State v. Columbian Nat. Life Ins. Co.

Decision Date01 February 1910
Citation141 Wis. 557,124 N.W. 502
PartiesSTATE v. COLUMBIAN NAT. LIFE INS. CO.
CourtWisconsin Supreme Court

OPINION TEXT STARTS HERE

Appeal from Circuit Court, Dane County; E. Ray Stevens, Judge.

Action by the State against the Columbian National Life Insurance Company. Plaintiff had judgment, and defendant appeals. Reversed.

This action was brought to recover a penalty. Prior to December 31, 1907, the defendant had been licensed to transact and did transact, a general life insurance business in the state of Wisconsin, and on the last-named date had 283 policies of insurance outstanding and in force in the state. The defendant on that date surrendered its license, and withdrew, or attempted to withdraw, from the state of Wisconsin and cease doing business therein. After December 31, 1907, no agent or officer of the defendant resided within the state, and no new business was written. The defendant refused to file, on March 1, 1908, the report required by section 1954, St. 1898, as amended by chapter 597, Laws 1907, and also refused to file the report required by section 1953n, St. 1898, being chapter 584, Laws 1907. The complaint averred that such report was not filed within the time required, nor within one month thereafter, and prayed for damages in the sum of $1,000. From a judgment awarding such damages this appeal is taken.Bloodgood, Kemper & Bloodgood (Jackson B. Kemper and Frederick H. Nash, of counsel), for appellant.

F. L. Gilbert, Atty. Gen., and Russell Jackson, Deputy Atty. Gen., for the State.

BARNES, J. (after stating the facts as above).

Chapter 584, Laws 1907 (section 1953n, St. 1898), reads as follows: “Every life insurance company doing business in this state, or having in force any policies issued or delivered therein, shall annually furnish the report required by section 1954 and with such report separately for its participating and nonparticipating business and its ordinary and industrial business a statement exhibiting the gains and losses separately for the first year's business and for the total business of the company upon blanks prepared by the commissioner in substantially the form heretofore required. Where a separate account of any items required on such statement shall not be kept as to the participating and nonparticipating or ordinary and industrial business of any company, such statement shall state what proportion of such items is apportioned to each kind of such business. Such company shall also furnish such other information in regard to said matters as the commissioner of insurance may require.” Section 1954, St. 1898, as amended by chapter 237, Laws 1903, and chapter 597, Laws 1907, requires every life insurance company doing business in Wisconsin to file, on or before March 1st in each year, in the office of the insurance commissioner, an annual statement, giving a complete and accurate account of its business and financial condition, verified in a manner prescribed, and covering the year ending on the preceding 31st day of December. The statute then enumerates the items of information that must be embodied in the statement, being 34 in number. For failure to file such report by March 1st in each year a penalty of $500 is provided, and for failure to file thereafter a further penalty of $500 per month is imposed while such company shall have any policy in force in this state, until the statement is filed. Prior to the time chapter 597, Laws 1907, went into effect, the cumulative penalty was effective for every month the insurance corporation continued to transact business in the state until the statement was filed. Chapter 597, Laws 1907, became effective on the same day as chapter 584. Chapter 483, Laws 1907, section 1955 o--5, reads: “Any corporation violating any of the provisions of the laws of this state relating to insurance shall, where no other penalty is prescribed, be punished by a fine of not more than five thousand dollars and any person violating any of the provisions of the laws of this state relating to insurance shall, where no other penalty is prescribed, be punished by a fine of not more than one thousand dollars, or by imprisonment in the county jail not exceeding one year, or by both such fine and imprisonment.” It will be observed that the report required by section 1954 must be made by companies doing business within the state, and that the report required by section 1953n must be made by companies doing business within the state, or having in force any policies issued or delivered therein. It will be further observed that section 1953n prescribes no penalty for its violation, and that section 1955 o--5, which became effective on the same day, provides that any corporation violating any laws of the state relative to insurance, where no other penalty is prescribed, shall be punished by a fine not exceeding $5,000, and that any person violating such laws may be punished by fine or imprisonment, or both.

It is contended by the state that the defendant violated the provisions of sections 1953n and 1954, St. 1898, and that the penalty provided for in section 1954 is not only applicable to the latter statute, but also to a violation of section 1953n, and that both statutes are valid laws. The defendant, on the contrary, urges that section 1954 has no application to it because it is not doing business in the state, and was not at the time it was required to file a report under that section on March 1, 1908. As to section 1953n, it is argued that it impairs the obligation of contracts, and is violative of the defendant's rights as guaranteed by the fourteenth amendment to the federal Constitution, and that in any event the action will not lie because the penalty sued for cannot be recovered, for the reason that it is not applicable to section 1953n. The view we have taken of the case necessitates a discussion of but two questions: (1) Did the defendant violate the provisions of section 1954 by failing to comply therewith; and (2) can the penalty prescribed by section 1954 be recovered for a violation of the provisions of section 1953n?

The answer to the first question depends on whether the defendant was “doing business” within the state, after its attempted withdrawal, within the meaning of those words as used in that statute. If it was, then it violated the law by failing to file the required report, and is liable for the penalty imposed by that section for its violation. The defendant has in force in Wisconsin 283 policies of life insurance. The amount of such insurance in the aggregate, or the amount of annual premiums collected thereon, does not appear in the record, but presumably both amounts are quite large. By its insurance contracts in force the defendant is obligated to notify policy holders when their premiums are about to become due, and it appears from the sample policy made a part of the record that such premiums fall due annually. It is admitted that the defendant has complied with its contracts by giving the required notices. The defendant continues to collect its premiums and to pay its obligations under its policies as they mature. It is almost inevitable that the prudent conduct of the business carried on in Wisconsin will necessitate investigations of claims made under policies in force in this state, and which must of necessity be made therein. It may be conceded that the defendant has done everything in the way of attempting to cease doing business in the state which it might do without violating the obligations of its contracts, which were in force when it ceased to take any new insurance because certain laws passed in 1907 were obnoxious to it. It thereafter employed no agents in Wisconsin, and sought no new business therein, and conducted its business with reference to outstanding contracts by correspondence through its home office in Boston, or through agents residing without the state. Notwithstanding these facts, we entertain little doubt that the acts which the defendant must of necessity do in order to carry out its contract obligations with policy holders residing in this state constitute doing business therein, so that defendant is subject to reasonable regulations for the benefit of residents of Wisconsin holding its obligations. The highest tribunal in the land has said that the identical acts which the defendant in this action is performing in reference to its insurance contracts constitute doing business within a state. Conn. M. L. Ins. Co. v. Spratley, 172 U. S. 602, 610, 611, 19 Sup. Ct. 308, 43 L. Ed. 569;Commercial M. A. Co. v. Davis, 213 U. S. 245, 255, 256, 29 Sup. Ct. 445, 53 L. Ed. 782. Nothing that is out of harmony with this view of the law is said in Chicago T. & T. Co. v. Bashford, 120 Wis. 281, 97 N. W. 940. The controversy there related to a single transaction. The mortgage sought to be foreclosed was given before section 1770b, St. 1898, was passed. The corporation owning it did no act in reference thereto, except to commence a foreclosure action in the courts of this state long after the indebtedness fell due, and it was held that neither the passive holding of a lien acquired prior to the passage of the law, nor the commencement of a suit, was the transaction of business within the forbidden sense. There is a palpable difference between the nature of the acts performed by the defendant in the case before us and the act of the plaintiff in the Chicago Title & Trust Company Case. Where an insurance company is transacting the volume and kind of business that this defendant is transacting from time to time with several hundred individuals in Wisconsin, it would be anomalous to say that it was not transacting business here because it did not happen to have a resident agent within the state. It is not doing all the kinds of business which it transacted before, but it is none the less doing business.

But it does not follow that because the defendant is doing business in Wisconsin it is doing business here within the...

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