Frink v. Nat'l Mut. Fire Ins. Co

• Decision Date: 11 March 1912
• Citation: 74 S.E. 33,90 S.C. 544
• Parties: FRINK. v. NATIONAL MUT. FIRE INS. CO. et al.
• Court: South Carolina Supreme Court

74 S.E. 33

(90 S.C. 544)

FRINK.

v.NATIONAL MUT. FIRE INS. CO. et al.

Supreme Court of South Carolina.

March 11, 1912.

Watts, J., dissenting.

Appeal from Common Pleas Circuit Court of Richland County; Robert E. Copes, Judge.

Action by L. J. Frink against the National Mutual Fire Insurance Company and Arthur C. Wakeley, its receiver. From a judgment for defendants, plaintiff appeals. Reversed and remanded.

Hunter A. Gibbes, for appellant.

Weston & Aycock, for respondents.

FRASER, J. One W. J. Kyser insured a dwelling house belonging to him with the respondent company for. the term of three years in the sum of $350, and the loss was made payable to the appellant, L. J. Frink, as mortgagee. The insurance company was incorporated under the laws of the state of Nebraska. The policy was issued on the 23d day of October, 1907. About the 18th day of February, 1909, the house was destroyed by fire. These facts are admitted by the defendant, but it alleged that it is not liable because that on the 4th day of December. 1907, under proper proceedings in the district court of Douglass county, Neb., the court having jurisdiction of the subject-matter, the said company was declared to be insolvent, the defendant, A. C. Wakeley, appointed receiver, and it was further adjudged and decreed that the said National Mutual Fire Insurance Company be, and the same is hereby, dissolved; that Arthur C. Wakeley duly qualified as receiver, and took charge of the property. The defendant further alleges that by order of the court made on the 18th day of April, 1908, it was duly ordered and adjudged that all persons having any claims of any kind or nature against said National Mutual Fire Insurance Company should present the same to said receiver at Omaha, Neb., on or by the 1st day of August, 1908; that true copies of said order of court were published in the newspapers of all states in which the National Mutual Fire Insurance Company had transacted business; that a true copy of said notice was published once a week for four weeks in the News and Courier of Charleston, S. C., prior to August 1, 1908, and that no demand was ever made by the plaintiff on his behalf on account of said claim prior to or by August 1, 1908. The defendant further alleges that it has had no legal existence of any kind and for any purpose since December 4, 1907, when it was dissolved, as above stated.

The defendant, by its answer, submitted itself to the jurisdiction of the court To this answer the plaintiff demurred on the ground, first, that the allegations upon their face do not constitute a defense; second, that the facts stated in said allegation are irrelevant to the contract set forth in the complaint, and do not constitute a legal avoidance of liability thereunder. Upon this demurrer the cause was tried in the circuit court for Richland county, before his honor, Judge Robert E. Copes, at the spring term, 1911. His honor overruled the demurrer, dismissed the complaint, and gave judgment for the defendant. The contract provides: "This policy shall be canceled at any time at the request of the insured; or by the company by giving five days notice of such cancellation. If this policy shall be canceled as hereinbefore provided, or become void or cease, the premium having been actually paid, the unearned portion shall be returned on surrender of this policy or last renewal, this company retaining the customary short rate; except that when this policy is canceled by this company by giving notice it shall retain only the pro rata premium." The authorities in other states are conflicting, andthere are none in this state bearing directly on the question, and this case will have to be decided on the general principles of law, as we deem them most applicable.

A corporation of one state has no right to transact business in another state without permission. The state of South Carolina has the right to impose such conditions upon foreign corporations that seek to do business here that its lawmaking department thinks wise and prudent for the protection of its citizens. In the case of John Hancock Mutual Life Insurance Company v. Warren, 181 U. S. 76, 21 Sup. Ct. 536, 45 L. Ed. 755, the Supreme Court of the United States said: "The state prescribed the purposes of a corporation and the means of executing those powers. Their purposes and means are within the state's control. This is true as to domestic corporations. It has even a broader application to foreign corporations, and the state court has held that the statute was a condition imposed on the company on doing business within the state. It was said of it that whatever its limitations were upon the power of contracting, whatever its discriminations were, they became conditions of the permit, and were accepted with it. [Authorities cited.] It was for the Legislature of Ohio to dispose of the public policy of that state in respect to life insurance, and to impose such conditions on the transactions of business by life insurance companies within the state as were deemed best."

In the exercise of this right the Legislature provided (section 1790, Code of Laws S. C. 1902): "All and every such foreign corporation carrying on business or owning property in this state shall be subject to the laws of the same in like manner, as corporations chartered under the laws of this state." Section 1796 provides "for the deposit with the proper officer of this state of a certificate of the official of some state of the United States, under his hand and official seal, that he holds on deposit, or in trust, for the benefit of all policy holders or members of such company or association securities worth at least one hundred thousand dollars, or in the absence of such capital or deposit, then with the State Treasurer of South Carolina valid securities aggregating ten thousand dollars or a bond for said amount, made by a solvent surety company, said treasurer shall be the judge of...