Swann v. Mutual Reserve Fund Life Ass'n

• Decision Date: 09 April 1900
• Citation: 100 F. 922
• Parties: SWANN v. MUTUAL RESERVE FUND LIFE ASS'N. KELLER v. SAME.
• Court: United States Circuit Court, District of Kentucky

100 F. 922

SWANN v. MUTUAL RESERVE FUND LIFE ASS'N.

KELLER v. SAME.

United States Circuit Court, D. Kentucky.

April 9, 1900

Randolph H. Blain, for plaintiff Swann.

Zack Phelps and Benj. F. Washer, for plaintiff Keller.

Pirtle & Trabue, for defendant Mutual Reserve Fund Life Ass'n.

EVANS District Judge.

Each of these cases was instituted in the state court at a date subsequent to October 10, 1899, and each was removed here by defendant. Upon commencing his action in the state court each plaintiff caused a summons to be issued against the defendant in due form, upon each of which the sheriff returned, in substance, that it had been executed upon the defendant by delivering a copy thereof to W. H. Stone, the insurance commissioner of Kentucky. The defendant has in each case moved the court to quash the return on the summons. Upon the hearing of these motions it was made to appear that the certificate of membership or policy upon which the plaintiff Swann had sued was delivered in Kentucky, where he has at all times resided, and that the certificate of membership or policy upon which the plaintiff Keller had sued was delivered in the state of Arkansas, where he has at all times resided.

On and before May 10, 1893, the following section of the Kentucky Statutes was in force, namely:

'Sec 631. Before authority is granted to any foreign insurance company to do business in this state, it must file with the commissioner a resolution adopted by its board of directors, consenting that service of process upon any agent of such company in this state, or upon the commissioner of insurance of this state, in any action brought or pending in this state, shall be a valid service upon said company; and if process is served upon the commissioner it shall be his duty to at once send it by mail, addressed to the company at its principal office; and if any company shall, without the consent of the other party to any suit or proceeding brought by or against it in any court of this state, remove said suit or proceeding to any federal court or shall institute any suit or proceeding against any citizen of this state in any federal court, it shall be the duty of the commissioner to forthwith revoke all authority to such company and its agents to do business in this state, and to publish such revocation in some newspaper of general circulation published in the state.'

On that day the defendant adopted a resolution in the following language, a copy of which was filed with the insurance commissioner:

'Resolved, that the Mutual Reserve Fund Life Association Insurance Company of the City of New York, in the state of New York, having been admitted or having applied for admission to transact business in the state of Kentucky, in conformity with the laws thereof, does hereby consent that service of process upon any and every agent that is now or may hereafter be acting for said company in Kentucky, or upon the insurance commissioner of said state, shall be valid service upon said company in any action or special proceedings against said company in the state of Kentucky, subject to and in accordance with all the provisions of the statutes and laws of said state of Kentucky now in force, and such other acts as may be hereafter passed amendatory thereof and supplementary thereto; and said agents, or said insurance commissioner, are hereby duly authorized and empowered to acknowledge service of process for and in behalf of said company in the state of Kentucky, in all cases as provided for by the laws of the state of Kentucky; and service of process, mesne or final, upon said agents, or said insurance commissioner, shall be taken and held to be as valid as if served upon said company, according to the laws of this or any other state, hereby waiving all claim or writ of error by reason of such acknowledgment or service; and the service of process upon such agents, or such insurance commissioner, in any county of this state, shall be deemed good and valid, and authorize trial of the cause in the court whence such process issued.'

On October 10, 1899, the defendant was given a notice in this language, namely:

'Office of Insurance Commissioner of the State of Kentucky.

'Frankfort, Ky., October 10th, 1899.

'Notice is hereby given that from and after this date all authority granted by this department to the Mutual Reserve Fund Life Association of New York City, a corporation organized under and existing by the authority of the laws of the state of New York, together with all licenses issued by this department to agents of the above-named association, are revoked.

'W. H. Stone, Insurance Commissioner.'

From and after the date last named the defendant had no agents in Kentucky, although a bank in the city of Louisville did afterwards receive from holders of certificates of membership for the credit of the defendant, and for the convenience of the certificate holders, the assessments made thereon, and delivered the company's receipts for the amounts thus received, and this practice continued up to the time of the filing of these actions; but the defendant did not, after October 10, 1899, otherwise transact any business in Kentucky, took no applications for membership therein, and maintained no agents or agencies in the state.

Had the defendant actually rescinded the resolution before the service there could have been no difficulty, but, as it did not, the interesting question has arisen whether the defendant shall, upon the facts stated, be held to have been duly and effectively served with process and notice to appear and answer in these actions, or either of them, by reason of the service upon the insurance commissioner. In order to make service of process good, as a general rule it must, in the case of a corporation, be made upon some one of its officers or agents, or upon some person upon whom it shall have consented that process might be served on its behalf; in short, upon one who is, at least, at the time an agent of the defendant in some proper sense of that term as applied to the service of process. It is equally certain that the defendant, by the resolution copied above, plainly consented that under certain circumstances service of process in suits against the defendant might be made upon that public official known as the 'Insurance Commissioner,' and be binding on the defendant. That the consent evidenced by the resolution was effective for that purpose, and that such service would support a judgment in personam against the corporation in all cases where the cause of action arose in Kentucky, and where, in addition, the action itself was instituted, and the service of process had, while the corporation was transacting business in Kentucky, within the meaning of the resolution, and in the statutory sense, seems to be conceded, and, indeed, to be incontrovertible. But it is insisted upon the one hand, and denied upon the other, that this is not true where the suit is brought after the corporation has ceased to carry on business in Kentucky by reason of an arbitrary revocation of the state's authority for it to do so; and this proposition is even more emphatically insisted upon in the case of the plaintiff Keller, whose action was not only instituted after the revocation of defendant's authority, but where the cause of action itself arose in the state of Arkansas, where the plaintiff lived and where the policy was delivered. The latter case seems to be altogether free from doubt, because there does not appear to be any plausible ground for contending that the purposes of the Kentucky Statutes were intended to embrace such a case.

The case of plaintiff Swann is somewhat more difficult, only because the contract with him was made in Kentucky, and while the defendant was lawfully transacting business here. In order to give jurisdiction of the person of a defendant whether a natural person or a corporation, there must be a service upon him of process,-- that is, a notice to appear and answer,-- and the thing done which is claimed to be a service must come up to this general requirement. In the case of an individual, this service can only be made upon him in person. Nothing else can be sufficient or valid. In the case of a corporation, it is equally essential that service shall be upon the defendant, which necessarily involves service upon some person who, pro hac vice, stands in the place of the corporation, and as its representative, for this purpose, by its authority and consent, or by operation of the law of a state, while the corporation is actually doing business therein. Unless...