Nalley v. Home Insurance

GRAVES, J. This is an action upon what is ordinarily called a “Cyclone or Tornado policy” of insurance, wherein the plaintiff seeks to recover $2000 for damages 'to his residence in Pike county, Missouri. The petition is in usual form and unchallenged here, therefore further particulars of this pleading may be omitted. The crux of the case lies in the answer and other matters injected in the course of the trial. The points in the answer can best be stated by the terms of that pleading. Such answer is as follows: “The defendant for answer to plaintiff’s petition says: “1st. It admits that it is licensed to do business in the State of Missouri, and has engaged in doing the windstorm, cyclone and tornado business. “2nd. It admits that on the 10th of January, 1906, it made the policy of insurance mentioned in the petition. [457] “3rd. Further answering defendant says it is provided in said policy as follows: 'In case of loss the assured shall give this company immediate written notice thereof at the office of the Western Farm Department of the company at Chicago, Illinois, and within sixty days thereafter shall render to such office, under oath, a particular and detailed statement and proof of the actual cash value at the time of the loss of any property or articles upon which loss or damage is claimed.’ And defendant alleges that if plaintiff sustained any loss by windstorm, cyclone or tornado, on the 22d day of November, 1908, he did not give to defendant immediate notice thereof and never did at any time, and never has furnished defendant under oath a particular and detailed statement and proof of such loss as required by the terms of said policy; by reason whereof plaintiff is not entitled to recover. “ Further answering defendant denies each and every allegation, matter, fact and thing in the petition alleged not herein expressly admitted, and having fully answered asks to go hence with its costs. ’ ’ Reply was in conventional form. Plaintiff had a verdict for $1750 and interest, and from a judgment thereon the defendant has appealed. The case reached this court by reason of a constitutional question which first arose upon.the giving of an instruction for the plaintiff, and later pressed in the motion for new, trial, thus: “The following instruction given by the court at the request .of the plaintiff, to-wit: ‘ The court instructs the jury that the defendant insurance company is forbidden by the law to insure any property for more than three-fourths of its value at the time of issuing its policy of insurance on the property therein described ; that the sum insured on the one and two-story brick and frame dwelling house described in defendant’s policy of insurance sued on is $2000. That for [458] the purpose of this case the law fixes the value of said property at the time of issuing said policy of insurance at the sum-.of $2666.66, and defendant cannot now deny that the said one and two-story brick and frame dwelling and foundation was at the time of issuing said policy of the said value of $2666.66.’ is erroneous, prejudicial and misleading, for the reason that there is no law so fixing the value of said property. That is, the court bases said instruction on section 7979, Revised Statutes 1899, said instruction is erroneous because said section is not applicable to companies writing windstorm, cyclone, or tornado policies, and for the further reason that said act which was passed by the Legislature in 1895', Laws 1895, p. 194, is violative of section 28 of article 4 of the Constitution of Missouri, in that said bill or act as passed by the Legislature aforesaid contains more than one subject, and all the subjects contained in said act are not clearly expressed in its title, and said act attempts to delegate legislative functions to insurance companies and the Insurance Commissioner of the State of Missouri. ’ ’ • Such is a fair outline of the case, leaving to the opinion the further details both of evidence and pleadings. I. The constitutionality of section 7030, Revised Statutes 1909‘, is- challenged by the defendant. This section comes from the Act of- 1895. [Laws 1895, p. 194.] The title to that act reads: “An act relating to Fire Insurance and Form of Policies.” The body of the act, which contained but one section, is as follows: “Section 1. Fire Insurance companies doing business in the State of Missouri are hereby required, on or before the first day of January of the year 1896, to agree upon a uniform form of policy for use by them in the State of Missouri, covering the responsibilities of the companies as well as the duties of the assured,, to be classed and known as the Missouri fire insurance [459] policy. Said policy shall he approved of .by the Insurance Commissioner of this State, and after the first day of January, A. D. 1896, no policy shall he issued in this State carrying risks by fire or lightning by any company which does not embrace the form made and approved of as herein directed. To all such policies shall he attached a blank notice, with the address of the company fully printed thereon, to he used by the assured in case of loss in notifying the company of such loss, which notice shall he given within ninety days thereafter. The appearance of an adjuster of any company at the place of fire and loss in which said company is interested by reason of an insurance on such property, shall he considered evidence of notice, and to he held as a waiver of the same on the part of the company. No company shall take a risk on any property in this State at a ratio greater than three-fourths of the value of the property insured, and when taken, its value shall not he questioned in any proceeding.” Delegation of Legislative Power. The first point urged against the validity of the law is that it is an unwarranted delegation of legislative powers. The contention is that there was left to the insurance companies then doing business in the State and the then Insurance Commissioner the power to fix a form of policy to he used in Missouri, and that the exercise of that power is the performance of a duty incumbent upon the Legislature, which duty cannot he delegated to another. There is no question from the case law that the Legislature can prescribe a form of policy to he used in this State. Nor do we think that there is much question about that portion of the Act of 1895, which refers to the adoption of a form of policy by the insurance companies and the Insurance Commissioner being invalid as being an unwarranted delegation of legislative power. Whether it invalidates the whole act, we discuss later. It is claimed by the plaintiff that (this court held the Act of 1895 constitutional in the [460] case of Business Men’s League v. Waddill, 143 Mo. 495. In this plaintiff is in error. In the Waddill case we made no attempt to discuss the constitutionality of the act. We did say that such question was urged, but this court saw fit, to permit that case to ride off upon another question, i. e., that the plaintiff had no sufficient interest to give them a standing in a court of equity. This court therefore has not heretofore passed upon the question. In Pennsylvania the act of 1891 authorized the Insurance Commissioner to prepare a form of policy to be used, and such law was declared invalid. [O’Neil v. Insurance Co., 166 Pa. St. 72.] The court among other things said: “In the light of this line of well considered cases let us examine the.act of 1891 in order to get its provisions before us. Section first declares ‘That the Insurance Commissioner shall prepare and file in his office, on or before the fifteenth day of November, 1891, a printed form in blank, of a contract or policy of fire insurance, together with such provisions, agreements or conditions as may' be indorsed thereon or added thereto and' form a part of such contract or policy; and such form when filed shall be known and designated as the standard fire insurance policy of the State of Pennsylvania. ’ Section second provides among other things for the incorporation of the provisions of the standard policy into the contracts of insurance made on property within the State by foreign insurance companies. Section third makes the use of this standard form of policy obligatory on all fire insurance companies doing business in this State from and after the first day of May, 1892. Section fourth provides the penalties to be imposed upon any insurance company, its officers or agents or either of them, for failure to comply with the requirements of the act or with the form of policy which the Insurance Commissioner may devise and file in his own office. [461] “It may be well to say in this place that we do not now deny the power of the Legislature to direct the form of a policy of insurance against fire. We held in Commonwealth v. Vrooman, 164 Pa. St. 306, decided in October last, that the business of insurance against loss by fire was, by reason of its nature, its magnitude, and the temptation to improper practices which it presented, a proper subject for legislative regulation and control. The power to prohibit technical and unjust conditions intended to open the way to vexatious litigation and to defeat the just expectations of the insured, belongs to the police control which Commonwealth v. Vrooman asserted. The question is not therefore one of power over the subject, but of the manner in which the conceded power must be exercised. Upon this question our judgment is with the appellant for reasons that we will state as concisely as possible. and without any attempt at elaboration. “The Act of 1891 is a delegation of legislative power because. “First. The act does not fix the terms and conditions of the policy the use of which it commands. “Second. It delegates the power to prescribe the form of the policy, and the conditions and restrictions to be added to and made a part of it, to a single individual. “Third. The appointee clothed with this power is not named but is designated only by his official title. He is the person who may happen to be Insurance Commissioner when the time comes to prepare the form for the standard policy for insurance against fire. “Fourth. The appointee is not required to report his work to the body appointing him, but simply to file in his own office the form of policy he has devised. It does not become part of the statute in fact, is not recorded in the statute book, and no trace of it can be found among the records of either branch of the Legislature. [462] “Fifth. The act was approved in April, 1891. The appointee had until the following November to prepare and file the form of policy over which when filed the Legislature had no control whatever. They did not consider, they had no knowledge of, the form which, they required all companies doing business in the State to adopt and the use of which they compelled by heavy penalties. “The elementary books divide a statute into three parts, the declaratory, the directory and the vindicatory. In this statute the Legislature furnished the first and third. It delegated the preparation of the second. It declared in effect the need of a standard form of policy. It provided punishment for the failure to use such form when provided; but it turned the preparation of the form over to its appointee and gave him six months in which to do his work and file a copy of it in his own office. Whoever might be interested in knowing the directory part of the statute and understanding what it was he was required to do, had to go beyond the act of Assembly and inquire of the appointee of the Legislature what it was he had filed in his own office, of which the people 'of the commonwealth were bound to take notice at their peril. “It will not do to say that the preparation of the form was an unimportant matter of detail, or an act partaking of an executive or administrative character. It was the sole purpose of the act. It was the only subject named in its title. The enforcement of the standard form of policy was the only object of its penalties. Take out the form prepared by the Insurance Commissioner and to be found in some pigeon hole in his office, and the act is without meaning or effect, it is completely eviscerated. “We do not see how a case could be stated that would show a more complete and unconstitutional surrender of the legislative function to an appointee than that presented by the Act of 1891. By its provisions [463] the Legislature says in effect to its appointee, ‘Prepare just such a policy or contract as you please. We do not care to know what it is. The governor shall have no opportunity to veto it. File it in your own •office and we will compel its adoption, whether it is right or wrong, by the punishment of every company, •officer or agent who hesitates to use it.’ “We do not take time to examine the voluminous •conditions loaded upon the back of a very simple and •concise contract of insurance. The assignments of error do not bring them before us for this purpose. The learned judge of the court below gave them careful •consideration and he was of opinion that they were unjust and oppressive. Speaking of the form of the standard policy as a whole he said, ‘I look upon it as infamous.’ Again he said, ‘The conditions put in that policy go beyond almost any policy that ever was exhibited in the courts before. Numerous provisions were put in that the courts had declared void because they were so unjust and inequitable. ’ Speaking of its .general character and effect he said: ‘It seems to be framed in the interest of dishonest companies and insurance brokers and puts an honest insurance company and honest officers of a company at a very great disadvantage.’ “This is a very serious arraignment of the ‘standard policy,’ to which we refer, without comment of our own, for the purpose of showing the impolicy of •such delegation of legislative power as might make it possible to fasten upon the people of the commonwealth a form of contract, open to such grave objections. “It is not to be supposed that a law really mischievous in its operations could pass both houses of the Legislature unchallenged. If by reason of any com-plieation of circumstances this should happen in any given case, then the people have a remaining safeguard in the veto power possessed by the Governor, [464] The Act of 1891 steered past both legislative discussion and executive veto, and vested in the insurance commissioners the power to fill in its directory provisions, and supply the form of insurance contract it was to enforce, without even the knowledge of the Legislature or the Governor of a single one of its many provisions that were to be bound by fines and penalties on insurers and insured all over the commonwealth. “Our conclusion is that the act of 1891 is void because clearly unconstitutional.” I can see no difference in delegating the power to-prescribe the form of the insurance contract to the-Insurance Commissioner alone, and in delegating it to the Insurance Commissioner and the insurance companies. In Dowling v. Insurance Co., 92 Wis. l. c. 73, in discussing a statute similar to the Pennsylvania act,, supra, the Wisconsin court said: “Within the lines indicated, a discretion was reposed in the commissioner as to the form of the policy which embodied the substance of the contract, and which was to have the sanction and force of law. The-effect, clearly, was to transfer to him bodily the legislative, power of the State on that subject. Within the limits prescribed, he was to prepare just such a policy or contract as, in his judgment and discretion,, would meet the legal exigencies of the case, no one could certainly predict what the result of his action might be. It was not to be published, as laws are required to he, or to he approved by the Governor. It was to be filed in the office of the Insurance Commissioner, instead of being deposited in the office of the Secretary of State, and its use was to be enforced by the penal sanction of the act. He was not required by the act to perform any mere administrative or executive duty, or to determine any matter of fact for the-purpose of executing or carrying the act into effect. [465] “The result of all the eases on this subject is that a law must be complete, in all its terms and provisions, when it leaves the legislative branch of the government, and nothing must be left to the judgment of the-electors or other appointee or delegate of the Legislature, so that, in form and substance, it is a law in all its details in praesenti, but which may be left to take effect in futuro, if necessary, upon the ascertainment of any prescribed fact or event. Instead of preparing a form of standard policy and adjusting it to the existing legislation, or modifying such legislation, if necessary, by virtue of its constitutional functions, the Legislature delivered over this task wholly to the Insurance Commissioner, to accomplish it as nearly as-might be; and this depended wholly upon his discretion and judgment as to what the law should be in this respect, for the act had not specifically declared' it. Conceding that the Legislature might have adopted the New York form as an entirety by the use of general language, it is evident that the proposed form, to-conform ‘as near as can be to the form adopted in New York,’ involved a duty equivalent to that of revision, which it cannot be contended could be delegated except subject to legislative approval. While the commissioner, within the discretion intrusted to him, might have approximated in a great degree to the policy which the Legislature may have intended, the objection, in view of the consideration stated, that it has not received the legislative sanction, is necessarily fatal to it. “The cases of State ex rel. R. & W. Comm. v. C. M. & St. P. R. R. Co., 38 Minn. 298, and Chicago & N. W. R. R. Co. v. Dey, 35 Fed. 866, are not in conflict, but in harmony, with the conclusion we have reached, as to‘ what is and what is not an unconstitutional delegation of the legislative power. [466] “For these reasons, we hold that the provision authorizing the Insurance Commissioner to prepare, approve, and adopt a printed form in blank of a contract or policy of fire insurance, together with such provisions, agreements, or conditions as may be indorsed thereon or added thereto and form a part of such contract or policy, and that such form shall, as near as the same can be made applicable, conform to the type and form of the New York standard fire insurance policy, so called and known, is unconstitutional and void. Conclusions in accord with these views, in somewhat similar cases, have been reached in other States. [Anderson v. Manchester F. Assn. Co. (Minn.), 63 N. W. 241; O’Neil v. Am. F. Ins. Co., 166 Pa.St. 72.] “The instruction of the court to the jury that if the plaintiff Dowling, at the time the policy was issued, stated to defendant’s agent fully the existence of the incumbrances, they would find in favor of the plaintiffs, was correct and in conformity with previous decisions of this court on the subject of waiver of conditions of forfeitures in the policy against incumbrances. [Renier v. Dwelling House Ins. Co., 74 Wis. 94, and cases there cited; Bourgeois v. Mut. F. Ins. Co., 86 Wis. 402.]” The same ruling was made in Anderson v. Insurance Co., 59 Minn. 182, and the Pennsylvania case, supra, cited with approval. So that we repeat that there can be no question (owing to the intricacies of insurance contracts) that the Legislature can prescribe a form for such contracts to be used in this State, but in our judgment it cannot delegate this important task to either the Insurance Commissioner or to the insurance companies, or to both combined. If public policy demands that the public be protected in these contracts the police power is no doubt broad enough to authorize legislative action, but it yet remains a legislative duty, which cannot be delegated. We are of opinion, that in so far as the Act of 1895 undertakes [467] to permit the insurance companies, with the approval of the Insurance Commissioner, to write the terms of an insurance policy, it is void for constitutional reasons. II. When we eliminate from the Act of 1895 that portion which refers to the Missouri form of a policy and the method of its creation, we have left the following : “Sec. 1. ... To all such policies shall be attached a blank notice, with the address of the company fully printed thereon, to be used by the assured in case of loss in notifying the company of such loss, which notice shall be given within ninety days thereafter. The appearance of an adjuster of any company at the place of fire and loss in which said company is interested by reason of an insurance on such property, shall be considered evidence of notice, and to be held as a waiver of the same on the part of the company. No company shall take a risk on any property in this State at a ratio greater than three-fourths of the value of the property insured, and when taken, its value shall not be questioned in any proceeding. ’ ’ This part of the statute covers three matters: (1) Time in which notice of loss must be given; (2) how notice may be waived; and (3) what is known as the “valued policy” law. Statute: Sufficient Title. Defendant challenges the constitutionality of the whole act and says that it violates section 28, article 4, of the Constitution, in that the subject-matter of the act embraces more than one subject and embraces subjects not clearly expressed in its title. That a part of an act may be unconstitutional and the remainder be valid has often been announced by the courts. So in this case it does not necessarily follow that, because that portion of the act providing for a uniform insurance contract in Missouri is invalid, the whole law must fail. If the invalid [468] portion can be carved from tbe act, and yet leave a good law, and one within the legislative intent, then the remainder should stand. If by the process of elimination the legislative intent is changed, no part of Ihe act can stand. And further in getting at the legislative intent the whole act, the unconstitutional as well as the constitutional portions, must be considered. But if when all is thus considered, and it is seen that the unconstitutional portion can be stricken out, and yet there remains a complete law, within the legislative intent, such portion of the act should stand. In our judgment that portion of this act, condemned in our paragraph one, can be eliminated from the Act of 1895', and leave a complete law, covering the three matters mentioned, supra, i. e. (1) time of notice of loss, (2) waiver of notice, and (3) the “valued policy” theory, and all fully within the original legislative intent. The last portion of the act should not, therefore, fall simply because the first portion must fall under the constitutional edict as to the delegation of legislative powers. But defendant urges that this does not save the act. Defendant contends that it must fall, as a whole, under the constitutional ban placed thereon by section 28, article 4, supra. This requires us to go to the title of the act. If the subject-matter of the latter portion of this act is within the limits of this title, or germane thereto, then it should stand, but otherwise it must fall. Singleness of subject in title to bills or legislative acts has been often before this court, but we know of no clearer statemnnt of our rule than that made by Ferriss, J., in the very recent case of State v. Smith, 233 Mo. l. c. 255, whereat he said: “The statute in question does not violate section 28 of article 4 of the Constitution. The act contains one subject which is clearly expressed in the title. The title of the act is not ‘Medicine and Surgery,’ as defendant asserts it to be in his brief. The words ‘Medicine and Surgery’ are merely the caption. The title [469] to the act is as follows: ‘An act to regulate the practice of medicine, surgery and midwifery, and to prohibit treating the sick and afflicted without a license, and to provide penalties for the violation thereof.’ [Laws 1901, p. 207.] “The one ‘subject’ of this act, within the meaning of the Constitution, is, broadly speaking, public health. [State v. Marble, 72 Ohio St. l. c. 36.] Treating the sick is well within the subject, and is specifically covered by the title. It is unnecessary to cite the cases in this State on this proposition. This court has again and again, with patient repetition, expounded the law upon this constitutional provision, and the law so expounded is this: ‘Where all the provisions of a statute fairly relate to the same subject, have a natural connection with it, and are the incidents or means of accomplishing it, then the subject is single, and if it is sufficiently expressed in the title, the statute is valid.’ [State v. Doerring, 194 Mo. 398, and cases therein cited.] The practice of medicine, or surgery, and the treatment of the sick by whatever means employed, are certainly germane to each other and are germane to the general subject of health. “ ‘This section of the Constitution is to be reasonably and liberally construed and applied, due regard being had to its object and purpose ... If all the provisions of the bill have a natural relation and connection, then the subject is single, and this, too, though the bill contains many provisions.’ [State ex rel. v. Bronson, 115 Mo. l. c. 276.] “If the treatment of the sick and the practice of medicine and surgery are not in natural relation, then it will be difficult to conceive of a case where two or more provisions in a bill relate to each other. ’ ’ Let us look at the title to the act in question; It is: “An Act relating to Fire Insurance and Form of Policies.” “Fire Insurance” is a very broad subject. Many things are germane to such a subject. The [470] broadness of tbe subject mentioned in tbe title does not invalidate the act.. Now, can it well be said, that tbe time in wbicb notice of a loss by fire and consequent damages under an insurance policy must be given, is not germane to this subject? We think not. Nor can it be said that statement of wbat shall be deemed a waiver of this notice is not germane to tbe subject. If tbe provision as to notice is germane, it of necessity follows that wbat may constitute a waiver of that notice would likéwise be germane. Tbe third matter mentioned, supra, is tbe “valued policy” feature. For this tbe laws of Missouri have been condemned in insurance circles, and to my mind unjustly condemned. Tbe most fruitful source of incendiaryism is excessive insurance. Such incendiary fires often hurt tbe innocent and honest citizens. Anxious insurance agents,, with an eye single to tbe commission coming into their pockets, encouraged large policies, and tbe innocent public were made to suffer. Insurance companies did not suffer so much because they got premiums on enhanced valuations, and these in a way removed a desire to restrict their agents. Not only so, if losses occurred, whether legitimate or illegitimate, they only bad to pay tbe actual value of tbe honest losses, and a chance to defeat all tbe dishonest losses. Tbe fault of a “valued policy” law lies with tbe agents of tbe companies, and not in tbe law. With honest, careful, painstaking agents (representatives of tbe companies) dishonest losses can be made a thing of tbe past in Missouri. But this is by the wayside. Reverting to tbe question in this case. Is that matter one wbicb is foreign to tbe title of this act or is it one germane to tbe subject in tbe title? We think it clearly germane and fully covered by tbe title. This contention of defendant is therefore overruled. [471] Fire Insurance. [470] III. It is urged further that tbe body of tbe act speaks of “risks by fire or lightning,” whilst tbe title [471] only speaks of “Pire Insurance,” and that for that reason the act itself deals with a subject not covered by the title. We are not impressed with this view the matter, although this is the closest question in the whole record. As a court we cannot close our eyes to what is generally known, and it is generally known that fire and lightning risks are usually covered by the same policy. Not only so, but a great many losses through lightning result from fire, which is set to burning by lightning. Ordinarily when we speak of a fire insurance policy we mean one which covers loss by both fire and lightning. Such has been the general understanding of fire insurance policies for years, and such has been the general understanding of “fire insurance,” i. e., an indemnity against loss both by actual fire and by lightning. In my judgment such is the sense in which the term “fire insurance” is used in the title to the act, and if so defendant’s contention must fall. Tornado Insurance: Valued Policy Law. IV. There are, however, one or more questions in this case which will preclude the present judgment from standing. Whilst we have held that the term “fire insurance” is broad enough to cover “lightning insurance” because of the generally accepted meaning of the term, yet it is not broad enough to cover tornado or cyclone insurance, and it has never been so generally understood or accepted. This is an action on a tornado policy. The Act of 1895 and none of the provisions thereof apply to this policy, and the court erred when it gave an instruction to the effect that the defendant could not deny that the building was worth not less than $2666.66, because defendant had taken a tornado risk thereon for $2000. In other words, the court erred in applying the “valued policy” law to a tornado policy of insurance. It is true that as a general classification of insurance our laws speak of “life [472] insurance” and “insurance other than life,” hut it •does not follow from this that all statutes on insurance other than life apply to each of the many lands of insurance risks. The 'peculiarities of the many different kinds of lisks make them classes unto themselves, although they may fall withih the very general class of “insurance other than life.” Statutes which could be made applicable to one of sundry classes could not be made applicable to each and all of them. In such case the law, if intended "to cover all, must state so explicitly, or by an inference so strong as to leave no doubt of the legislative intent. By its terms this statute does not cover tornado insurance, nor is there any very violent inference that it was ever so intended. This being a tornado policy and therefore one not within the terms of our valued policy law, the plaintiff should be put upon his proof as to the value of the property injured. We must gather the legislative intent from the whole act, as said before, and if in doubt we may look to the title as an aid in determining- the legislative intent. When the whole act (of which the “valued policy” law is a small part and parcel) is viewed, it is evident that the. Legislature only had in mind fire insurance and not tornado insurance. In other words, no part of this act applies to that class of insurance. Upon the question of notice and waiver of notice the parties will have to be relegated to the terms of the policy itself and to general rules of law, rather than the statute here under consideration. For these reasons the judgment is reversed and the cause remanded. Other questions of error need not be discussed, because this ruling will evidently change the whole trend of a new trial of the cause. Let the judgment be reversed and the cause remanded. [473] All concur. Woodson, P. J., and Lamm, J., in separate opinions.