202 U.S. 246 (1906), Security Mutual Life Insurance Company v. Prewitt

Citation:202 U.S. 246, 26 S.Ct. 619, 50 L.Ed. 1013
Party Name:Security Mutual Life Insurance Company v. Prewitt
Case Date:May 14, 1906
Court:United States Supreme Court

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202 U.S. 246 (1906)

26 S.Ct. 619, 50 L.Ed. 1013

Security Mutual Life Insurance Company



United States Supreme Court

May 14, 1906




A writ of error having been dismissed, after full argument, as being a moot case on mistaken assumption of fact justified by the record, and the petitions for rehearing showing facts on which substantial relief can be granted, the application for rehearing is allowed, and the case decided on the merits on the arguments already made.

A state has the power to prevent a foreign corporation from doing business at all within its borders unless such prohibition is so conditioned as to violate the federal Constitution, and a state statute which, without requiring a foreign insurance company to enter into any agreement not to remove into the federal courts cases commenced against it in the state court, provides that, if the company does so remove such a case, its license to do business within the state shall thereupon be revoked, is not unconstitutional. Doyle v. Continental Insurance Co., 94 U.S. 535, followed and held not to be overruled by Barron v. Burnside, 121 U.S. 186, or any other decision of this Court.

The facts are stated in the opinion.

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PECKHAM, J., lead opinion

MR. JUSTICE PECKHAM delivered the opinion of the Court.

Motions for rehearing have been presented by plaintiffs in error. The cases were commenced in the proper state court in Kentucky, and were argued here on their merits in January of this term, and the writs of error were dismissed, 200 U.S. 446, because, as appeared from the record, only abstract questions remained to be decided, the licenses to do business within the State of Kentucky in both cases, which had been granted on July 1, 1904, for one year, having expired since issuing the writs of error.

In No. 178, the petition stated that the permission or authority to continue to do business in Kentucky had been renewed and extended from year to year by the State Insurance Commissioner, and that he had, on July 1, 1904, "continued the authority to the Security Mutual to transact the business of life insurance," as evidenced by the permit "for a period of one year from July 1, 1904." It was also averred that the permit had been revoked in September, 1904, and the company asked to have the revocation cancelled.

In No. 184, the petition stated that the company had been granted authority to transact business in the State of Kentucky for the period of one year then next ensuing -- that is, from July 1, 1904. The petition showed that the permit had not then (October, 1904) been revoked, but it was alleged that the Superintendent of Insurance threatened to revoke it (on grounds substantially similar to those set forth in the Security case, in 200 U.S., supra, viz., the removal to a federal court of a case commenced against the company in the state court), and an injunction was asked to prevent the revocation of the permit on that account.

On these motions for a rehearing, it is now shown, what did

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not appear in the records, that the permits in fact had been renewed for another year, from July 1, 1905, to July 1, 1906, for the purpose, as it would seem, of having the point involved reviewed by this Court. Neither party adverted to this fact on the argument, and the cases were fully presented by counsel on both sides on the merits, and the question treated as still existing.

As the dismissal was ordered on a mistaken assumption of fact, justified by the records, that the permits had expired by lapse of time and had not been renewed, the applications for rehearing are granted, and the judgments of dismissal set aside, and the cases will be decided upon the arguments already made in full by counsel for both parties.

The facts upon the main question sufficiently appear in the report in 200 U.S. 446. The Court of Appeals of Kentucky held the statute valid. 26 Ky. 1239; dissenting opinion, 27 Ky. 77.

The matter to be now determined is [26 S.Ct. 620] whether a state has the right to provide that, if a foreign insurance company shall remove a case to the federal court which has been commenced in a state court, the license of such company to do business within the state shall be thereupon revoked.

The statute under which the question arises is known as § 631 of the Kentucky statutes, and reads as follows:

Before authority is granted to any foreign insurance company to do business in this state, it must file with the Commissioner a resolution adopted by its board of directors consenting that service of process upon any agent of such company in this state, or upon the Commissioner of Insurance of this state, in any action brought or pending in this state, shall be a valid service upon said company, and if process is served upon the Commissioner, it shall be his duty to at once send it by mail, addressed to the company at its principal office, and, if any company shall, without the consent of the other party to any suit or proceeding brought by or against it in any court

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of this state, remove said suit or proceeding to any federal court, or shall institute any suit or proceeding against any citizen of this state in any federal court, it shall be the duty of the Commissioner to forthwith revoke all authority to such company and its agents to do business in this state and to publish such revocation in some newspaper of general circulation published in the state.

A state has the right to prohibit a foreign corporation from doing business with in its borders unless such prohibition is so conditioned as to violate some provision of the federal Constitution. Among the later authorities on that proposition are Hooper v. California, 155 U.S. 648; Allgeyer v. Louisiana, 165 U.S. 578, 583; Orient Ins. Co. v. Daggs, 172 U.S. 557; Waters-Pierce Oil Co. v. Texas, 177 U.S. 28; New York Life Insurance Company v. Cravens, 178 U.S. 389. 395; John Hancock Mutual Life Insurance Company v. Warren, 181 U.S. 73.

Having the power to prevent a foreign insurance company from doing business at all within the state, we think the state can enact a statute such as is above set forth.

The question is, in our opinion, settled by the decisions of this Court. In Insurance Company v. Morse, 20 Wall. 445, a statute of Wisconsin passed in 1870 in relation to fire insurance companies, after providing for certain conditions upon which the foreign company might do business within the state, continued:

Any such company desiring to transact any such business as aforesaid by any agent or agents in this state shall first appoint an attorney in this state, on whom process of law can be served, containing an agreement that such company will not remove the suit for trial into the United States circuit court or federal courts, and file in the office of the Secretary of State a written instrument, duly signed and sealed, certifying such appointment, which shall continue until another attorney be substituted.

While that statute was in force, the Home Insurance Company of the State of New York established an agency in Wisconsin,

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and, in compliance with the provisions of the statute, the company duly filed in the office of the Secretary of State of Wisconsin the appointment of one Durand as their agent upon whom process might be served. The power of attorney was filed, containing the following agreement:

Said company agrees that suits commenced in the state courts of Wisconsin shall not be removed by the acts of said company into the United States circuit or federal courts.

After doing business in the state for some time, the company issued a policy to Morse, and, a loss having occurred, Morse sued the company in one of the state courts of Wisconsin to recover the amount alleged to be due on the policy. The company entered its appearance in the suit and filed its petition to remove the case, which petition was in proper form, and was accompanied by the required bond and bail. Being presented to the state court of Wisconsin in which the suit was brought, that court held that the statute justified the denial of the petition to remove the case into the federal court, and, a trial having been had in the state court, it gave judgment for the plaintiff on a verdict found in his favor. Upon a review of the judgment by the Supreme Court of Wisconsin, it was affirmed. Thereupon, the insurance company sued out a writ of error from this Court, and the sole question was whether the statute and agreement were sufficient to justify the state court in refusing to permit the removal of the case to the federal court, and proceeding to judgment therein. This Court held that the agreement was void inasmuch as, if carried out, it would oust the federal courts of a jurisdiction given them by the Constitution and statutes of the United States. It was said that the statute of Wisconsin was an obstruction to the right of removal provided for by the Constitution of the United States and the laws made in pursuance thereof, and [26 S.Ct. 621] that the agreement of the insurance company derived no support from the unconstitutional statute, and it was void as it would have been had no such statute been passed. The Chief Justice, with whom concurred Mr. Justice Davis, dissented, holding that, as

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the state had the right to exclude foreign insurance companies from the transaction of business within its jurisdiction, it had the right to impose conditions upon their admission, which was a necessary consequence from the right to exclude altogether.

It will be seen the statute provided that, in the power of attorney, appointing an agent for the company within the state, there should be an agreement that the...

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