Stevens v. Rasin Fertilizer Co.

Bryan, J., delivered the opinion of the Court. The Commonwealth Mutual Fire Insurance Company, á body corporate of the State of Massachusetts, issued several policies of insurance, whereby it insured against fire certain property of the Rasin Fertilizer Company, a body corporate of the State of Maryland. It is admitted that the Massachusetts corporation has never complied with sections 118, 119 and 124 of Article 23 of the Code of Public General Laws of this State. These sections enact that it shall not be lawful for any insurance company incorporated under [684] the laws of another State “ to take risks or transact any insurance business in this State,” unless it has performed the conditions required by their terms. The important question in this case is whether the risks covered by the policies were taken in this State. The question arose in the Court below in an action brought by the receiver of the Insurance Company to recover certain assessments made on the policies. The defendant pleaded “that the defendant applied to an insurance broker in the city of Baltimore, in the State of Maryland, for insurance upon its property and assets; that said insurance broker in the city of Baltimore made application by mail to insurance brokers in New York for such insurance ; whereupon, said insurance brokers in New York made application for the same to the manager of the said Commonwealth Mutual Fire Insurance at its office in the city of Boston, State of Massachusetts; whereupon, said policies, and each of them, were made out and signed in Boston, and forwarded by its manager by mail to said brokers in New York, and by said brokers in New York said policies, and each of them were then by mail forwarded to said broker in Baltimore, in the State of Maryland, and that said broker in Baltimore upon the receipt of said policies respectively delivered the same to the defendant in Baltimore, and after the delivery of said policies, respectively, the defendant paid in Baltimore to said broker in Baltimore, the full amount of the premium mentioned in said policies respectively; that thereafter the said broker in Baltimore, after first deducting from the premium so received by him from the defendant, his commissions for services rendered in the premises, remitted the balance to said brokers in New York who, upon receipt of the same, deducted their commission for their services in the premises, and remitted the balance to the Commonwealth Mutual Fire Insurance Company in Boston; all of which was with the knowledge and consent of said last-named corporation.” We have quoted from the plea in its words, so that we might have the question distinctly [685] in our minds. On demurrer, the plea was sustained and judgment entered for the defendant. The plaintiff has appealed. There is no doubt that the broker in the city of Baltimore was the agent of the defendant for procuring insurance. This agent appointed sub-agents in the city of New York. These sub-agents obtained the policies from the Insurance Company. When they were put in the mail at Boston the Insurance Company signified its willingness to take the risk on defendant’s property according to the terms contained in the policies. But certainly the contract of insurance was not completed at that time. The defendant at that time had never seen the policies, had not assented to their terms, and had not paid the premiums, which, as we learn from the declaration, were payable in cash. We think that at this point of time the policies had not gone into operation. They had not become effective to confer any rights on the assured; nor to impose any obligations on the insurer. If the property of the defendant had been destroyed by fire before the policies were received in Baltimore, the Insurance Company would not have been responsible. To complete the contracts so as to give them a binding effect, it was necessary that they should be delivered, and that the cash premiums should be paid, or security be given which the Insurance Company should accept as the equivalent of payment. The delivery took place in Baltimore, and at that place the premiums were paid. And then and there the ■obligation of the contracts was consummated. It is not questioned that a binding and complete contract might have been made in Boston ; and that if the defendant had performed its part of the contract, the mailing of a policy of insurance to it would have been an unconditional delivery. By the act of putting the policy in the mail it would have passed beyond the control of the Insurance Company with the intent that it should unconditionally' go into the possession of the defendant. There would be nothing more for either party to do in order to manifest its as [686] sent to the contract, or to fix the liability of the other contractor. We have said that the broker in the city of Baltimore who obtained the insurance was the agent of the defendant. But.he performed other services in addition to obtaining the consent of the Insurance Company to its part of the contract. He was intrusted with the possession of the policies for the purpose of delivering them to the defendant, provided it would pay the cash premiums ; and he was also entrusted with the collection and transmission of the money. For these services he was paid by the Insurance Company, and therein he was its agent. He was paid by being allowed to retain a commission out of the premiums received from the defendant. Undoubtedly he delivered the policies for and in behalf of the Insurance Company. He would not have delivered them, if the premiums had not been paid, or adequately secured. Undoubtedly when the premiums were paid, the money belonged to the Insurance Company. If the broker was authorized to receive the premiums for and in behalf of the Insurance Company, payment to him was a discharge of the defendant’s liability for them. But if the defendant was delivering the money to his own agent for transmission to Boston, he was not discharged until the whole amount was paid into the hands of the Insurance Company; in this event no deduction from the amount could have been made by the defendant’s agent. The Insurance Company surely was not paying the defendant’s agent, for collecting from the defendant monej? and transmitting it to itself at Boston. (Decided June 28th, 1898). As the risks were taken in the city of Baltimore, there can be no recovery in this case. It is therefore unimportant to consider any other question in the case. Judgment affirmed.