it would seem tjhat the agent was not authorized to make a binding contract of insurance. As between him and the company, he was empowered to solicit and receive applications for insurance, and receipt for the premium money therefor, and to-forward them to the company for their approval or rejection. In Armstrong v. State Ins. Co. 61 Iowa, 215, it was held that the agent of an insurance company, who was authorized to take applications for insurance, and receive and receipt for premiums, and forward applications and premiums, and receive from the company policies of insurance when issued, and deliver them to — 43 — .the assured, that such agent had no powers or authority to bind the company by a contract of insurance. (Dickinson Co. v. Mississippi Valley Ins. Co. 41 Iowa, 286; Critchett v. American Ins. Co. 53 Iowa, 404; S. C. 5 N. W. Rep. 543; Ayres v. Hartford Ins. Co. 17 Iowa, 176; Reynolds v. Continental Ins. Co. 36 Mich. 131; Morse v. St. Paul F. & M. Ins. Co. 21 Minn. 407.) When the defendant Yesler presented and delivered his application, and the premium money therefor, to the agent, to be by him forwarded to the company for its acceptance or rejection, he knew and understood no policy of insurance would be issued unless the company accepted his application. Nor was any contract consummated until the application was accepted, and the policy duly issued. The final act which made the transaction a binding contract upon the parties was the acceptance of the application. Until this took place it was a mere proposition tendered, to be accepted or rejected. The contract was consummated when the company acted upon the proposal and issued the policy, for then the minds of the parties had met and agreed. “What was before,” says Harris, J., “a mere proposition, then became invested with the attributes of a contract, and from that time each party became bound for its performance. If this be so, the contracts are to be regarded as having been made when the company received and accepted the defendant’s application, and issued and transmitted to him their policies.” (Hyde v. Goodnow, 3 N. Y. 270.) It was, therefore, a contract of insurance made and executed in Kansas. (Lamb v. Bowser, 7 Biss. 373; Lamb v. Bowser, 7 Biss. 315; Western v. Genesee M. Ins. Co. 12 N. Y. 261; Tayloe v. Merchants’ F. Ins. Co. 9 How. 400.) Thus far the case stands clear. When the second annual premium became due on the policy of insurance, the agent called upon the defendant Yesler for its payment, and in lieu thereof, and under the circumstances already indicated, accepted the note in question. And the inquiry now arises whether the taking of the note was doing business in the Territory. To undertake to give an exact definition to the word “ business,” which could be applied as a test or criterion in every case, would — 44 — be an impossible task. It is said to be a word of large signification, and to denote tbe employment or occupation in which a person is engaged to procure a living. (Goddard v. Chaffee, 2 Allen, 395) Martin v. State, 59 Ala. 36.) Under a statute that any person who shall do any manner of labor, business, etc., shall be punished, etc., the loaning of money and taking a note therefor was held to be business within the meaning of such statute. (Troewert v. Decker, 51 Wis. 46.) In Towle v. Larrabee, 26 Me. 466, it was held that a promissory note made on Sunday, for the price of a horse bought on that day, was void, as being in contravention of the statute prohibiting trade and business. In Lovejoy v. Whipple, 18 Vt. 379, the taking of a promissory note, executed upon Sunday, in consummation of a contract previously made, was considered business. “It thus seems,” as said by Thurman, J., “to be the common expression of the courts that the making of a contract is business within the meaning of these acts.” (Bloom v. Richards, 2 Ohio St. 388.) It is the inhibition against doing business on this particular day against which these statutes are directed. It is not that the consideration is illegal or void, as against public policy, but it is the doing of a thing—the making of a contract —on a day when it is prohibited and unlawful, that vitiates the transaction and renders it void. The taking of a note for a loan or debt, or other consideration, is the making of a contract, and is a transaction which signifies business in the sense of these statutes. The transaction is, in fact, the doing of business which, being prohibited on that particular day, is void. The company was prohibited from doing business ip the Territory without compliance with its laws. This it had not done. It had effected an insurance, issued its policy, and the semiannual premium was due. Was the taking of the note in question by the agent in payment of this premium the doing business in the Territory? Was it a transaction which signifies the doing of business? Tested by the judicial interpretation applied to these statutes, the taking of the note was the making of a contract, which signifies the doing of business, and is within the prohibition of the law. — 45 — In Smyth v. International Life Ass. Co. 35 How. Pr. 128, the court held that the acceptance of yearly premiums upon outstanding policies, and of paying the losses thereon which may accrue, was doing business within the meaning of an act taxing all persons who are not residents doing business in the State. The issuing of policies, taking of premium notes, collecting or receiving cash premiums, and adjusting and paying losses, constitute the principal business of insurance companies. (Lamb, Assignee, v. Lamb, 6 Biss. 425.) Any or all of these acts, when they involve the making of a contract, import, at least, the doing of business, and if done within the Territory without compliance with its laws are void. The taking of a note for premium money is as much the making of a contract as was the insurance policy. As such, either or both would denote a transaction which signifies business, and if done when or where prohibited would not constitute valid contracts. It is not material that the note was made payable to the agent. The consideration was for premium money due the company, and it was taken by the agent, in his capacity as such, for the benefit of the company. It was as agent for the company, and in its interests and for its benefit, that he transacted the business. He had no other or personal business or dealings with the defendant Tesler. In the person of its agent it was constructively present, making a contract or doing business in violation of the laws of the Territory. This it could not do. To enforce, therefore, the payment of this note would be virtually to disregard tire plain provisions of the law, enacted to subserve wise and salutary purposes. (Pierce v. People, 106 Ill. 18; Bliss Life Ins. § 140.) “When the legislature prohibits an act/’ says Mr. Justice "Walker, “ or declares that it shall be unlawful to perform it, every rule of interpretation must say that the legislature intended to interpose its power to prevent the act, and as one of the means of prevention that the courts shall hold it void. This is as manifest as if the statute had declared that it should be void. To hold otherwise would be to give to the person or corporation or individual the same right in enforcing prohibited. — 46 — contracts as the good citizen who respects and conforms to the law. To permit such contracts to be enforced, if not offering a premium to violate a law, certainly withdraws a large portion of the fear that deters men from defying the law. To do so, places the person who violates the law on an equal footing with those who strictly observe its requirements.” (Cincinnati Mut. H. A. Co. v. Rosenthal, 55 Ill. 91; Bank of British Columbia v. Rage, 6 Oreg. 435; In re Comstock, 3 Sawy. 218.) As the note was transferred after it was due, it was open to the defense alleged, which in our judgment is well sustained. There was no error, and the judgment must be affirmed.