Physicians' Defense Co. v. O'Brien

LEWIS, J.

(dissenting).

The statutory definition' of insurance is comprehensive, but it does not follow that all contracts which contain a technical element of indemnity are insurance contracts. The statute should be read in the light of the development of insurance law, and the purpose of requiring insurance companies to become subject to the examination and control of the state. Mr. May defines insurance as a contract whereby one, for a consideration, undertakes to compensate another if he shall suffer loss, and approves of the following definition: “Insurance is a contract by which the one party, in consideration of a price paid to him, adequate to the risk, becomes security to the other that he shall not suffer loss, prejudice, or damage by the happening of the perils specified to certain things which may be exposed to him.” Chapter *497175, § 3, Laws 1895,. defined insurance as an agreement by which one party, for a consideration, promises to pay money, or its equivalent, or do some act of value to the assured upon the destruction or injury of something in which the other party has an interest. Section 27 of that act defined the different kinds of-insurance authorized under seven heads. While the definition of insurance now found in the Revised Laws of 1905 introduced the word “indemnity,” the code also expanded and enlarged the scope of insurance, and the various purposes for which insurance companies may be incorporated are found in section 1597:

1. To insure against loss or damage to property on land by fire, lightning, hail, or tempest, or any or all of them.
2. To insure vessels, freight, goods, money, effects, and money lent on bottomry or respondentia against the perils of the sea and other perils usually insured against by marine insurance, including risks of inland navigation and transportation.
3. To insure property of the assured, or life, person, or property of another, for which the assured is liable, against loss or damage caused by the explosion of steam boilers.
4. To make contracts of life or endowment insurance, and grant, purchase, or dispose of annuities or endowments of any kind; but not including authority to any corporation transacting the business of life insurance in this state to take any other kinds of risks except those connected with or appertaining to insurance on life, or against accidents to or sickness of persons, and the granting, purchasing and disposing of annuities and endowments.
5.' To insure against loss or damage by the sickness, bodily injury, or death by accident of the assured, or of any other person for whom the assured is responsible.-
6. To guarantee the fidelity of persons in fiduciary positions, public or private, or to act as surety on official and other bonds, and for the performance of official or other obligations.
.7. To insure owners and others interested in real estate against loss or damage by reason of defective titles, incum-brances, or otherwise.
*4988. To insure against loss or damage by breakage of plate glass, located or in transit.
9. To insure against loss or damage by burglary or theft, or attempt thereat, or loss of money or securities in course of transportation.
10. To insure against loss or damage by water, caused by accidental breakage of automatic sprinkler heads.
11. To insure against loss or damage by death of live stock.
12. To guarantee merchants and those engaged in business and giving credit, from loss by reason of giving credit to those dealing with them; this shall be known as credit insurance.

Each of these subdivisions may be read with the greatest care, and nothing will be found embracing a subject such as the contract now under consideration. What the legislature had in mind in introducing the word “indemnity” in section 1596 was indemnity applicable to insurance as defined by the subsequent section 1597. The latter section covers all the recognized subjects of insurance which the statute treats of. I do not think this contract is one of indemnity, within the meaning of the statute, for the reason that it is limited in its scope, furnishing skilled services to certain professional men, and having no application to the general public, and that the term “expense,” therein used, refers merely to the incidental expenses of conducting the trial, and is only an incidental matter to the main feature of the contract. This agreement is based upon a perfectly legitimate purpose. It proceeds upon the theory that the company is able to furnish, at less cost, the most desirable services obtainable to make such defense.

Another feature of insurance is lacking. The consideration is not adequate to the so-called risk. Instead of being built up on the principles of insurance to pay money or indemnity upon a contingency, it is, in substance, an agreement to furnish services. I attach ño importance to the fact that respondent is a corporation and technically cannot practice law. That fact does not prevent it from furnishing the services described in the contract. In my judgment, the legislature never contemplated subjecting this class of service corporations to the expense and annoyance required by state inspection.

From a careful examination of the authorities and treatises upon *499insurance, I have not been able to discover a single case where a contract similar to the one now under consideration was held to be a contract of insurance. I concur in the opinion of former Attorney General Douglas, of this state, wherein he holds that the company is empowered to, and does enter into a contract with the physicians of the state to furnish them and pay for the services of an attorney in actions of malpractice, and that such contract is not insurance within the definition adopted by the legislature. Such was also the opinion of the corporation counsel for the District of Columbia, and of the attorney general of the state of Missouri. To the same effect, counsel for the insurance commissioner of Maryland. I am informed, though I have not examined the opinion, that the appellate court of the First district of Illinois in the case of Vredenburgh, Ins. Supt. of Ill., v. This Respondent, 126 Ill. App. 509 (decided May 8, 1906) supra, that the contract was not one of insurance. I also call attention to the case of State v. Laylin, 73 Ch. St. 90, 76 N. E. 567, and Commonwealth v. Provident, 178 Pa. St. 636, 36 Atl. 197, 36 L. R. A. 589, to the same effect.

I therefore dissent.