Saucier v. Life & Casualty Ins. ( 1940 )

I dissent from the majority opinion herein, as I think it is clearly wrong in the construction of section 5196 of the Code of 1930, and in overruling certain cases named in the opinion.

A careful reading of section 5196 shows that a person who does the things named in the statute on behalf of the insurance company is the agent of the company for that purpose, although not a general agent. The knowledge of the agent and his acts on behalf of the company, are the acts of the insurance company itself, or of its principal officers, or even of the board of directors.

After setting out the various points in the statute constituting such person an agent of the company, the section continues: "Shall be held to be the agent of the company for which the act is done or the risk is taken as to all the duties and liabilities imposed by law, whatever conditions or stipulations may be contained in the policy or contract." And the section then provides that any person knowingly procuring through fraudulent representations the payment, or obligation for the payment, of a premium of insurance, shall be punished by a fine of not less than $100 nor more than $500, or be imprisoned for not more than one year.

The majority opinion sets out some purposes of this statute, but not all. One purpose of the statute is to make the insurance companies responsible for the acts of their agents, and to cause them to select as their agents qualified and proper persons. The statute has been construed by this Court in numerous decisions, and has been re-enacted by the legislature under such constructions; and through such re-enactment without change the construction becomes a part of the statute itself.

In Stewart v. Coleman Co., 120 Miss. 28, 81 So. 653, decided at the March term, 1919, it was held that the statute involved, being then section 2615 of the Code of 1906, section 5078 of Hemingway's 1917 Code, and section 2327 of the Annotated Code of 1892, makes the agent delivering an insurance policy the agent of the company for that purpose; and the company cannot avoid a policy because of other insurance if the company's agent who wrote the insurance had knowledge of the fact. In that case the statute was distinctly held to make the knowledge of the agent the knowledge of the company as to the existence of such other insurance, which other insurance, but for such knowledge, would have avoided the policy.

It will be noted that the statute nullifies all stipulations in the policies which would avoid the policies in the absence of knowledge on the part of the agent, where the agent acted in a particular capacity, with knowledge of the facts. While the case of Stewart v. Coleman Co., supra, seems to have been the first in which the statute was held to control, the same rule had prevailed for many years prior thereto.

For instance, in Big Creek Drug Co. v. Stuyvesant Ins. Co.,115 Miss. 333, 75 So. 768, it was held that the agent, in delivering a policy and receiving a premium with knowledge that the insured had no iron safe as stipulated in the policy, bound the company, estopping it from effecting forfeiture of its policy; and that this was true whether the agent was a soliciting or a general agent.

In the case of Stewart v. Coleman Co., supra, it was said: "Section 2615, Code 1906 (section 5078, Hemingway's Code), makes the agent delivering an insurance policy the agent of the company for that purpose and the company cannot avoid a policy because of other insurance, if the agent writing the insurance for the company had knowledge of the facts."

In Aetna Ins. Co. v. Smith, McKinnon Son, 117 Miss. 327, 78 So. 289, L.R.A. 1918D, 1158, it was said: "Under a fire insurance policy which provided that the policy should be void if additional insurance should be procured on the property by insured, such provision was waived where the agent of the insurer knew of and wrote an additional policy upon the property for a number of years and the mere fact that the insured had such additional insurance canceled and took a policy for such additional insurance in a different company did not work a forfeiture of the main policy under such over insurance clause."

In Phoenix Ins. Co. v. Randle, 81 Miss. 720, 33 So. 500, it was held that, "A fire insurance company which delivers a policy with knowledge of facts upon which, but for such knowledge its validity might be questioned, cannot avail of such facts after a loss in avoidance of liability on the policy." In the opinion in that case the Court said: "The agent of the insurance company who solicited the risk did not rely on Mr. Randle's statement for anything. He went in person and examined the building — knew that the doctor's shop was upstairs, and knew that Randle kept no iron safe, and did not intend to get one until the following fall; and the company, therefore, is bound as upon both waiver and estoppel. `It will not be presumed that the party making the contract intended to perpetrate a fraud, by putting in a condition which he knew would prevent it from taking effect.' [Citing a Texas case]. The agent knew that, `as warranties of existing facts, they were false'; and, `to deliver a policy with full knowledge of facts upon which its validity may be disputed, and then to insist upon these facts as grounds of avoidance, is to attempt a fraud,' and `the courts will not hear the insurance company to say that it knowingly made and delivered to the assured what it knew at the time to be an invalid policy, and that therefore it is not liable for the loss sustained.'" See, also, Agricultural Ins. Co. v. Anderson,120 Miss. 278, 82 So. 146; Mutual Life Ins. Co. v. Vaughan, 125 Miss. 369, 88 So. 11, decided at the March term, 1921.

The last-named case is almost identical with the case at bar. In St. Paul F. M. Co. v. Loving, 163 Miss. 114, 140 So. 727, the case was based on the statute, although it was stated that the agent there was a general agent, because of his various duties. Home Ins. Co. v. Thornhill, 165 Miss. 787, 144 So. 861, is expressly put on the section now under review. The case of Aetna Ins. Co. v. Lester, 170 Miss. 353, 154 So. 706, was definitely based on the Code section. In Aetna Ins. Co. v. Singleton, 174 Miss. 556, 164 So. 13, it was held that a soliciting agent, after delivery of the policy, could not bind the company, as his agency terminated on the delivery of the policy.

Many decisions could be cited antedating the case of Stewart v. Coleman Co., supra, to show that the agent who performed a particular act bound the company within the scope of such act as he was authorized to do, or did, and which was accepted by the insurance company.

In Hartford Fire Ins. Co. v. Clark, 154 Miss. 418, 122 So. 551, the insurance company was held liable, and to have waived policy stipulations, because of the knowledge on the part of the agent who delivered the policy that representations made in the application were, in fact, untrue — it being held that the knowledge of the agent was the knowledge of the company itself, as to such facts as the agent knew. In that case the company undertook to provide that only its officers in Atlanta, Georgia, would be authorized to pass on the risk; and the policy provided for its avoidance if misrepresentations of the facts were made by the insured. An examination of the main opinion and the dissent in this case will show that this holding was predicated upon section 5196 of the Code of 1930, as then set out in the Code of 1906. This decision was made at the March, 1929, term of the Court. The cases overruled in the majority opinion are all squarely based on the statute, and are sound in principle. They should not be overruled, even though they do not meet the views of the Judges constituting the majority of the Court at this time, for many contracts have been made under them, and overruling them interferes with the contractual rights of thousands of policyholders, who will lose their rights.

I shall not undertake to set forth all of the decisions, or to review all of those referred to in the majority opinion here; but the decisions referred to in this opinion construed the law in regard to the effect of the statute; and by the re-enactment of the statute without change in 1930, the construction so placed upon it became a part of the statute itself. Where a statute was re-enacted after its erroneous construction the Court must assume that the re-enactment was with full knowledge on the part of the legislature of such construction. Smith v. Richardson, 2 Miss. Dec. 287. Re-enactment of a statute which has been judicially construed is an adoption of the construction, unless intention to the contrary appears in the statute so re-enacted. White v. Illinois Cent. R. Co., 97 Miss. 91, 52 So. 449, 55 So. 593; Hamner v. Yazoo Delta Lbr. Co.,100 Miss. 349, 56 So. 466; Henry v. Henderson, 103 Miss. 48, 60 So. 33. Construction of a statute by the Supreme Court should control construction of the same statute subsequently re-enacted. Womack v. Central Lbr. Co., 131 Miss. 201, 94 So. 2. Later re-enactment of construction by the Supreme Court adopts the construction of the Court. Burks v. Moody, 141 Miss. 370, 106 So. 528, 107 So. 279.

The legislature, by re-enacting statute in the same terms adopts the construction placed on the statute by the highest court of the state, etc.

"Where a statute has been construed by the Supreme Court, and afterwards re-enacted in substantially the same terms, the Legislature by such re-enactment adopts such construction along with the statute." White v. Williams, 159 Miss. 732, 132 So. 573, 574, 76 A.L.R. 757.

"Construction of a statute, subsequently re-enacted, as prohibiting judges from instructing juries without written requests, will not be departed from." Masonite Corp. v. Lochridge, 163 Miss. 364, 140 So. 223, 141 So. 758.

The same rule prevails at common law, and in practically all the states. In Black's Interpretation of Law, (2 Ed.), 596, it is said: "When the legislature revises the statutes of the state after a particular statute has been judicially construed, without changing that statute, it is presumed that the legislature intended that the same construction should continue to be applied to that statute." And in the same work, at page 607, it is said: "A statute literally or substantially re-enacting a prior statute after its words have received a judicial interpretation must be regarded as adopted with knowledge of such construction and with the intention that it should thereafter be interpreted in the same way." See, also, 25 R.C.L. 1075, sec. 297; 59 C.J. p. 1061, sec. 625.

There is sound reason for the rule as to re-enactment of the statute without change, carrying with it the construction placed upon it by the highest court of the state. It is very desirable that stability be had in the decisions of such court. Every person and every officer of the state other than this Court are bound by the construction placed upon it by this Court, to conduct their business and social relations upon the theory that the law has been settled by the highest authority known to the law. The legislative department is vested with the power to change or amend laws, and it is presumed to keep up with the construction placed upon statutes, that it may properly and intelligently exercise this function. Where the legislature is readopting a code, it is presumed to, and in fact does, through appropriate committees, investigate the sections of the Code and the constructions placed upon them, and may change the laws if they need changing. That function should not be exercised by the Court.

It is true that the Court has the power to overrule its decisions construing the statutes prior to their re-enactment or readoption or recodification by the legislature; but that power should cease when its decisions have received the sanction of the legislature. It has been said that it is a dangerous thing to be wiser than the law; and those exercising this power should always bear in mind that changing decisions may greatly disturb transactions made in accordance with the decisions of the Court. The rule that the legislature, by re-enacting a statute without change, also adopted the construction placed upon it by the Court is clearly conducive to the public welfare; for when the legislature changes the law its operation is prospective or forward-looking; but when the Court changes its decision it unsettles business and transactions made on the faith of the Court's decisions in the conduct of their business and personal relations.

I think it is beyond the rightful power of the Court to overrule a decision which has received legislative sanction through re-enactment of the statute and the construction placed upon it by the Court. The statute here involved serves a most wholesome purpose. Every person who takes an insurance policy knows that as a rule they contain many provisions limiting the liability and the rights of the parties; and it is difficult for even the legal mind to reach a correct understanding of many of these provisions. It is the purpose of section 5196 of the Code to make the act of the agent the act of the insuring company, insofar as it falls within the authority confided to the agent, with the intention that the company shall exercise caution in selecting proper agents to deal with the public. Under our laws only corporations can engage in the insurance business, or become insurers of persons or property; and since a corporation can only act through agents, it is a wise policy to require that the corporation shall be bound by the act of its agent within the field, and for the purposes of his employment by the corporation; and the doctrine of waiver and estoppel should be applied in proper cases.

Overruling a line of decisions which have been in force for a long time in such a general field as insurance operates will certainly affect many contracts.