Commonwealth Mut. Fire Ins. Co. v. Hayden

• Decision Date: 18 October 1900
• Citation: 83 N.W. 922,60 Neb. 636
• Parties: COMMONWEALTH MUT. FIRE INS. CO. ET AL. v. HAYDEN ET AL.
• Court: Nebraska Supreme Court

60 Neb. 636

83 N.W. 922

COMMONWEALTH MUT. FIRE INS. CO. ET AL.

v.HAYDEN ET AL.

Supreme Court of Nebraska.

Oct. 18, 1900.

Syllabus by the Court.

1. Recitals which are not contractual elements of a policy of insurance are not conclusive on the parties thereto.

2. Contracts which contravene the established policy of this state cannot be enforced by action in its courts.

3. A foreign insurance company, which has done business in this state without complying with the conditions prescribed by our statutes, cannot rightfully claim of our courts, as an exercise of comity, the enforcement of contracts made with our citizens insuring property in this state.

4. Full faith and credit will be given a judgment of a sister state by which an assessment has been made against members of an insolvent mutual insurance company, although such members were residents of this state, and not served with summons or other jurisdictional process.

5. A stockholder is bound by a decree of a court of equity against a corporation in enforcement of a corporate duty, although not a party as an individual, but only through representation by the company. Hawkins v. Glenn, 9 Sup. Ct. 739, 131 U. S. 319, 33 L. Ed. 184.

6. The theory upon which a stockholder is held to be concluded by a judgment rendered against him in a suit brought to enforce a corporate obligation is that, although not personally served with process, he is before the court as an integral part of the corporation, and that the corporation represents him.

7. Membership in a mutual insurance company ceases with the expiration of the member's policy and payment of liabilities incurred while the policy was in force. Jurisdiction of such a company does not include jurisdiction of ex-members, who are not in fact indebted on account of the policies which they once held.

8. And in an action in this state to enforce the judgment of a sister state against such ex-member he may allege and show that the court had no jurisdiction to render such judgment against him.

9. In an action to enforce the judgment of a foreign court of general jurisdiction, the burden is on the defendant to show the nonexistence of jurisdictional facts.

Error to district court, Douglas county; Keysor, Judge.

Action by the Commonwealth Mutual Fire Insurance Company and others against Hayden Bros. From a judgment for defendants, plaintiffs appeal. Reversed.

Richard S. Horton, for plaintiffs in error.

T. J. Mahoney, for defendants in error.

SULLIVAN, J.

The Commonwealth Mutual Fire Insurance Company, a Massachusetts corporation, issued two fire insurance policies to Hayden Bros., insuring property owned by them and in their possession at Omaha, in this state. After one of the policies had expired, but while the other was in force, the company became insolvent, and passed into the hands of a receiver, who brought this action to recover assessments made against the defendants for the purpose of paying losses and liabilities incurred. The district court held on demurrer to the petition that the facts pleaded did not constitute a cause of action, and gave judgment accordingly. Counsel for plaintiff contends for two propositions: (1) That the contracts were made in Massachusetts; that they are valid in that state, and therefore enforceable in this. (2) That the assessments were made by a court of general jurisdiction in the domicile of the corporation, and that the amounts charged against defendants and their obligation to pay the same are established by a valid adjudication.

Notwithstanding the recitals of the policies indicating that they were issued by the company's Omaha agency, we think it clear that the averment of the petition that they were executed in Massachusetts must be taken as true. The recitals are not contractual elements, and consequently are not conclusive upon the plaintiff. It has, in effect, alleged that they are false, and no reason is perceived why that allegation may not be sustained by proof. 1 Greenl. Ev. (15th Ed.) § 285. But whether these contracts were made in Massachusetts or Nebraska, they contravene the policy of this state, and could not be enforced by action in our courts. The statute prescribing the conditions upon which foreign insurance companies may do business here is a police regulation designed to protect our people against irresponsible insurers. It forbids them to do any insurance business, directly or indirectly, in this state, until they have complied with its terms; and the principle of judicial comity does not require our courts to actively aid in the enforcement of contracts which interfere with, and tend to frustrate, the policy established by the legislature. Rose v. Kimberly & Clark Co., 89 Wis. 545, 62 N. W. 526, 27 L. R. A. 556;Cowan v. Assurance Corp., 73 Miss. 321, 19 South. 298;Seamans v. Temple Co., 105 Mich. 400, 63 N. W. 408, 28 L. R. A. 430;Seamans v. Zimmerman, 91 Iowa, 363, 59 N. W. 290. The company, having engaged in business in this state without authority, and in defiance of the policy of our laws, is not now in a position to insist that our courts should, as an exercise of comity, give effect to its contracts. The defendants agreed to pay all lawful assessments made against them. This agreement was valid in Massachusetts, but it will not support an action here. These remarks dispose of plaintiff's first contention.

The claim that the amounts of the assessments and the liability of the defendants to pay them are unalterably fixed by the decree and orders of the supreme judicial court of Massachusetts raises a question of jurisdiction which will be now considered. In Hawkins v. Glenn, 131 U. S. 319, 9 Sup. Ct. 739, 33 L. Ed. 184, it was held that: “The stockholder is bound by a decree of a court of equity against the corporation in enforcement of a corporate duty, although not a party as an individual, but only through representation by the company. A stockholder is so far an integral part of a corporation that, in view of the law, he is privy to the proceedings touching the body of which he is a...