Com. v. Provident Sav. Life Assur. Soc.

• Decision Date: 09 October 1913
• Citation: 159 S.W. 698,155 Ky. 197
• Parties: COMMONWEALTH et al. v. PROVIDENT SAVINGS LIFE ASSUR. SOCIETY.
• Court: Kentucky Court of Appeals

159 S.W. 698

155 Ky. 197

COMMONWEALTH et al. v. PROVIDENT SAVINGS LIFE ASSUR. SOCIETY.

Court of Appeals of Kentucky.

October 9, 1913

Appeal from Circuit Court, Franklin County.

Action by the Commonwealth and others against the Provident Savings Life Assurance Society. Judgment for defendant, and plaintiffs appeal. Reversed and remanded.

James Garnett, Atty. Gen., C. R. McDowell, of Danville, and John A Judy, of Mt. Sterling, for appellants.

Wm Marshall Bullitt, Clarence C. Smith, Keith L. Bullitt, and Bruce & Bullitt, and all of Louisville, for appellee.

NUNN J.

This is an appeal by the commonwealth of Kentucky from a judgment of the Franklin circuit court overruling a demurrer to the answer of appellee, and carrying it back to the petition sustaining and dismissing it. The petition was based upon section 4226 of the General Statutes, which is as follows "Every life insurance company, other than fraternal assessment life insurance companies, not organized under the laws of this state, but doing business therein, shall, on the first day of January in each year, or within thirty days thereafter, return to the auditor of public accounts for deposit in the insurance department a statement under oath of all premiums receipted for on the face of the policy for original insurance and all renewal premiums received in cash or otherwise in this state, or out of this state, on business done in this state during the year ending the 31st day of December, and no deductions shall be made for dividends, or since the last returns were made, on all premium receipts, which shall include single premiums, annuity premiums, and premiums received for renewal, revival or reinstatement of policies, annual and periodical premiums, dividends applied for premiums and additions, and all other premium payments received during the preceding year on all policies which have been written in, or on, the lives of residents of this state, or out of this state on business done in this state, and shall at the same time pay into the state treasury a tax of two dollars upon each one hundred dollars of said premiums as ascertained."

The Legislature passed an act in 1906, which took effect in June, 1906 (Laws 1906, c. 22), declaratory of this act, and fixing a penalty for the violation thereof, which is as follows (this is now section 4230a, sub-sec. 2, Kentucky Statutes): "Any insurance company that has been authorized to transact business in this state shall continue to make the reports required herein as long as it collects any premiums as provided for herein, and shall pay taxes thereon, even after it has voluntarily ceased to write insurance in the state or has withdrawn therefrom, or its license suspended or revoked by the insurance commissioner, and for failure to make report of the premiums collected and pay the taxes due thereon, shall be fined five hundred dollars for such offense."

The appellee filed an affidavit, and made a motion to quash the service of process which was served on the insurance commissioner as required by law. The court refused to quash the service, and appellee excepted. The court was correct in this. See Home Benefit Society v. Muehl, 109 Ky. 479, 59 S.W. 520, 22 Ky. Law Rep. 1378; Germania Insurance Co. v. Ashby, 112 Ky. 303, 65 S.W. 611, 23 Ky. Law Rep. 1564, 99 Am.St.Rep. 295.

A foreign insurance company upon its entry into the state to do business, and after filing its written consent that service upon the insurance commissioner should constitute due service in all actions against it, cannot revoke that authority so long as it has liabilities in the state. It cannot cease to do business in the state, and withdraw all of its agents, and revoke the authority to serve process upon the insurance commissioner so long as they have existing policies in the state.

Where an insurance company goes into a state and makes contracts of insurance, it does not cease to do business simply because it withdraws its agents, and solicits no new business. See Hunter v. Mutual Reverse Life Ins. Co., 218 U.S 573, 31 S.Ct. 127, 54 L.Ed. 1155, 30 L.R.A. (N. S.) 686. Also, Conn. Mut. Life Ins. Co. v. Spratley, 172 U.S. 602, 19 S.Ct. 308, 43 L.Ed. 569. In the last-named case the court said: "We think the evidence in this case shows that the company was doing business within the state at the time of this service of process. From 1870 until 1894 it had done an active business throughout the state by its agents therein, and had issued policies of insurance upon the lives of citizens of the state. How many policies it had so issued does not appear. Its action in July, 1894, in assuming to withdraw from the state was simply a recall of its agents doing business therein, the giving of a notice to the state insurance commissioner, and a refusal to take any new risks or to issue any new policies within the state. Its outstanding policies were not affected thereby, and it continued to collect the premiums upon them, and to pay the loses arising thereunder, and it was doing so at the time of the service of process upon its agent. *** It cannot be said with truth, as we think, that an insurance company does no business within a state unless it have agents therein who are continuously seeking...