American Fire Insurance v. First National Bank

Marcellus Green, Special Judge, delivered the opinion of the court. Under the revenue laws of this state (code 1892, § 3390), an annual privilege tax; payable in advance, is imposed upon the occupation of a merchant. The amount of the tax varies, in accordance with the value of the stock of goods to be carried during the year, from $2.50 to $150. ‘‘ Where the stock sometimes exceeds $2,000, but never $3,500 dollars,” thetaxis$15; and where the stock sometimes exceeds $7,000, but never $10,-000, the amount of the tax is $30. Upon application for the license, which issues upon the payment of the required tax, the applicant is required to make an affidavit, which “must state the largest amount which the party expects to have on hand during the year for which license is desired.” Code, § 3410. For the enforcement of the collection of this tax, in addition to the usual remedy by distress and sale, highly penal remedies are prescribed, whereby “ any person who shall receive any of the privileges enumerated, . . . without first paying the tax and procuring license, ’ ’ shall be guilty of a misdemeanor, ‘ ‘ and all contracts made with any person who shall violate the provisions of this chapter in reference to the business carried on in disregard thereof, shall be null and void so far only as such persons may base any claim upon them, and a suit shall not be maintainable in favor of any such person on any such [477] contract.” Code 1892, § 3401. A policy of insurance upon the stock of goods of a merchant is a contract with reference to his business. Pollard v. Insurance Co., 63 Miss., 244; Insurance Co. v. Searles (Miss.), ante, p. 1. The undisputed facts are that, a short time prior to June 1, 1893, which was the date of the license of C. J. Searles Co. for the year during which the policy sued on was taken out, the stock amounted to §9,330.51; on April 1, 1894, it amounted to §8,282.12, andón June 15, 1894, to §8,956.77. The president of'C. J. Searles Co. could not fix the amount of stock on hand on March 3,1894, the date of the policy, nor could he state' whether it exceeded §3,500 or equaled §7,500 at that date. He stated that a firm engaged in the character of business his company was engaged in could not do a business of any magnitude with a stock of §2,500; that the stock might run down to less than that, but, as a general thing, he had to have a ‘ pretty healthy stock ’ ’ to handle the line of business that he had, “and our custom was this: The stock of goods would vary, and we carried a general line of insurance of §7,500. Sometimes we would have that amount of goods in the warehouse, and, then again, it would run down to §2,5 0 0 or §2,0 0 O. ” It thus appears that C. J. Searles Co., with the knowledge that its stock of goods would vary from §2,000 or §2,500 to §7,000, a'nd intending that the stock should vary between those sums, paid a privilege tax of §15, and took out a license on a stock “where the stock sometimes exceeds §2,000, but never §3,500. The required affidavit, if it had been made, would have fixed §7,500 as the basis of taxation, and thereby §30 would have been exacted, instead of §15, as the tax to be paid. It is clear that, in so doing, C. J. Searles Co. knowingly and'intentionally “ exercised one of the privileges enumerated, . . . without first paying the tax and procuring license, as required,” and, hence, the business so carried on was, and continued to be, during that year, a violation of the provisions of that chapter of the code, and this contract of insurance, made in reference to that [478] business, and while it was being thus conducted in violation of law, was thereby rendered void. It is contended, however, that, after the year had expired during which an insufficient privilege tax was paid, and during the month of June, 1894, C. J. Searles Co. paid a sufficient privilege tax for the year commencing on June 1, 1894, and that, during that month, this policy was made a new contract of insurance by the change made in the “form” attached by the company, and that, as this change was made after June 1, 1894, the policy was thenceforth unaffected by the former invalidity. While § 3401 of the code requires that the party shall first pay the tax and obtain a license before exercising any of the privileges enumerated, and that a failure so to do will incur the penalties named, § 3408 requires the tax collector to date the privilege license from the first day of the month of its issuance, and it declares that such license £ £ shall be good for one year from that date.” Construing these two sections of the chapter together, and in the light of the rule that such statutes must be strictly construed, we are of opinion that the payment of the privilege tax at any time during the month of the issuance of the license will have a retroactive effect, and that all contracts made in reference to the business during the month of issuance of said license will be valid. The payment, therefore, of a sufficient privilege tax during the month of June, 1894, made effective and enforceable all contracts made by C. J. Searles Co. during that month. The fact relied on to create a new contract of insurance after June 1, 1894, was the substitution by the appellant of the form now attached, on June 4, 1894, for the form originally attached. The words of the substituted form are identical with those of the original form, except in an immaterial particular. The change was one of verbiage only. The legal import of both forms is the same, and the contract, in legal effect, remained constant. There was no new contract, therefore, made after June 1, 1894, and the invalidity inherent in the policy at its creation, adhered [479] to it, and was not affected by the subsequent payment of a sufficient privilege tax. The remaining question for decision is whether the admitted breach of the contract of the policy forbidding additional insurance was waived by the change of the form attached, at the request of the appellant, and a return of the policy to the bank, with knowledge thereby of the agent, of such additional insurance. The evidence conflicts as to whether appellant’s agent know of the additional insurance at the time of the change of the form and the return of the policy to the bank, but the verdict finds that the agent had such knowledge. Whatever may be the rule elsewhere, it is settled in this state that the clause in policies of insurance limiting the power of agents or officers of the insurance company to waive breaches of the condition of the policy, except in a certain manner, is inoperative, where a waiver has been made other than that specified in the policy. Association v. Matthews, 65 Miss., 301; Insurance Co. v. Bowdre, 67 Miss., 620; Insurance Co. v. Sheffy, 71 Miss., 919; Insurance Co. v. Scales, 71 Miss., 975; Insurance Co. v. Gibson, 72 Miss., 58. If, with the knowledge of the breach of this condition by the agent, the appellant, through the agent, requested and made a change in the form attached, and then returned the policy, as one of binding obligation, to the bank, the appellant cannot now complain of such precedent breach of that condition. The foregoing principles can be applied to the pleadings and the instructions in the further conduct of this cause, and hence it is unnecessary to refer to them in detail. It follows, from the case made by this record, that it was error to refuse the peremptory instruction asked by appellant; wherefore, the judgment is Reversed, and the cause remanded for a new trial.