In 1887, the plaintiff in error issued a certificate or policy of insurance for $3,000 upon the life of Charles C. Snyder. His wife, the defendant in error, was the beneficiary. He died in 1908, and liability upon the policy having been denied by the company, this suit was brought by Mrs. Snyder in the chancery court of Tennessee to compel payment. The court gave judgment in her favor, and finding that the refusal to pay was not in good faith, added to the recovery 25 per cent of the principal, or $750, which was adjudged to be 'reasonable compensation and reimbursement to the complainant' for the 'additional loss, expense, and injury' which had been inflicted upon her as the holder of the policy by the refusal. This addition was made pursuant to an act passed by the legislature of Tennessee in 1901 (chap. 141). The supreme court of the state, sustaining the statute, affirmed the judgment, and the insurance company has sued out this writ of error. 122 Tenn. 248, —L.R.A.(N.S.) --, 122 S. W. 981.
The sole Federal question for decision is whether the above-mentioned statute, as applied, impaired the obligation of the contract in suit, and thus violated article I, § 10 of the Constitution of the United States.
'Section 1. . . . That the several insurance companies of this state, and foreign insurance companies and other corporations, firms, or persons doing an insurance business in this state, in all cases when a loss occurs and they refuse to pay the same within sixty days after a demand shall have been made by the holder of said policy on which said loss occurred, shall be liable to pay the holder of said policy, in addition to the loss and interest thereon, a sum not exceeding 25 per cent on the liability for said loss; Provided, that it shall be made to appear to the court or jury trying the case, that the refusal to pay said loss was not in good faith, and that such failure to pay inflicted additional expense, loss, or injury upon the holder of said policy; and provided, further, that such additional liability within the limit prescribed shall, in the discretion of the court or jury trying the case, be measured by the additional expense, loss, and injury thus entailed.
'See. 2. . . . That in the event it shall be made to appear to the court or jury trying the cause that the action of said policy holder in bringing said suit was not in good faith, and recovery under said policy shall not be had, said policy holder shall be liable to such insurance companies, corporations, firms, or persons in a sum not exceeding 25 per cent of the amount of the loss claimed under said policy; Provided, that such liability, within the limits prescribed, shall, in the discretion of the court or jury trying the cause, be measured by the additional expense, loss, or injury inflicted upon said insurance companies, corporations, firms, or persons by reason of said suit.'
The contention is that the provision for added liability placed a burden upon the assertion of the rights which the contract secured, and thus in effect changed the contract by allowing a recovery to which the parties had not agreed, and which was not sanctioned by the law as it existed at the time the contract was made. Bronson v. Kinzie, 1 How. 311, 317, 11 L. 2d. 143, 145; Barnitz v. Beverly, 163 U.S. 118, 41 L. ed. 93, 16 Sup. Ct. Rep. 1042; Bedford v. Eastern Bldg. & L. Asso. 181 U.S. 227, 45 L. ed. 834, 21 Sup. Ct. Rep. 597; Oshkosh Waterworks Co. v. Oshkosh, 187 U.S. 437, 439, 47 L. ed. 249, 250, 23 Sup. Ct. Rep. 234. It is pointed out that in the cases in which statutes have been sustained providing for the addition to the recovery of attorneys' fees or damages, or penalties, the question arose under the 14th Amendment; and that, so far as they applied to suits upon contracts, the latter had been made after the enactments. Atchison, T. & S. F. R. Co. v. Matthews, 174 U.S. 96, 43 L. ed. 909, 19 Sup. Ct. Rep. 609; Fidelity Mut. Life Asso. v. Mettler, 185 U.S. 308, 322, 46 L. ed. 922, 931, 22 Sup. Ct. Rep. 662; Iowa L. Ins. Co. v. Lewis, 187 U.S. 335, 355, 47 L. ed. 204, 213, 23 Sup. Ct. Rep. 126; Farmers' & M. Ins. Co. v. Dobney, 189 U.S. 301, 304, 305, 47 L. ed. 825, 826, 23 Sup. Ct. Rep. 565; Seaboard Air Line R. Co. v. Seegers, 207 U.S. 73, 52 L. ed. 108, 28 Sup. Ct. Rep. 28; Yazoo & M. Valley R. Co. v. Jackson Vinegar Co. 226 U.S. 217, 57 L.ed. --, 33 Sup.Ct.Rep. 40.