Hunter v. Mutual Reserve Life Insurance

.delivered the opinion of the court.

This writ of error, is prosecuted to review a judgment of the Court of Appeals of the State of New York, modifying a judgment of the Supreme Court of that State. The judgment of the Court of Appeals was remitted to and madé the judgment of the latter court.

The action was brought- by Hunter, whom we shall call plain tiff ¿ against the insurance company, which we shall refer to as defendant', upon five judgments obtained in the State of North Carolina, recovered by one Emrick Wadsworth, a citizen of North Carolina, and owned by plaintiff. The judgments were recovered upon policies of insurance issued by defendant, one of which was issued to a eitizen of North Carolina while defendant was doing business there, the others to citizens of New York and New Jersey. • They were assigned to Wadsworth long after

The judgments were obtained by default after service made upon the insurance commissioner of the State. The decision of the case' turns upon the validity of the service.

The defendant is a life insurance company, organized under the laws of New York. Prior to March 13, 1899, it was duly admitted to do business in the State of North Carolina, it complying with the laws of the State successively passed, which required insurance companies to appoint agents upon whom service of process could be made.

On March 6, 1899, the legislature passed a law known as the Willard law. The law prescribed that no foreign insurance company should do business in the State until it had, by a duly .executed instrument filed in the office of the secretary of state, constituted and appointed the insurance commissioner its true and lawful attorney, upon whom all lawful process in any action or legal proceedings might be served, and agreed that such service should have the same force and validity as if served on the company, and that “the authority thereof” should “continue in forcé irrevocable so long as any liability of the company” should “remain outstanding in this Commonwealth.” Chapter 54 of the Laws of 1899. .

On or about the thirteenth of April defendant executed the power of attorney required, and thereupon a license

The legislature which passed the Willard law passed also a law called the Craig act, by which it was provided that any foreign insurance company desiring to do business in the State after June 1 then ensuing must become a domestic corporation of thé State. There were severe penalties prescribed for the violation of the act. The company was subjected to a penalty of $200 á day for every day it “continued to operate-or do business without having complied with the requirements of the act,” and it was deprived of the right of suing in the state courts or to enter into any new contracts or enforce those it had made. In addition to the penalty of $200 it was subjected to a penalty of $500 for each day that it did business after the first day of June, 1899, “without first becoming a domestic corporation.”

The act took effect on the tenth of February, 1899. In May of that year the board of ‘'directors of defendant passed a resolution to withdraw from the State and to dispense with and terminate the services of all of its agents. It also revoked the authority of the insurance commissioner to act as its attorney to receive service of process. A’ certified copy of the resolution was served on the commissioner, and the agents of the company were withdrawn from the State, the premiums upon the policies theretofore issued by it being remitted by mail .to its home office, .where the policies and premiums were payable, and losses upon policies being paid by check from its office. Outside of this the record shows four transactions: (1) the rewriting of a policy of insurance in 1899, originally issued in 1886, which was mailed from its office in New York; (2) sending a check in payment of a policy issued prior to May 17, 1899, to be delivered upon receipt of cértain unpaid assessments; (3) the adjustment in North Carolina, in June, 1902, of a loss upon a policy issued in Washing

Three of the policies upon which judgments were' recovered were issued in the State of New York long prior to the year 1899. The fourth policy was issued in New Jersey, also prior to 1899. The assignments to Wads-worth were made in December, 1901, and January, 1902, and the suits were begun on January 20, 1902.

There is no controversy over the power of the State to pass the Willard and Craig acts so called, or to make their provisions conditions upon which foreign insurance corporations could do business in the State. The controversy is over the duration of the conditions; The decision upon that, plaintiff contends, depends upon the question whether the insurance company was doing business in the State at the time the actions on the policies were brought and process served,, and, insisting that it was, cites Connecticut Mutual Life Ins. Co. v. Spratley, 172 U. S. 602 ; Mutual Reserve Association v. Phelps, 190 U. S. 147 . Plaintiff further insists that, even it be assumed that defendant had withdrawn from the State in good faith and had ceased to do business therein after May 18, 1899, it was still liable to be sued in the courts of the State “in any action or local proceeding of every nature of which the courts of North Carolina had jurisdiction,” and that the insurance commissioner was its agent to receive service of process. This contention is based on the provision of the statute which continues the authority of. the commissioner “in force and irrevocable so long as any

If the situation of deféndant, regarding what it had done and its obligations, was exactly expressed by the contentions of plaintiff, they might be irresistible. But not only the Willard act but the Craig act must be considered in determining defendant’s conduct. It had done business in the State and the former act becam'e a part of its obligations to its policy-holders. The latter act imposed new conditions upon it, and as an alternative to compliance with them required it to remove from the State. An evasion of the requirement was, as we have seen, severely penalized. Money penalties, one of $200 and one of $500, for every day it should do business after the first of June, 1899, were imposed upon it and no contract it should make or had'made could be enforced in the courts of the State. Such were the alternatives presented' by the Craig act. In other words, defendant was given the choice to become a domestic corporation or go out of the State. It chose to go out of the State, and adopted the only way it could tó do so. We think such course was open to it and we see no reason to question its good faith.

It is, however, contended that defendant “persisted in doing business in the State and was so found at the time of the service of process in question. ” Four instances are adduced to sustain the contention, two of which occurred in 1899 and two in 1902. These instances have no relation to one another and no relation to the transactions upon which the judgments were based. Between the first two and the last two there was an interval, of three years, and yet it is insisted that there was such connection between them that they constituted doing business continuously in the State, and the defendant was hence precluded from revoking its power of attorney to the insurance commissioner. The contention of plaintiff, so far as based on the

Plaintiff, however, presses with earnestness, in support of his contention, the following cases: Connecticut Mutual Life Ins. Co. v. Spratley, 172 U. S. 602 ; Mutual Reserve Fund Life Association v. Phelps, 190 U. S. 147 ; Mutual Reserve Ins. Co. v. Birch, 200 U. S. 612 ; Commercial Mutual Accident Co. v. Davis, 213 U. S. 245 .

In the Spratley case the life insurance policy, which was the subject of the suit, was issued by the insurance company when it was concededly present and doing business in the State of Tennessee. The service was upon an agent by the'name of Chaffee, sent to investigate into the circumstances of the death of Spratley and the claims of his widow. These facts distinguish the case from the one at bar. But certain language of the court is quoted to establish, not only was the insurance company so doing business in the State as to justify service of process upon the agent appointed by the company, but doing business génerally. The court, through Mr. Justice Peckham, said:

“We think the evidence in this ease shows that the company was doing business within the State at, the time of this service of process. From 1870 until 1894 it had done an active business throughout the State by its agents

therein, and had issued policies oí insurance upon the lives of citizens of the State. How many policies it had so issued does not appear. Its action in July, 1894, ’ in assuming to withdraw from the State was simply a' recall of its agents doing business therein, the giving of a notice to the State insurance commissioner, and a refusal to take any new risks or to issue any new policies within the State. Its outstanding policies were not affected thereby, and it continued to collect the premiums upon them and to pay the losses arising thereunder, and it was doing so at the time of the service of process upon its agent.”

And further:

“It cannot be,said with truth, as we think,.that an.insurance company does no business within a State unless it has agents therein who are continuously seeking new risks, and it is continuing to issue new policies upon such risks. . Having succeeded in taking risks in the State through a number of years, it cannot be said to cease' doing business therein when it ceases to obtain or ask for new risks or to issue new policies, 'while at the same time its old policies continue in force and the premiums thereon are continuously paid by the policy holders to an agent residing in another State, and who was once agent in the State where the policy holders resided. This action on the part of the company constitutes doing business within the State, so far as is necessary, within the meaning of the law upon this subject. And this business was continuing at the time of the service of process on Mr. Chaffee in Memphis.”

This reference to the law in the State; must be considered. A statute of the State provided that process might be served upon any agent of a corporation doing business in the State found within the county where the suit was brought, no matter what character of agent such person might be, and in the absence of such an agent it

Further explanation of the language of the court is contained in the following passage:

“A vast mass of business is now done throughout the country by corporations which are chartered by States other than those in which they are transacting part of their business, aiid justice requires that some fair and reasonable, means should exist for bringing such corporations within the jurisdiction of the courts of the State where the business was done, out of which the dispute arises.” (Italics ours.).

Mutual Reserve Association v. Phelps is distinguished from the case at bar by the same features that distinguish the Spratléy case from it. The suit was brought by a citizen of the State of Kentucky upon a policy issued .when-the-association was doing a general business in the State through regular agents under a license from the State. The commissioner subsequently' cancelled its license, and it withdrew its agents from the State. The service of process in the action was nevertheless: made upon the commissioner and sustained. It was stipulated by the parties that outstanding policies were continued in force after the action of the commissioner on which the association had collected and was collecting dues, premiums and ¿ssessments, and this court held, on the au

Mutual Reserve Life Insurance Company v. Birch was a like case. Certain judgments which were sued on in New York were obtained in actions upon policies issued when the insurance company was doing its regular business in the State of North Carolina, and antedated its resolution to withdraw from the State. The ease was rested in the Court of Appeals of New York on Woodward v. Mutual Life Ins. Co., 178 N. Y. 485 , 490. It was said in that case that the stipulation of the company in regard to service of process became an obligation of- the company precisely as though it “had been incorporated in the policies, and thereafter, whether the company continued to do business in the State or not, policy holders could commence action by service of process upon the Secretary of State,” subsequently changed to the insurance commissioner. Woodward v. Mutual Life Ins. Co. was cited by this court in its opinion sustaining the judgment in the Birch case.

Commercial Mutual Accident Co. v. Davis has the same

The first contention of plaintiff is, therefore, untenable. The next contention is that even f defendant did withdraw from the State in good faith the authority to the insurance commissioner to receive service of process continued as long as the company had outstanding liabilities in the State. And this, it is insisted, constituted the duration of the authority not only for causes of action arising in the State, but for causes of action arising in other States. In other words, that the language of the statute is not limited by its purpose to protect the resident policy-holders of the company, but for the benefit of every litigant upon any cause of action, and, to use the graphic language of the Court of Appeals, to “perpetuate a local forum to which under the guise of an assignment to some resident, non-residents of far distant States might flock.for the purpose of instituting litigation upon contracts issued to them at their homes, against a corporation there readily subject to sérvice and which long before had attempted in good faith to withdraw from the jurisdiction thus hunted out.”

This is certainly the logical consequence of plaintiff’s contention, and to sustain it he relies upon Johnston v. Trade Ins. Co., 132 Massachusetts, 432; Wilson v. Martin, 149 Id. 24; Biggs v. Life Association, 128 N. C. 5 . A statute liké that of North Carolina was construed in the Massachusetts cases, and, therefore, the construction given to it is instructive. In all of the cases the corporation had “a domicil of business in the Commonwealth,” to use the language of the Supreme Judicial Court of Massachusetts, and the court recognized that the right to sue upon cause of action arising in another State was not within “the main purpose” of the statute passed on, indeed, that it “was not framed for that purpose,” but decided that

In Biggs v. Mutual Reserve Life Association the policy on which the action was based was issued to a resident of the State. The language of the court was quite general. The court did not discuss whether it was “‘ceasing to do business in this State’ to transact that business through agents located outside of the State, by means of the mail,” though it may be said that the court 'expressed doubt of it by referring to the Spratley case. It was said:

“It is sufficient to point out that the statute.requires the power of attorney to be irrevocable, not ‘as long as the company continues to do business’ in this State, but. as long as any liability of the company-remains outstanding’ in this State, and the contract with the State, as expresséd in the power of attorney filed by the company, so specifiés. -N.o amount of authorities having a more or less fancied analogy can overcome these plain words of the statute and of the power of attorney drawn and filed, in conformity thereto. Green v. Life Association, 105 Iowa, 628 ; Insurance Co. v. Gillett, 54 Maryland, 213.”

This general language must be considered in reference to the case, a conclusion which is justified by the decision of the court in Moore v. Mutual Reserve, 129 N. C. 31 , where it is said that the State, having the right to prescribe the terms-upon which the insurance company might carry on its business in the State, and the-company; “being permitted, proceeded to make contracts with the citizens of the State, and became liable to them under these contracts. One of the provisions upon which the defendant was allowed to do business here was that James R. Young, insurance commissioner, and his successors in office

“It is conceded that, as a general rule, a principal has the right to revoke a power of attorney at any time, whether it is in terms irrevocable or not. But to this general rule there are well-established exceptions as where it is coupled* with an interest, or where it is contractual in its nature, given for & consideration and for the protection of some one, or some interest. In our opinion this power -falls under this exception to the general rule. It was contractual in its nature; was given upon consideration that defendant should have the right to carry on its business in this State.-and for the protection 'of those who should deal with the’ defendant.”

Manifestly, this means who should deal with the defendant in the State. The facts in the case at bar are different from the cited cases. The policies upon which the four judgments were recovered were not issued in North Carolina, and not having been issued under the faith of its laws are not entitled to their remedial sanction. The facts in this case are also different from those in the Massachusetts cases. Defendant did not have “a domicil of business” in tjhe State, nor were the contracts to be performed there. It in good faith withdrew from the State — withdrew indeed under the compulsion of law. We say under compulsion of law, for clearly the Craig act required that as an alternative to compliance with its provisions. It presented a choice to defendant of one of two courses. Defendant accepted one of them; that is, withdrew from the State, and revoked the power which it had giverr- to the insurance commissioner to accept .service for it. Revoked it as far as it could do so. It

Judgment affirmed.