Langworthy v. Garding
| Decision Date | 29 November 1898 |
| Docket Number | 11,324 - (99) |
| Citation | 77 N.W. 207,74 Minn. 325 |
| Parties | BENJAMIN F. LANGWORTHY v. NICHOLAS GARDING |
| Court | Minnesota Supreme Court |
Action in the district court for Stearns county to recover $204.75. From an order, Searle, J., denying a motion for a new trial after a verdict for defendant, plaintiff appealed. Reversed.
Foreign Corporation -- Certificate to Do Business in Minnesota -- Noncompliance with Statute Matter of Defense.
In an action brought by a foreign corporation in a court of this state, it is not incumbent upon such corporation to show that it has complied with our statutes, and has obtained a certificate of authority to transact business within our borders. Noncompliance with the law in reference to obtaining such a certificate is a matter of defense.
Insolvency Proceedings in Foreign Jurisdiction -- Members of Association Parties -- Assessment.
In proceedings in a court of another state to wind up a domestic mutual insurance corporation, as an insolvent, in which said court has jurisdiction of the subject-matter and of the defendant company, the members thereof are parties through representation by the corporation; and, until attacked and directly set aside in appropriate judicial proceedings, an assessment made in the action upon the members is conclusive evidence in the courts of this state of the necessity of making such an assessment, and, to that extent, binds each of the members without personal notice to him.
Insolvency Proceedings in Foreign Jurisdiction -- Mutual Insurance -- Payment of Assessments -- Statute of Limitations.
Where a policy holder in such company contracts to pay a sum certain by such instalments as the directors of said company shall assess and order for the losses and expenses of said company the statute of limitations does not begin to run in favor of the policy holder until an assessment is made.
Wicks, Paige & Lamb and C. W. Greenfield, for appellant.
In a suit brought by a foreign corporation it is not necessary for the plaintiff either to allege or to prove a compliance with the law which permits such foreign corporation to do business within the state. Noncompliance is a matter of defense. Williams v. Cheney, 3 Gray, 215; American v. Cutler, 36 Mich. 261; Sprague v. Cutler, 106 Ind. 242; Acme v. Rockford, 10 S.D. 203; Horan v. Weiler, 41 Pa. St. 470; Hartwell v. Root, 19 Johns. 344; Lawson, Presump. Ev. 81. The fact that the complaint alleged a compliance did not impose upon the plaintiff the burden of proving it. Steamboat War Eagle v. Nutting, 1 Minn. 201 (256).
The duly-authorized decree of the circuit court of Illinois, making the assessment against the company of which defendant was a member and plaintiff the receiver, is binding on the defendant and is not open to attack in this suit. Lycoming v. Langley, 62 Md. 196; In re Commercial (R.I.) 36 A. 930; Morris v. Farmers Mut. Fire Ins. Co., 63 Minn. 420; Taylor v. North Star Ins. Co., 46 Minn. 198; Capitol v. Boggs, 172 Pa. St. 91; Eichman v. Hersker, 170 Pa. St. 402; Ward v. Farwell, 97 Ill. 593; Glenn v. Liggett, 135 U.S. 533. It has been so held where this identical decree was involved. Rand v. Mutual, 58 Ill.App. 528; Parker v. Stoughton, 91 Wis. 174; Mutual v. Phoenix, 108 Mich. 170; Thompson v. Mutual, 66 Ill.App. 254; Mallen v. Langworthy, 70 Ill.App. 376; Farwell v. Parker, 59 Ill.App. 43; Parker v. Central, 3 Ohio Nisi Prius, 207; Langworthy v. Nelson, 14 Nat. Corp. Rep. 212. This decree is entitled to the same faith and credit in every state that is given it in the state of Illinois. Mills v. Duryee, 7 Cranch, 481; Christmas v. Russell, 5 Wall. 290; Green v. Van Buskirk, 7 Id. 139; Hanley v. Donoghue, 116 U.S. 1; Cole v. Cunningham, 133 U.S. 107; Holt v. Johnson, 50 Mo.App. 373; Griggs v. Becker, 87 Wis. 313; Leep v. St. Louis, 58 Ark. 407; Brown v. Parker, 28 Wis. 21; Parker v. Stoughton, supra; Mutual v. Phoenix, supra.
George H. Reynolds, for respondent.
Respondent contends that the Illinois decree authorizing the receiver to levy an assessment on the stockholders of the insurance company is not conclusive as to this respondent, who was not served with process and was not a resident of Illinois; and, further, since the decree does not purport to levy an assessment but simply authorizes the receiver to make such levy, appellant's position is untenable. See Parker v. Lamb, 99 Iowa 265. And his position is still more untenable from the fact that the petition which was the basis for the decree does not ask that an assessment be made by the court. Reynolds v. Stockton, 140 U.S. 254. This decree is not an adjudication and respondent can defend against the assessment and any action based thereon. Great Western Tel. Co. v. Purdy, 162 U.S. 329; Parker v. Lamb, supra; Warner v. Delbridge, 110 Mich. 590. Whether the decree is entitled to the same faith and credit in every state that is given it in Illinois, is essentially a federal question. Hawkins v. Glenn, 131 U.S. 319; Glenn v. Liggett, 135 U.S. 533; Mutual v. Phoenix, 108 Mich. 170; Parker v. Stoughton, 91 Wis. 174. The appellant failed to show at the trial that the Illinois court had jurisdiction to make the assessment, or that respondent was a member of the insurance company and liable upon the assessment; hence the court below did not err in instructing the jury to find a verdict for defendant. Wyman v. Gillett, 54 Minn. 536. Appellant's right of action is barred by the six years statute of limitations, as the cause either accrued at the time the company became insolvent or at such time as either the directors, the assignee or the receiver, could have levied an assessment. Hospes v. Northwestern Mnfg. & Car Co., 48 Minn. 174; State v. Norton, 59 Minn. 424; Sanford v. Lancaster, 81 Me. 434.
Under the various provisions of the statutes regulating insurance business in this state, it was plaintiff's duty to prove at the trial, as a condition precedent to his right to recover, not only that the company was authorized to do business in this state, but that the agent was also duly licensed. See Seamans v. Christian Bros. Mill Co., 66 Minn. 205; Handy v. St. Paul Globe Pub. Co., 41 Minn. 188; Buckley v. Humason, 50 Minn. 195; 1 Pomeroy, Eq. Jur. § 402.
The plaintiff receiver is not authorized to bring this suit, as the territorial extent of his jurisdiction and power for the purposes of bringing actions is confined to the state appointing him. Seamans v. Christian Bros. Mill Co., supra; Parker v. Lamb, supra; Ayres v. Siebel, 82 Iowa 347; High, Rec. § 239; Hurd v. City, 41 N.J.L. 1; Comstock v. Frederickson, 51 Minn. 350; Seamans v. Zimmerman, 91 Iowa 363; Seamans v. Temple, 105 Mich. 400.
This is an action brought by the appellant, as receiver of the Mutual Fire Insurance Company of Chicago, to recover an assessment made by a decree of the circuit court of Cook county, Illinois, in the case in which the appellant was appointed receiver, against the respondent, upon his premium note of date July 26, 1887, and membership liability as a member and policy holder in said insurance company.
The answer admitted the execution and delivery of the note, and also the policy set out in the complaint, but averred that the note was executed and delivered, and the policy accepted, only by reason of certain fraudulent statements made by the insurance company and its agents with reference to its business and financial condition; alleged that such representations were made in order to cheat and defraud the defendant and others, and that on the strength of such representations the note was executed and the policy received, and not otherwise. It was also averred that the assessment was void because the defendant was called upon to contribute towards the payment of losses and expenses which accrued prior to the time when he became a member. It was also alleged that the insurance company was insolvent at all times at and after the execution of the said note, and continued to do business in violation of the law, and that therefore the note was void; that the cause of action did not accrue within six years; and, further, that the cause of action did not accrue within five years. The answer demanded that the suit be dismissed, with costs; that plaintiff be compelled to surrender and cancel the note; and for further relief.
When plaintiff's counsel rested his case, counsel for defendant moved the court to instruct the jury to return a verdict for the defendant, which motion was granted, and an instruction given and verdict returned accordingly, to which exception was taken by counsel for plaintiff, who thereupon made a motion for judgment, or for a new trial, which was denied.
1. At the trial plaintiff's counsel offered in evidence a duly certified copy, made by the state insurance commissioner, of a copy on file in his office of the original certificate of authority to do business in the state of Minnesota, issued to the insurance company in question, covering the year 1887, that being the year in which the note and policy were executed and delivered. Objection being made to the reception of this copy of a copy as insufficient, and not in compliance with G.S. 1894, § 3152, or with § 5733, the court excluded the offer. Therefore it was not shown that, at the time the insurance was solicited, the policy issued, and the note given, the defunct company, or its agent, had complied with the law (sections 3157, 3167, 3168), and had procured the required certificates of authority to transact business.
The primary question involved in this ruling is whether, in an action brought by a foreign corporation in this state, it is incumbent upon it affirmatively to prove compliance with the statutes, which require it to obtain a certificate of authority...
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