Connecticut Mut Life Ins Co v. Spratley
| Decision Date | 30 January 1899 |
| Docket Number | No. 183,183 |
| Citation | 19 S.Ct. 308,43 L.Ed. 569,172 U.S. 602 |
| Parties | CONNECTICUT MUT. LIFE INS. CO. v. SPRATLEY |
| Court | U.S. Supreme Court |
B. M. Estes, for plaintiff in error.
T. B. Turley and L. E. Wright, for defendant in error.
The plaintiff in error filed its bill against the defendant in error in the chancery court of Shelby county, Tenn., for the purpose of enjoining her from taking any proceedings under a judgment by default which she had obtained in the state of Tennessee against the corporation upon certain policies of insurance, and also for the purpose of obtaining a decree pronouncing the judgment void and releasing the corporation therefrom.
The ground set forth in the bill, and upon which the complainant sought to have the judgment against it set aside, was that the complainant was a nonresident of the state of Tennessee, had no office or agent there at the time the process was served, and was doing no business in the state, and the person upon whom the process in the action had been served in behalf of the corporation was not its representative in the state, and no process served upon him was in any way effectual to give jurisdiction to the state court over the corporation. The bill also alleged that the judgment, if enforced, would result in taking complainant's property without due process of law, and would violate the fifth and fourteenth amendments of the constitution of the United States.
The defendant in error herein appeared and answered the bill, and alleged that the judgment she had obtained was a valid and proper judgment, and she denied the allegation in the bill that complainant was doing no business in the state at the time of the service of rocess, and alleged, on the contrary, that it was then doing business therein. She asked that the preliminary injunction theretofore granted should be dissolved.
The court of chancery upon the trial gave judgment in favor of the complainant, and decreed that the preliminary injunction granted in the cause should be made perpetual. The defendant appealed to the supreme court of the state, where the decree of the court of chancery was reversed, the injunction dissolved, and a judgment granted the defendant in error on the bond executed by the company in obtaining the injunction, for the amount of the original judgment, with interest from its date, together with the costs of the suit for the injunction. 42 S. W. 145. The complainant thereupon brought the case here by writ of error.
In addition to the objection that the person upon whom process was served was not such a representative of the company that service of process upon him was sufficient to give the court jurisdiction, the company alleges that under the act of 1875, which will be referred to hereafter, the company appointed an agent pursuant to its provisions, and that any act subsequently passed relating to the service of process upon any other than the person so appointed could not affect the company, because such act would impair the contract which it alleges was created between the state and the company when it appointed an agent, by its power of attorney, pursuant to the provisions of such act of 1875.
The material facts are as follows: The corporation is a life insurance company, incorporated under the laws of, and having is principal office in, the state of Connecticut. It did a life insurance business in the state of Tennessee from February 1, 1870, until July 1, 1894. On March 22, 1875, the state of Tennessee passed an act to regulate the business of life insurance in that state, and by section 12 of the act it was enacted that a company desiring to transact business by any agent or agents in the state should file with the insurance commissioner a power of attorney authorizing the secretary of state to acknowledge service of process for and in behalf of such company at any and all times after a company had first complied with the laws of Tennessee and been regularly admitted, even though such company may subsequently have retired from the state or been excluded; and it was made the duty of the secretary of state, within five days after such service of process by any claimant, to forward by mail an exact copy of such notice to the company. Pursuant to that statute the company duly filed a power of attorney as required, and appointed therein the secretary of state to receive service of process, and that power of attorney the company never in terms altered or revoked.
In 1887 the legislature of Tennessee passed an act, approved March 29, 1887, entitled 'An act to subject foreign corporations to suit in this state.' The first section of this act provided that any foreign corporation found doing business in the state should be subject to suit there, to the same extent that said corporations were by the laws of the state liable to be sued, so far as related to any transaction had, in whole or in part, within the state, or to any cause of action arising therein, but not otherwise.
The second section provided that any corporation that had any transaction with persons or concerning any property situated in the state, through any agency whatever acting for it within the state, should be held to be doing business, within the meaning of the act.
The third and fourth sections of the act are set forth in full in the margin.1
The company continued to do business in the state after the passage of this act, and on the 12th day of December, 1889, it insured the life of Benjamin R. Spratley, the husband of the defendant in error, for the term of his life, in the sun of $5,000, for the benefit of his wife, the defendant in error, or, in case of her death befor payment, to his children, etc. The company also insured the life of Mr. Spratley on the 25th day of February, 1893, in the sum of $3,000, in favor of his wife, and for her sole use and benefit, with other conditions not material here. These policies were issued through the solicitation and by the procurement of the agent of the company for the states of Tennessee and Kentucky, and who had headquarters at Louisville, Ky. He came to Memphis, and solicited Mr. Spratley to take the policies, and the application for them was taken by such agent at Memphis. The defendant in error alleges in her answer that the premiums were paid thereon in Tennessee up to the death of Mr. Spratley, in February, 1896, but that fact does not otherwise appear. It does appear that all premiums had been paid at the time of the death of Mr. Spratley.
On July 1, 1894, the company ceased issuing any new policies in the state of Tennessee, and withdrew its agents from the state, and on July 21, 1894, notified the state insurance commissioner to that effect. It had, however, a number of policies, other than those issued on the life of Mr. Spratley, outstanding in the state at the time it withdrew (how many is not stated), and it continued to receive the premiums on these policies through its former agent for that state, and to settle, by payment or otherwise, the claims upon policies in that state as they fell due.
The former agent resided in Louisville when he received payment of the premiums, and it does not appear that after July, 1894, he was in the state of Tennessee when any payment of premiums was made to him by Tennessee policy holders. He received these payments as agent of the company, and it recognized such payments as sufficient.
Mr. Spratley died in the city of Memphis, in the state of Tennessee, on the 28th of February, 1896, leaving his widow, the defendant in error, surviving him. The two policies were in force at the time of his death. The company, being notified of the death of Mr. Spratley, sent its agent to Memphis to act under its instructions in the investigation and adjust- ment of the claim. Mr. Chaffee was the agent employed, and he had been employed in the service of the company since the 1st day of July, 1887. The writing under which he was employed stated that the company employed him 'for special service in any matters which may be referred to you, with instructions, during the pleasure of the directors of the company and under the direction of the executive officers; to have your entire time and services, except upon leave of absence; to pay the necessary traveling and hotel expenses incurred in the line of your duty, and to pay you for your time and services at the rate of $2,500 per annum,—this agreement terminable, on the part of the company, at the pleasure of the directors, and on your part by thirty days' written notice.'
The company sent Mr. Chaffee specially to the state of Tennessee for the purpose of investigating into the circumstances of the death of Mr. Spratley, and into the merits of the claim made by Mrs. Spratley, and while there was authorized by the company to compromise the claim made by her upon terms stated in a telegram from the vice president of the company. While Mr. Chaffee was engaged in negotiations with Mrs. Spratley and her brother in relation to her claims, and after she had refused to accept the compromise offered by him in behalf of the company, and on April 15, 1896, he was served, in Memphis, with process against the corporation in an action upon the policies above mentioned.
The attorneys for the plaintiff also sent a notice addressed to the president and directors of the company, together with a copy of the process issued out of the circuit court of Shelby county, which notice and copy of process were sent to Mr. Dunham, an attorney at law in the city and county of Hartford, in the state of Connecticut, who, on May 8, 1896, at Hartford, served them upon the company by leaving them in the hands of its vice president, and an aff davit of that fact was made by Mr. Dunham, and filed at the time of the entry of judgment by default in the clerk's office at Memphis. A copy of the writ was also sent by registered letter by John A. Strehl, clerk of the court, addressed...
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