Source: http://en.wikisource.org/wiki/Connecticut_Mutual_Life_Insurance_Company_v._Moore/Opinion_of_the_Court
Timestamp: 2013-05-26 09:07:38
Document Index: 415700501

Matched Legal Cases: ['§ 700', '§ 703', '§ 1402', '§ 95', '§ 1412', '§ 237', '§ 344', '§ 2', '§ 700', '§ 1404', '§ 434', '§ 17', '§ 143', '§ 42']

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Connecticut Mutual Life Insurance Company v. Moore/Opinion of the Court
< Connecticut Mutual Life Insurance Company v. Moore
Connecticut Mutual Life Insurance Company v. Moore by Stanley Forman Reed
Connecticut Mutual Life Insurance Company v. Moore — Opinion of the Court Stanley Forman Reed
CONNECTICUT MUTUAL LIFE INSURANCE COMPANY v. MOORE
Argued: Dec. 19, 1947. --- Decided: March 29, 1948
Article VII of the Abandoned Property Law, Consol.Laws, c. 1, headed 'Unclaimed Life Insurance Funds,' was enacted in 1943. In 1944 the law was amended so as to cover insurance companies incorporated out of state. [1] Section 700 states that 'any moneys held or owing' by life insurance companies in the following three classes of policies issued on the lives of residents of New York shall be deemed abandoned property: (1) matured endowment policies which have been unclaimed for seven years; (2) policies payable on death where the insured, if living, would have attained the limiting age under the mortality table on which the reserves are based (an age varying from 96 to 100), as to which no transaction has occurred for seven years; and (3) policies payable on death in which the insured has died and no claim by the person entitled thereto has been made for seven years. [2] Other sections of Art. VII provide that insurance corporations doing business in New York shall make an annual report of abandoned property falling within the definitions of § 700, the lists shall be advertised, and if the abandoned property advertised remains unclaimed, the amounts due and owing shall be paid to the state comptroller so as to be in the care and custody of the state. Art. VII, § 703, Art. XIV, § 1402; State Finance Law, Consol.Laws, c. 56, § 95. Upon payment to the state, the companies are discharged of any obligation, and any person subsequently setting up a claim must file a claim with the comptroller. A penalty of $100 a day is provided for failure to file the required report. Art. XIV, § 1412.
The present suit was brought by nine insurance companies, incorporated in states other than New York, in the Supreme Court of New York for a declaration of the invalidity of the Abandoned Property Law of New York, as applied to the plaintiffs, and to enjoin the state comptroller and all other persons acting under state authority from taking any steps under the statute. The Supreme Court ruled that the Abandoned Property Law was void in so far as it applied to policies of life insurance issued for delivery outside of New York by foreign life insurance companies. As no appeal from this ruling was taken by the state, it is not before us. The Supreme Court reserved to the appellant insurance companies the right to assert the invalidity of the Abandoned Property Law or any application thereof in so far as such law or state action thereunder sought to deprive them of any defense against any claim under any life insurance policy. With the above exceptions, the Supreme Court upheld the life insurance sections of the Abandoned Property Law against appellants' attack. The Appellate Division affirmed and the Court of Appeals reversed the judgment of the Supreme Court in so far as it reserved to the companies further right to assert defense against claims under the policies. The Court of Appeals by its interpretation of the New York statute left open to the insurance companies all defenses except the statute of limitations, noncompliance with policy provisions calling for proof of death or of other designated contingency and failure to surrender a policy on making a claim. 297 N.Y. 1, 74 N.E.2d 24. With this modification, it affirmed the trial court's judgment. [3] Appeal to this Court was perfected under § 237(a) of the Judicial Code, 28 U.S.C.A. § 344, and probable jurisdiction noted. 332 U.S. 788, 68 S.Ct. 103.
We see no constitutional reason why a state may not proceed administratively, as here, to take over the care of abandoned property rather than adopt a plan through judicial process as in Security Sav. Bank v. People of State of California, supra. There is ample provision for notice to beneficiaries and for administrative and judicial hearing of their claims and payment of same. [4] There is no possible injury to any beneficiary. The right of appropriation by the state of abandoned property has existed for centuries in the common law. See Anderson National Bank v. Luckett, supra, at pages 240 and 251 of 321 U.S., at page 603 of 64 S.Ct., 88 L.Ed. 692, 151 A.L.R. 824. We find no reason for invalidating the statutory plan under the Contract Clause.
II. Nor do we agree with appellants' argument that New York lacks constitutional power to take over unclaimed moneys due to its residents on policies, issued for delivery in the state, by life insurance corporations chartered outside the state. The appellants claim that only the state of incorporation could take these abandoned moneys. They say that only one state may take custody of a debt. [5] The statutory e ference to 'any moneys held or owing' does not refer to any specific assets of an insurance company, but simply to the obligation of the life insurance company to pay. The problem of what another state than New York may do is not before us. That question is not passed upon. To prevail appellee need only show, as he does as to policies on residents issued for delivery in New York, that there may be abandoned moneys, over which New York has power, in the hands of appellants. The question is whether the State of New York has sufficient contacts with the transactions here in question to justify the exertion of the power to seize abandoned moneys due to its residents. Appellants urge that the following considerations should be determinative in choosing the state of incorporation as the state for conservation of abandoned indebtedness, if such moneys are to be taken from the possession of the corporations. It is pointed out that the present residence of missing policyholders is unknown; that with our shifting population residence is a changeable factor; that as the insured chose a foreign corporation as his insurer, his choice should be respected; that moneys should escheat to the sovereignty that guards them at the time of abandonment. As a practical matter, it is urged that restricting escheat or conservancy to the state of incorporation avoids conflicts of jurisdiction between states as to the location of abandoned property and simplifies the corporations' reports by limiting them to one state with one law. Attention is called to presently enacted statutes in Pennsylvania, [6] New Jersey, [7] and Massachusetts. [8] None of these statutes apply to corporations chartered outside of the respective states. Furthermore, it is argued that the analogous bank deposit cases have upheld escheat or conservancy by the state of the bank's incorporation. [9] Finally reliance is placed on the undisputed fact that the policies are payable at the out-of-state main offices of the corporations, the evidences of their intangible assets are there located and there claims must be made and other transactions carried on.
These are reasons which have no doubt been weighed in legislative consideration. We are here dealing with a matter of constitutional power. Power to demand the care and custody of the moneys due these beneficiaries is claimed by New York, under Art. VII of the Abandoned Property Law as construed by its courts, only where the policies were issued for delivery in New York upon the lives of persons then resident in New York. We sustain the constitutional validity of the provisions as thus interpreted with these exceptions. We do not pass upon the validity in instances where insured persons, after delivery, cease to be residents of New York or where the beneficiary is not a resident of New York at maturity of the policy. As interests of other possible parties not represented here may be affected by our conclusions and as no specific instances of those types appear in the record, we reserve any conclusion as to New York's power in such situations. The appellants sought a declaration pursuant to New York procedure of the invalidity of Art. VII of the New York Abandoned Property Law, directed at unclaimed life insurance funds. The Court of Appeals refused to accept appellants' arguments for invalidation of the law on federal constitutional or any other grounds. This decision compelled the appellants to comply with Art. VII, except as theird efenses were saved by the opinion of the Court of Appeals, unless this Court reviewed the federal constitutional issues and decided them in appellants' favor. Consequently a case or controversy arising from a statute interpreted by the state court is here with precise federal constitutional questions as to policies issued for delivery in New York upon the lives of persons then resident therein where the insured continues to be a resident and the beneficiary is a resident at the maturity of the policy. A judgment on that class of policies should be reviewed by this Court. Nashville, C. & St. L.R. Co. v. Wallace, 288 U.S. 249, 259, 53 S.Ct. 345, 346, 77 L.Ed. 730, 87 A.L.R. 1191; Nashville, C. & St. L.R. Co. v. Walters, 294 U.S. 405, 55 S.Ct. 486, 79 L.Ed. 949. See Alabama State Federation of Labor v. McAdory, 325 U.S. 450, 459-463, 65 S.Ct. 1384, 1388-1390, 89 L.Ed. 1725. We pass only upon New York's power to take over the care of abandoned moneys under those circumstances.
There have been, over the years, a close supervision and regulation by states of the business of insuring the lives of their citizens. There has been complete recognition of this relationship. See Prudential Insurance Co. v. Benjamin, 328 U.S. 408, 66 S.Ct. 1142, 90 L.Ed. 1342, 164 A.L.R. 476. [10] New York has practiced such regulation. [11] Foreign corporations must obtain state authority to do business, segregate securities, submit to examination and state process. The business activities connected with the purchase of insurance by New York residents normally take place in New York. It is the beneficiary of the policy not the insurer who has abandoned the moneys. Undoubtedly the relationship is very close. [12] Certainly the relationship between New York and foreign insurance companies as to policies here under ciscussion, is as close as that between the company and its state of incorporation. [13] The Court of Appeals on this point said (297 N.Y. 1, 74 N.E.2d 27):
How the conflicting interests of the States should be adjusted calls for proper presentation by the various States of their different claims. Words may seek to restrict a decision purporting to pass on a small fragment of what is in truth an organic complexity to that isolated part. But such an effort to circumscribe what has been decided is self-defeating. A decision has a momentum of its own, and it is nothing new that legal doctrines have the faculty of self-generating extension. We ought not to decide any of these interrelated issues until they are duly pressed here by the affected States, so that a mature judgment upon this interrelation may be reached. All the considerations of preventive adjudication-the avoidance of a truncated decision of indeterminate scope, with the inevitable duty of reconsidering it or unconsciously being influenced by implicit overtones of such a decision-require that decision await the ripening process of a defined contest over particular funds as to which different States make concrete claims.
^1 The first statute which included insurance policies as abandoned property was enacted in 1939, ch. 923 of the Laws of 1939. That statute applied only to companies incorporated in New York, but covered all policies issued by such companies. Chapter 602 of the Laws of 1940 amended the statute so as to apply only to policies issued on the lives of residents of New York. Chapter 697 of the Laws of 1943 reenacted the principal features of the earlier statutes as Art. VII, and cc. 497 and 498 (§ 2) of the Laws of 1944 made the statute applicable to foreign insurance companies. Chapter 452 of the Laws of 1946 amended Art. VII so as to provide that a life insurance company which had paid the proceeds of a policy to the state could subsequently pay a second time to a claimant and acquire the rights of the claimant against the comptroller.
^2 '§ 700. Unclaimed life insurance corporation moneys.
^3 187 Misc. 1004, 65 N.Y.S.2d 143; Id., 271 App.Div. 1002, 69 N.Y.S.2d 323; Id., 297 N.Y. 1, 74 N.E.2d 24.
^4 Abandoned Property Law, Art. XIV, § 1404:
^5 Compare State Tax Commission v. Aldrich, 316 U.S. 174, 62 S.Ct. 1008, 86 L.Ed. 1358, 139 A.L.R. 1436; Northwest Airlines v. State of Minnesota, 322 U.S. 292, 293, 294, 64 S.Ct. 950, 951, 88 L.Ed. 1283, 153 A.L.R. 245.
^6 Purdon's Penna.Stat., Title 27, §§ 434-437.
^7 N.J.Rev.Stat. § 17:34-49-34-58, N.J.S.A.
^8 Ch. 455, Mass.Acts and Resolves (1946).
^9 See Anderson National Bank v. Luckett, supra; Security Sav. Bank v. People of State of California, supra; In re Rapoport's Estate, 317 Mich. 291, 26 N.W.2d 777.
^10 An old provision makes New York law applicable to policies issued for delivery in New York. Insurance Law, Consol.Laws, c. 28, § 143(2).
^11 New York Insurance Law, §§ 42, 59, 103, 143, 208(5), 216(6).
^12 See Greenough v. Tax Assessors, 331 U.S. 486, 67 S.Ct. 1400, 172 A.L.R. 329; Curry v. McCanless, 307 U.S. 357, 59 S.Ct. 900, 83 L.Ed. 1339, 123 A.L.R. 162. Compare International Shoe Co. v. State of Washington, 326 U.S. 310, 320, 66 S.Ct. 154, 160, 90 L.Ed. 95, 161 A.L.R. 1057: 'It is evident that 95, 161 A.L.R. 1057: 'It is evident that or ties with the state of the forum to make it reasonable and just according to our traditional conception of fair play and substantial justice, to permit the state to enforce the obligations which appellant has incurred there.'
^13 See New England Mutual Life Insurance Co. v. Woodworth, 111 U.S. 138, 4 S.Ct. 364, 28 L.Ed. 379; Ex parte Schollenberger, 96 U.S. 369, 377, 24 L.Ed. 853; Morgan v. Mutual Benefit Life Insurance Co., 189 N.Y. 447, 82 N.E. 438.
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