Rybasack v. Travelers Ins. Co.
| Decision Date | 04 February 1937 |
| Parties | RYBASACK v. TRAVELERS INS. CO. |
| Court | New Jersey Supreme Court |
Action by John Rybasack, for himself and the State of New Jersey, against the Travelers Insurance Company. On motion to strike the complaint.
Motion granted.
William Harris, of Newark, for plaintiff.
Lindabury, Depue & Faulks, of Newark, for defendant.
This matter is before me, sitting as a Supreme Court Commissioner, on a motion to strike the complaint on the grounds that it is in part sham, in part frivolous, and that it does not state a good cause of action against the defendant.
The suit instituted by the plaintiff is a common informer's action in which the plaintiff claims damages under and by virtue of section 1 of chapter 168 of the Laws of 1895, chapter 167 of the Laws of 1927 (Comp.St.Supp.1930, § 99— 116) and section 2 (2 Comp.St.1910, p. 2876, § 117). Section 1 reads as follows:
"No life insurance company doing business in this State shall make or permit any distinction or discrimination in favor of individuals between the insured of the same class and equal expectation of life."
Section 2 of chapter 168 of the Laws of 1895 is in part as follows:
"Any person or corporation violating any of the provisions of the preceding section of this act shall, for each and every offense, forfeit and pay the sum of one hundred dollars for very twenty-five hundred dollars of insurance or fraction thereof effected by the said policy contract of insurance; such penalty to be sued for and recovered with costs in an action of debt in any court of competent jurisdiction in the county where the offense shall have been committed, or in any county wherein such offender may reside or be served with process, by any person who shall sue for the same; one-half of such penalty shall be for the benefit of the person prosecuting the suit, and the other half shall be paid to the state treasurer for the benefit of the school fund of the state."
The plaintiff alleges that in April, 1936, the James Butler Grocery Company entered into an insurance contract with the defendant company for the purpose of obtaining group insurance for certain grocery store owners and their employees, some of which stores were owned by the James Butler Grocery Company, others not; that no employer and employee relationship existed between the owners of some of the stores and others engaged in and about some of the stores covered by the contract of insurance; that the premium charged for the life insurance to the store owners and others is less than the premium charged to individuals who obtained similar life insurance protection without the benefit of the contract which exists between the James Butler Grocery Company and the Travelers Insurance Company; and that the rates are less than regular manual rates filed. He then charges that by reason of the foregoing, the defendant company has violated the provisions of the statute heretofore quoted in that all the assureds under the contract between it and the James Butler Grocery Company have received distinction or discrimination and special favor or advantage expressly forbidden by statute.
The affidavits show that some of the members of the group of assureds are residents of New Jersey and, further, that the defendant company is not domiciled here but is licensed to do business in this state.
The contract of insurance between the defendant and the James Butler Grocery Company was executed in the state of New York. Payment of premiums and loss, if any, was to be made in the state of Connecticut.
There can be no question but that the state of New Jersey cannot interfere with a contract of insurance made outside the state; and that a contract valid in the state wherein made is valid everywhere. The state cannot by its statutes control or impair transactions which are extraterritorial. Allgeyer v. Louisiana, 165 U.S. 578, 17 S.Ct. 427, 41 L.Ed. 832; Palmetto Fire Ins. Co. v. Beha (D.C.) 13 F.(2d) 500, 506.
The problem presented in this case is the construction of the words "doing business in this State" as contained in section 1, chapter 168, P.L.1895, chapter 167, P.L.1927 (Comp.St.Supp.1930, § 99—116).
Defendant contends that the statute prohibits any life insurance company which does business in this state from having discriminatory rates anywhere and says that the purpose of the legislation was to insure the financial stability of life insurance companies and to protect the public so that in buying life insurance, one person would not be preferred over another. How can it be said that if a life insurance company charges higher rates in other states or countries it can affect a company doing business here?
The statute does not concern the power of the commissioner of banking and insurance to authorize a license or to revoke the license of an insurance company to do business in this state for financial instability or for making discriminatory rates.
It is a penal statute and must be strictly construed.
I am not persuaded by the arguments on behalf of the plaintiff or the cases cited in support thereof. A clear reading of the statute leads to the conclusion that what the Legislature meant by "doing business in this State" was the making of contracts in this state. Otherwise it would have said "no Company shall be allowed to do business in this State unless its rates are the same the world over and no matter where the contract is made." What the Legislature sought to do was to prevent in contracts for life insurance entered into in this state a discrimination or distinction. There is no doubt of the power of the state to prohibit foreign insurance companies from doing business within its limits. As a condition of admission, the state can impose such conditions as it pleases upon the doing of any business by those companies within its borders, and unless the conditions be complied with, the prohibition may be absolute. Allgeyer v. Louisiana, supra.
In Palmetto Fire...
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...by an unauthorized insurer outside the state, even though the insured may be a resident of the state. Cf. Rybasack v. Travelers Ins. Co., 15 N.J.Misc. 266, 190 A. 308 (1937). Nothing in this result contradicts what this Court said in Graham v. American Casualty Company, 261 La. 85, 259 So.2......
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