State ex rel. Ætna Ins. Co. v. Fowler

• Decision Date: 18 June 1928
• Citation: 220 N.W. 534,196 Wis. 451
• Parties: STATE EX REL. ÆTNA INS. CO. ET AL. v. FOWLER, JUDGE. ART WALL PAPER CO., INC., v. ÆTNA INS. CO. ET AL.
• Court: Wisconsin Supreme Court

196 Wis. 451

220 N.W. 534

STATE EX REL. ÆTNA INS. CO. ET AL.

v.FOWLER, JUDGE.

ART WALL PAPER CO., INC.,

v.ÆTNA INS. CO. ET AL.

Supreme Court of Wisconsin.

June 18, 1928.

Petition to this court for a writ of prohibition commanding Chester A. Fowler, Judge of the Circuit Court for Fond du Lac County, to dismiss an action commenced in that court by the Art Wall Paper Company as plaintiff against the petitioner and a number of other insurance companies. Petition denied.

It is here shown that the Art Wall Paper Company, an Illinois corporation, with a plant in operation in the city of Chicago, carried some $80,000 of insurance against fire loss in a large number of insurance companies; that on November 2, 1927, the building and property of the insured were destroyed by fire.

On April 14, 1928, the said Art Wall Paper Company caused summons to be served on the commissioner of insurance of this state as the statutory agent for the insurance companies named as defendants in said summons, which was entitled in the circuit court for Fond du Lac county. Of the more than 30 so named, all but one were foreign insurance companies duly licensed to do business in this state, and but two were companies organized under the laws of the state of Illinois. The combined amount of the respective policies of such named defendants aggregated about $69,000, out of the total of $80,000.

On April 23d, upon affidavit of one of the Wisconsin counsel for the defendants, an alleged special appearance was made before the circuit court in effect asking the court to refrain from or refuse to entertain jurisdictionof said action, and the hearing of such petition was set for April 30th.

On April 28th the Art Wall Paper Company obtained a license from the secretary of state under section 226.02, Stats., permitting it to do business in this state, and on the same day garnishment proceedings were instituted against a number of state agents or representatives of the various named defendants who were claimed to be holding unremitted premiums due said companies. On the hearing on April 30th an affidavit was presented on behalf of the plaintiff Art Wall Paper Company to the effect that, under the law and practice in the state of Illinois, there cannot be a joinder in one action of several insurance companies as is permitted in this state under section 260.18, Stats., and that in the usual course of procedure in the courts of Illinois it would take about two years before an action to recover on any such insurance policy could be tried.

The petition was dismissed and on the same day a verified petition was made on behalf of the insurance companies for application to this court for a writ of prohibition which was issued May 4th. On May 14th a return and answer by the circuit judge was made and filed and the matter was submitted upon briefs.

Shaw, Muskat & Sullivan, of Milwaukee, for petitioners.

Richmond, Jackman, Wilkie & Toebaas, of Madison (Julius Moses, of Chicago, Ill., of counsel), for defendants.

ESCHWEILER, J.

The grounds upon which the petitioners challenge the right to exercise or the propriety of exercising jurisdiction by the circuit court of Fond du Lac county in an action brought by an Illinois corporation, not then licensed to do business in this state, against several insurance companies not organized under the laws of this state, but licensed under section 201.38, Stats., to do business here, to recover on policies of fire insurance taken out by the plaintiff, an Illinois corporation, upon its property there, are in substance these two: (1) That the statute (section 201.38 (2) under which such foreign insurance companies licensed to do business here make the commissioner of insurance their agent for the service of process upon them, is not applicable here; and (2) that even if such service be valid, nevertheless, and on the grounds of public policy, such a foreign plaintiff should not be permitted to use the courts of this state at the consequent expense to its taxpayers and the possible interference with or delay to their lawsuits to prosecute here a cause of action based upon an alleged breach of contract and for which cause such foreign corporation can obtain relief in the courts of Illinois.

There is no claim made that any of the defendants so sought to be brought within the jurisdiction of our courts is in an unsound financial condition or has not adequate assets to meet the claims of the assured if sued in the state of Illinois. All of the insurance companies named in the summons, other than one, have complied with the provisions of section 201.38 found in chapter 201 regulating insurance corporations; the material provisions on the question here presented, being (b) of subsection (2) thereof, providing:

“Such insurer [i. e., foreign insurance corporation] shall also appoint, in writing the commissioner of insurance and his successors in office to be its true and lawful attorney upon whom all legal process in any action or proceeding against it may be served, and in such writing shall agree that any legal process against it which is served on said attorney shall be of the same legal force and validity as if served on the insurer, and that such authority shall continue in force so long as there is any liability outstanding against the insurer in this state, whether the license of such insurer to do business in this state shall remain in force or shall be revoked or otherwise terminated.” (The italics are ours.)

And also:

“(c) Service upon such attorney shall be deemed sufficient service for all purposes upon the principal, and shall be as effectual for all purposes as though made upon a corporation or other insurer existing under the laws of this state.”

In connection with this statute the petitioners call attention to certain provisions found in chapter 262, entitled “Manner of Commencing Civil Actions,” and particularly section 262.09, providing that actions against corporations shall be commenced in the same manner as personal actions against natural persons, and:

“(9) If against any insurance corporation not organized under the laws of this state, to the agent or attorney thereof having authority therefor by appointment under the provisions of section 201.38 [supra],”

––and providing further that it may be served on any agent soliciting, transmitting applications for, collecting or receiving premiums, adjusting, settling, or paying losses for such a company, etc.

In the same section 262.09 is also found:

“(13) If against any other foreign corporation, to any such officer being within the state, or to any agent having charge of or conducting any business therefor in this state, or any trustee or assignee of such corporation, or upon the secretary of state, as provided in section 226.02. But such service can be made upon a foreign corporation only either when it has property within the state or the cause of action arose therein, or the cause of action exists in favor of a resident of the state, and upon the secretary of state only when the cause of action arises out of business transacted in this state or when the defendant has property therein.”

It is now argued that considering the above–quoted statutes together there should be read out of them a declaration that it is the public policy of this state that all foreign corporations, including foreign insurance corporations, are only to be subject to service upon the commissioner of insurance as the authorized agent of the insurance corporations and the secretary of state as to all other foreign corporations only, when, as is expressly declared in the statutory provisions last above quoted, it either has property within the state, or the cause of action arose therein or exists in favor of the resident of a state, and that it should be held that such express limitation so found in section 262.09 (13), supra, should apply in logic and reason, if not by express language, to a situation such as is here presented, where the plaintiff is a nonresident, and the cause of action arose without the state, and in no wise concerns any property of the defendants within the state, and that, therefore, there was here no valid service of process.

[1] Under the broad and general power that each state has of prescribing the conditions upon which any foreign corporation may be permitted to come within the borders of the state to transact business, the state has the undoubted power to prescribe the conditions under which foreign insurance companies may be permitted to do business here, and even though such conditions are different than those prescribed as to foreign corporations engaged in other lines of business.

[2] That the business of life and fire insurance as it is being carried on at the present day and for many years past is so charged with the public interest that it is subject to reasonable state regulations is beyond question. Fire Dept. of Milwaukee v. Helfenstein, 16 Wis. 136, 140;Swing v. Western Lumber Co., 205 U. S. 275, 278, 27 S. Ct. 497, 51 L. Ed. 799; note, 49 A. L. R. p. 740.

It is also held by the United States Supreme Court that the proper leaning in cases of doubt should require a holding that such statutes regulating service on foreign corporations is not intended to apply to causes of action not arising in the business done by such corporations in the particular state. Missouri P. R. Co. v. Clarendon Boat Oar Co., 257 U. S. 533, 535, 42 S. Ct. 210, 66 L. Ed. 354, and cases there cited.

[3] But where, as here, we have a special law relating to insurance corporations, both domestic and foreign (chapter 201), and where, as shown by the above–cited statutes, the foreign insurance corporation desiring to do business as such in this state must give its consent that service upon the commissioner of insurance shall be as effectual for all purposes as though made upon an insurance corporation existing under the laws of this state, such statute (section 201.38 (2) (c)...