Ben Franklin Insurance v. Gillett

Robinson, J., delivered the opinion of the Court. The defendant is a foreign corporation, but was at the time of issuing the policy now in controversy, doing business in this State, and H. G-. Stewart & Co. were their general agents for the transaction of-insurance business. The plaintiff is a citizen of Virginia, and the property insured is situate in that State. The policy was issued in the City of Baltimore on the 20th of June, 1877, and mailed to the plaintiff at Norfolk, Virginia, and the property was destroyed by fire on the 24th March, 1878. In January, 1878, more than two months before the loss under this policy, the defendant corporation withdrew its •agency from this State, and from that time ceased to do business in the State. Process was served on Jesse K. Hines, Insurance Commissioner for this State, and also on H. G-. Stewart, the former agent of the company. The question presented by the demurrer, is whether the defendant under these circumstances can be sued in this State ? And this depends upon the construction of secs. 209 and 211 of ch. 471, Act of 1868, and ch. 358, sec. 33, of the Act of 1872. The Act of 1868 provides, that any foreign corporation doing business in this State shall be deemed to hold and ■exercise franchises in this State, and shall he liable to suit in any Courts of the State on any dealing or transaction therein, and that process may be served upon the president, director, manager or other officer of such corporation. Secs. 209 and 210. Sec. 211 provides that any person not a resident of the State may sue any foreign corporation doing business in this State, where the cause of action has arisen or the subject of the action shall be situated in this State, and that process may be served as above stated. The privilege to sue foreign corporations doing business in this State upon policies issued in the State, is thus ex [216] pressly conferred upon non-residents by the statute. And had the defendant corporation continued to do business here, the right of the plaintiff to bring this action could not be questioned. The question, however, in this case is-whether this right exists after the company has ceased to do business in this State, and after it has withdrawn its agency. The Act of 1868 provided, as we have seen, that a nonresident might sue a foreign corporation doing business in this State upon policies issued here, and it provided, also, how and upon whom process should be served. No provision, however, was made for the service of process in the event of the withdrawal by the company of its agency, and it was to meet this contingency that sec. 30 of chap. 106 of the Act of 1816 was passed. It provides that no-foreign insurance company shall do business in this State until it has filed with the Insurance Commissioner, a written stipulation, agreeing that any legal process affecting the company served on the Insurance Commissioner, or the party designated by him, or the agent specified by the company, shall have the same effect as if served on the company within the State, and if the company shall cease to maintain such agent in this State so designated, such process may be served on the Insurance Commissioner. Here, then is an express provision in the first place that the company shall agree that process should be served upon either of certain parties therein specially designated, and should the company withdraw its agency, then in that event process should be served on the Insurance Commissioner. No distinction is made between residents and nonresidents. And had the section stopped here, no question could have arisen, we think, as to the right of the plaintiff to sue the defendant after the withdrawal of its agency, but it is supposed that this right cannot exist consistently with the remaining part of the section which says that so long as any liability of the stipulating com [217] pany to any resident of this State continues, such stipulation cannot he revoked or modified, except that a new one may he substituted, &c. Here is no doubt an express reservation in behalf of resident policy-holders, hut there is no reason why this reservation should he held to limit and restrict the broad and comprehensive language of the preceding part of the section, and especially in view of the policy of the previous legislation to make foreign corporations liable to suit in this State upon all policies issued in the State, whether to residents or non-residents. We think upon a fair and reasonable construction of the Act of 1816, taken in connection with the previous Acts on the subject, the complainant in this case had the right to sue the defendant corporation, even after the withdrawal of its agency, and that the process was properly served upon the Insurance Commissioner of the State. The demurrer, therefore, to the defendent’s plea was properly sustained. We come now to the merits of the defence, if there can he any merit in such a defence. It appears that the general agent of the company, made application in person to the complainant to insure the property mentioned in the policy, and after some conversation in regard to the rates, the nature and character of the property, it was finally agreed that defendant would insure the property from loss against fire for one year, in consideration of forty dollars, which sum was paid to the agent. In this conversation the complainant expressly told the agent that the building stood upon leased ground, and the nature and character and amount paid as ground rent was fully discussed. The agent returned to Baltimore, made out the policy and mailed it to the complainant, by whom it was received, and having entire confidence in the good faith of the agent, without reading it, he put it away with other policies in his safe. It was not until after the destruction of the property by fire, and the objection made by the defend [218] ant to the payment of the loss on that ground, that the complainant found that the property was not described in the policy as leasehold property as required by the terms of the policy. H. Gr. Stewart, the general agent of the defendant, admits that the complainant told him that the property was a leasehold, and stated the amount of rent paid, and that he was to describe' it as such in the policy. That the mistake in regard to the description of the property was his mistake and not that of the complainant. The law is well settled that where the general agent of a company is entrusted with the power to make and issue policies, and the insured fully and frankly discloses all facts material to the risk, and the agent in making out the policy through fraud or mistake fails to state such facts, such error or fraud on the part of the agent cannot be relied on by the company in avoidance of the policy, and a Court of equity upon application will reform the policy so as to make it express the real contract between the parties. Ins. Company vs. Wilkinson, 13 Wall., 222; Ins. Comp’y vs. Mahone, 21 Wall., 152; Savings Bank vs. Charter Oak Comp’y, 31 Conn., 51; Rowley vs. Empire Ins. Co., 36 N. Y., 550; Columbia Ins. Co. vs. Cooper, 50 Penn., 331; Masters vs. Madison Ins. Co., 11 Barbour, 624; Peck vs. New London Ins. Co., 22 Conn., 575. The proof in this case shows that the agent was authorized to make out the policy in question; that he was fully informed in regard to the nature and character of the property; that the omission to describe it as leasehold was his mistake, and that the complainant relying upon him to make out the policy correctly, did not discover the mistake until after the loss of the property. Under such circumstances as these, the Court was right in reforming the policy so as to make it express the contract of the parties, and in decreeing that the defendant should pay [219] to the complainant the amount to which the proof shows he was clearly entitled under it. (Decided 30th June, 1880.) Eor these reasons the order of March 14th, 1819, sustaining the demurrer to the defendant’s plea, and the final decree passed in this case will he affirmed. Order and decree affirmed.