Metropolitan Casualty Insurance v. Basford

WHITING, J.

The relator is an insurance company organized under the laws of the state of New York, and, -under such laws, authorized to write insurance “upon' plate glass against breakage, *162 and against injury, disablement or death resulting from traveling or general accident, • and against disablement, resulting from sickness, and every other insurance appertaining thereto.” It is not authorized by its charter to transact any other business than as above stated. Under the laws of the state of New York the business of employer’s liability insurance is recognized and treated as separate and distinct from general • accident and casualty - insurance, and separate authorization in a company’s charter is required for each, but in the charter granted to relator there was nothing calling attention to this classification made by the New York statutes, and nothing in such charter specifically forbids relator from engaging in employer’s liability insurance business. Relator, having been engaged in the business of insuring plate glass against breakage within the state for several years, did at the beginning of the year 1912 apply to the respondent, the insurance commissioner of this state, for a certificate authorizing it to continue in said business in this state. It made no application for authority to engage in any other business named in its charter. The certificate asked for was refused, and relator 'brought a special proceeding in the circuit court asking for a writ of mandamus requiring the respondent, as commissioner of insurance of this state, to issue it such certificate. An alternative writ with order to show cause was issued by such court, and, upon the hearing thereon, the court, after considering the affidavits submitted, refused the peremptory writ, and dismissed the proceeding. It is from the judgment refusing such writ and dismissing such' proceeding that this appeal is taken.

It is conceded by respondent that appellant is entitled to the certificate prayed for, and that a writ compelling respondent to grant such certificate should- issue, unless appellant has failed to c&nplv with the provisions of chapter 73, Laws of 1905, and acts amendatory thereof. It is claimed ’by respondent thát appellant comes under the provisions of such act and its amendments, and that it has not -complied therewith; while it is contended by appellant that those provisions of said act and amendments, which may appear to apply to appellant, are unconstitutional and therefore void. To get a clear understanding of the precise questions presented to- us, it is necessary to call attention to the titles and some of the provisions of the act in question and its amendments.

The title of the original act, to^wit, (chapter 73, Laws 1905), *163 is as follows: “An act entitled an .act _ concerning the powers oí surety, title.guaranty,, employer’s liability_ and burglarly insurance and fidelity corporations, to provide for, the. examination,, management and-control of .the same.” Section i of said act reads as follows: “Section i. [Corporations governed by act.] Any corporation now existing.or hereafter organized under the laws of -this state or any other state or country, for the purposes, either wholly or in part, of issuing or. becoming surety on bonds and undertakings, employer’s liability and burglary insurance, guaranteeing title to real property or acting as trustee, shall, before transacting any of said business in this state, make the deposit of guarantee fund, file the statement and procure the certificate of authority to transact said business as' hereinafter provided.” Section 2, so far as the same is material to the matters before us, provides: “No such corporation shall transact any business in this state, nor issue any' bond, undertaking, certificate of employer’s liability or burglary insurance, certificate of -title, * * * until i-t shall have -deposited with the state -treasurer a guarantee fund. ^ * *” By chapter no, Session Laws of 1907, -section 2 of theVact of 1905 was amended, but the amendment is immaterial so far as the questions before us are concerned.

Chapter 243, Session Laws of 1909, is -entitled as follows.: “An act entitled an act to amend -chapter 73 of the Session Laws of 1903 as amended by chapter no of the Session Laws of 1907, relating to surety, title -guaranty, employer’s liability, burglary insurance, fidelity corporations and relating to deposit of securities with the state treasurer.” This law purported to amend both sec1 tions 1 and 2, section 1 being amended by inserting therein after the words, “guaranteeing title to real property,” the words, “accident o-r casualty insurance.” So far as material to- the question now before us, section 2 remained identical in wording with the quotation from the original section 2 above, excepting that it had a provision requiring the corporation to have a paid-up capital of at least a certain amount, but no reference was made in said section 2 to “accident 01: -casualty insurance.”

Chapter 176, Laws of 1911, is entitled: “An act entitled an act amending section 2 of chapter 73 of the Session Laws of 1,905 as amended by chapter no of the.Session Laws of 1907 pertaining to the capital stock -for surety of title, guaranty, employer’s lia *164 bility, burglary, fidelity, -accident and casualty insurance companies.” The only change in that part of section 2 hereinbefore referréd to was a change in the amount of capital stock required and the amount of guarantee fund to be deposited with the treasurer; there still being in section 2 no reference whatever to “ accident and casualty insurance.”

Respondent contends that, inasmuch as under its charter the appellant was empowered to engage in the business of accident and casualty insurance, it was not entitled, even under the law of 1905, supra, to do business in this state until it had deposited the guarantee fund required 'by such law, because appellant, being authorised to do an accident and casualty insurance business, had authority to engage in employer’s liability insurance; respondent contending that any corporation having authority to engage in such insurance must comply with the provisions of section 2 of that act, regardless of whether it is. seeking to do1 that particular kind of an insurance business within this state.

[1] Appellant insists that, inasmuch as it was not asking to conduct any class of insurance business named in the 1905 statute, it was entitled to- a certificate without making the deposit of the guarantee fund, even though it was authorized by its charter to engage in employer’s liability insurance. Appellant further contends that the term “employer’s liability insurance” is not included within the comprehensive term “accident and casualty insurance” under the laws of the state granting to it its charter, and that it would not be included within such term, even though the statute of New York did not specifically distinguish between the two terms. With this last contention of relator we cannot agree. Though the statute of New York may make a clear distinction between accident and casualty insurance on the one hand and employer’s, liability insurance upon the other, and even though chapter 176 of the Raws of 1911, supra, by its title seems to recognize such a distinction, yet ‘ as a matter of fact and law employer’s liability insurance is but a' branch of accident and casualty insurance; and when appellant, .by its charter, is authorized to do an accident and casualty insurance business, and there are no restrictive words in its charter showin that, regardless of the use of such general terms, the business of employer’s liability insurance is not included, respondent would be justified in assuming that appellant, holding such charter, was author *165 ized to engage in the business of employer’s liability insurance. Employer’s Liability Assurance Co. v. Merrill, 155 Mass. 404 , 29 N. E. 529 .

[2] Certainly neither respondent nor the people of this state will take notice of the laws of the state of New York.

[3] It will be noticed that in section 2 of the act under con-. sideration, and in all the amendments thereof, it is provided that “no such corporation shall transact any business in this state * * * *” until it has complied with such act; while in section 1 it is provided that the corporation, “before transacting any of said business in this state,” shall do the things required by section 2. Respondent, relying upon the wording of section 2, insists that while a foreign corporation, which, by its charter, could only engage in the business of insuring plate glass against breakage, would be entitled to a certificate without complying with the provisions of the law of 1905, yet, inasmuch as relator is empowered to do a class of insurance business included within this law, to-wit, employer’s liability insurance, it cannot get such certificate without complying with the provisions of section 2. We think this is placing an unreasonable construction upon this law. Respondent concedes that he has a right to grant a certificate to a corporation authorizing it to do only one of two or more classes of business authorized by its charter. It seems to us that a fair interpretation of this law, construing the several parts thereof together, and considering the thing aimed at by the law — which was not so much the protecting of the people against the corporations as it was to protect them against the doing of certain kinds of business without proper safeguards — would require the word “business” in said section 2 to be held to refer to and include only business such as one of the corporations designated in this act would be empowered to1 conduct if it complied with the conditions of this act; and that, therefore, no matter how broad may be the charter powers of a corporation, it may still get a certificate to do one certain class of business under this law, provided it complies with the provisions of such law so far as the same are aimed at the doing of that particular class of business. One can readily see that if the charter powers of a foreign insurance company were very broad, and we had in this state statutes like chapter 73, laws of 1903, supra, each one relating only to one certain class of insurance and imposing restrictions upon the *166 doing of that particular class of' insurance, which conditions differed as between the several classes of insurance that'such company was authorized to engage in, and if such company, when it came into this state, sought' permission to engage in' only - one -of the many different branches of insurance which it was authorized to conduct, yet, under the construction placed upon this statute by the respondent, such a company would have to comply'with the provisions of perhaps a dozen different laws in no -manner pertaining to the particular class of 'business it desired to conduct in this state. Certainly if the people of this state do not think it necessary'to safeguard plate glass insurance,, or if there be another statute relating thereto, it would be unreasonable ,to require a company seeking to engage in that -business, and that business only, to comply with a law having no bearing upon that particular business.

[4] What we have already said would dispose of this case if it were n-oi for the amendments to chapter 73, laws 1905, by which it was attempted to amend such law so that it would include within its terms and provisions accident and casualty insurance companies. Of course, it must be conceded that insurance against breakage of plate glass comes directly within the term “accident and casualty insurance,” so that, if there has been a valid amendment bringing companies -doing accident and casualty insurance within the terms of this law, the appellant must comply with the provisions of such law before it is entitled to receive a certifica1", from respondent. Appellant contends that the amendments to this law, so far as -such amendments attempted to extend the provisions of the law to- accident' and casualty insurance companies, are unconstitutional as being' in contravention o-f section 21, art. 3, of the Constitution -of this state, providing that “no law shall embrace more than one subject, which shall be expressed in its title.”

[5, 6] We fully appreciate the importance and delicacy of the question presented. No rule is better settled than that every act of the Legislature is presumed toi be constitutional, and that the courts should sustain the constitutionality of a law unless the conflict between the statute and the Constitution is so palpable as to- leave no room for reasonable doubt as to its unconstitutionality. Wickhem v. Alexandria, 23 S. D. 556, 122 N. W. 597 ; Bekker v. Railway, 28 S. D. 84, 132 N. W. 797 . Yet -ours is a constitutional government, the people, in their sovereign capacity, have placed the above re *167 striction upon the methods of legislation, have prescribed the above rule which their legislative servants must conform to, and, if they neglect to conform to -this rule and keep within this restriction, their labor; no matter how meritorious otherwise, will be of no effect, as this -section of the Constitution is mandatory. State v. Tibbets, 52 Neb. 228 , 71 N. W. 990 , 66 Am. St. Rep. 492 . To the courts is left the duty of determining when -the Legislature has disregarded such rule and restriction; and, when it is found that either of these provisions of the supreme law of the state 'has been disregarded, the further duty of the courts is clear, let the consequences be what they' may. As was well said by the Supreme Court of Virginia in Fidelity Insurance, Trust & Safe Deposit Co. v. Shenandoah Valley R. Co., 86 Va. 1 , 9 S. E. 759 , 19 Am. St. Rep. 858 : “As to the constitutional .provision in question, it is * * * * not only mandatory, but of great public utility. It was introduced into the Constitution for a wise purpose, and ought to- be reasonably interpreted and firmly enforced. One of its objects is to prevent corrupt or surreptitious legislation by incorporating into a bill obnoxious -provisions of which the title gives no indication, and its requirement is that the title, while it need not be a complete index of the act, must indicate its object with sufficient distinctness to enable the members of the Legislature to fairly understand it by simply hearing the title read. In other words, the title is not to be used as a deceptive -cover for vicious or surreptitious legislation. When the title is general, as it may -be, all persons interested are put upon inquiry as to anything in the body of the act which is germane to the subject expressed; but when the title is restrictive, and confined to a special feature of a particular -subject, the natural inference is that -other features of the same general -subject are excluded. As the Legislature,’ says Judge Cooley, ‘may make the title to an act as restrictive as they please, it is obvious that they may sometimes so frame it as to’ preclude many matters being included in the act which might with entire propriety have been -embraced in one enactment with the matters indicated by the -title, but which must now be excluded 'because the title has been made unnecessarily restrictive.’ Nor can the courts, he adds, ‘enlarge the scope of the title. They are vested with no dispensing power. The Constitution has made the title the conclusive index to- the legislative intent as to what shall have operation. It is no answer to say that *168 the title might have 'been made more comprehensive, if in fact the Legislature have not seen fit to make it so/ Cooley’s Constitutional Limitations, 149.” As was said by Justice Brewer in the case of State v. Bankers’.& Merchants’ Mut. Ben. Ass’n., 23 Kan. 499 ; “The Constitution has said that the title must be an index to- the law, and the courts may not sanction as a valid enactment any part of a statute to which the finger of the title does not point. If we should attempt to enlarge the title, we should defeat the very purpose of the constitutional prohibition, which was to make the title to a bill notice of all contemplated legislation.” In Memphis St. Ry. Co. v. Byrne, 119 Tenn. 278 ; 104 S. W. 460 , the court said: “ Tf the title adopted be narrow and restricted, carving out for treatment only a part of a general subject, the legislation under it must be confined within the same limits (State v. Bradt, 103 Tenn. 584 , 53 S. W. 942 ; Hyman v. State, 87 Tenn. 109, 113 , 9 S. W. 372 , 1 L. R. A. 497; Cooley, Const. Lim. (5th Ed.) 179) ; and, if it be broad and general, the legislation under it may have a like scope.’ ” In the case of In re Breene, 14 Colo. 401 , 24 Pac. 3 , the court said: “The General Assembly may within reason make the title of a bill as comprehensive as it chooses; but, when it elects to limit the title to a particular -subdivision of some general subject, the right to- embody in the bill matters pertaining to other subdivisions of such subject is relinquished.” See, also, State v. Tibbets, 52 Neb. 228 , 71 N. W. 990 , 66 Am. St. Rep. 492 ; State v. Barrett, 27 Kan. 213 . To illustrate what we have said above: Under a -title declaring the purpose of a bill to> be to regulate the running at large of “cattle,” there could be legislation as to all kinds thereof, including horses, mules, 'hogs, sheep, etc., but, if the Legislature saw fit to use in the title -of the act the more restrictive term “horses,” there could be under -such title no legislation pertaining to any other class of “c-attle,” and, if the Legislature saw fit to use in the title of the act the yet more restrictive tenn “white horses,” there could be -under it no legislation relating to horses of any other color.

[7] W-e find that in chapter 73, laws 1905, the Legislature, instead -of using in the title thereof a comprehensive term -such as would include all kinds -of companies doing a surety or insurance business, used definite restrictive terms which absolutely excluded *169 the right, under such title, of legislating in relation to any class of insurance companies not named therein.

From what we have said above it becomes clear that under the title of the act of 1905 the Legislature of that year could not have-included in the -body of that act, and thus brought within its provisions, accident and casualty insurance companies. Can a Legislature do indirectly, through amendments, what it could not have done directly?

[8] There can be no question but that a Legislature may, by amendment, enlarge the scope of the original act so that the subject matter found in the body of the amendment may materially differ from that of the original act, providing, however, that the subject-matter of the amendment be germane to the subject matter of the original act and be included within the title of the original act. This is but another way of saying that, by amendment, anything may he brought into the amended act that might have been originally enacted under the title of the original act. Board of Sup’rs of Chippewa County v. Auditor General, 65 Mich. 408 , 32 N. W. 651 ; Fidelity Insurance, Trust & Safe Deposit Co. v. Shenandoah Valley R. R. Co., supra; Roby v. Sheppard, 42 W. Va. 286 , 26 S. E. 278 . There is some conflict in the authorities upon the point as to whéther a Legislature can by amendment, bring into- an act all that might have originally been enacted under the title thereof. In Erickson v. Cass County, 11 N. D. 494 , 92 N. W. 841 , the court said: “Appellants’ counsel contends, in substance, that section 61 of the state Constitution, before quoted, prohibits an amendment to a section of a statute when the subject-matter of the amendment differs from the subject-matter contained in the section amended, even though the amendment relates to- the same subject of legislation, and is within the title of the act amended. The cases are in confusion upon thi-s point, and the conflict does not entirely arise because of differences in the constitutional provisions upon which the)' are based. The position of appellants’ counsel has the support of a number of cases. We are of the opinion, however, that the better reason and the best-considered cases, including those under constitutions like our own, -are against this view, and are to the effect that a section of a statute may be amended so as to include provisions which are not directly related to those embraced in the original section, provided the new provisions are germane to the *170 subject of the act amended a$ expressed in its title.” The Supreme Court of Minnesota holds in favor of the limitation upon the rule announced in the North Dakota decision. -In the case of State ex rel. Rice v. Smith, 35 Minn. 257 , 28 N. W. 241 , speaking of the rule upheld in the above, decision, being the rule contended for by the respondent in that case, that court says: “It may be thus expressed : In an amendatory act, entitled. as such, the title being not restrictive in its terms, may be embraced any legislation which might have been enacted in the original law under its title.” But in laying down the rule which they maintain should prevail that court in the same case says: “An amendatory law is for the amendment, not of what might have been enacted under the title of the original statute, but of what was enacted; not of what the original law might have been, but of wliat it was. * * * Yet, the principle relied upon by the respondent would sustain such legislation, because it might have been adopted under the title of the original law. The fault in the asserted rule is that it does not regard the nature and extent of the original, enactment, which it is the declared purpose of the later act to amend, but only the title of it. It rests upon the assumption, that the enactment was as comprehensive as under its title it might have been. We think it cannot be relied upon to aid in the determination of such cases, and, if recognized as a rule without qualification, that it would open a way to the accomplishment of the very evils which the constitutional provision was intended to prevent.”

As supporting the rule that in any case the subject-matter of the amendment must be within the title, be such title ever -so restrictive, we cite, -besides the cases last cited, Eaton v. Walker, 76 Mich. 579 , 43 N. W. 638 , 6 L. R. A. 102, and also Memphis St. Ry. Co. v. Byrne, supra, where the court, after noting the rules applicable to the case of the original act, says: “These rules apply to amendatory statutes. Such a -statute incorporates itself with the original law, and the two become one act, as'fully and completely a-s if enacted at one time in one bill, and the matter of the amendment must not only be germane to the body of the original act, in order to avoid violating the one-subject mandate of the Constitution, but, in the absence of an enlargement of the title of the latter act, it must come within the title of the original -statute and be germane to the subject there expressed, in order to- comply *171 with the other - mandate that-the subject be'expressed-'in' the'title. If it be otherwise in either- particular, it is void. Hyman v. State, supra; Goodbar v. Memphis, 113 Tenn. 23 , 81 S. W. 1061 .” The underscoring in the above quotation'is'ours. In Fidelity Insurance, Trust & Safe Deposit Co. v. Shenandoah Valley R. Co., supra, the court held that by an amendment to an act entitled an act to secure the payment of the - “wages and salaries” of certain- employes of railway, canal, steamboat, and other transportation .companies, the act could not be extended so- as to have it apply to payment for “engines” and “cars” supplied. In the case of Eaton v. Walker, supra, the defendant, a mercantile corporation, claimed to have been incorporated under an act, entitled “An act for the incorporation of manufacturing companies” (Acts 1875, No. 187), the Legislature, in -1881 (Acts 1881, No. 274), amended this act, the title of -the amended act being “An act to amend section one of an act entitled 'An act for the incorporation of manufacturing companies,’ approved May i, 1875, so as to include mercantile business,” and the body of the amended section was changed so as to read, “for the purpose of engaging in and carrying on any kind of manufacturing or mercantile business, or,any union df the two.” Here we find, not only an amendment -of the law, but an enlargement -6f the title, which enlargement of the title, if effective to -allow legislation- of wider scope than -that under the original title, made the title comprehensive enough so that it embraced the subject-matter of the amended section. The court -said: “The title of the act of 1875 remains unchanged, and only provides for the incorporation of manufacturing companies. The act of 1881 provides for the incorporation of companies -to carry on a mercantile business — a' business entirely foreign to the act of 1875, which it purports to- amend — and therefore introducing matters not embraced in the purposes indicated in the title to the act amended., Section 20, art. 4, of the Constitution, provides that 'no law shall embrace more than one object, which shall be expressed in its title.’ This attempt to incorporate a new business into the act of 1875 by the amendment of 1881 falls plainly within the pi'O-hibition of this section of article 4 -of 'the Constitution. The amendment is, in effect, an independent statute, and provides for the incorporation of companies that are not mentioned or provided for by the act of 1875.” The original act considered in Fish v. Stockdale, 111 Mich. 46 , 69 N. W. 92 , was entitled: “An *172 act to regulate the taking and catching of fish in the inland lakes of this state.” • The title of the amendment was “An act to amend section one of act * * *' entitled: ‘An act to regulate the taking and catching of fish in the inland waters of this state/ ” The court said: “The title was defective, in that it did not express the object of the bill. Section 20, art. 4, Const. The title gave no notice to the legislators or to the people that the 'bill provided that the provisions of the original act should be extended to other subjects.” So the title of the 1909 amendment gave no notice whatever that the amendment was designed to extend the provisions of the 1905 law to companies not already included in such law. In the state of Alabama they have a statute providing for the trial of misdemeanors. This statute was afterwards amended, the title to- the amendment reading that it is an act “to amend an act for the trial of misdemeanors. * * * ” One section of the amended act purported to extend the provisions of the act to the tidal of “felonies.” It will be readil)'- seen that if the title to the original act had used the comprehensive term “crimes” instead of the restrictive term “misdemeanors,” and the bodj'' of. the original act had only related to “misdemeanors,” the amendment would have been within the original title. The Supreme Court of Alabama, speaking of this act and its amendment, say, in Harper v. State, 109 Ala. 28 , 19 'South. 857: “It is clear, therefore, that the amendatory act, in so far as it relates to misdemeanors and their trial in said court, is, as to this class of crimes, purely amendatory and within its title. But it needs only a suggestion to make it equally clear that felonies and their trial were not comprehended within the title of said act, and, in so far as there was an attempt to include them in the act, under such a caption, it was futile and void.” It thus becomes absolutely clear that the insertion of the words “accident and casualty companies” in section 1 of the act of 1909 was unconstitutional, for the reason that such words could not have been included in section 1 of the original act under its title, and there has been no attempt in the title of the 1909. amendment to' so enlarge upon the title of the original act as to permit of extending the provisions of this law to such companies. As the amendment of 1911 does not purport to amend section 1 of the original act, the words “accident and casualty companies” have never become a part of said section 1; nor is there any reference to* such companies in section 2 even as amended by *173 the act of 1911. It follows that the provisions of the 1905 -act have never been extended to accident and casualty companies and therefore do not apply to a company engaged only in the business of insuring plate glass against breakage.

There are authorities seeming to hold, as is implied by the words underscored in the above quotation from the opinion in Memphis St. Ry. Co. v. Byrne, that the title of an'amendatory act may so enlarge upon the title of the act to be amended that, under such title of the amendatory act, there may be legislation broader and more comprehensive in its scope than would have been permissible under the title of the original act, providing only that the subject-matter of the legislation contained in the amendment must be germane to that óf the act amended. Upon the other hand, there are authorities seeming to hold that in an amendment, no matter ■how enlarged may be its title, there can be included no subject-matter, except such as is both germane to the subject-matter of the original act and within the title of such act. Eaton v. Walker, supra, as well as the comments thereon in the latter case of Jenking v. Secretary of State, 79 Mich. 305 , 44 N. W. 787 . It is unnecessary at this time for us to pass upon this disputed question, and nothing that we have said herein should be taken as indicating our views thereon. The Legislature of 1905 could, if it had so desired, have used a title for chapter 73 comprehensive enough to have permitted of an enactment thereunder as broad as that sought by the ■several amendments, but 'it did not elect so to do. The object sought through the • purported amendment is undoubtedly meritorious, and can readily be secured through the enactment of a new act including within its terms all the companies sought to be reached, or by the passage of an act, under an appropriate title, providing that the law of 1905 and its several amendments shall apply to “accident and casualty companies.” The Legislature has used an unconstitutional method in trying to secure a constitutional object. We have discussed at considerable length the propositions bearing upon the issues herein, as they are of great importance; and we trust that what wé have said may not only be a guide to our courts, but may aid the legislative branch in its efforts to enact valid laws.

The judgment appealed from is reversed, and the special proceeding remanded for further action in conformity with this decision.