Source: https://caselaw.findlaw.com/us-supreme-court/204/8.html
Timestamp: 2019-04-22 13:05:14+00:00

Document:
[204 U.S. 8, 9] Mr. A. S. Worthington for plaintiff in error.
[204 U.S. 8, 12] No counsel for defendants in error.
A summons, addressed to the sheriff of Susquehanna county, Pennsylvania, was sued out and the following return thereof was made: 'Served the Old Wayne Mutual Life Association [204 U.S. 8, 13] of Indianapolis, Indiana, an insurance company incorporated under the laws of the state of Indiana, by giving, September 26th, 1900, a true and attested copy of the within writ to Israel W. Durham, insurance commissioner for the state of Pennsylvania, and making known to him the contents thereof, the said association having no attorney in the state of Pennsylvania upon whom service could be made.' It does not appear, if the fact be material, that any notice of this summons was given by the commissioner to the defendant.
Subsequently, the plaintiffs filed a declaration or statement in the Pennsylvania case, which contained, among other things, the following: 'That the said the Old Wayne Mutual Life Association of Indianapolis, Indiana, defendant, is a mutual life insurance association, foreign to the state of Pennsylvania, to wit: of the state of Indiana, as aforesaid, and as such has been doing business of life insurance in the state of Pennsylvania, more particularly in the counties of Susquehanna and Lackawanna, in said state of Pennsylvania, issuing policies of life insurance to numerous and divers residents of said counties and state for many years, upon application therefor taken in said counties of Susquehanna and Lackawanna, and was transacting such business of life insurance in said state and counties on the 3d day of December, 1897, and before and since till July 5th, 1900, and after. That the said the Old Wayne Mutual Life Association has no duly appointed agent in said county of Susquehanna, state of Pennsylvania, for the acceptance of service of process other than the commissioner of insurance of the state of Pennsylvania. The writ of summons in this action, duly issued by the court of common pleas of Susquehanna county, directing the said defendant, the Old Wayne Mutual Life Association of Indianapolis, Indiana, to appear and answer, was legally and duly served on the commissioner of insurance of the state of Pennsylvania on the 26th day of September, 1900, the said commissioner of insurance for the state of Pennsylvania being the proper person for service in this case.' [204 U.S. 8, 14] This was followed by a notice in that case addressed to the insurance commissioner, and stating that judgment would be taken if no appearance was entered or an affidavit of defense filed by the association within fifteen days after service of that notice. At a later date, the insurance commissioner not having appeared, and no affidavit of defense having been filed, judgment was taken against the life association, by default, April 16th, 1901.
The defendant demurred to the complaint as insufficient in law, but the demurrer was overruled. It then filed its answer, denying 'each and every material allegation' in the complaint. In a separate paragraph it alleged that its only offices for the transaction of business were, and at all times had been, at Indianapolis, Indiana, where its officers had always resided; that it had never been admitted to do business in Pennsylvania, and never had an office or agency there for the transaction of business; that no one of its officers or agents was in that commonwealth at the date of the alleged suit, nor had been there since; that no summons was ever served upon it at any time, and that it did not appear in that action; that no one ever appeared for it there who had authority to do so; and that the first notice or knowledge it ever had of the alleged judgment against it was long after the day when it appears to have been rendered. [204 U.S. 8, 15] The plaintiffs replied, denying each and every material allegation of the answer.
The plaintiff in error insists that the Pennsylvania court had no jurisdiction to proceed against it; consequently the judgment it rendered was void for the want of the due process of law required by the 14th Amendment. If the defendant had no such actual, legal notice of the Pennsylvania suit as would bring it into court, or if it did not voluntarily appear therein by an authorized representative, then the Pennsylvania court was without jurisdiction, and the conclusion just stated would follow, even if the judgment would be deemed conclusive in the courts of that commonwealth. The constitutional requirement that full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state is necessarily to be interpreted in connection with other provisions of the Constitution, and therefore no state can obtain in the tribunals of other jurisdictions full faith and credit for its judicial proceedings if they are wanting in the due process of law enjoined by the fundamental law. 'No judgment of a court is due process of law, if rendered without jurisdiction in the court, or without notice to the party.' Scott v. McNeal, 154 U.S. 34, 46 , 38 S. L. ed. 896, 901, 14 Sup. Ct. Rep. 1108. No state can, by any tribunal or representative, render nugatory a provision of the supreme law. And if the conclusiveness of a judgment of decree in a court of one state is questioned in a court of another government, Federal or state, it is open, under proper averments, to inquire whether the court rendering the decree or judgment had jurisdiction to render it.
The complaint in this case, as we have seen, alleged that on the 3d day of December, 1897,-the date of the insurance certificate.-as 1897,-the date of the insurance certificate,-as well as prior and subsequent thereto, the defendant association engaged in business in Pennsylvania, soliciting applications for insurance and issuing policies to residents of that commonwealth. The answer denied each and every material allegation in the complaint, and such a [204 U.S. 8, 18] denial under the Indiana Code of Civil Procedure was sufficient to put the plaintiffs upon proof of every fact that was essential in establishing their cause of action. Thornton's Code Ind. art. 10, 47, title 'Pleadings;' U. S. Rev. Stat. 914, U. S. Comp. Stat. 1901, p. 684.
The burden of proof was therefore upon the plaintiffs to show by what authority the Pennsylvania court could legally enter a personal judgment against a corporation which, according to the complaint itself, was a corporation of another state, and was not alleged to have appeared in person or by an attorney of its own selection, or to have been personally served with process. This burden the plaintiffs met by introducing in evidence a complete transcript of the record of the action in the Pennsylvania court, from which it appeared: 1. That the defendant association was sued in the Pennsylvania court as a life insurance association of Indiana, was alleged to have been engaged in business in Pennsylvania, and was so engaged before and after the certificate of insurance in question was issued. 2. That the summons in that action was served on the commissioner of insurance for Pennsylvania, the defendant association not having appointed an agent in that commonwealth upon whom process could be served nor having appeared by an attorney or representative. 3. That, the insurance commissioner not having appeared in the action, judgment was taken against the defendant; and that is the judgment here in suit.
The defendant association introduced no evidence. If, looking alone at the pleadings in the Pennsylvania suit, it be taken that, at the time of the contract in question, the [204 U.S. 8, 20] Indiana corporation was engaged in transacting, at least some business in Pennsylvania, without having complied with the provisions of the above statute of that commonwealty,-that is, without having filed with the insurance commissioner the written stipulation required by that statute,- still, plaintiffs cannot claim, on the present record, the full benefit of the general rule that the judgment of a court of superior authority, when proceeding within the general scope of its powers, is presumed to act rightly within its jurisdiction; that nothing shall be 'intended to be out of the jurisdiction of a superior court but that which specially appears to be so.' Peacock v. Bell, 1 Wms' Saund. 74. When a judgment of a court of superior authority is attacked collaterally for the want of jurisdiction, such a presumption cannot be indulged when it affirmatively appears from the pleadings or evidence that jurisdiction was wanting. We make this observation in view of the fact, distinctly shown by the plaintiffs themselves, that the policy of insurance and contract in question was, in fact, executed in Indiana, and not in Pennsylvaina. The policy sued on provided as one of its conditions that 'for all purposes and in all cases this contract shall be deemed to have been made at the special office of this association in the state of Indiana, U. S. A., and all benefits and claims thereunder shall be payable at such office.' Besides, to the complaint or petition in the Pennsylvania court was appended the following memorandum signed by the attorney for the plaintiffs: 'The above contract of insurance is governed by the laws of the state of Indiana, the contract having been entered into at Indianapolis.' And when the suit was brought in Pennsylvania the plaintiffs were confronted with the condition in the policy that 'it is expressly understood and agreed that no action shall be maintained nor recovery had for any claims under or in virtue of this policy, after the lapse of six months from the death of said member,'-McNally. More than six months had elapsed after McNally's death before the suit was instituted in Pennsylvania. In order to obviate this difficulty the plaintiffs, in [204 U.S. 8, 21] their declaration or statement in assumpsit, in the Pennsylvania court, alleged that the contract of insurance was governed by the laws of Indiana, 'the contract having been entered into at Indianapolis, Indiana;' also, that 'said policy of insurance and the contract touching the issuing the same were executed in the state of Indiana, in which state all provisions limiting liability on policies where suit is not brought within a certain time are held void and of no account.' The plaintiffs cannot, therefore, be heard now to say that the contract was not, in fact, made in Indiana. What they alleged in the Pennsylvania suit precluded the idea that the contract of insurance was made in that commonwealth. Indeed, if they had alleged that the business was transacted in Pennsylvania, their action on the contract would have been defeated by the condition in the policy that no suit thereon could be brought on it after the expiration of six months from the death of the person whose life was insured.
But even if it be assumed that the insurance company was engaged in some business in Pennsylvania at the time the contract in question was made, it cannot be held that the company agreed that service of process upon the insurance commissioner of that commonwealth would alone be sufficient to bring it into court in respect of all business transacted by it, no matter where, with, or for the benefit of, citizens of Pennsylvania. Undoubtedly, it was competent for Pennsylvania to declare that no insurance corporation should transact business within its limits without filing the written stipulation specified in its statute. Lafayette Ins. Co. v. French, 18 How. 404, 15 L. ed. 451; Paul v. Virginia, 8 Wall. 168, 19 L. ed. 357; Hooper v. California, 155 U.S. 648, 653 , 39 S. L. ed. 297, 300, 5 Inters. Com. Rep. 610, 15 Sup. Ct. Rep. 207, and authorities cited; Waters- Pierce Oil Co. v. Texas, 177 U.S. 28, 45 , 44 S. L. ed. 657, 664, 20 Sup. Ct. Rep. 518. It is equally true that, if an insurance corporation of another state transacts business in Pennsylvania without complying with its provisions, it will be deemed to have assented to any valid terms prescribed by that commonwealth as a condition of its right to do business there; and it will be estopped to say that it had not done what it should [204 U.S. 8, 22] have done in order that it might lawfully enter that commonwealth and there exert its corporate powers. In Baltimore & O. R. Co. v. Harris, 12 Wall. 65, 20 L. ed. 354, the question was as to the jurisdiction of the supreme court of the District of Columbia of a suit against a corporation in Maryland, whose railroad entered the District with the consent of Congress. This court said: 'It [the corporation] cannot migrate, but may exercise its authority in a foreign territory upon such conditions as may be prescribed by the law of the place. One of these conditions may be that it shall consent to be sued there. If it do business there it will be presumed to have assented, and will be bound accordingly.' This language was cited and approved in Chicago & N. W. R. Co. v. Whitton, 13 Wall. 270, 285, 20 L. ed. 571, 576. The same question was before the court in Ex parte Schollenberger, 96 U.S. 369, 376 , 24 S. L. ed. 853, 854, and the principle announced in the Harris and Whitton Cases was approved. In the Schollenberger Case the Pennsylvania statute here in question was involved. To the same effect are the following cases: Ehrman v. Teutonia Ins. Co. 1 McCrary, 123, 129, 1 Fed. 471; Knapp, S. & Co. v. National Mut. F. Ins. Co. 30 Fed. 607; Berry v. Knights Templars' & M. Life Indemnity Co. 46 Fed. 439, 441, 442; Diamond Plate Glass Co. v. Minneapolis Mut. F. Ins. Co. 55 Fed. 27; Stewart v. Harmon, 98 Fed. 190, 192.
Conceding, then, that by going into Pennsylvania, without first complying with its statute, the defendant association may be held to have assented to the service upon the insurance commissioner of process in a suit brought against it there in respect of business transacted by it in that commonwealth, such assent cannot properly be implied where it affirmatively appears, as it does here, that the business was not transacted in Pennsylvania. Indeed the Pennsylvania statute, upon its face, is only directed against insurance companies who do business in that commonwealth,-'in this state.' While the highest considerations of public policy demand that an insurance corporation, entering a state in defiance of a statute [204 U.S. 8, 23] which lawfully prescribes the terms upon which it may exert its powers there, should be held to have assented to such terms as to business there transacted by it, it would be going very far to imply, and we do not imply, such assent as to business transacted in another state, although citizens of the former state may be interested in such business.
As the suit in the Pennsylvania court was upon a contract executed in Indiana; as the personal judgment in that court against the Indiana corporation was only upon notice to the insurance commissioner, without any legal notice to the defendant association, and without its having appeared in person or by attorney or by agent in the suit; and as the act of the Pennsylvania court in rendering the judgment must be deemed that of the state within the meaning of the 14th Amendment, -we hold that the judgment in Pennsylvania was not entitled to the faith and credit which, by the Constitution, is required to be given to the public acts, records, and judicial proceedings of the several states, and was void as wanting in due process of law.
The judgment of the Supreme Court of Indiana must, therefore, be reversed, with directions for further proceedings not inconsistent with this opinion.
Ex parte Virginia, 100 U.S. 339, 346 , 347 S., 25 L. ed. 676-680; Neal v. Delaware, 103 U.S. 370 , 26 L. ed. 567; Yick Wo v. Hopkins, 118 U.S. 356 , 30 L. ed. 220, 6 Sup. Ct. Rep. 1064; Gibson v. Mississippi, 162 U.S. 565 , 40 L. ed. 1075, 16 Sup. Ct. Rep. 904; Chicago, B. & Q. R. Co. v. Chicago, 166 U.S. 226, 233 , 234 S., 41 L. ed. 979. 983, 984, 17 Sup. Ct. Rep. 581.

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