Clark v. Middleton & Riley

Gamble, Judge, delivered the opinion of the court. Middleton & Riley being summoned as garnishees on an ex’* ecution in favor of Clark & Co., against the Columbus Insurance Company, answered an interrogatry in relation to their indebtedness to the company, by stating that they had effected insurance with an agency of the company and that the premium on such insurance amounted to $474 54. They further stated that when the policy was issued, the company held itself [55] out to the public as entirely solvent and able to meet its engagements in the line of its business, and that the garnishees, relying on the representations of the company, accepted the policy, when the fact-was, that the company was not then solvent or able to meet its engagements, as its agents and servants well knew, except, perhaps, the agent who issued the policy to them. The garnishees further alleged that the Insurance Company had failed to file .the annual statement required to be filed by the act to license and regulate the agencies of foreign insurance companies, and claimed that the entire contract of insurance was thereby rendered void. 1. The mere fact of the insolvency of the company, at the time of issuing the policy to the garnishees, does not authorize them to repudiate it as a contract, -and claim an exemption from liability to pay the premium. There must have been an actual fraud practiced upon them, by which they were deceived. It has been decided at the present term of -this court, that the mere insolvency of a person who purchases goods on a short credit, does not authorize the seller to annul the sale and reclaim the property. There must be a fraudulent purpose on the part of the purchaser, and a contrivance to effect it. Bidault v. Wales and others, ante, 36. In the present case, the charge is, -that-the Insurance Company held itself out to the public as solvent, when, in fact,-it was insolvent., What act was done, what -representatiomwas made by which the .garnishees were deceived, is not stated. Whether there was any purpose to deceive, is not stated, but it would appear from the answer, that probably the. agent with whom they dealt did -not himself -know that the company was insolvent. The insurance was effected in February, 1851, on goods to be transported from the eastern cities to St. Joseph, in this state, and the answer which was filed in June, 1852, long after the goods must have been received, discloses, for the first time, the objection to the contract, that the company-was insolvent. The authorities cited on the part of the garnishees, have no application to the question. . [56] 2. This court has before passed upon the question, whether the failure of an agency of a foreign company to file the statement required by the act, avoids the promises made to the company to pay the premium on insurance, and' we have held that it has no such effect. The judgment is, with the concurrence of the other judges, affirmed.