Bothwell v. Buckbee, Mears Co.
| Citation | 207 N.W. 724,166 Minn. 285 |
| Decision Date | 19 March 1926 |
| Docket Number | No. 24884.,24884. |
| Parties | BOTHWELL et al. v. BUCKBEE, MEARS CO. |
| Court | Supreme Court of Minnesota (US) |
Appeal from District Court, Ramsey County; Charles Bechhoefer, Judge.
Action by James W. Bothwell and others, receivers of an insolvent insurance company, against the Buckbee, Mears Company, to recover an assessment. Judgment in the plaintiffs' favor was ordered, and defendant appealed from an order denying a new trial. Reversed.
Oppenheimer, Peterson, Dickson & Hodgson and M. Brown, all of St. Paul, for appellant.
Barrows & Metcalf, of St. Paul, for respondents.
The plaintiffs are the receivers of an insolvent insurance company, whose business it was to insure employers of labor against loss by reason of strikes on the part of their employees. The defendant is a Minnesota corporation, operating a printing establishment in the city of St. Paul. After a trial by the court, judgment in plaintiffs' favor was ordered, and defendant appealed from an order denying a new trial.
A representative of the insurance company came to St. Paul, and, at a public meeting, made certain representations as to the desirability of the kind of insurance written by the company, and distributed its blank applications for membership and insurance. Defendant received one of the applications, filled it out, and sent it, with a check for the first premium, to the home office of the company in Baltimore, where the policy was written, and then sent to defendant by mail.
The policy provided that the insured should be liable for assessments if the premiums charged were not sufficient to pay losses. They proved to be insufficient, the company became insolvent, receivers were appointed, the policy holders were assessed, and this action was brought to recover the amount of defendant's assessment.
The defense is that the company never complied with the insurance laws of this state.
The question to be decided is this: Can a foreign insurance company, or receivers appointed in liquidation proceedings, maintain an action against the insured in a court of this state to collect an assessment, when it appears that the company failed to comply with the provisions of the statute regulating the business of insurance?
The trial court answered the question in the affirmative, saying, "upon the authority of Minn. Com'l Men's Ass'n v. Benn, 43 S. Ct. 293, 261 U. S. 140, 67 L. Ed. 573, it is held that, in issuing its policy to the defendant the insurance company was not doing business in this state, and, in consequence, it was not obliged to comply with the statutory provisions of this state relating to the right of foreign insurance companies to do business here." Unless the Benn Case controls the decision of the case at bar, the question above stated must be answered in the negative.
In Seamans v. Christian Bros. Mill Co., 68 N. W. 1065, 66 Minn. 205, the court had before it the identical question presented here. It was there held that an insurance company which had not complied with the statutory requirements so as to be authorized to do business in this state could not recover a premium on a contract insuring property in this state, whether the contract was made within or without the state. In the course of the opinion, it was said that the statutory provisions are police regulations intended to protect the people of this state against irresponsible insurance companies, and to compel all insurance companies doing business in the state or taking risks on property therein to comply with our local laws; that, if the public policy of the state prohibits the making of a certain contract and the contract is made elsewhere, the state is not bound to enforce it by extending to it the comity which exists between states; that the laws and public policy of the state may destroy this comity, and especially so if the contract was to be performed within the state although it was made elsewhere.
Swing v. Red River Lbr. Co., 117 N. W. 442, 105 Minn. 336, 342, cites the Seamans Case with approval. The doctrine there announced prevails in Wisconsin. Rose v. Kimberly & Clark Co., 62 N. W. 526, 89 Wis. 545, 27 L. R. A. 556, 46 Am. St. Rep. 855; Presbyterian Ministers' Fund v. Thomas, 105 N. W. 801, 126 Wis. 281, 110 Am. St. Rep. 919. In the Rose Case the court remarked that the evil which the insurance statutes seek to correct is not the writing of the policy within the state by an unlicensed company, but the writing of such a policy at all. The same doctrine prevails in Michigan (Swing v. Cameron, 108 N. W. 506, 145 Mich. 175, 9 L. R. A. [N. S.] 417, 9 Ann. Cas. 332). in Iowa (Seamans v. Zimmerman, 59 N. W. 290, 91 Iowa, 363), and in Pennsylvania (Swing v. Munson, 43 A. 342, 191 Pa. 582, 58 L. R. A. 223, 71 Am. St. Rep. 772). The basis upon which it rests is that the principle of judicial comity does not require a state court to lend its aid in the enforcement of contracts which interfere with and tend to frustrate the policy established by the Legislature. Commonwealth Mut. Fire Ins. Co. v. Hayden, 83 N. W. 922, 60 Neb. 636, 83 Am. St. Rep. 545.
These decisions must be read in conjunction with Allgeyer v. Louisiana, 17 S. Ct. 427, 165 U. S. 580, 41 L. Ed. 832, in which the court condemned a state statute which subjected to a fine any person who did an act within the state intended to effect for himself or for another insurance on property in the state in a marine insurance company which had not complied with the laws of Louisiana. In the opinion of the court, it was said that it may be conceded that the right to contract in relation to persons or property within the jurisdiction of the state may be regulated and sometimes prohibited if the contract conflicts with the policy of the state as contained in the statutes. But the power cannot extend to prohibiting the citizens from making contracts outside the limits and jurisdiction of the state which are also to be performed outside of such jurisdiction. The words italicized are significant, and indicate that the court intended to limit the application of the rule announced to cases in which a foreign insurance company does not engage to perform its part of the contract in the state, where the insured resides, and in which the property insured is situated.
The policy of the Legislature is expressed in section 3314, G. S. 1923, as follows:
Section 3722, G. S. 1923, also throws light on the...
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