Wilson Hunter v. Mutual Reserve Life Insurance Company

• Decision Date: 12 December 1910
• Docket Number: No. 39,39
• Citation: 218 U.S. 573,54 L.Ed. 1155,31 S.Ct. 127
• Parties: WILSON R. HUNTER, Plff. in Err., v. MUTUAL RESERVE LIFE INSURANCE COMPANY et al
• Court: U.S. Supreme Court

218 U.S. 573

31 S.Ct. 127

54 L.Ed. 1155

WILSON R. HUNTER, Plff. in Err.,

v MUTUAL RESERVE LIFE INSURANCE COMPANY et al.

No. 39.

Argued November 7, 1910.

Decided December 12, 1910.

Mr. Paul Armitage for plaintiff in error.

[Argument of Counsel from pages 573-577 intentionally omitted] Mrssrs. William Hepburn Russell, George W. Field, Frank H. Platt, and William Beverly Winslow for defendant in error.

[Argument of Counsel from pages 577-579 intentionally omitted] Mr. Justice McKenna delivered the opinion of the court:

This writ of error is prosecuted to review a judgment of the court of appeals of the state of New York, modifying a judgment of the supreme court of that state. The judgment of the court of appeals was remitted to and made the judgment of the latter court.

The action was brought by Hunter, whom we shall call plaintiff, against the insurance company, which we shall refer to as defendant, upon five judgments obtained in the state of North Carolina, recovered by one Emrick Wadsworth, a citizen of North Carolina, and owned by plaintiff. The judgments were recovered upon policies of insurance issued by defendant, one of which was issued to a citizen of North Carolina while defendant was doing business there, the others to citizens of New York and New Jersey. They were assigned to Wadsworth long after defendant had attempted to remove move from North Carolina. Judgment was rendered for their full amount with interest and costs, to wit, the sum of $9,965, by direction of the appellate division of the court, to which the case was submitted upon an agreed statement of facts. The court of appeals reduced the same by the amount of the four judgments recovered on the policies issued in New York and New Jersey. The Federal question presented is whether due faith and credit was refused to the judgments, in violation of the Constitution of the United States.

The judgments were obtained by default, after service made upon the insurance commissioner of the state. The decision of the case turns upon the validity of the service.

The defendant is a life insurance company, organized under the laws of New York. Prior to March 13, 1899, it was duly admitted to do business in the state of North Carolina, it complying with the laws of the state successively passed, which required insurance companies to appoint agenst upon whom service of process could be made.

On March 6, 1899, the legislature passed a law known as the Willard law. The law prescribed that no foreign insurance company should do business in the state until it had, by a duly executed instrument, filed in the office of the secretary of state, constituted and appointed the insurance commissioner its true and lawful attorney, upon whom all lawful process in any action or legal proceedings might be served, and agreed that such service should have the same force and validity as if served on the company, and that 'the authority thereof' of' should 'continue in force irrevocable so long as any liability of the company' should 'remain outstanding in this commonwealth.' Chapter 54 of the Laws of 1899.

On or about the 13th of Arril, defendant executed the power of attorney required, and thereupon a license was issued to it to do business, as provided by law, under which it did business in the state for a time.

The legislature which passed the Willard law passed also a law called the Craig act, by which it was provided that any foreign insurance company desiring to do business in the state after June 1 then ensuing must become a domestic corporation of the state. There were severe penalties prescribed for the violation of the act. The company was subjected to a penalty of $200 a day for every day it 'continued to operate or do business without having complied with the requirements of the act,' and it was deprived of the right of suing in the state courts, or to enter into any new contracts, or enforce those it had made. In addition to the penalty of $200, it was subjected to a penalty of $500 for each day that it did business after the 1st day of June, 1899, 'without first becoming a domestic corporation.'

The act took effect on the 10th of February, 1899. In May of that year the board of directors of defendant passed a resolution to withdraw from the state, and to dispense with and terminate the services of all of its agents. It also revoked the authority of the insurance commissioner to act as its attorney to receive service of process. A certified copy of the resolution was served on the commissioner, and the agents of the company were withdrawn from the state, the premiums upon the policies theretofore issued by it being remitted by mail to its home office, where the policies and premiums were payable, and losses upon policies being paid by check from its office. Outside of this the record shows four transactions: (1) The rewriting of a policy of insurance in 1899, originally issued in 1886, which was mailed from its office in New York; (2) sending a check in payment of a policy issued prior to May 17, 1899, to be delivered upon receipt of certain unpaid assessments; (3) the adjustment in North Carolina, in June, 1902, of a loss upon a policy issued in Washing- ton, District of Columbia, the beneficiary having removed to North Carolina; (4) the adjustment, by an attorney employed for the purpose, of a claim upon a policy written in North Carolina prior to May 17, 1899. The two first transactions were prior to the beginning of the actions in which the judgments were recovered, and the two last were subsequent to that time. These are the transactions upon which plaintiff relies to establish that defendant was doing business at that time in the state.

Three of the policies upon which judgments were recovered were issued in the state of New York long prior to the year 1899. The fourth policy was issued in New Jersey, also prior to 1899. The assignments to Wadsworth were made in December and January, 1902, and the suits were begun on January 20, 1902.

There is no controversy over the power of the state to pass the Willard and Craig acts, so called, or to make their provision conditions upon which foreign insurance corporations could do business in the state. The controversy is over the duration of the conditions. The decision upon that, plaintiff contends, depends upon the question whether the insurance company was doing business in the state at the time the actions on the policies were brought and process served; and, insisting that it was, cites Connecticut Mut. L. Ins. Co. v. Spratley, 172 U. S. 602, 43 L. ed. 569, 19 Sup. Ct. Rep. 308; Mutual Reserve Fund Life Asso. v. Phelps, 190 U. S. 147, 47 L. ed. 987, 23 Sup. Ct. Rep. 707. Plaintiff further insists that, even if it be assumed that defendant had withdrawn from the state in good faith, and had ceased to do business therein after May 18, 1899, it was still liable to be sued in the courts of the state 'in any action or local proceeding of every nature of which the courts of North Carolina had jurisdiction,' and that the insurance commissioner was its agent to receive service of process. This contention is based on the provision of the statute which continues the authority of the commissioner 'in force and irrevocable so long as any liability of said company remains outstanding in said state.'

If the situation of defendant, regarding what it had done and its obligations, was exactly expressed by the contentions of plaintiff, they might be irresistible. But not only the Willard act, but the Craig act, must be considered in determining defendant's conduct. It had done business in the state, and the former act became a part of its obligations to its policy holders. The latter act imposed new conditions upon it, and as an alternative to compliance with them, required it to remove from the state. An evasion of the requirement was, as we have seen, severely penalized. Money penalties, one of $200 and one of $500, for every day it should do business after the 1st of June, 1899, were imposed upon it, and no contract it should make or had made could be enforced in the courts of the state. Such were the alternatives presented by the Craig act. In other words, defendant was given the choice to become a domestic corporation or go out of the state. It chose to go out of the state, and adopted the only way it could to do so. We think such course was open to it, and we see no reason to question its good faith.

It is, however, contended that defendant 'persisted in doing business in the state, and was so found at the time of the service of process in question.' Four instances are adduced to sustain the contention, two of which occurred in 1899 and two in 1902. These instances have no relation to one another, and no relation to the transactions upon which the judgments were based. Between the first two and the last two there was an interval of three years, and yet it is insisted that there was such connection between them that they constituted doing business continuously in the state, and the defendant was hence precluded from revoking its power of attorney to the insurance commissioner. The contention of plaintiff, so far as based on the instances adduced, encounters a great difficulty. They were not new business. They related to old transactions, and were intended only to fulfil their obligations. This was the plain duty of defendant,—a duty which it could not evade, nor could the state even prevent it. Bedford v. Eastern Bldg. & L. Asso. 181 U. S. 227, 45 L. ed. 834, 21 Sup. Ct. Rep. 597. Between doing business for such purposes and doing business generally there is quite a difference. If not, the consequences are somewhat serious. The Craig act, as we have seen, imposes a penalty of $700 a day for each day after the 1st day of June, 1899, that a foreign corporation shall do business in the state without conforming to the provisions of the act.

Plaintiff, however, presses with earnestness, in support of...