Steinberg v. Aetna Fire Ins. Co., 2900.

• Decision Date: 18 June 1943
• Docket Number: No. 2900.,2900.
• Parties: STEINBERG v. ?TNA FIRE INS. CO. et al.
• Court: U.S. District Court — Western District of Pennsylvania

50 F. Supp. 438

STEINBERG v. ?TNA FIRE INS. CO. et al.

No. 2900.

District Court, E. D. Pennsylvania.

June 18, 1943.

David N. Feldman, of Philadelphia, Pa., for plaintiff.

Horace Michener Schell and Howard R. Detweiler, both of Philadelphia, Pa., (Arthur T. Vanderbilt, of Newark, N. J., of counsel), for defendants.

KALODNER, District Judge.

The plaintiff is a resident of Pennsylvania.

The defendants are foreign corporations having been incorporated under the laws of a foreign country or of states other than Pennsylvania. All the defendants are authorized to do business in Pennsylvania.

The Pennsylvania Act of Assembly of May 17, 1921, P.L. 682, ? 301, 40 P.S. ? 421, provides in part as follows:

"Section 301. Requisites for foreign companies to do business. ?€” No stock or mutual insurance company or association of any other State or foreign government shall be admitted and authorized to do business until: * * *

"(c) It shall, by a duly executed instrument filed in his office, constitute and appoint the Insurance Commissioner or his successor its true and lawful attorney, upon whom all lawful processes in any action, rule, order, or legal proceeding against it may be served; and therein shall agree that any lawful process against it which may be served upon him as its said attorney shall be of the same force and validity as if served on the company, and that the authority thereof shall continue in force irrevocable so long as any liability of the company remains outstanding in this Commonwealth."

Some of the defendants had been authorized to do business in Pennsylvania prior to the passage of the Act of May 17, 1921. However, the statutes which preceded the Act of May 17, 1921, and which were in force on the dates each of the defendants admitted to do business in Pennsylvania prior to 1921 were so admitted, contained provisions identical with those contained in Section 301(c). Act of June 1, 1911, P.L. 607, ? 10, subsection Third, supplemented by Act of June 1, 1915, P.L. 653.

The issue involved here is as to whether the plaintiff can maintain his suit in this District by the service of process on the Insurance Commissioner of Pennsylvania. The defendants contend that he cannot do so because the cause of action set forth in the complaint did not arise in Pennsylvania.

The issue has been raised by the defendants' motion to set aside the service of summons following their entry of a special appearance.¹

The complaint sounds as an action for malicious prosecution, and avers that on May 24, 1935, the defendants arrested or caused the arrest of the plaintiff in the County of Gloucester in the State of New Jersey, charging the plaintiff with "Conspiracy to Defraud and the Crime of Arson". It further avers that the conduct of the defendants was malicious and that the plaintiff was incarcerated in the county jail at Woodbury, New Jersey, for ten days, until he posted bail in the amount of $5,000. The complaint further alleges that bills of indictment were found against the plaintiff, and that subsequently on December 24, 1941, the bills of indictment were noll prossed and the criminal proceedings terminated.

Although the plaintiff's complaint does not set forth these facts, plaintiff in his written and oral arguments states that the defendant insurance companies issued the fire policies to insure certain risks in Woodbury, New Jersey; that these policies were delivered to the plaintiff in Philadelphia. A fire occurred on the risks covered and the arrest of the plaintiff in New Jersey followed. Counsel for defendants has written to the court stating that all the policies conclude with this language:

"In Witness Whereof, this Company has executed and attested these presents; but this policy shall not be valid until countersigned by the duly authorized Agent of the Company at * * *" and that therefore each policy in order to become effective had to be countersigned, and that the counter-signature was in fact made in the respective foreign offices of the defendant companies.

As I have already stated, the pleadings do not contain the averments relating to the making of the insurance contracts and if material, the pleadings would be amendable. However, I do not believe that the averment of the fact that these insurance contracts were made in Philadelphia is material. The action of the plaintiff is based upon a tort alleged to have been committed by the defendants in the state of New Jersey. The issuance of the policies, wherever that might have taken place, is merely a coincidence, and might be interesting in throwing light on the history of the dealings between the plaintiff and the defendants, but has nothing to do with the alleged cause of action which arose in the state of New Jersey.

It is to be noted that there is no provision in the Pennsylvania Act that the cause of action must have arisen within the Commonwealth. However, I am of the opinion that the purpose of requiring the "compulsory consent" of service upon the Insurance Commissioner is to subject the foreign insurance companies to the jurisdiction of the local courts in causes of action arising within the State.

I have been unable to find any reported decisions in Pennsylvania construing this Act which cover that point. The decisions elsewhere are quite uniform in holding that the service under the circumstances of this case is improper.

In Morris & Co. et al. v. Skandinavia Insurance Co., 279 U.S. 405, at pages 408, 409, 49 S.Ct. 360, at page 361, 73 L.Ed. 762, the court said: "The purpose of state statutes requiring the appointment by foreign corporations of agents upon whom process may be served is primarily to subject them to the jurisdiction of local courts in controversies growing out of transactions within the state. Old Wayne Mut. Life Ass'n v. McDonough, 204 U.S. 8, 18, 21, 27 S.Ct. 236, 51 L.Ed. 345; Simon v. Southern Railway, 236 U.S. 115, 130, 35 S.Ct. 255, 59 L.Ed. 492; Mitchell Furniture Co. v. Selden Breck Const. Co., 257 U.S. 213, 215, 42 S.Ct. 84, 66 L.Ed. 201; Louisville & Nashville R. Co. v. Chatters, 279 U.S. 320, 49 S.Ct. 329, 73 L.Ed. 711. The language of the appointment and of the statute under which it was made plainly implies that the scope of the agency is intended to be so limited. By the terms of both, the authority continues only so long as any liability of the company remains outstanding in Mississippi. No decision of the state Supreme Court supports the construction for which petitioner contends. And, in the absence of language compelling it, such a statute ought not to be construed to impose upon the courts of the state the duty, or to give them power, to take cases arising out of transactions so foreign to its interests. The service of the summons cannot be sustained." (Emphasis supplied.)

In Robert Mitchell Furniture Co. v. Selden Breck Construction Co., 257 U.S. 213, at...