172 U.S. 602 (1899), 183, Connecticut Mutual Life Insurance Company v. Spratley

Docket Nº:No. 183
Citation:172 U.S. 602, 19 S.Ct. 308, 43 L.Ed. 569
Party Name:Connecticut Mutual Life Insurance Company v. Spratley
Case Date:January 30, 1899
Court:United States Supreme Court

Page 602

172 U.S. 602 (1899)

19 S.Ct. 308, 43 L.Ed. 569

Connecticut Mutual Life Insurance Company



No. 183

United States Supreme Court

January 30, 1899

Submitted January 3, 1899




In a suit in a state court against a foreign corporation where no property of the corporation is within the state, and the judgment sought is a personal one, it is material to ascertain whether the corporation is doing

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business within the state, and if so, the service of process must be upon some agent in the state so far representing it that he may properly be held in law its agent to receive such process in its behalf.

A foreign insurance company which has been doing business within a state through its agents does not cease to do business therein when it withdraws its agent and ceases to obtain or ask for new risks or obtain new policies, while at the same time its old policies continue in force, and the premiums thereon are paid by the policyholders to an agent residing in another state who was once the agent in the state where the policyholders reside.

On the facts stated in the opinion of the Court, it is held that the law implies, from the appointment and authority of the agent of the plaintiff in error, the power to receive in Tennessee service of process against the company.

If it appears that there is a law of the state in respect to the service of process upon foreign corporations, and that the character of an agency of a foreign corporation is such as to render it fair, reasonable and just to imply an authority on the part of the agent to receive service, the law will, and ought to, draw such an inference and imply such authority, and service under such circumstances and upon an agent of that character is sufficient.

When the Legislature of Tennessee, under the Act of March 22, 1876, permitted the plaintiff in error, a foreign corporation, to do business within the state on appointing an agent therein upon whom process might be served, and when, in pursuance of such provisions, the company entered the state and appointed the agent, no contract was thereby created which would prevent the state from thereafter passing another statute in regard to service of process, and making such statute applicable to all foreign corporations already doing business within the state.

The case is stated in the opinion.

PECKHAM, J., lead opinion

MR. JUSTICE PECKHAM delivered the opinion of the Court.

The plaintiff in error filed its bill against the defendant in error in the Chancery Court of Shelby County, Tennessee, 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

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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 process, 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. 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

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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.

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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.

[19 S.Ct. 310] The third and fourth sections of the act are set forth in full in the margin. *

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 sum

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of $5,000, for the benefit of his wife, the defendant in error, or, in case of her death before 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, Kentucky. 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 policyholders. He received these payments as agent of the company, and it recognized such payments as sufficient.

Mr. Spratley died...

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