Opinion
Submitted December 17, 1909
Decided January 18, 1910
Charles A. Hawley and Calvin J. Huson for appellant. Thomas Carmody for respondent.
As the case comes up to this court, all questions of fact are conclusively settled by the action of the courts below. We are not concerned with any questions, which relate to the manner of the application for, and of the issuance of, the policies of insurance; or to the subsequent adjudication of the insolvency of the insurer, the Electric Mutual Casualty Association, a corporation organized under the laws of the state of Pennsylvania, for the purpose of carrying on the business of accident insurance and of insuring its members on the mutual assessment plan; or to the appointment of the plaintiff as receiver, in proceedings instituted by the attorney general of the state of Pennsylvania, in the Court of Common Pleas, of Dauphin county, in that state, which were regular according to the laws and practice of that state; or to the decree ordering and levying an assessment upon all members, including this appellant, holding assessable policies The defendant, notwithstanding it was not a party before the Pennsylvania court, was bound by the proceedings there had, which resulted in the order for an assessment; so far as the necessity for making it was determined. The directors might have made it and the court, having assumed the charge of the assets and affairs of the corporation, could exercise their office, in that respect. The decree, however subject to direct attack, was not subject to collateral attack. ( Great Western Telegraph Co. v. Purdy, 162 U.S. 329, 336; Howarth v. Angle, 162 N.Y. 179, 186; Hammond v. Knox, 125 App. Div. 9; affd., 194 N.Y. 555.) In this suit by the receiver to recover the amount of the assessments upon the policies held by the appellant, while the decree of the foreign court is not open to attack, as to the matters determined thereby, the latter was not debarred from pleading, or showing, that it was not liable upon its contract; whether by reason of payment, or of release, or of the running of the Statute of Limitations, or of any other legal defense. The decree of the foreign court was in rem, not in personam, and the receiver's action must rest upon the theory that, an assessment having been validly made, the appellant was liable upon its agreement in the contract of insurance. To this claim the appellant could interpose any defense, which established the cessation of its liability, or its non-enforceability. The appellant pleaded in defense the incapacity of the association to issue the particular policies, by reason of its having failed to comply with certain requirements of the Insurance Law of this state, obligatory upon foreign corporations transacting the business of insurance here, and other defenses, denying the capacity of the plaintiff to maintain the action and setting up the bar of the Statute of Limitations. No evidence, however, was offered on its part and the case was submitted to the trial court upon sufficient proof by the plaintiff; consisting in the records of the Pennsylvania court, in the Pennsylvania statutes, in stipulations as to certain facts and in admissions of the defendant bearing upon plaintiff's case. The case must be considered as made upon the decrees of the foreign court, having jurisdiction to make them, in proceedings regularly had under the laws of the state, which established the insolvency, the custody by the court, through the appointment of its receiver, and the necessity for an assessment upon the policies held by members of this mutual association, in order to discharge its liabilities, and upon the appellant's agreement in the contract with the insurer.
The first important question for our consideration, upon this appeal, is whether these policies of insurance represented contracts of the parties, made in the state of Pennsylvania, or in this state. The referee does not find upon this subject, otherwise than by a statement of the facts, showing how they came to be issued. According to them, written applications for the policies were mailed by the treasurer of the appellant to the association, at its office in Philadelphia; one from Penn Yan, in the state of New York, and two from Worcester, in the state of Massachusetts, the latter being the place of his residence. Policies were issued, thereupon, by the association, which were mailed to the appellant, addressed to the places from which the applications had been forwarded. They were retained by the assured and remained in force during the periods specified in each policy. I think it to be clear that the contracts for insurance were made in the state of Pennsylvania; for it was there that the applications were received and acted upon. It was there that the policies were executed and issued. Upon being mailed to the appellant, they became effective and having been retained by the assured, there is, of course, no question of its acceptance of their terms and conditions. If Pennsylvania contracts, no question is raised as to their validity there and if valid there, then they are valid everywhere. There is no statute of this state, which forbids its citizens from entering into contracts with foreign corporations, and any law to such effect would be of doubtful validity, within the provisions of the fourteenth amendment of the Federal Constitution. (See Allgeyer v. Louisiana, 165 U.S. 578, 591.) Nor is there any such law restricting the corporations of the state. It is objected, however, that, assuming the validity of these contracts for insurance, nevertheless, because of the provisions of our Insurance Law, they are unenforceable in this state. The Insurance Law of this state provides that "no corporation * * * shall transact the business of insurance within this state without the certificate of the superintendent of insurance, certifying * * * that such corporation * * * has complied with all the requirements of law to be observed by such corporation * * * and that such corporation is authorized to transact the business of insurance specified therein in this state." (L. 1892, ch. 690, as amended L. 1893, ch. 725, sec. 9.) This prohibition is made specially applicable to foreign corporations by sections 29 and 30. There can be no question as to the power of the state to enact the prohibition and to impose any restrictions upon the operations of foreign corporations within its borders. By the comity existing between the states, corporations are permitted to do business in other states than their own; but their operations must be subject to such laws of the foreign state as are made applicable. (See Bank of Augusta v. Earle, 13 Pet. 519, 588; Hooper v. California, 155 U.S. 648; Allgeyer v. Louisiana, 165 ib. 578; Bard v. Poole, 12 N.Y. 495, 505; Penn Collieries Co. v. McKeever, 183 ib. 98, 102.) Doubtless, if this association has brought itself within the purview of the Insurance Law, it would follow that the plaintiff would be unable to maintain the action, by reason of the contract being a prohibited insurance transaction. But that is not the case. It had neither office, nor agency, within this state; nor does it appear to have solicited business here, or that there was any attempt to evade the operation of our law. As we have seen, the transaction was initiated and consummated at its home office. If it were possible to regard the transaction as business done in this state, still, I should say, within the principle of our decision in the Penn Collieries Case, ( supra), that the insurer was not transacting, or doing business here, within the meaning of the provisions of the Insurance Law referred to, or of section 15 of the General Corporation Law, which denies to a foreign corporation, not having its certificate of regularity, the right to sue here.
If, then, these insurance contracts were validly made and enforceable in the foreign state, is there any force in the objection that the case is not one "for the exercise of judicial comity?" I think not. If any policy of the state would be contravened by admitting the receiver to sue in our courts upon these contracts, the rule of comity could not be applied. But how can it be said that they are repugnant to any public policy? The most that can be argued is that the defendant had contracted for insurance with a foreign insurer, which had not qualified itself for transacting such a business in this state. But that objection is without good ground, when, as we have seen, the insurer was not in this state for the business of insurance and was not shown to be procuring it by means of solicitation, direct, or indirect. The objection is unavailable, unless it can be made to appear that in permitting the enforcement of the appellant's agreement, some public policy will be contravened, or that the rights of our citizens will be interfered with. Subject to these qualifications, the right of the plaintiff, as a foreign receiver, to maintain this action in this state, upon the principle of comity, is one which has long been recognized. ( Dayton v. Borst, 31 N.Y. 435; Lowry v. Inman, 46 ib. 119; Howarth v. Angle, supra; Hammond v. Knox, supra.) The statement in Howarth v. Angle, ( supra), can be repeated here, appropriately: "the plaintiff does not come here seeking to remove assets from this state to the possible prejudice of domestic creditors, but asks that he be permitted to enforce against our own citizens the performance of contracts into which they have entered in another jurisdiction." This case differs, in an important feature, from those cases, where a foreign receiver is suing to enforce, not a common-law liability, but one which is peculiar to the foreign state, because founded upon some local statute. What is sought to be enforced by this action is an agreement of the appellant. It had assented to a prospective liability for an assessment, when entering into the contract with the association, and the promise to pay it sprang therefrom. Its agreement was that "if the fixed premium rate charged by said association shall be insufficient to pay losses, the directors may charge a pro rata additional sum, to make up said deficiency, but in no event shall the total amount of premium and liability exceed five per centum of the gross traffic receipts of the assured." The assessment, as fixed by the court, did not violate this agreement and it having been competently made, a liability to the receiver therefor followed legally; which was, as well, enforceable under our laws, as under those of the state, where the contract was made. In Mabon v. Ongley, ( 156 N.Y. 196), a case where the right of a foreign receiver to maintain an action for the appointment here of an ancillary receiver was denied, the opinion was careful to point out that, subject to the right of domestic creditors, he could reduce to possession all the property of the corporation and that the courts, upon the principle of comity, were as open to him as to a domestic receiver. "Every remedy," it was said by Judge VANN, "to gather in the assets is afforded, unless it would interfere with the policy of the state, or impair the rights of its own citizens." (p. 201.) In Stoddard v. Lum, ( 159 N.Y. 265), it was said that "the receivers and assignees of individuals and corporations domiciled in another state are permitted under interstate comity to enforce the contracts of such individuals and corporations in the state of the debtor's residence." (p. 275.)
I think that the plaintiff could maintain the action here to recover the unpaid balance of the premium due and the assessments made and, therefore, that the judgment, appealed from, should be affirmed.
EDWARD T. BARTLETT, VANN, WILLARD BARTLETT, HISCOCK and CHASE, JJ., concur; CULLEN, Ch. J., absent.
Judgment affirmed, with costs.