Orient Insurance v. Daggs

after stating the case, delivered the opinion of the court.

The statute of Missouri is alleged to violate the Fourteenth Amendment of the Constitution of the United States in the following particulars: (1) that it abridges the privileges or immunities of citizens of the United States; (2) denies to

(1) It is not clear that this ground is relied on. It is, however, not available to plaintiff in error. A corporation is not a citizen within the meaning of the provision, and hence has not “ privileges and immunities ” secured to “citizens” against state legislation. This was decided in Paul v. Virginia, 8 Wall. 168 , against a corporation upon which were imposed conditions for doing, business in the State of Virginia, and has been repeated in many cases since, including one at the present term, Blake v. McClung, ante, p. 239.

(2) It is not easy to make a succinct statement of the objections of plaintiff in error under this provision. Counsel says : “The business of insurance includes insurance against damages on account of death, accident, personal injury, liability for acts of employés, damages to plate glass, damages by hail, lightning, high wind, tornadoes, and against damages to personal property on account 'of fire or casualty by other elements, as well as insurance against loss or damage to buildings on account of fire. . . . No other business is subject to the discrimination, in case such business is involved in litigation, of having the damages assessed without due process of law. The statute singles out persons engaged in fire insurance as against all other kinds of insurance, and as against all other kinds of business, and imposes the onerous and unusual conditions provided in the statute, against such persons.” And again: “ The statute thus discriminates as to the subject-matter, as to the parties, as to the mode of trial of actions at law and equity, and imposes upon this particular class of underwriters, as distinguished from all the rest of the world, conditions which abrogate its contracts, compel it to pay damages never sustained, and prevent it from having an investigation upon the trial by due process of law.”

This mingles grounds of objection, and confounds the prohibitions of the'provision we are considering with that of the next provision. Whether the statute of Missouri provides for “ due process” we shall consider-hereafter, and upon that con

It is not necessary to state the reasoning upon which classification by legislation is based or justified. This court has had many occasions to do so, and only lately reviewed the ■subject in Magoun v. Illinois Trust and Savings Bank, 170 U. S. 283 . We said in that case that “ the State may distingiiish, select and classify objects of legislation, and necessarily the power must have a wide range of discretion.” And this because of the function of legislation and the purposes to which it is addressed. Classification for such purposes is not invalid because not depending on scientific or marked differences in things or persons or in their relations. It suffices if it is practical, and is not reviewable unless palpably arbitrary. The classification of the Missouri statute is certainly not arbitrary. We see many differences between fire insurance and other insurance, both to the insurer and the insured — differences in the elements insured against and the possible relation of the parties to them, producing consequences which may justify if not demand different legislative treatment. Of course it is not for us to debate the policy of any particular treatment, and the freedom of discretion which we have said the State has is exhibited by analogous if not exact examples • to the Missouri statute in Railway Company v. Mackey, 127 U. S. 204 , 208, and in Minneapolis & St. Louis Railway v. Beckwith, 129 U. S. 26 .

In Railway Company v. Mackey, 127 U. S. 201 , a law of Kansas was passed which abrogated as to railroads the rule othe common law exempting masters from liability to one servant for the negligence of another. It was sustained as a valid classification, notwithstanding that it did not apply to other carriers, or even to other corporations using steam. The law was objected to, as the statute of Missouri is objected to, on the ground that it violated the provisions of the constitution which we are now considering.

In Minneapolis Railway Company v. Beckwith, 129 U. S. 26 , a law of Iowa making a class of railroad corporations for special legislation was sustained.

(3) “ What it is for a State to deprive a person of life, liberty or property without due process of law” is not much nearer to precise definition to-day than it was said to be by Mr. Justice Miller in Davidson v. New Orleans, 96 U. S. 97 .

The process “of judicial inclusion and exclusion” has proceeded, and yet this court, in Holden v. Hardy, 169 U. S. 366 , 389, again declined specific definition. Mr. Justice Brown, speaking for the court, said: “ This court has never attempted to define with precision the words ‘ due process of law,’ nor is it necessary in this case. It is sufficient to say that there are certain immutable principles of justice which inhere in the very idea of free government, which no member of the Union may disregard, as that no man shall be condemned in his person or property without due notice and an opportunity of being heard in his defence.” These principles were extended to the right

The legislation sustained was an act of the State of Utah making the employment of workingmen in all underground mines and workings and in smelters and all other institutions for the reduction and refining of ores or metals eight hours per day, except in cases of emergency, where life or property should be in imminent danger. The violation of the statute was made a misdemeanor. It was undoubtedly a limitation on the right of contract — that of the employer and that of the employed —• enforced by a criminal prosecution and penalty on the former and on his agents and managers. It was held a valid exercise of the police powers of the State. These powers were not defined except by illustration, nor need we now define them. The case is a precedent to support the validity of the Missouri statute now under consideration.

The statute provides as follows: “ In all suits brought upon policies of insurance against loss or damage by fire, hereafter issued or renewed, the defendant shall not be permitted to deny that the property insured thereby was worth at the time of the issuing of the policy the full amount insured therein on said property ; and in ease of total loss of the property insured, the measure of damages shall he the amoimtfor which the same was insured, less whatever depreciation in value below the amount for which the property is insured the property may have sustained between the time of issuing the policy and the time of the loss, and the burden of proving such depreciation shall be upon the defendant.” . . . It is also provided that no condition in any policy of insurance contrary to such provision shall be legal or valid.

The specific objections which, it is claimed, bring the statute within the prohibition of the Constitution, in the last analysis, may be reduced to the following: That the statute takes away a fundamental right and precludes a judicial inquiry of liability on policies of fire insurance by a conclusive presumption of fact.

' The statute then does not present the alternative of wager policies to indemnity policies. The change is from one kind of indemnity policy to another kind, from open policies to valued policies, both of which are sanctioned by the practice and law of insurance, and this change is the only compulsion of the law. It makes no contract for the parties. In this it permits absolute freedom. It leaves them to fix the valuation of the property upon such prudence and inquiry as they choose. It only ascribes estoppel after this is done ■ — ■ estoppel, it must be observed, to the acts of the parties, and only to their acts in open and honest dealing. Its presumptions cannot be urged against fraud, and it permits the subsequent depreciation of the property to be shown.

We see no risk to insurance companies in this statute. ITow can it come? Not from fraud and not from change, because, as we have seen, the presumptions of the statute do not obtain against fraud or change in the valuation of the property. Risk then can only come from the failure to observe care — that care which it might be supposed, without any prompting from the law, underwriters would observe, and which if observed would make their policies true contracts of assurance, not seemingly so, but really so; not only when premiums are paying, but when loss is to be paid. The State surely has the power to determine that this result is desirable, and to

It would be idle and trite to say that no right is absolute. Sic utere tuo ut alienvm non laidas is of universal and pervading obligation. It is a condition upon which all property is held. Its application to particular conditions must necessarily be within the reasonable discretion of the legislative power. When such discretion is exercised in a given case by means appropriate and which are reasonable, not oppressive or discriminatory, it is not subject to constitutional objection. The Missouri statute comes within this rule.

The. cases cited by plaintiff in error, which hold that the legislature may give the effect of prima facie proof to certain acts, but not conclusive proof, do not apply. They were not of contract nor gave effect to contracts. It is one thing to attribute effect to the convention of parties entered into under the admonition of the law, and another thing to give to circumstances, maybe accidental, conclusive presumption and proof to establish and force a result against property or liberty.

The statute is not subject to the condemnation that it regulates contracts made or rights acquired prior to its enactment; and we may repeat the language of Mr. Justice Field, in Missouri Railway Co. v. Mackey, supra, that “it cannot be successfully contended that the State may not prescribe the liabilities under which corporations created by its laws shall conduct their business in the future, wher,e no limitation is placed upon its power in this respect by their charters. Legislation to this effect is found in the statute books of every State.”

That which a State may do with corporations of its own creation it may do with foreign corporations admitted into the State. This seems to be denied, if not generally, at least as to plaintiff in error. The denial is extreme and cannot be maintained. The power of a State to impose conditions upon foreign corporations is certainly as extensive as the power over domestic corporations, and is fully explained in Hooper v. California, 155 U. S. 618 , and need not be repeated.

The other contentions of plaintiff in error we do not consider it is necessary to review.

Judgment affirmed.