Wojtczak v. Am. United Life Ins. Co.

• Decision Date: 03 June 1940
• Docket Number: No. 88.,88.
• Citation: 293 Mich. 449,292 N.W. 364
• Parties: WOJTCZAK v. AMERICAN UNITED LIFE INS. CO.
• Court: Michigan Supreme Court

293 Mich. 449

292 N.W. 364

WOJTCZAK

v.AMERICAN UNITED LIFE INS. CO.

No. 88.

Supreme Court of Michigan.

June 3, 1940.

Action by Maryan Wojtczak against the American United Life Insurance Company, an Indiana corporation, to restrain performance of a reinsurance management contract. From a decree dismissing plaintiff's bill, plaintiff appeals.

Affirmed.Appeal from Circuit Court, Wayne County, in Chancery; Theodore J. Richter Judge.

Argued before the Entire Bench.

Wm. Henry Gallagher, of Detroit, for plaintiff and appellant.

Oxtoby, Robison & Hull, of Detroit (Robert A. Adams, to Indianapolis, Ind., Shields, Ballard, Jennings & Taber, of Lansing, and Oscar C. Hull and Leo I. Franklin, both of Detroit, of counsel), for defendant and appellee.

WIEST, Justice.

Defendant is a mutual life insurance corporation, organized under the laws of the State of Indiana, with its headquarters and principal office in the city of Indianapolis, and is authorized to do business in the State of Michigan. In August, 1939, it issued to plaintiff a $1,000 life insurance policy. In December, 1939, plaintiff, as such policyholder, filed the bill herein to restrain performance of a re-insurance management contract under which defendant re-insured and assumed, with certain limitations, all valid outstanding policy obligations of the American Life Insurance Company, a Michigan corporation, which was adjudged insolvent in a proceeding in the circuit court for the county of Ingham, brought by the Michigan commissioner of insurance, and in which a permanent liquidating receiver was appointed who, under authorization of the court, entered into the contract, the operation of which plaintiff seeks to have the court enjoin. Plaintiff's bill was dismissed upon a holding that the contract of re-insurance management was an internal affair of the foreign corporation which the Michigan court would not attempt to regulate by injunction restraint.

Upon appeal from such holding, plaintiff alleges that the contract is ultra vires, and in violation of the by-laws of defendant company; that the statute of Indiana prohibiting injunction proceedings in insurance matters other than by the insurance commissioner is inapplicable and a similar law in the insurance code of the State of Michigan (Act No. 249, Pub.Acts 1933, § 9, Stat.Ann. § 24.48) does not bar this suit.

Plaintiff also claims that the circuit court for the county of Ingham had no jurisdiction to appoint a permanent liquidating receiver for the American Life Insurance Company which had its business office in the city of Detroit, and finally that the suit at bar is of such a nature that the courts of this State should assume jurisdiction.

The re-insurance management contract has been executed and approved by the insurance commissioners of Indiana and Michigan. If the restraint sought undertakes to exercise control or management of the internal affairs of defendant, a foreign corporation, the courts of this State will not assume jurisdiction. This rule is in line with authority.

In Rogers v. Guaranty Trust Co., 288 U.S. 123, 53 S.Ct. 295, 297, 77 L.Ed. 652, 89 A.L.R. 720, it was stated: ‘It has long been settled doctrine that a court-state or federal-sitting in one state will, as a general rule, decline to interfere with, or control by injunction or otherwise, the management of the internal affairs of a corporation organized under the laws of another state but will leave controversies as to such matters to the courts of the state of the domicile.’ Citing many cases. See also Thompson v. Southern Connellsville Coke Co., 269 Pa. 500, 112 A. 533;Sauerbrunn v. Hartford Life Ins. Co., 220 N.Y. 363, 115 N.E. 1001.

In 17 Fletcher, Cyc., Law of Private Corporations, § 8425, it is stated, with citation of many authorities: ‘Ordinarily, therefore, the courts of a state or country will not assume jurisdiction to interfere, by injunction or otherwise, in the management of the internal affairs of a foreign corporation, even at the suit of a resident stockholder, and even though the corporation may be doing business in the state or country and may have expressly or impliedly agreed to submit to the jurisdiction of the...