This action was brought in one of the courts of Alabama by the defendant in error, hale, on a policy of fire insurance issued by the German Alliance Insurance Company, a New York corporation.
The policy covered 'lumber and squared timber while stacked on the banks of Byrne's Mill pond, near Bay Minette, Baldwin county, Alabama, said lot of lumber and timber containing 300,000 feet,' etc.
Upon the petition of the defendant, the case was removed into the circuit court of the United States for the southern district of Alabama, where a verdict was returned for $5,198.93 in favor of the plaintiff. For that amount judgment was rendered against the company. The circuit court suggested that the verdict was excessive, and that the motion for new trial would be granted, unless the plaintiff reduced the verdict to $4,112. The required reduction was made and the new trial denied. Northern P. R. Co. v. Herbert, 116 U.S. 642, 647, 29 L. ed. 755, 758, 6 Sup. Ct. Rep. 590.
The principal question presented by the assignments of error arises out of certain provisions of the Code of Alabama, as follows:
'§ 2619. Every contract or policy of insurance hereafter made or issued shall be construed to mean that, in the event of loss or damage thereunder, the assured or beneficiary thereunder may, in addition to the actual loss or damage suffered, recover 25 per cent of the amount of such actual loss, any provision or stipulation in such contract or policy to the contrary notwithstanding. Provided, at the time of the making of such contract or policy of insurance, or subsequently, before the time of trial, the insurer belonged to, or was a member of, or in any way connected with, any tariff association or such like thing, by whatever named called, or who had made any agreement or had any understanding with any other person, corporation, or association engaged in the business of insurance, as agent or otherwise, about any particular rate of premium which should be charged or fixed for any kind or class of insurance risk; and provided further, no stipulation or agreement in such contract or policy of insurance to arbitrate loss or damage, nor to give notice or make proofs of loss or damage, shall in any such case be binding on the assured or beneficiary, but right of action accrues immediately upon loss or damage.
'§ 2620. If it is shown to the reasonable satisfaction of the jury by a preponderance of the weight of the testimony that such insurer, at the time of the making of such agreement or policy of insurance, or subsequently, before the time of trial, belonged to, or was a member of, or in any way connected with, any tariff association or such like thing, by whatever name called, either in or out of this state, or had made any agreement or had any understanding, either in or out of this state, with any other person, corporation, or association engaged in the business of insurance, as agent or otherwise, about any particular rate of premium which should be charged or fixed for any risk of insurance on any person or property, or on any kind or class of insurance risk, they must, if they find for the assured or beneficiary, in addition to his actual damages, assess and add 25 per cent of the amount of such actual loss, and judgment shall be rendered accordingly, whether claimed in the complaint or not.' Ala. Code 1896, §§ 2619, 2620; Id. 1907, §§ 4594, 4595.
At the time of the contract of insurance, the defendant corporation was connected with a tariff association which prescribed the rates of premium to be charged by its constituent members. The verdict and judgment against the company gave effect to that clause of the statute providing that, under every contract or policy of insurance, thereafter made or issued by any such association, the assured or beneficiary may, in addition to the actual loss or damage suffered, recover 25 per cent of the amount of such actual loss, any provision or stipulation in such contract or policy to the contrary notwithstanding.
The assignments of error present a question of practice which is supposed to be raised by those provisions of the policy which contained a covenant and warranty in these words: