Stone v. Old Colony St. Ry. Co.

• Decision Date: 01 July 1912
• Citation: 212 Mass. 459,99 N.E. 218
• Parties: STONE v. OLD COLONY ST. RY. CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

212 Mass. 459

99 N.E. 218

STONE v. OLD COLONY ST. RY. CO.

Supreme Judicial Court of Massachusetts, Suffolk.

July 1, 1912

COUNSEL

Butler Cox, Murchie & Bacon, Guy W. Cox, and Guy Murchie, all of Boston, for plaintiff.

Gaston Snow & Saltonstall and Arthur A. Ballantine, all of Boston for defendant.

OPINION

BRALEY J.

The defendant by purchase and consolidation has succeeded to the rights and liabilities of a number of street railway companies which held assessable policies of indemnity or accident insurance in the Mutual Casualty Association, a corporation chartered by the commonwealth of Pennsylvania. By the terms of the contract, whenever the fixed premiums were insufficient to pay matured claims, the directors were empowered to charge a proportional additional sum, not exceeding 5 per centum on the gross traffic receipts of the assured, to cover the deficiency. The association having become financially unable to do business, it was adjudicated insolvent by a court of its domicile having full jurisdiction, and the plaintiff was appointed receiver. Upon his report of assets and liabilities a further decree was entered, levying proportional assessments on the policy holders sufficient in amount for the payment of accrued liabilities, and authorizing him if necessary to enforce collection by suit not only within the jurisdiction of the tribunal appointing him, but wherever legal proceedings might be necessary. It is in pursuance of these decrees that the present action has been brought to collect from the defendant the combined amount of the assessments due from the policy holders of which it is comprised. The proceedings were before a court having jurisdiction of the association, and while the defendant was not a party, and there is no personal judgment by which it is bound, the authority of the plaintiff to enforce the defendant's contractual liability and the amount recoverable are not open to collateral attack. Howarth v. Lombard, 175 Mass. 570, 579, 56 N.E. 888, 49 L. R. A. 301; Converse v. Ayer, 197 Mass. 443, 84 N.E. 98; American Spirits Mfg. Co. v. Eldridge, 209 Mass. 597, 95 N.E. 942; Converse v. Hamilton, 224 U.S. 243, 32 S.Ct. 415, 56 L.Ed. 749. Indeed the defendant concedes this, and the trial court correctly ruled that the plaintiff had not obtained judgment, and the finding for the plaintiff distinctly rests on the amended declaration. But the contractual relations of the policy holders and the association were unchanged by the receivership, and the defendant is not precluded from contesting its liability. Hayward v. Leeson, 176 Mass. 310, 57 N.E. 656, 49 L. R. A. 725; Capital City Mut. Fire Ins. Co. v. Boggs, 172 Pa. 91, 33 A. 349.

The association not having complied with St. 1894, c. 522, §§ 77, 78, 79, by procuring from the insurance commissioner authority to issue policies, and make contracts of insurance, within this commonwealth, it is contended under section 3, that the policies were unlawfully issued. The agreed facts regarding the negotiations, and formation of the contracts, are full and definite. A railway company desiring insurance signed the printed form of application furnished by the association, and mailed it to the home office in Philadelphia, where upon acceptance the policies were signed, issued and deposited in the mail properly addressed to the applicant. The judge having been warranted in finding, that the policies in suit were thus procured, the contracts were completed, and were to be performed, in Pennsylvania. Milliken v. Pratt, 125 Mass. 374, 28 Am. Rep. 241; Brauer v. Shaw, 168 Mass. 198, 46 N.E. 617, 60 Am. St. Rep. 387; Perry v. Hope Iron Co., 15 R.I. 380, 381, 5 A. 632, 2 Am. St. Rep. 902; Com. Mutual Fire Ins. Co. v. William Knabe & Co. Mfg. Co., 171 Mass. 265, 50 N.E. 516; Stone v. Penn Yan, Keuka Park & Branchport Ry., 197 N.Y. 279, 90 N.E. 843, 134 Am. St. Rep. 879; United States v. Thayer, 209 U.S. 39, 43, 28 S.Ct. 426, 52 L.Ed. 673. See American Malting Co. v. Souther Brewing Co., 194 Mass. 89, 95, 80 N.E. 526. And the defendant had the burden of proving that they were illegal. Abraham v. Reserve Fund Life Association, 183 Mass. 116, 119, 66 N.E. 605.

But if in making the attempt the evidence of its witness, who had acted as counsel for the insured companies and of the association, that in some instances the association's secretary had personally solicited and received applications, and taken them to the home office, was not privileged under the decision in Thompson v. Cashman, 181 Mass. 36, 62 N.E. 976, and should not have been excluded, the defendant is not shown to have been prejudiced. It did not appear from his very indefinite statements, that any of the policies in question had been issued on applications received by the secretary while in this commonwealth. If, however, this evidence can be considered as susceptible of the inference the defendant urges, nothing appears indicative of any purpose by the witness or of those with whom he advised, to evade the statute. The judge unhesitatingly decided, that in all the transactions there had been no intention on the part of the association to engage in any acts violative of our laws, and it 'did not do any acts in this state on the theory that it was entitled to do insurance business here,' and the defendant does not contend that the finding is unsupported by the evidence. It being manifest that whatever mode of receiving the applications may have been employed, the applications were finally acted upon, and the contracts were actually delivered in another state where they are conceded by the defendant not to have been illegal, the defendant's first, second, seventh, eighth, tenth, eleventh, twelfth, thirteenth and sixteenth requests could not properly have been given. McIntyre v. Parks, 3 Metc. 207; Finch v. Mansfield, 97 Mass. 89; Graves v. Johnson, 179 Mass. 53, 60 N.E. 383, 88 Am. St. Rep. 355; Reliance Mut. Ins. Co. v. Sawyer, 160 Mass. 413, 36 N.E. 59; Commonwealth Mut. Fire Ins. Co. v. Fairbank Canning Co., 173 Mass. 161, 164, 53 N.E. 373.

It is further contended that our courts should not lend their aid for the collection of the assessments. No express legislative prohibition however is found, and the concluding sentence in section 3 of chapter 522 of the St. of 1894, that 'all contracts of insurance on property, lives or interests in this commonwealth shall be deemed to be made therein,' should not be construed by implication as intended to regulate or prohibit contracts of insurance made in other jurisdictions. Johnson v. Mut. Life Ins. Co. of N. Y., 180 Mass. 407, 409, 62 N.E. 733, 63 L. R. A. 833. It is settled that while an insurance broker who in violation of section 98 solicits insurance in foreign companies which have not been licensed by the insurance commissioner may be prosecuted criminally, state legislation cannot deprive a citizen of the personal right to protect himself from loss, through insurance obtained on his property under a contract made outside of the state of his domicile. Com. v. Nutting, 175 Mass. 154, 55 N.E. 895, 78 Am. St. Rep. 483; Nutting v. Mass., 183 U.S. 553, 22 S.Ct. 238, 46 L.Ed. 324; Pierce v. People, 106 Ill. 11; Allgeyer v. Louisiana, 165 U.S. 578, 17 S.Ct. 427, 41 L.Ed. 832; Delamater v. South Dakota, 205 U.S. 93, 102, 27 S.Ct. 447, 51 L.Ed. 724, 10 Ann. Cas. 733. The general rule, where enforcement of a foreign contract is sought against a party in the courts of his residence, has been stated in these words: 'If it is valid there it is to be deemed valid everywhere, and will sustain an action in the courts of a state whose laws do not permit such contracts. Scudder v. Union National Bank, 91 U.S. 406 . Even a contract expressly prohibited by the statutes of the state in which suit is brought, if not in itself immoral, is not necessarily nor usually deemed so invalid that the comity of the state as administered by its courts will refuse to entertain an action on such contracts made by one of its citizens brought in a suit in which the laws protect it.' Milliken v. Pratt, 125 Mass. 374, 375 (28 Am. Rep. 241).

A contract of indemnity against loss from casualties arising from the operation of a street railway is not detrimental to fundamental public interests, or repugnant to justice. It is not tainted with illegality, as the plaintiff is not compelled to prove an unlawful act in order to maintain the action. Bourne v. Whitman, 209 Mass. 155, 95 N.E 404, 35 L. R. A. (N. S.) 701. The amount when recovered will constitute assets for the liquidation of the liabilities of the insolvent, and no rights of domestic creditors are impaired. Contracts creating preferential assignments, where some of...