State of South Carolina Ex Relatione Phoenix Mutual Life Insurance Company v. Fitz Master State of South Carolina Ex Relatione Louis Sherfesee v. Fitz Master

• Decision Date: 05 April 1915
• Docket Number: Nos. 195 and 196,s. 195 and 196
• Citation: 59 L.Ed. 839,35 S.Ct. 504,237 U.S. 63
• Parties: STATE OF SOUTH CAROLINA EX RELATIONE PHOENIX MUTUAL LIFE INSURANCE COMPANY, Plff. in Err., v. FITZ H. McMASTER, as Insurance Commissioner of the State of South Carolina. STATE OF SOUTH CAROLINA EX RELATIONE LOUIS SHERFESEE and Frank F. Covington, Plffs. in Err., v. FITZ H. McMASTER, as Insurance Commissioner of the State of South Carolina
• Court: U.S. Supreme Court

237 U.S. 63

35 S.Ct. 504

59 L.Ed. 839

STATE OF SOUTH CAROLINA EX RELATIONE PHOENIX MUTUAL LIFE INSURANCE COMPANY, Plff. in Err.,

v FITZ H. McMASTER, as Insurance Commissioner of the

State of South Carolina.

STATE OF SOUTH CAROLINA EX RELATIONE LOUIS SHERFESEE

and Frank F. Covington, Plffs. in Err.,

v. FITZ H. McMASTER, as Insurance Commissioner of the

State of South Carolina.

Nos. 195 and 196.

Argued March 12, 1915.

Decided April 5, 1915.

Mr. T. Moultrie Mordecai for plaintiffs in error.

[Argument of Counsel from page 64 intentionally omitted] Mr. F. H. Dominick and Mr. Thomas H. Peeples, Attorney General of South Carolina, for defendant in error.

[Argument of Counsel from pages 65-66 intentionally omitted] Mr. Justice Day delivered the opinion of the court:

These cases involve the same questions, and, being practically one proceeding, may be disposed of together. They arise out of an application to the supreme court of the state of South Carolina for a writ of mandamus, requiring the respondent, Fitz H. McMaster, as insurance commissioner of the state of South Carolina, to issue to the Phoenix Mutual Life Insurance Company, a corporation of the state of Connecticut (hereinafter called the Phoenix Company), a license to do business in South Carolina as a life insurance company for the year beginning April 1st, 1912. The supreme court of the state refused to issue the writ (94 S. C. 379, 382, 77 S. E. 401), and the case is brought here, because of alleged deprivation of rights under the 14th Amendment to the Federal Constitution.

By the act of March 8, 1910, 26 Stat. at L. (South Carolina) 774, § 13, it was provided:

'Before licensing any insurance company to do business in this state, the insurance commissioner shall require each such company to deposit with him an approved bond or approved securities, in the discretion of the commissioner, as follows: Each legal reserve life insurance company, $20,000; each fire, accident, or casualty or surety insurance company, or any company not herein specified, $10,000: Provided, that domestic industrial insurance companies shall in no case be required to deposit more than the legal reserve on their policies, but not less than $1,000, which said deposit may be made at the rate of $500 a year, on April 1st, of each year, until the whole be deposited; each domestic mutual life insurance company doing business on a recognized table of mortality with interest assumption not higher than 4 per centum per annum, not less than $3,000. But each such domestic company shall keep on deposit with the insurance commissioner at all times, not less than the legal reserve on all of its outstanding policies: Provided, further, that the terms of this section shall not apply to domestic mutual assessment companies not doing business in more than two adjoining counties. If a bond be given, it shall be conditioned to pay any judgment entered up against any such company in any court of competent jurisdiction in this state, and such judgment shall be a lien upon the bond or securities. In case a bond is given, the judgment creditor shall have the right to bring suit on said bond for the satisfaction of the judgment in the county in which the judgment is received.'

Under authority of this act, the insurance commissioner notified insurance companies that, exercising a discretion reposed in him to require such companies to make deposits with the insurance commissioner or accept a surety bond, beginning April 1st, 1912, companies which had not invested at least one fourth of their reserve in South Carolina in securities named in the act of 1910 would be required to deposit South Carolina securities with the department. From such companies no surety bond would be accepted. From companies which had invested at least one fourth of their reserve on South Carolina policies in securities of that state, a surety bond would be accepted. The letter also stated that the department would receive on deposit South Carolina state, county, or municipal bonds; first-mortgage bonds of real estate in the state first-mortgage bonds of solvent domestic corporations, whose property was situate entirely within the state; or time certificates of deposit in banks of the state.

The Phoenix Company applied for a license for the year beginning April 1st, 1912, and inclosed its check for the license fee and a surety bond in the sum of $20,000. The insurance commissioner refused the license, and declined to issue the same unless the Phoenix Company would make a deposit with him of securities acceptable to him, in the sum of $20,000, in bonds of the state of South Carolina, of any county, state, or town of the state of South Carolina, or first-mortgage bonds on real estate in the state of South Carolina, or first-mortgage bonds of solvent domestic corporations, whose property was situated entirely within that state, or any property situated in that state and taxable therein, or time certificates of deposit in banks of that state.

Afterwards the commissioner notified the surety company that he would not accept a bond from the Phoenix Company unless the latter would furnish him with an affidavit showing that at least one fourth of its reserve on South Carolina policies had been invested in the securities named in the act of 1910. The insurance company declined to make such affidavit, or to make such investments, on the ground that the same was not required by any law of the state of South Carolina. It is the contention of the insurance company that the action of the commissioner in undertaking to exact from it as a condition of receiving a license the investment of at least one fourth of its reserves in the securities as required by the commissioner, and in accepting from other insurance companies,...