Cordy v. Hale

Owen, J. While the defendant Guaranty Fund Fire Underwriters corporation is joined as a defendant, it has not appeared in the action, and we are concerned only with considerations affecting the liability of the other defendants who solicited and placed the insurance. Their liability, if any, is referable to sec. 1919/, Stats., which provides: “Any company or person who shall solicit or place insurance in a fire insurance company not authorized to do business in this state shall, in the event of the failure of such unauthorized company to pay any claim or loss within the policy issued, be liable to the insured for the amount thereof to the extent that such company would have been liable.” The complaint alleges that the Guaranty Fund Fire Underwriters is a Texas corporation organized for the purpose of writing fire insurance and that it is not and was not at the time of the issuance of the policy authorized to do business in this state. It is further alleged that the defendants Northern Security Company, Hale, and Deniston solicited and placed insurance in the Guaranty Fund Fire Underwriters. The provisions of sec. 1919/ clearly embrace the transaction here under consideration, unless it be construed in accordance with defendants’ contention that it applies only to insurance written on property located in this state. Their contention, tersely stated, is that the purpose of our laws regulating the business of fire insurance is h> protect our citizens in insurance contracts affecting property located in this state, and attention is called to numerous sections regulating contracts of insurance upon property in this state, such as secs. 1941 — 64, 1941 — 65, and perhaps others, [71] where the regulatory provision applies to policies of insur-' anee written on property in this state. However, .we do not think it can be said as a general proposition that the legislative purpose in regulating the business of fire insurance was to protect alone the citizen securing fire insurance upon property located in this state. We think the purpose is broader and more inclusive. We think it was the legislative intent to protect the citizens of this state from loss in dealing with unsound insurance companies, whether their contracts related to property located within or without the state; and this purpose is manifest by a consideration of numerous sections of the statutes: for instance, sec. 1915 provides that “no company incorporated under the laws of any other state or of any territory or of any foreign government or other insurer having its home office outside of this state shall, directly or indirectly, take risks or transact any business of insurance in this state except upon compliance with and maintenance of the following requirements,” naming them, and sec. 1916 provides that “the commissioner of insurance shall, upon being satisfied that any such insurance corporation has fully complied with all provisions of law applicable thereto, and that the interests of the people of the state are not jeopardized by dealing with such corporation, deliver to such corporation a license to transact business in this state as prescribed in these statutes.” It is to be noticed that the company is to be licensed to do business in this state if the commissioner of insurance is satisfied “that the interests of the people of the state are not jeopardized by dealing with such corporation.” The license issued by the commissioner of insurance to a foreign corporation to transact business in this state is accepted by the citizen as an assurance from the state that it is solvent and financially sound, and that he is safe in transacting business with any such company whether it relate to insurance on property located within or without the state. While the fact that a number of the provisions of the statutes relating [72] to the fire insurance business by their terms relate to insurance contracts written upon property in this state lends force to the contention that all statutory regulations should be so limited in their interpretation, we are of the opinion that the legislative intent will be more certainly enforced by giving to each section of the statutes the scope indicated by the language used. The provision of the statutes which gives rise to the liability sought to be enforced in this case includes the transaction set out in the complaint. The defendants solicited and placed insurance in a fire insurance company not authorized to do business in this state. The unauthorized company in which the insurance was written has failed to pay the loss which the policy indemnified. The section plainly provides that under such circumstances the person so soliciting or placing the insurance shall be liable to the insured for the amount of such loss to the extent that the company would have been liable. We are not inclined to construe this as referring only to contracts of insurance written upon property located in this state. To do so would constitute an unreasonable restriction upon the language used. A contrary legislative purpose is not so plain as to'justify it. Considerations of public policy do not require it. The duty which the state owes to its citizens in the matter of assuring them safety in the financial responsibility of insurance companies with whom they do business is scarcely less in principle where the property is located outside of the state than where it is located within the state. We therefore hold that the complaint states a good cause of action against the defendants, so far as the question thus far considered is concerned. . A little different question is raised by the demurrer of the Northern Security Company. This defendant is a corporation. Under our statutes (sub. 6, sec. 1976) “no corporation or stock company shall be licensed as agent of any insurance company.” It is contended that because under the laws of this state the defendant Northern Security Com73 pony could not be licensed as an insurance agent, with knowledge of which the plaintiffs must be charged, as they are presumed to know the law of the state, the Northern Security Company cannot be held liable to them under the statutory provision quoted. We must confess that the reasoning justifying this conclusion is obscure, and we shall not attempt to state it. Sec. 1977 defines the term “agent” to be “every person or member of a firm or corporation who solicits insurance on behalf of any insurance corporation or person desiring insurance of any kind,” etc. The definition excludes the idea that the corporation itself can be an agent. However, that defines a lawful agent, that is, one who may be permitted under our laws to act as an agent. It is an elementary principle of law that one corporation may act as an agent of another, and where, as in this case, one of the purposes of a corporation, as defined in its articles of incorporation, is declared to be “to act as insurance agent for insurance companies of all kinds and as such agent to do a general insurance business,” such a corporation may act as such agent and, when authorized, will bind its principal. The mere fact that the Northern Security Company could not be licensed to act as insurance agent under the laws of this state by no means implies that by so acting in defiance of the laws of the state its acts are not binding upon its principal and that its contracts are void and unenforceable. The statute does not so provide. It recognizes that one may unlawfully act as the agent of an insurance company, and provides a penalty to be visited upon the one thus offending, but there is no provision declaring the contracts engendered by it for and on behalf of its principal void. Furthermore, the liability created by sec. 1919/ is not limited to those who are or may be lawfully licensed to transact insurance business in this state, but it applies to any company or person who does in fact solicit or place insurance in a fire insurance company not authorized to do business. This section is broad enough to include all persons or companies [74] who in fact solicit or place insurance in a fire insurance company not authorized to do business in this state, even though under the laws of the state they could not be licensed to act as an insurance agent. Our conclusion is that the court properly overruled the demurrer of the defendants Hale and Deniston, and erroneously sustained the demurrer of the' Northern Security Company. „ By the Court. — Upon the appeal of H. C. Hale and G. W. Deniston the orders are affirmed. Upon the appeal of the plaintiffs the order is reversed, and cause remanded with instructions to overrule the demurrer.