Central Glass Co. v. Niagara Fire Insurance

PROVO STY, J.

This is a suit upon a fire insurance policy, the policy in the standard form. In addition to the amount of the insurance, plaintiff claims damages and attorney’s fees; the latter claims being founded upon Act 168, p. 226, of 1908. We give this act in the margin.1

It requires insurance companies to make payment within 60 days from notice of loss, instead of as stipulated in the policy after 60 days from the adjustment of the loss, under penalty of 12 per cent, damages on the amount of the loss, and reasonable attorney’s fees; and it imposes upon the insurance company the duty of furnishing the assured a blank form for use in making the proof of loss.

Defendant is now willing to pay the insurance, and contests only the claim for damages and attorney’s fees. Defendant’s refusal to pay was based on the fact that the officers of the plaintiff company had been indicted on the charge of having procured the building to be burned. After the criminal case had been tried and the accused acquitted, the defendant tendered the amount of the policy; but plaintiff refused to accept the tender, unless the damages and attorney’s fees were added.

Defendant contends that said act has no application to policies which, like the one in suit, were in existence before the passage of the act; and contends, further, that attorney’s fees are not required by said act to be paid in all cases, but only in cases where the delay in paying was unjustifiable; and contends, finally, that said act, if applied to policies already in existence at the time of its passage, would impair the obligations of contracts, in that it would require the insurance company to furnish a blank form for making the statement of the loss, which, by the terms of the policy, it is not required to do, and would change the point of departure of the delay of 60 days, within which, under the terms of the policy, the insured must render a statement of the loss, from the date of the fire to that on which the blank form for making the proof of loss is furnished, and, finally, would make the 60 days allowed for payment of the insurance run from the receipt of the proof of loss, instead of from the adjustment of the loss, as stipulated in the policy.

All these points were passed on by this court in the case of Monteleone v. Insurance Co., 126 La. 807, 52 South. 1032. The court held that the act did apply to antecedent contracts, and did not impair their obligation, as the changes made by it were merely in the remedy for the enforcement of the contract and not in the contract itself; and, *223finally, that the allowance of attorney’s fees was discretionary. Upon further consideration, we have concluded that the act does ■impair the obligation of the contract, and as this point disposes of the case we spare •ourselves the trouble of considering the others.

There can be no denying that the act makes changes; the sole question must be us to whether the changes are in the contract itself, or merely in the remedy.

By the remedy, as distinguished from the obligation of the contract, we understand the means of judicially enforcing the contract. And by the Legislature having complete control over the remedy -we understand that the parties cannot by their contract deprive the Legislature of its power to regulate the manner in which the power of the courts shall be exercised for the enforcement of contracts. For instance, cannot, by agreeing that their contract of lease shall be enforceable by distress for rent, deprive the Legislature of its power to abolish distress for rent. Cooley, Const. Lim. 349, 350. In -other words, that parties cannot by their ■contract deprive the Legislature of its power to change the laws of the state.

But we do not understand that the Legislature has control over stipulations or conditions inserted in a contract as integral parts thereof, and not needing recourse to the judicial tribunals for being efficient To allow the Legislature to change the contract in such features as these, existing solely by the will of the parties, and operating without need of any recourse to the judicial tribunals, would be to allow the Legislature to ■change or impair the contract of the parties. Even when such conditions and stipulations have come into the contract, not by express agreement, but merely as an effect of the ■existing law being read into the contract, they are beyond legislative control, if they have become integral parts of the contract. Thus, as to a note already in existence, the Legislature cannot dispense with demand, protest, and notice for holding the indorser. Farmers’ Bank v. Gunnell, 67 Va. 131. For other examples, see, also, Rose’s Notes to Sturges v. Crowninshield, 4 Wheat. 122, 4 L. Ed. 529; Rubric, Limitations upon the General Rule.

In the case at bar, the stipulations and conditions in, question exist solely by the will of the parties, and need no recourse to the judicial tribunals for their efficiency, and are integral parts of the contract, and important at that. The delay within which payment becomes due under a contract of insurance is as much an integral, vital part of the ■ contract as the delay within which payment becomes due on a promissory note; and the conditions under which such payment' becomes exigible are as much an integral, vital part of the contract as conditions in general are in contracts in general. If the Legislature could compel the insurance company to furnish a blank for use in making out the statement of loss, it could compel the company to furnish an expert for filling out the blank; in fact, if it be true that the proof of loss is a matter pertaining to the remedy over which the Legislature has complete control, the Legislature might dispense the insured altogether from making proof of loss; and, in like manner, if .the 60 days delay for making payment is a matter pertaining to the remedy, the Legislature might dispense with the delay altogether, and require payment to be made at once, so that the payment would be due at once, without any proof of loss having been made.

We conclude that the said act, if applied to policies already extant at the time of its enactment, would be unconstitutional.

The judgment appealed from is affirmed, in so far as it condemns the defendant company to pay the amount of the insurance, *225with interest from judicial demand, and costs up to the time the tender was made of the said amount, and is set aside, in so far as it condemns the defendant to pay damages and attorney’s fees. Plaintiff to pay costs of appeal and all costs incurred subsequent to the tender.

See note at end of case.