The sun. [volume] (New York [N.Y.]) 1833-1916, 1878-04-04
Insurance Companies and the Federal
Courts.

| insurance NOmpNntcs ana the fe0efal
Courts.
There IL general impression that justice
is quite rs we'll administered in the Federal
courts as in the courts of the several
States. Why. then. are efforts so often
made TO prevent in'u.lncc companies from
having access to the Federal courts? Leg
islation has been successfully invoked for
this purpose in som, Of the Western States.
notably Wisconsin, and is now proposed in
| New York. There Is "A hill before the Legis-
| lature providing that any foreign insurance
corporation which applies FOR the removal
of suit, to which 1t is party. to the Cir
! cult Court Of the United States, shall there
/ by forfeit all its rights TO do business in this
state. The term foreign il here applied to
! corporations in other Sta'e Of the Union as
well a. to those existing under the laws OF
other countries. The bill declares il unlaw-
| full for an" such company to transact bus-
ness in New York, unless they file rcsolu-
ton Of the board of directors. in the Insur-
ance Department at Albany. substantially
agreeing not to remove tn the United States
Court any action or proceeding commenced
/ rs or against the corporations ia court Of
| this State
So far as the proposed statute requires an
agreement not To transfer eases to the Fed
eral courts, there can be little doubt that it
is unconstitutional. The Supreme Court Of
the United States, on this ground, adjulgcd
a similar requirement In the Wisconsin stat
ute To- be- Illegal and void This was upon
the principle said the same court in Il later
case. that every man Is entitled to resort
to all the courts OF the country. to invoke
the protection which all the laws and all the
courts may afford him, and that he cannot
barter away his life hi- freedom, or his con-
| stitutional rights"
1t * remarkable that the decision in which
this language was used really destroys the
practical effect and value Of the earlier de-
cisiOn to which il refers. The supreme Court
now holds DOYLE agt. Continental lnsur-
ance Company. OTTO, 535' that although n
/ foreign insurance company cannot bc made
| to bind itself 10 abstain from the Federal
courts, permission To such n corporation To
enter state does not uvolye II permanent
right to remain; and, therefore, it, license
to do business therein may be cancelled. If
the state 80 provides, by reason of the for
hiddon removal Of suits from the State
courts to the courts Of the United States,
Three Of the Judges dissontcd from this
view, and the logic Of the case seems to lis
entirely with their opinon. # is just as un-
constitutional To impose forfeiture for re-
sorting 20 the Federal courts, as it is to
exact an agreement not to resort TO them.
We are told that inasmuch as n State has
tine power to exclude foreign corporations
from its dominions altogether il can ex-
cludc them for n bad cause rs well as for a
7 tf,I an ltlt ln ptt think en Wn,rn
the bad cause is simply Noncompliance with
an unconstitutional condition, n correct eX-
position Of the law would seem to require
an absolute denial of any right to exclude
ON that ground. As il is, however, the SUI
premc Court says TO the States, in sub
stance: You cannot make insurance com
panrs promise not TO do this thing, for that
would be unconstitutional; but you can
punish them by Punishment if they actually
venture to do II.
Whatever purpose there may be in enact
ing these statutes To keep insurance litiga-
tion out of the United States courts the
effort indicates the existence of an evil
somewhere. The movement is evidently on
behalf of parties who are likely To be OPP
posed to the companies in lawsuits. From
what does their antipathy to the Federal
tribunals proceed II tho fact should be
that the courts of the United States gen
orally favor these corporations then it may
be AS umed that the national judicial sys-
tenn needs reform IT, on the othor hand. It
il true that the Federal courts are most eli
ccnt TO secure n fairness toward foreign in
surancc companies which is not alwaye
attainable in State courts, why should
honest suitors seek to coniine themselves u
the latter?
These considerations seom to require the
rejection OF the bill we have criticised, 1t is
partly unconstitutional, and wholly ohicc'
tionabc Legislation Of the Same sort has
only brought dscredit ON the States which
have attempted It, and New York ought t,
be warned By their example.