The State ex rel. Equitable Life Assurance Society of the United States v. Vandiver

• Decision Date: 09 July 1909
• Parties: THE STATE ex rel. EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES v. W. D. VANDIVER, Superintendent of Insurance of the State of Missouri
• Court: Missouri Supreme Court

121 S.W. 45

222 Mo. 206

THE STATE ex rel. EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES v. W. D. VANDIVER, Superintendent of Insurance of the State of Missouri

Supreme Court of Missouri

July 9, 1909 ^[*]

Peremptory writ denied.

O. M Spencer, Franklin Ferriss and Frank Hagerman for relators.

(1) Each relator has a binding statutory contract by which it is entitled to a renewed certificate by complying with section 7888, and which cannot be impaired. The Act of 1907, if applicable to it, is unconstitutional. 6 Thomp., Corp., sec 7902; State v. Root, 83 Wis. 667. Upon the faith of these statutes each relator acted, making large investments and building up an extensive business. The Constitution of the State (art. 2, sec. 15), and of the United States (art 1, sec. 10), both provide that "no State shall . . . pass any . . . law impairing the obligation of contracts." So far as concerns legislative grants of authority to domestic corporations, the courts since the Dartmouth College Case (Trustees of Dartmouth College v. Woodward, 4 Wheat. 518), have recognized them as contracts which cannot be impaired. State ex rel. v. Adams, 44 Mo. 576; Sloan v. Railroad, 61 Mo. 30; State ex rel. v. Greer, 78 Mo. 191; Hovelman v. Railroad, 79 Mo. 643; State ex rel. v. Railroad, 85 Mo. 282; Railroad v. Springfield, 85 Mo. 676. A contract with a foreign corporation as to the terms upon which it may do or continue business cannot be impaired. Am. Smelt. & Ref. Co. v. Colorado, 204 U.S. 103; Railroad v. Penn., 153 U.S. 628; Bedford v. Eastern B. & L. Assn., 181 U.S. 241; British Am. Mort. Co. v. Jones, 76 S.C. 218; State ex rel. v. Cook, 171 Mo. 361; Seaboard Air Line Co. v. R. R. Commission, 155 F. 802. (2) The Act of 1907, even if not the impairment of a contract, does not apply to the renewed certificate of authority provided for by section 7888. The Act of 1907 says that any company violating its terms shall not "be licensed to transact business in this State." The language of section 7989 providing for the original authority to all companies, domestic, foreign and alien, provides for "a certificate . . . authorizing it to do business." To "transact business" in the Act of 1907 is the same as to "do business" in section 7989. Section 7880 requires a company to obtain "a renewed certificate of authority to continue business," which is different language and a different thing from obtaining a license to transact business. This State cannot deprive them of the right to do business -- all that it can do is to exclude them from its own borders. State v. Ins. Co., 49 Oh. St. 440; State v. Ins. Co., 39 Minn. 538. (3) By its title this act purports to relate to all life insurance companies, and then only as a regulation of salaries. Section 1 relates alone to domestic companies, section 2, if, as hereinbefore contended, applicable alone to domestic companies, is beyond the title which covers all companies. If applicable to both foreign and domestic companies, then the bill contains two subjects: (1) a general prohibition against a domestic company paying a salary in excess of $ 5,000 without the approval of its directors, though it may violate the provision and still be licensed, and (2) a prohibition of a license to any company if more than a $ 50,000 salary be paid. The title properly construed refers to domestic companies, because the State has no concern with salaries paid by foreign companies for services outside of the State. When so construed, section 2, if applicable to foreign companies, deals with a subject not expressed in the title. So, if the act be treated as one of exclusion, then it is invalid because it has no relation to the subject mentioned in the title, which is the regulation of salaries. The constitutional provision is mandatory, and many acts have been declared to be void because conflicting therewith. State ex rel. v. Schofield, 41 Mo. 39; Witzman v. Railroad, 131 Mo. 618; State v. Great Western Coffee & Tea Co., 171 Mo. 640; State ex rel. v. Baker, 129 Mo. 486; State ex inf. v. Borden, 164 Mo. 237; State ex rel. v. Hiege, 135 Mo. 119; Shively v. Lankford, 174 Mo. 545; In re Goode, 3 Mo.App. 230; State v. Persinger, 76 Mo. 346; State ex rel. v. Jackson Co. Ct., 102 Mo. 531. (4) The Act of 1907 is void if applied to salaries paid for services outside of the State. The act cannot be sustained as an exclusion statute because it is not limited to foreign but is applicable to domestic corporations. Carroll v. Greenwich Ins. Co., 199 U.S. 409. (5) The Act of 1907, if sustained at all, must be a reasonable exercise of the police power. It was an unreasonable exercise thereof, and therefore contrary to sections 4 and 15, of article 2, of the State Constitution and the 5th and 14th amendments to the Constitution of the United States. 22 Am. and Eng. Ency. Law (2 Ed.), 933, 935, 936; Plessy v. Ferguson, 163 U.S. 537; Railroad v. Jacobson, 179 U.S. 301; Lochner v. New York, 198 U.S. 53; Coffeyville Vit. Brick Co. v. Perry, 69 Kan. 297; Railroad v. Wilson (Tex.), 19 S.W. 912; State v. Tie & Timber Co., 181 Mo. 558; State v. Loomis, 115 Mo. 315; State ex rel. v. Norton, 5 Ohio N. P. 183; Street v. Varney Sup. Co., 160 Ind. 338; People v. Coler, 166 N.Y. 1; Braceville Coal Co. v. People, 147 Ill. 66; Com. v. Perry, 155 Mass. 117; State v. Goodwill, 33 W.Va. 179; Godcharles v. Wigeman, 113 Pa. St. 431; State v. Coal & Coke Co., 33 W.Va. 188; Millett v. People, 117 Ill. 294; Ramsey v. People, 142 Ill. 380; Low v. Prtg. Co., 41 Neb. 127; Cleveland v. Clements, 67 Ohio St. 197; People v. Orange Co., 175 N.Y. 84.

Herbert S. Hadley, Attorney-General, and John Kennish, F. G. Ferris and Rush C. Lake, Assistant Attorneys-General, for respondent.

(1) Relators are precluded from assailing the constitutionality of the Act of 1907. Under the facts set forth in the alternative writ, and the law applicable thereto, respondent contends that relators being without authority to transact business in this State, and being "outside, at the threshold, seeking admission, with consent not yet given," have no standing in this court to challenge the constitutionality of the Act of 1907 upon the grounds complained of. The law is well settled that foreign corporations licensed to do business in a State are precluded from challenging the constitutionality of laws in force in such State at the time the corporation was admitted to do business therein, and this principle should apply with greater force to the case of a foreign corporation seeking a license to entitle it to enter and do business in another State. Daggs v. Orient Ins. Co., 136 Mo. 398; State ex inf. v. Standard Oil Co., 194 Mo. 149; Orient Ins. Co v. Daggs, 172 U.S. 566; Railroad v. Kentucky, 183 U.S. 503. Manchester Fire Ins. Co. v. Herriott, 91 F. 711. (2) "If anything can be settled by adjudication, then it is settled that a State can impose upon foreign insurance corporations seeking to transact insurance business in such State such terms and conditions as it may deem proper or may wholly exclude them." Daggs v. Orient Ins. Co., 136 Mo. 393; Security Mutual Life Ins. Co. v. Prewitt, 202 U.S. 246; Doyle v. Continental Ins. Co., 94 U.S. 535; Hooper v. California, 155 U.S. 648; Allgeyer v. Louisiana, 165 U.S. 578; Orient Ins. Co. v. Daggs, 172 U.S. 557; Waters-Pierce Oil Co. v. Texas, 177 U.S. 28; N. Y. L. Ins. Co. v. Cravens, 178 U.S. 289; Hancock Mut. Life Ins. Co. v. Warren, 181 U.S. 73. (3) All insurance companies, whether domestic, foreign or alien, are required by Secs. 7989 and 7888, R. S. 1899, to procure from the Superintendent of Insurance a certificate of authority to do business in this State and to have such certificate renewed annually. (4) Relators were not entitled to a renewal of the certificates of authority, except upon compliance with the laws of this State, including the Act of 1907. Eagle Ins. Co. v. Ohio, 153 U.S. 446; Ins. Co. v. Needles, 113 U.S. 574; 8 Cyc. 938; 15 Am. and Eng. Ency. Law, 1038; State v. Gilmore, 141 Mo. 513. The theory advanced by relators that because investments were made in this State under the laws in force during the life of former licenses, and that thereby an implied contract resulted which may now be used as a basis for challenging the constitutionality of the Act of 1907, is so untenable and without support in reason or authority as to require little attention. Under the Constitution of this State, and under the general law, it was not within the power of one Legislature to barter away the police power of the State, and no reason has been given, or can be given, why any different rule should apply to foreign corporations as being exempt from the general principles of law upon this subject because investments were made than in the case of individuals or domestic corporations under similar circumstances. Prewitt v. Ins. Co., 26 Ky. L. R. 1240; Railroad v. Penn., 153 U.S. 628. (5) The Act of 1907 contains but one subject, and that is clearly expressed in its title. State v. Cantwell, 179 Mo. 260; O'Connor v. Railroad, 198 Mo. 633; Ex parte Loving, 178 Mo. 205; State v. Doerring, 194 Mo. 398; State v. Delmar Jockey Club, 200 Mo. 34; State v. Murlin, 137 Mo. 305; Coffee v. Carthage, 200 Mo. 616; Blair v. Chicago, 201 U.S. 400; Detroit v. Railroad, 184 U.S. 392. (6) This act is a proper and reasonable exercise of the police power. 1 Tiedeman's State and Federal Control of Persons and Property, p. 237; Holden v. Hardy, 169 U.S. 398. Relators contend that the Act of 1907 is an unreasonable exercise of the police power of the State, in that it fixes the maximum annual salary which an insurance officer may receive at $ 50,000. Is $ 50,000 unreasonably low? In fixing such maximum salary at $ 50,000 per annum, did the Legislature abuse its discretion and make the police...