333 U.S. 541 (1948), 337, Connecticut Mutual Life Insurance Co. v. Moore

Docket Nº:No. 337
Citation:333 U.S. 541, 68 S.Ct. 682, 92 L.Ed. 863
Party Name:Connecticut Mutual Life Insurance Co. v. Moore
Case Date:March 29, 1948
Court:United States Supreme Court

Page 541

333 U.S. 541 (1948)

68 S.Ct. 682, 92 L.Ed. 863

Connecticut Mutual Life Insurance Co.



No. 337

United States Supreme Court

March 29, 1948

Argued December 19, 1947



1. As applied to policies of insurance issued by foreign corporations for delivery in New York on the lives of residents of New York, where the insured persons continue to be residents of New York and the beneficiaries are residents at the maturities of the policies, Article VII of the Abandoned Property Law of New York, requiring payment to the State of the monies held or owing by life insurance corporations and remaining unclaimed for seven years by the persons entitled thereto, does not impair the obligation of contracts within the meaning of Art. I, § 10 of the Constitution. Pp. 545-548.

2. Nor does it deprive foreign insurance companies of their property without due process of law contrary to the Fourteenth Amendment, since the relationship between New York and its residents who abandon claims against foreign insurance companies and the relationship between New York and foreign insurance companies qualifying to do business in New York are sufficiently close to give New York jurisdiction. Pp. 548-551.

3. The problem of what another state may do as to custody of abandoned insurance monies of companies incorporated therein is not presented in this case, and is not passed upon. P. 548.

4. Decision is reserved as to instances where insured persons, after delivery of the policies, cease to be residents of New York or where the beneficiaries are not residents of New York at the maturities of the policies. P. 549.

5. A decision of the highest court of a state sustaining generally the validity of a state abandoned property law and having the effect of requiring appellants to comply with the state law is reviewable in this Court on an appeal under § 237(a) of the Judicial Code when precise questions arising under the Federal Constitution are presented, even though the decision arises out of a suit for a declaratory judgment presenting the questions abstractly, and not out of a concrete case involving particular funds and facts. Pp. 550-551.

29 N.Y. 1, 74 N.E.2d 24, affirmed.

Page 542

In a suit for a declaratory judgment, the Supreme Court of New York sustained (with certain exceptions) the validity of Article VII of the Abandoned Property Law of New York, as applied to foreign insurance companies. 187 Misc. 1004, 65 N.Y.S.2d 143. The Appellate Division affirmed. 271 A.D. 1002, 69 N.Y.S.2d 323. The Court of Appeals affirmed with modification. 297 N.Y. 1, 47 N.E.2d 24. On appeal to this Court, affirmed except as to issues specifically reserved, p. 551.

REED, J., lead opinion

MR. JUSTICE REED delivered the opinion of the Court.

We are asked in this suit to consider the validity of the New York Abandoned Property Law as applied to policies of insurance [68 S.Ct. 684] issued for delivery in New York on the lives of residents of New York by companies incorporated in states other than New York.

Article VII of the Abandoned Property Law, headed "Unclaimed Life Insurance Funds," was enacted in 1943. In 1944, the law was amended so as to cover insurance companies incorporated out of state.1 Section 700 states

Page 543

that "any moneys held or owing" by life insurance companies in the following three classes of policies issued on the lives of residents of New York shall be deemed abandoned property: (1) matured endowment policies which have been unclaimed for seven years; (2) policies payable on death where the insured, if living, would have attained the limiting age under the mortality table on which the reserves are based (an age varying from 96 to 100), as to which no transaction has occurred for seven years, and (3) policies payable on death in which the insured has died and no claim by the person entitled thereto has been made for seven years.2 Other sections

Page 544

of Art. VII provide that insurance corporations doing business in New York shall make an annual report of abandoned property falling within the definitions of § 700, the lists shall be advertised, and, if the abandoned property advertised remains unclaimed, the amounts due and owing shall be paid to the state comptroller so as to be in the care and custody of the state. Art. VII, § 703, Art. XIV, § 1402; State Finance Law, § 95. Upon payment to the state, the companies are discharged of any obligation, and any person subsequently setting up a claim must file a claim with the comptroller. A penalty of $100 a day is provided for failure to file the required report. Art. XIV, § 1412.

[68 S.Ct. 685] The present suit was brought by nine insurance companies, incorporated in states other than New York, in the Supreme Court of New York for a declaration of the invalidity of the Abandoned Property Law of New York, as applied to the plaintiffs, and to enjoin the state comptroller and all other persons acting under state authority from taking any steps under the statute. The Supreme Court ruled that the Abandoned Property Law was void insofar as it applied to policies of life insurance issued for delivery outside of New York by foreign life insurance companies. As no appeal from this ruling was taken by the state, it is not before us. The Supreme Court reserved to the appellant insurance companies the right to assert the invalidity of the Abandoned Property Law or any application thereof insofar as such law or state action thereunder sought to deprive them of any defense against any claim under any life insurance policy.

Page 545

With the above exceptions, the Supreme Court upheld the life insurance sections of the Abandoned Property Law against appellants' attack. The Appellate Division affirmed, and the Court of Appeals reversed the judgment of the Supreme Court insofar as it reserved to the companies further right to assert defense against claims under the policies. The Court of Appeals, by its interpretation of the New York statute, left open to the insurance companies all defenses except the statute of limitations, noncompliance with policy provisions calling for proof of death or of other designated contingency, and failure to surrender a policy on making a claim. 297 N.Y. 1, 74 N.E.2d 24. With this modification, it affirmed the trial court's judgment.3 Appeal to this Court was perfected under § 237(a) of the Judicial Code, and probable jurisdiction noted. 332 U.S. 788.

In addition to objections under New York law, appellants raised in their complaint and have consistently maintained that the statute impairs the obligation of contract within the meaning of Art. I, § 10, of the Constitution, and deprives them of their property without due process of law under the Fourteenth Amendment. Their argument under the Contract Clause is that the statute transforms into a liquidated obligation an obligation which was previously only conditional. Their argument under the Due Process Clause is that New York has no power to sequester funds of these life insurance companies to meet the companies' obligations on insurance policies issued on New York residents for delivery in New York.

I. In support of their first contention, appellants note that the policy terms provide that the insurer shall be under no obligation until proof of death or other contingency

Page 546

is submitted and the policy surrendered. They contend that, in dispensing with these conditions, the statute transforms an obligation which is merely conditional into one that is liquidated. They further claim that, unless proof of death or other contingency is submitted, they will have difficulty in establishing other complete or partial defenses, such as the fact that the insured understated his age in his application for insurance, that the insured died as a result of suicide, military service, or aviation, and that the insured was not living and in good health when the policy was delivered. We assume that appellants may find it more difficult to establish other defenses, but we do not regard the statute as unconstitutional because of these enforced variations from the policy provisions.

Unless the state is allowed to take possession of sums in the hands of the companies classified by § 700 as abandoned, the insurance companies would retain moneys contracted to be paid on condition and which normally they would have been required to pay. We think that the classification of abandoned property established by the statute describes property that may fairly be said to be abandoned [68 S.Ct. 686] property and subject to the care and custody of the state and ultimately to escheat. The fact that claimants against the companies would under the policies be required to comply with certain policy conditions does not affect our conclusion. The state may more properly be custodian and beneficiary of abandoned property than any person.

We think that the state has the same power to seize abandoned life insurance moneys as abandoned bank deposits, Anderson National Bank v. Luckett, 321 U.S. 233; Security Bank v. California, 263 U.S. 282, and abandoned deposits in a court registry, United States v. Klein, 303 U.S. 276. There are, of course, differences between the steps a depositor must take to withdraw a

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bank deposit and those that a beneficiary of a policy must take to collect his insurance. Each, however, must make appropriate representations according to the requirements of his contract with bank or insurance company. When the state undertakes the protection of abandoned claims, it would be beyond a reasonable requirement to compel the state to comply with conditions that may be quite proper as between the contracting parties. The state is acting as a conservator, not...

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