North American Ins. Co. v. Yates

• Decision Date: 21 February 1905
• Citation: 73 N.E. 423,214 Ill. 272
• Parties: NORTH AMERICAN INS. CO. et al. v. YATES, Ins. Supt.
• Court: Illinois Supreme Court

214 Ill. 272

73 N.E. 423

NORTH AMERICAN INS. CO. et al.

v.YATES, Ins. Supt.

Supreme Court of Illinois.

Feb. 21, 1905.

Appeal from Appellate Court, First District.

Bill by Henry Yates, Insurance Superintendent, against the North American Insurance Company and others. From a decree in favor of complainant, defendants appeal. Affirmed.Hobart P. Young (Alden, Latham & Young, of counsel), for appellants.

Fred H. Rowe (Samuel A. Harper, of counsel), for appellee.

RICKS, C. J.

Appellee, Henry Yates, as Insurance Superintendent for the state, filed a bill to enjoin 20 foreign fire insurance companies and 33 individuals who were acting as agents for such companies from transacting any business of fire insurance in this state without first complying with the laws of the state relative to fire insurance.

The proncipal allegations of the amended bill are that each of the defendant corporations is engaged in the business of fire insurance and maintains and office for the transacting of such business in the city of Chicago; that no one of the said corporations has complied with the insurance laws of the state, and particularly the act of March 11, 1869, and the amendments thereto, and the act of July 1, 1879, or with either or any of such acts, and no one of them has been licensed to do business in this state; that each of the said corporations at its office in Chicago, through its said agents, does everything in the way of fire insurance other than to insure property situated in this state; that this manner of doing business is a trick and device to evade the insurance laws of this state and all other states, and is illegal; that each of said corporations is unlawfully exercising a franchise in this state and is exercising powers not conferred upon it by law; that each of the individual defendants has been and is now engaged in carrying on the business of fire insurance through such corporations in the manner described; and that the defendants have conspired and are conspiring to carry on the fire insurance business as herein set forth, without license, and without complying with the insurance laws of this state. To this bill special demurrers were filed by the appellants and other defendants, which were overruled, and, appellants electing to stand by their several demurrers, the court entered the decree enjoining them, and each of them, as prayed. As to the other defendants than the appellants, the court stayed its final order to abide the result of this appeal. From the decree the appeal was prosecuted to the Appellate Court for the First District, where the decree of the circuit court of Cook county was affirmed, and this appeal is prosecuted.

Appellants challenge the sufficiency of the bill in this cause mainly upon grounds going to the jurisdiction of the court of equity. It is said that equity has no jurisdiction to restrain the violation of a penal statute or the commission of a penal offense unconnected with injury to civil rights or property rights, and that the proceeding here is to restrain the alleged violation of a penal statute, does not affect civil or property rights; that there is an adequate remedy at law; that the bill is multifarious; and that the acts complained of are not violations of the laws of this state.

We may be better able to arrive at a satisfactory conclusion by briefly considering the nature of the business involved and the interests relating to it, and under which the appellee claims the right to present the information here in question. The business of insurance is the outgrowth of time and the demands and necessities of the public. It extends into and covers almost every branch of business and all the relations of life, and is applied to all the hazards of business in life where a basis of risk and compensation can be estimated. In all the stages of life, from the cradle to the grave, it asserts an interest and offers succor and aid. In the business enterprises, whether by land or sea; in the possessions of men, from a pane of glass to the mansion or the factory; in his undertakings involving every chance, misfortune, moral turpitude, or the act of God-it demands admission and promises indemnity, reward, or gain. It poses as the faithful and zealous trustee of his earnings and savings, and promises to the widow and orphan a guaranty against misery and want. It intercedes between principal and agent, master and servant, contractor and owner, and insures against loss from almost any and every cause. It is a public necessity that deals in its own credit for a cash consideration from the assured, and is stamped with public interest, and must yield obedience to necessary and proper regulations by the state in the exercise ofits police power. Freund on Police Power, §§ 373, 399, 400, 401, 494; Commonwealth v. Vrooman, 164 Pa. 321, 30 Atl. 217, 25 L. R. A. 250, 44 Am. St. Rep. 603; John Hancock Mutual Life Ins. Co. v. Warren, 181 U. S. 73, 21 Sup. Ct. 535,45 L. Ed. 955;Fidelity Mutual Life Ass'n v. Mettler, 185 U. S. 327, 22 Sup. Ct. 662, 46 L. Ed. 922. ‘Banking and insurance being peculiarly affected with the public interest, it followsthat the right to carry on their business may be made to depend upon the compliance with certain conditions.’ Freund on Police Power, § 401. The business is usually conducted by corporations that are creatures of the law, and their rights and immunities are to be found in the law. They have no natural rights. The corporations in question are foreign corporations. In speaking of such corporations and the extent of their rights, it is said in Waters-Pierce Oil Co. v. Texas, 177 U. S. 28, 20 Sup. Ct. 518, 44 L. Ed. 657: ‘The plaintiff in error is a foreign corporation, and what right of contracting has it in the state of Texas? This is the only inquiry, and it cannot find an answer in the rights of natural persons. It can only find an answer in the rights of corporations and the power of the state over them. What these rights are and what that power is has often been declared by this court. A corporation is the creature of the law, and none of its powers are original. They are precisely what the incorporating act has made them, and can only be exercised in the manner which that act authorizes. In other words, the state prescribes the purposes of a corporation and the means of executing those purposes. The 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.’ This language was quoted and applied in both the above cases of John Hancock Mutual Life Ins. Co. v. Warren and Fidelity Mutual Life Ass'n v. Mettler with approval. And this court in Harding v. American Glucose Co., 182 Ill. 551, 635, 55 N. E. 577, 605,64 L. R. A. 738, 78 Am. St. Rep. 189, said: ‘It is the settled doctrine in this state, established by many decisions of this court, that foreign corporations do not come into this state as a matter of legal right, but only by comity, and that said corporations are subject to the same restrictions and duties as corporations formed in this state, and have no other or greater powers. * * * Foreign corporations cannot be permitted to come into this state for the purpose of asserting rights in contravention of our laws.’ In that case it was also said (page 616, 182 Ill., page 599, 55 N. E.,64 L. R. A. 738, 74 Am. St. Rep. 189): ‘The public policy of a state is to be found in its statutes, and, when they have not directly spoken, then in the decisions of the courts and in the constant practice of government officials. When the Legislature speaks upon a subject upon which it has the constitutional power to legislate, public policy is what the statute passed by it indicates.’

The public policy of this state touching insurance companies is amply attested by over 40 designated statutes relating to them, and many decisions of its courts of appeal. Eighteen of those acts now in force relate solely to fire insurance-the branch of that business herein affected-and several of which are directly applicable to and are for the regulation of the business of appellants and their codefendants. Regulation of such companies is the chief object of all of such statutes. That this is so is evidenced alike by the title of the acts and their various provisions. It may be that one of the objects, and the main one, of so regulating these corporations is the protection of the citizens of the state. But this is not the only object. People v. Pavey, 151 Ill. 101, 37 N. E. 691. Appellants are foreign corporations. We have hundreds of domestic insurance corporations organized under our law doing business in this and other states, and hundreds of other foreign companies licensed under and complying with the laws of our state and doing business within the state, and the state is concerned in the maintenance of a standard of security and fair dealing according to the prescribed regulations for all. All those organized under our laws and those licensed and complying with our laws are in a sense citizens of our state, and are entitled to the protection of the law against companies doing business in this state contrary to its laws, with less than the required capital, and so managed that by manipulation and transfer their obligations are avoided and the business brought into ill repute.

So great is the importance of the insurance business that there has been created a special branch of the government, designated ‘Insurance Department of the State of Illinois,’ charged with the execution of all laws of the state in relation thereto and the companies organized or doing business in the state. The laws governing fire insurance companies organized in this state which we have termed ‘domestic’ require them to have a minimum of cash capital of $100,000 and $200,000 of bona fide subscribed risks before beginning business, to invest their money in the manner pointed out by law, and to make...