Case Name: National Liberty Insurance Company v. Trattner
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1927-04-04
Citations: 173 Ark. 480
Docket Number: 
Parties: National Liberty Insurance Company v. Trattner.
Judges: 
Reporter: Arkansas Reports
Volume: 173
Pages: 480–489

Head Matter:
National Liberty Insurance Company v. Trattner.
Opinion delivered April 4, 1927.
Leahy, Saunders £ Walther and Gautney & Dudley, for appellant.
Abbott, Fauntleroy, Cullen £ Edivarcls and N. F. Lamb, for appellee.
Greens/elder, Dyott £ Grand, and Hawthorne, Hawthorne £ Wheatley, amici curiae.

Opinion:
Kirby, J.,
(after stating the facts). Appellant contends that the court erred in not sustaining its motion to quash the summons; that it did not consent to service of summons upon it in this State in such actions, but only in order that it might be authorized to do business here in compliance with the requirement of the laws in that respect, and that the court was without jurisdiction to render judgment against it herein.
The facts are undisputed that appellant company is a foreign insurance corporation authorized to do business here under our laws; that the contract for insurance was made in Missouri, where the property insured was located, in the building in the city of St. Louis, of which State the plaintiff is a citizen and resident, and was at the time of the issuance of the policy, and when the loss occurred; that plaintiff and defendant, a foreign corporation, are non-residents of the State of Arkansas, the corporation only doing business in this State as a foreign insurance corporation.
Section XI, article 12, of our Constitution, provides:
"Foreign corporations may be authorized to do business in this State under such limitations and restrictions as may be prescribed by law; provided that no such corporation shall do any business in this State except while it maintains therein one or more known places of busi ness and authorized agent or ageiits in the same, upon whom process may be served; and, as to contracts made or business done in this State, they shall be subject to the same regulations, limitations and liabilities as like corporations of this State." * '
Section 6063, Crawford & Moses ' Digest of the Statutes, provides: "No insurance company] not of this State, nor its agents, shall do business in this State until it has filed with the Insurance Commissioner and State Fire Marshal a written stipulation, duly authenticated by the company^ agreeing that any legal process affecting the company, served on the Insurance Commissioner and State Fire Marshal, or the party designated by him, or ihe agent specified by said company to receive service of process for the company, shall have the same effect as if served personally on the company within this State. And if isuch company should cease to maintain such agent in this State, so designated, such process may thereafter be served on the Insurance Commissioner and State Fire Marshal; but, so long as any liability of the stipulating company to any resident of this State continues, such stipulation cannot be revoked or modified, except that a new one may be substituted, so as to require or dispense with the service at the office of said company within this State, and that such service, according to this stipulation, shall bo sufficient personal service on the company. The term 'process' includes any writ, summons, subpoena or order, whereby any action, suit or proceeding shall be commenced, or which shall be issued in or upon any action, suit or proceedings."
Under the provisions of the Constitution, such foreign insurance companies may be authorized to do'business in the State upon the appointment of an agent upon whom process may be served, and, " as to contracts made or business done in-this State," are subject to the same limitations and liabilities as like corporations of the State, and, under the statute requiring the appointment of such agent, "so long as any liability of the stipulating company to any resident of this State continues, such stipulation cannot be revoked or modified, except that a new one may be substituted so as to require or dispense with tbe service at tbe office of said company within this State, and that such service, according to this stipulation, shall be sufficient personal service on the company." ' C. & M. Dig., § 6063.
In American Casualty Co. v. Lea, 56 Ark. 511, 20 S. W. 416, it was held that a foreign insurance company, authorized to do business in this State, after having appointed the Auditor its agent to receive service of process, could be sued by-a resident in the counts of this State for libel committed here.' That was a petition by the insurance company to this court, praying a writ of prohibition against the circuit court from proceeding in the 'cause pending therein, the suit for libel in which process was issued against defendant and served on the Auditor of State as agent for the insurance company, alleged to be a foreign corporation, organized in the State of Maryland, "and doing an accident, casualty and liability insurance business in this State, and no other business in this State." The insurance company contended that it could be sued in this State only upon liability growing out of its insurance contracts, while it was doing no other than insurance business in the State, and that it could not be held to answer upon this service in a suit for libel committed in the State.
The writ was denied, the court saying: "We are not prepared to accede to the' proposition that a foreign insurance company, doing only an insurance business in this State, can be sued only upon liabilities arising out of its insurance contracts made in this State. We understand that, when the foreign corporation agrees to 'be found' in the State, it may be sued as a domestic corporation or a citizen of the State upon any liability upon a cause of action arising within the State." The cause of action arose out of or was an incident to "contracts made or business done in this State," the publications complained of being made in advertising the company's business.
In the other Arkansas cases cited, wherein judgment was rendered upon causes of action, arising outside of the State, all the parties were either not nonresidents of the State or no proper objection was made to the jurisdiction of the court on that account; in other words, the precise question raised by this motion to quash the service has not been heretofore involved or decided in any cause determined by this, court.
At the common law, corporations could not be sued out of the State of their domicile under the laws of which they were created or organized.
This is a transitory action, it is true, which, under the common-law rule, could be brought in any jurisdiction where the defendant could be found or lawfully summoned to appear, and a recovery could have been had here had the insurance company voluntarily appeared and defended, without objection to the jurisdiction of the court. Timely objection was interposed, however, and insisted upon throughout the proceedings in the trial court, and this court is now urged to reverse the judgment of the lower court for erroneously holding that service of summons could be effectively made upon appellants within this jurisdiction.
The State has no special interest in enforcing the rights of citizens and residents of other States on causes of action arising outside its boundaries against foreign corporations doing business in the State, but is chiefly interested in administering justice under the forms of law, to all persons entitled to seek remedies in its courts, for protection and enforcement of their rights, and for redress of injuries and wrongs, promptly and without delay.
A fair construction of our law under the provisions of which foreign corporations are authorized to do business in the State upon the appointment of- an agent upon whom process can be served, made primarily to secure local jurisdiction in respect of contracts made and business done within the State, would seem to require only that such corporations shall be subject to suit for any liability arising from or growing out of contracts made or business clone in tbe State or necessarily incident thereto, and not that they shall be required by service of summons upon said agent to be subjected to suits of nonresidents of the State upon foreign causes of action, transactions and causes of action arising outside the State and in no wise incident, related to, or connected with contracts made or business done in the State.
The Legislature (quoting syllabus) is presumed to intend that its statutes shall not apply to acts or contracts done or effected beyond the limits of the State, and having no reference to or effect upon persons or property in this State. State v. Lancashire Fire Ins. Co., 66 Ark. 466, 51 S. W. 633, 45 L. R. A. 348.
We are not unmindful of the decisions of the courts of other States holding a different view and giving larger scope to statutes of like kind in their construction, but we do not think comity requires that our courts shall be unduly burdened with litigation of actions of nonresi - dents against foreign insurance corporations doing business here, upon causes of action arising entirely outside of our jurisdiction and having no relation whatever to the contracts made or business done by such foreign corporation within the State, under'the requirements of our laws providing therefor.
The Supreme Court of the United States, which follows the construction of such statutes put upon them by the courts of the State of their enactment, has expressed a leaning toward such construction of like statutes as that made by this court of the statute under consideration herein. In M. P. R. Co. v. Clarendon Co., 257 U. S. 533, 42 S. Ct. 210, 66 L. ed. 354, Chief Justice Taft, for the court, said: "In dealing with statutes providing for service upon foreign corporations doing business in the State upon agents Avhose designation as such is especially required, this court has indicated a leaning toAvard a construction, Avhere possible, that Avould exclude from their operation causes of action not arising in the business done by them in the State."
It follows, from the view expressed, that the court erred in not sustaining the motion of appellant to quash the summons, and for such error its judgment will be reversed, and the cause dismissed. It is so ordered.