Williams v. Cheney

Dewey, J.

This case has heretofore been before the court, and as to many of the questions arising thereon has been finally disposed of, as may be seen in 3 Gray, 215. Two points are now taken, which are supposed to be open upon the case as presented on the new trial which has been had before the jury-

1. It is said that, however true it may be that the policies, and the notes given as premiums therefor, would have been illegal, had the transaction taken place on the account of a resident of Massachusetts; yet such is not the case where the policies are really effected for a citizen of the State of Maine, through an agent residing in Boston, and the policies made, as the present were, “ for the benefit of whom it may concern.” Such a policy, it is said, enures to the benefit of the real party in interest, and may be sued in his name, and is therefore, although in form made in the name of his agent, yet in reality a contract with the principal, a citizen of Maine.

The first inquiry is therefore whether a policy made by a foreign insurance company, through an agent residing in Boston, solely for the benefit of a citizen of Maine, is illegal, if there has been a failure to comply with the provisions of our statutes rogulating foreign insurance companies, who may have established agencies in Massachusetts.

Looking at the general provisions on this subject in the Rev. Sts. c. 37, §§ 41-43, we should suppose that the statute had prohibited the establishment of foreign agencies here, for the purpose of making any insurance, unless they had previously complied with the provisions of our statutes as to filing and publishing certain statements of the business of the company, its funds, &c. Such positive prohibition would, without any penalty being annexed thereto, render the making of insurances here illegal. It is true, however, that in other sections of the statute, imposing a penalty upon the agent who should proceed to make and issue policies here, the case which subjects the agent to the penalty is that of making a contract for. insurance within this state and with persons resident in this state. The St. of 1847, c. 273, is much to the like effect. Although this be so, yet if the general prohibition be broader and forbids making any policy through an agent residing in Massachusetts, that would have the like effect, and be equally fatal to this contract, as though forbidden under a penalty named. We are strongly of opinion that such was the intention and such the effect of the Rev. Sts. c. 37.

But if it were otherwise, the defence is equally well maintained. These contracts were actually made with a resident of Massachusetts. The defendant was the only party whose name appeared upon the policies. The plaintiff does not deal with him as agent, but as principal. He treats the notes given by the defendant for the premiums as his personal notes. Whatever rights might pass to others as to enjoying the fruits of the policies, in case a loss had occurred, it is no less true that the contracts were in fact made with a resident of Massachusetts, and are now sought to be enforced against him as his contracts. The defendant is therefore entitled to the full benefit of the defence arising under the provisions of the statute. The insurance company having neglected to comply with the requisitions of law, if the suit upon the notes were brought in the name of the company, this would constitute a good defence.

2. But the notes having been negotiated before they became due and payable, the further inquiry is whether the plaintiff is to be affected by this illegality in the contracts, and the notes avoided in bis hands for that cause. It is conceded that the plaintiff knew, at the time he took these notes, that they were taken by an agent of the insurance company in Boston, for premiums on policies of insurance issued by such agent. The only further point to be established in the defence was, that the plaintiff knew that the policies were issued by the insurance company in violation of the laws of Massachusetts. The court instructed the jury, as to this, that the plaintiff was entitled to recover upon the notes, unless the plaintiff knew or had reasonable cause to know, that the notes were so given in violation of the laws of Massachusetts, and that from the facts shown, and particularly detailed in the charge to the jury, they had a right to find such knowledge, or reasonable cause to know, that the policies were issued in violation of the laws of Massachusetts. This ruling was, as we think, correct, and adapted to the case.

Exceptions overruled.