Connecticut Mut. Life Ins. Co. v. Moore

• Decision Date: 02 July 1947
• Parties: CONNECTICUT MUT. LIFE INS. CO. et al. v. MOORE, State Comptroller.
• Court: New York Court of Appeals Court of Appeals

297 N.Y. 1

74 N.E.2d 24

CONNECTICUT MUT. LIFE INS. CO. et al.

v.MOORE, State Comptroller.

Court of Appeals of New York.

July 2, 1947.

Appeal from Supreme Court, Appellate Division, First Department.

Action by the Connecticut Mutual Life Insurance Company and others against Frank C. Moore, Comptroller of the State of New York, for a declaratory judgment that Article 7 of the Abandoned Property Law, s 700 et seq., is unconstitutional as to plaintiffs and an injunction against enforcement of the statute against plaintiffs. From a judgment of the Appellate Division of the Supreme Court in First Judicial Department, 271 App.Div. 1002, 69 N.Y.S.2d 323, unanimously affirming, in so far as appealed from, a judgment of the Supreme Court, entered in New York County upon an order of the court at Special Term, 187 Misc. 1004, 65 N.Y.S.2d 143, which granted in part and denied in part a motion by plaintiffs and a motion by defendant for judgment on the pleadings, plaintiffs appeal on constitutional grounds.

Modified, and affirmed as modified. Ganson J. Baldwin, of New York City, for appellants.

Nathaniel L. Goldstein, Atty. Gen. (Abe Wagman, of New York City, and Wendell P. Brown, of Albany, of counsel), for respondent.

LOUGHRAN, Chief Judge.

This case presents questions as to the validity of the New York Abandoned Property Law, Consol.Laws, c. 1, in its application to unclaimed life insurance funds.

The gist of the relevant operative sections of the statute is as follows: Abandoned property includes any moneys, held or owing by any life insurance company which have remained unclaimed for seven years by the person or persons entitled thereto under (1) matured life insurance policies on the endowment plan issued on the lives of residents of this State; (2) other kinds of life insurance policies issued on the lives of residents of this State, where the insured, if living, would have attained the limiting age under the mortality table on which the reserves are based; (3) life insurance policies issued on the lives of residents of this State who have died (s 700). On or before April 1st, in each year, every life insurance corporation shall make a verified written report to the State Comptroller of all such abandoned property held or owing by it (s 701). Within thirty days thereafter such corporation shall publish a newspaper notice to the persons appearing to be entitled to any of such unclaimed moneys together with a statement (1) that a list of the names of such persons is on file and open to public inspection at the principal office of the corporation; (2) that payment of such unclaimed moneys will be made on or before the succeeding August 31st, to persons establishing their right thereto; and (3) that in the succeeding September such unclaimed moneys still remaining will be paid to the State Comptroller, after which the insurance corporation shall cease to be liable therefor (s 702). Such payment shall be made to the State Comptroller at the time so fixed (s 703). Thereupon the care and custody of such property shall pass to the State, the State shall be responsible for all claims established thereto pursuant to law less any lawful deductions, and the insurance corporation shall be relieved of liability for any such claim (s 1404).¹ The State Comptroller shall publish annual statements of abandoned property received by him and not paid to claimants ( s 1402). Claims may be filed with him for such property and his determination thereof shall be subject to review in the courts ( s 1406). The statute shall be enforced notwithstanding the bar of any statute of limitations ( s 1400).

Whether these parts of the statute should be declared unconstitutional is the question. The plaintiffs are a number of foreign life insurance companies that are licensed to do business in this State. The State Comptroller is the defendant. Upon motions made by all parties for a decision on the pleadings, Special Term annulled the statute in so far as it pertains to policies of life insurance issued for delivery outside the State of New York, but upheld the challenged provisions in all other respects, except that the court put aside an issue as to the asserted unlawful operation thereof upon defenses that life insurance companies may have to claims upon their insurance contracts. From so much of the judgment of Special Term as denied relief prayed for by them, the plaintiff companies appealed to the Appellate Division, and, when a nuanimous affirmance followed, they brought the case to this court as of right on the basis of the constitutional questions that are directly involved. Since the defendant State Comptroller has at all times been content with the decision of Special Term, we are here concerned only with the effect of the statute upon presumptively abandoned proceeds of insurance policies issued upon the lives of residents of this State and delivered within its borders by companies doing business here, and what follows has reference to policies so issued and delivered and to no others.

Each of the plaintiff companies concededly has its home office outside this State and, by his motion for judgment on the pleadings, the defendant State Comptroller admits the following allegations of the complaint. ‘The business of the plaintiffs, and other life insurance companies, is conducted from their Home Offices, where their officers, records, and securities are situated. Applications for policies are obtained by agents throughout the United States, and are sent to the Home Offices for consideration, and, if approved, the policies are written at the Home Offices and are sent to the agents for delivery to the applicants. Premiums are payable at the Home Offices, or, if paid to an agent, are forwarded to the Home Offices. * * * Claims under policies must be made at the Home Offices, under the terms of the policies, which provide that upon receipt at the Home Office of ‘due proof’ of death, or other event, the company will pay, etc., and all claims are considered at the Home Offices, and, if allowed pursuant to the terms of the policies, are paid by checks drawn at the Home Offices.' On the strength of the above circumstances, the plaintiff companies insist that their debtor obligations under the contracts in question are beyond the territorial reach of the power of the New York Legislature.

Other defects imputed to the statute by the companies may be summarized in this manner: it cancels provisions of insurance contracts whereby the proceeds become payable only upon filing of due proof of specified events, e.g., death, age, survival, and upon surrender of the policy; it takes away defenses to policies, e.g., misrepresentation and breach of conditions; if given retrospective effect, it will operate to revive claims which at the time of its enactment were barred by the Statute of Limitations. In the foregoing aspects, the statute, as the plaintiff companies see it, is not only repugnant to the due process clauses, but also impairs the obligation of contracts, takes private property for public use without making just compensation therefor and runs foul of the fundamental demand for the equal protection of equal laws. U.S.Const., art. I, s 10; 14th Amendt.; N.Y.Const., art. I, ss 6, 7, subd. (a).

The reason of the statute is plain enough. Section 102 says: ‘It is hereby declared to be the policy of the state, while protecting the interest of the owners thereof, to utilize escheated lands and unclaimed property for the benefit of all the people of the state, and this chapter shall be liberally construed to...