Case Name: Rose, Receiver, Respondent, vs. Kimberly & Clark Company, Appellant
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1895-03-05
Citations: 89 Wis. 545
Docket Number: 
Parties: Rose, Receiver, Respondent, vs. Kimberly & Clark Company, Appellant.
Judges: 
Reporter: Wisconsin Reports
Volume: 89
Pages: 545–551

Head Matter:
Rose, Receiver, Respondent, vs. Kimberly & Clark Company, Appellant.
January 15
March 5, 1895.
Insurance against fire: Unlicensed foreign company: Contract made outside of the state: Validity: Enforcement.
A. contract insuring property within this state, made outside oí the state by a foreign insurance company which has not complied with the requirements of secs. 1916-1919, S. & B. Ann. Stats., is within the prohibition bf sec. 1916, providing that no such company “ shall directly or indirectly take risks or transact any business of insurance in this state; ” and no action on such contract against the insured to recover an assessment can be maintained in the courts of this state. Seamans v. Knapp-Stout & Co. Company, ante, p. 171, distinguished.
Appeal from a judgment of tbe county court of Winnebago county: C. D. Cleveland, Judge.
Reversed.
Action by tbe receiver of an insolvent foreign mutual insurance company to recover an assessment made upon policy holders. Tbe Consolidated Mutual Eire Insurance Company was an Illinois corporation, having its principal office at Chicago, and it never complied with the laws of the state of "Wisconsin relating to foreign insurance companies doing business within this state, and consequently had no license to transact such business. In 1890 the defendant made applications to the insurance company for insurance upon its property in Neenah in this state. The applications were sent by mail to the office of the insurance company at Chicago, and there accepted, and the policies mailed to the defendant at Neenah.
The policies contained provisions that the insured assumed a contingent liability equal to three times the annual cash premium, to pay losses and expenses, the same to be paid upon the making of assessments for that purpose by the officers of the company. In December, 1890, the officers of the insurance company made an assessment of twenty per cent, upon the policy holders, upon this contingent liability to pay losses and expenses, and the defendant refused to pay. In April, 1891, the plaintiff was appointed receiver of the insurance company by the proper court at Chicago, and duly qualified, and brings this action as such receiver. It appeared that said assessment was necessary to pay the losses and expenses of the company outstanding.
Upon these facts, which were substantially undisputed, the trial court held that the policies were valid contracts of. insurance, and rendered judgment for the plaintiff for the amount of the assessment, and the defendant appealed.
For the appellant there was a brief by Eaton & Weed, and oral argument by JET. I. Weed.
They argued, among other things, that the issuing of a policy of insurance is not a transaction of commerce within the clause which declares that Congress shall have power to regulate commerce with foreign nations and among the several states. Paul v. Virginia, 8 Wall. 168; State ex rel. Drake v. Doyle, 40 Wis. 175; Doyle v. Oont. Ins. Co. 94 U. S. 535; Cincinnati 3£ut. JET. Ass. Co. v. Rosenthal, 55 Ill. £5. A state has the right to impose conditions not in conflict with the United States constitution upon a foreign insurance company. Doyle v. CJont. Ins. Go. 94 U. S. 535. An action cannot be maintained in this state by a. foreign insurance company upon an insurance contract, unless the company has first complied with our laws. ■ FEina Ins. Go. v. Hwrvey, 11 Wis. 394. A contract in violation of a statute is void, and courts will not aid in enforcing it. Lemon v. Grosskopf\ 22 Wis. 447; Brackett v. Hoyt, 29 N. H. 267; Buxton v. Hamblen, 32 Me. 448; Bancroft v. Dumas, 21 Yt. 456; BouiweU v. Foster, 24 id. 485. “A contract insuring property in this state necessarily involves the doing of business in this state.” 8tcm-hilber v. Mut. M. Ins. Go. 76 Wis. 285. Premium notes taken by a foreign insurance company which has not complied with the laws of the state are void. Gincinnati Mut. II. Ass. Go. v. Bosenihal, 55 Ill. 85; FEtna Ins. Go. v. Harvey, 11 Wis. 394; Wood, Eire Ins. § 494. The legislature may prohibit or permit foreign insurance companies doing business in this state, and if permit is granted may impose such restrictions as it sees fit. Fire Dept, of Milwaukee v. Helfenstein, 16 Wis. 142; Morse v. Home Ins. Go. 30 id. 496. Contracts contrary to the provisions of any statute cannot be recovered upon. Mélchoi/r v. McCarty, 31 Wis. 252; FEt/na Ins. Go. v. Harvey, 11 Wis. 394. Foreign insurance companies may be excluded • entirely or compelled to conform to the laws of the state where they are permitted to do business. Richards, Ins. § 4; Doyle v. Oont. Ins. Go. 94 U. S. 535; Philadelphia F. Asso. v. Hew Fork, 119 U. S. 110. Companies cannot recover under similar circumstances in the state of Illinois. Pierce v. People, 106 HI. 11. Our courts will not enforce a contract coming from another jurisdiction contrary to the policy of our own laws. Wight v. Rindskopf, 43 Wis. 344, 364. It makes no difference whether the contract is made within or without the state. Stanhilber v. Mut. M. Ins. Go. 76 Wis. 285; Pierce v. People, 106 III. 11, 19. Our statute being aimed solely at the foreign insurance company which takes risks on property in this state not having a license, and not at the assured, the •parties are not in pari delicto. Statutes made for the protection of one class of persons against another are only applicable to the latter. First Fat. Bank v. Plmikimton, 21 Wis. Ill, 188. A contract to do work by a person who is forbidden to do the work without a license cannot be enforced. Pe Wit v. Lamder, 12 Wis. 120.
M. G. Phillips, for the respondent,
contended, inter'alia, that by the law of comity as well as by statute the plaintiff has the privilege of litigating in this state a liability arising upon a contract deliberately made by the parties in Illinois, although it had not complied with a prohibitory statute. Sec. 2602, R. S.; Bank of Augusta v. Parle, 13 Pet. 519; Christian v. Am. F. L. M. Go. 89 Ala. 198; Texas L. & M. Go. v. Worsham, 16 Tex. 556; Powder Rimer G. Go. v. Custer Go. 9 Mont. 145; Pixon v. Order of Ry. Conductors, 46 Fed. Rep. 910. The defendant is estopped from denying the validity of these policies or its liability to this assessment, on the ground of this statutory prohibition. Cemada So. R. Go. v. Gebhard, 109 U. S. 521; Lwngstrass v. German Ins. Go. 51 Mo. 109; Merchants' Bomk v. State Bank, 10 Wall. 644; Marine Ins. Co. v. St. I., I. M. & S. R. Co. 41 Fed. Rep. 643; White R. L. Go. v. S. W. Imp. Asso. 55 Ark. 625; Sherwood v. Alvis, 83 Ala. 115, 3 Am. St. Rep. 695. This being an Illinois contract the fact that the company had not complied with the laws of Wisconsin does not affect the validity of the contract or note. Lamb v. Bowser, 1 Biss. 315; S. O. id. 312; Marine Ins. Go. v. St. L., I. M. da S. R. Go. 41 Fed. Rep. 643; Olay F. <& M. Ins. Go. v. Huron S. (& L. Mfg. Go. 31 Mich. 346; Golumibia F. Ins. Go. v. Kin-yon, 31 N. J. Law, 33; Hyde v. Goodnow, 3 N. Y. 266; Western v. Genesee Mut. Ins. Go. 12 id. 258; Bailey v. Hope Ins. Go. 56 Me. 414; May, Ins. § 563; Humtley v. Merrill, 32 Barb. 626. Made in tbe domicile of the company, they are not invalid unless expressly so declared by statute. Toledo T. (& L. Go. v. Thomas, 33 W. Ya. 566; Sherwood v. Aims, 83 Ala. 115; American L. & T. Go. v. F. <£t W. S. Go. 37 Fed. Rep. 242. The policy would be valid against the company, and as a logical sequence it must be binding on defendant. Wright v. Lee, 2 S. Dak. 596; Ganser v. Firemen’s F. Ins. Go. 34 Minn. 372; Fean-born F. Go. v. Augustine, 5 Wash. 67.

Opinion:
WiNsnow, J.
The insurance contracts in question were made outside of this state upon property within the state, by a foreign company which had not complied with the laws of Wisconsin and was thus debarred from doing business within the state. The question arising is not whether these contracts can be enforced in the courts of Illinois where they were made. It might well be that, were this action pending before an Illinois court, the contracts being Illinois contracts, and there being nothing in the statutes or policy of that state prohibiting them, they would be held valid and binding. Such, in substance, was tl^e ruling of this court in the case of Seamans v. Knapp-Stout & Co. Company, ante, p. 171, where a contract made in Wisconsin insuring property in Missouri by a Wisconsin insurance? company which had no license to transact business in Missouri was upheld. But it is obvious that that decision does not reach or control this case. The question here presented is whether the courts of this state will enforce a contract plainly and squarely opposed to the public policy and laws of the state.
Doubtless the general rule of law is that a contract valid where made is valid everywhere, but this rule is not without exception. The provisions of our statutes which prescribe the conditions upon which alone foreign insurance companies may do business within this state are very stringent and sweeping. S. & B. Ann. Stats, secs. 1915-1919. They provide, in substance, that no foreign fire insurance company shall, dAreciby or indi/rectl/y, take risks or transact am/y business of i/nsv/ranoe in this state, except upon compliance with certain specified requirements. It is unnecessary to state what these requirements are in detail, but it is sufficient to say that they include, among other things, the filing of verified statements showing investments of capital in certain specified securities and to certain amounts, or,.in lieu thereof, a deposit with the state treasurer of a certain amount of United States bonds; also, the payment of certain license fees, and the fifing of various documents intended for the benefit and protection of policy holders within the state; and only upon compliance with all these requirements is the commissioner of insurance authorized to issue the license which authorizes the doing of business within this state. The object of this statute is so plain that it cannot be mistaken. It is to protect our citizens against irresponsible and worthless foreign companies of the very kind which we have now before us. The evil to be corrected is not the writing of a policy by an unlicensed company within this state alone, but the writing of such a policy at all. Bearing in mind the object of the statute and the evil to be corrected, it is very plain that the object will be largely defeated, and the evil wifi flourish as before, if it be held that companies without license can establish their agencies just outside of the state fine and conduct their business by mail.
Now, it will be observed that the legislature was not content with providing that no unlicensed company should make \a contract of insurance within this state, but provided that no such company should, directly or indirectly, take risks or transact any business of insurance in this state. The writing of a policy of insurance upon property situated within this state would seem pretty clearly to be, in some degree at least, the transaction of insurance- business in this state, wh.eth.er the policy be written just within or just without the state line. It was said in Stanhilber v. Mut. M. Ins. Co. 76 Wis. 285, on page 291: "A contract insuring property in this state necessarily involves the doing of business in this state, and hence is subject to the laws of this state." We regard the remark' as entirely correct, and fully as applicable to the present case as to the 8icmhilber Case. It is not meant by this that the legislation in question has extraterritorial effect, or that it will invalidate a contract made in Illinois, but simply that when that contract is a contract insuring property within, this state it is against the policy of our law and will not be enforced by the courts of Wisconsin, unless the conditions prescribed by our laws have been complied with. In no other way can the manifest purpose and intent of the statute be reached; any different construction would render the law of little effect.
Authorities as to restrictions on the business of foreign insurance companies are found in a note to State ex rel. Richards v. Ackerman, (Ohio) 24 L. R. A. 298. As to what constitutes doing business within the state by such companies, see, also, note to Cone E. & C. Co. v. Poole, (S. C.) 24 L. R. A. 289, 295.— Eep.
These views necesitate reversal of the judgment.
By the Cowrt.— Judgment reversed, and action remanded with directions to enter judgment for the defendant in accordance with this opinion.