Court Opinion

ID: 9417884
Source: CourtListenerOpinion
Date Created: 2023-08-02 20:42:20.809174+00
Date Added: 2024-06-11T17:21:52.083587
License: Public Domain

*328Mr. Justice Harlan
(with whom concurred Mr. Justice Brown) dissenting.
I cannot assent to that part of the opinion of the court relating to the constitutionality of the statute of Texas of 1895 which provides that a life or health insurance company, failing to pay a loss within the time specified in the policy, after demand therefor, shall be liable, in addition to the amount of the loss, to pay the holder of the policy “ twelve per cent damages on the amount of such loss, together with all reasonable attorney’s fees for the prosecution and collection of such loss.”
The operation of the statute is well illustrated in the present case ; for, the verdict of the jury was for $15,000 as principal, $2250 as interest, $5175 as twelve per cent damages, (of which the plaintiff remitted $3375), and $2500 as special attorney’s fees for the plaintiff.
The rule embodied in the statute is not made applicable to fire or marine insurance companies, or to any otheiy companies or corporations doing business in' Texas. ■ Does not the/State by that statute deny to.life and health insurance companies, do-' ing business within its limits, the equal protection of the laws' which is secured by the Fourteenth Amendment of the Constitution of the'United States? '
It seems to me that this question must be answered in the affirmative if any regard whatever be had to the principles announced in Gulf, Colorado & Santa Fé Railway v. Ellis, 165 U. S. 150, 153, 154.
In that'case we had before us a statute, declaring that any person in Texas having “ a valid bona fide claim for personal services rendered or labor done, or for. damages, or for overcharges on freight, or claims for stock killed or injured by the train of any railway company, provided that such claim for stock killed or injured shall be presented to the agent of the company nearest to the point where such stock was killed or injured, against any railroad corporation operating a railroad in. this State, and the amount of such claim does not exceed $50, may present the same, verified by his affidavit, for payment to such corporation, by filing it with, any station agent of such *329corporation in any county where suit may be instituted for the same, and if, at the expiration of thirty days after such presentation, such claim has not been paid or satisfied, he may immediately institute suit thereon in the proper court; and if he shall finally establish his claim, and obtain judgment for the full amount thereof, as presented for payment to such corporation in such court, or any court to which the suit may have been appealed, he shall be entitled to recover the amount of such claim and all costs of suit, mid in addition thereto all reasonable attorney1 s fees, provided he has an attorney employed in his case, not to exceed $10, to be assessed and awarded by the court and the jury trying the issue.”
That statute being in force, an action was brought to recover $50 for a colt killed by the railway company. There was a judgment against the company for the amount claimed, and a special attorney’s fee of $10 in favor of the plaintiff was added, as required by the' above statute.
The contention in that case was that the statute made such an arbitrary discrimination against railroad companies embraced by its provisions as to bring it within the prohibition of the Fourteenth Amendment. That view was sustained. This court said : “ It is.simply a statute imposing a penalty upon railroad corporations for a failure to pay certain debts. No individuals are thus punished, and no other corporations. The act singlés out a certain class of debtors and punishes them, when for like delinquencies it punishes no others. They are not treated as other debtors. They cannot appeal to the courts as other litigants under like conditions and with like protection. If litigation terminates adversely to them they are mulcted in the attorney’s fees of the successful plaintiff; if it terminates in their favor, they recover no attorney’s fees. It is no sufficient answer to say that they are punished only when adjudged to be in the wrong. They do not enter the courts upon equal terms. They must pay attorney’s fees if wrong ; they do not recover any if right; while their adversaries recover if right and pay nothing if wrong. In the suits, therefore, to which they are parties they are discriminated against; and are riot treated as others. They do not stand equal before the law. *330They do not receive its equal protection. All this is obvious from a mere inspection of the statute.” Eeferring to the Fourteenth Amendment of the Constitution, the court said: “ The rights and securities guaranteed to persons by that instrument cannot be disregarded in respect to these artificial entities called corporations any more than they can be in respect to the individuals who are the equitable owners of the property belonging to such corporations. A State has no more power to deny to corporations the equal protection of the laws than it has to individual citizens.” Again: “ Neither can it be sustained as a proper means of enforcing the payment of small debts and preventing any unnecessary litigation in respect to them, because it does not impose- the penalty in all cases where the amount in controversy is within the limit named in the statute. Indeed, the .statute arbitrarily singles out one class of debtors and punishes it for a failure to perform certain duties — duties which are equally obligatory upon all debtors; a punishment not visited by reason of the failure to comply with any proper police regulations, or for the protection of the laboring classes or to prevent litigation about trifling matters, or in consequence of any special corporate privileges bestowed by the .State. Unless the legislature may arbitrarily select one corporation or one class of corporations, one individual or one class of individuals, and visit a penalty upon them which is not imposed upon others guilty of like delinquency, this statute cannot be sustained. But arbitrary selection can never be justified by calling it classification. The equal protection demanded by the. Fourteenth Amendment forbids this.”
I do not perceive how the present decision can be upheld without disregarding the principles of the Ellis case. If a railroad company sued in Texas upon a claim of less than $50 for killing or injuring stock, cannot be required, when unsuccessful in its defence, to pay a special attorney’s fee — no such rule being established in reference to other corporations or individuals, sued for a like amount of money — I cannot understand how life and health insurance companies, alone of all corporations or companies doing business in Texas, can be required to pay special damages and special attorney’s fees when unsuccess*331ful in defending suits brought against them. The two statutes aré alike in this, that the defendant company or corporation, whether a railroad corporation or a life or health insurance company, even if successful in an action brought against it, could not recover special attorney’s fees or special damages against its adversary. Thus the defendant company in a suit brought under either statute is- not permitted to appear in court upon terms of equality with the party suing it, and is subjected to special burdens not imposed upon other companies .or other corporations refusing to pay money demanded of them.
We are informed by the opinion of this court that the courts in Texas have held that the Ellis ease was distinguishable from the present case, and we are referred to Union Central Life Ins. Co. v. Chowning, 86 Texas, 651; Fidelity and Casualty Company v. Allibone, 39 S. W. Rep. 632, affirmed in Fidelity &c Company v. Allibone, 90 Tex. 660, and New York Life Ins. Co. v. Orlopp, 61 S. W. Rep. 336. The first named, of those cases was decided more than two years before the Ellis case was determined by this court. The first case in Texas in which the Ellis ease was referred to was that of Fidelity &c. Company v. Allibone. In that case the Court of Civil Appeals of Texas, after referring to certain prior decisions in that State sustaining the constitutionality of the statute here in question, said: “A late decision of the Supreme Court of the United States, Railway Co. v. Ellis, construing a somewhat analogous statute of this State, and reversing the decision of our Supreme Court approving its validity, may be at variance with the cases just cited; but, until it is expressly so held either by our own Supreme Court or that of the United States, we will adhere to the decisions already made.” The judgment in the last case was affirmed, the Supreme Court of Texas observing nothing more than that the case was “ distinguishable ” from the Ellis case. Upon what grounds the two cases were distinguishable was not stated. It is a very convenient mode for distinguishing two cases, apparently in conflict, to say nothing more than that they are distinguishable. In New York Life Ins. Co. v. Orlopp, the statute was sustained upon the ground that the State could prescribe the terms on which foreign insurance companies might do business within its limits.
*332This court says that the particular liability imposed by the statute-in question “ amounted to one of the conditions on which life and health insurance companies were permitted to do business in Texas, and the power of the State in the matter of the imposition of conditions of its own and foreign corporations has been repeatedly recognized by this court.”
Of course, speaking generally, a State may impose conditions on its own and foreign corporations. But will any one say, or has this court ever directly held, that a provision of a state enactment relating to corporations, foreign or domestic, was legally operative or binding if such provision be inconsistent with the Constitution of the United States ?
It is one thing for a State to forbid a particular foreign corporation, or a particular class of foreign corporations, from doing business at all within its limits. It is quite another thing for a State to admit or license foreign corporations to do business within its limits and then subject them to some statutory provision that is repugnant to the Constitution of the United States. If a corporation, doing business in Texas under its license or with it's consent, insists that a particular statute or regulation is in violation of the Constitution of the United States, and cannot therefore be enforced against it, the State need only reply — such seems to be the logical result of the present decision — that the statute or regulation is a condition of the right of the corporation to do business in the State, and, whether constitutional or not, must be respected by the corporation. Corporations created by the several States are necessary to the conduct of the business of the country; and it is a startling proposition that a State may permit a corporation to do business within its limits, and by that act acquire the right to subject the corporation to regulations that may. be inconsistent with the supreme law of the land.
In Insurance Company v. Morse, 20 Wall. 445, 455, 456, a statute of Wisconsin, requiring insurance companies of other States to stipulate, as a condition of their right to do business in that State, that they would not remove into the Federal court any suit brought against them in the state courts, was held invalid not only because it tended to oust the courts of the *333United States of a jurisdiction conferred upon them by the Constitution, but because it created an obstruction to the exercise of a right granted by that instrument. The court said: “ Every citizen is entitled to resort to all the courts of the country, and to invoke the protection which all the laws or all those courts-may afford.” The court further said that the right of the insurance company to remove the suit was “ denied to it by the state court on the ground that it had made the agreement referred to, and that the statute of the State authorized and required the making of the agreement. We are not able to distinguish this agreement and this requisition, on principle, from a similar one made in the case of an individual citizen of New York. A corporation has the same right to the protection of the laws as a natural citizen, and the same right to appeal to all the courts of the country. The rights of- an individual are not superior, in this respect, to 'that of a corporation. The State of Wisconsin can regulate its own corporations and the affairs of its own citizens, in subordination, however, to the Constitution of the United States. The requirement of an agreement like this from their own corporations would be brutumfulrnen, because they possess no such.right under the Constitution of the United States. A foreign citizen, whether natural or corporate, in' this respect possesses a right not pertaining to one of her own citizens. There must necessarily be a difference between the statutes of the two in this respect.”
This question was presented in somewhat different form in W. W. Cargill Co. v. Minnesota, 180 U. S. 452, 468. That was an action by the State to prevent a Wisconsin corporation from operating a warehouse owned by it until it should have obtained a license from the Railroad and Warehouse Commission of Minnesota organized under a statute of that State, and relating to elevators and warehouses. That statute provided : “ It shall be unlawful to receive, ship, store or handle any grain in any such elevator or warehouse, unless the owner or owners thereof shall have procured a license therefor from the state Railroad and Warehouse Commission, which license shall be issued for the fee of one dollar per year, and only upon written application under oath, specifying the location of such elevator or *334warehouse and the- name of the person, firm or corporation owning and operating such elevator or warehouse, and the names of all the members of the firm or the names of all the officers of the corporation owning and operating such elevator or warehouse, and all moneys received for such licenses shall be turned over to the state grain inspection fund. Such license shall confer upon the licensee full authority to operate such warehouse or elevator in accordance with the laws of this State and the rules and regulations prescribed by said Commission, and every person, company or corporation receiving such license shall be held to have accepted the provisions of this act, and thereby to have agreed to have complied with the same”
The Wisconsin corporation defended the suit brought against it upon the ground that the statute there involved was repugnant to the Constitution of the United States. This court said : “ We cannot question the power of the State, so far as the Constitution of the United States is concerned, to require a license for the privilege of carrying on business of that character within its limits — such a license not being requited for the purpose of forbidding a business lawful or harmless in itself, but only for purposes of regulation.” Again — and this is most pertinent here — the court said: “The defendant however insists that some of the provisions of the statute are in violation of the Constitution of the United States, and if it obtained the required’ license, it would be held to have accepted all of its provisions, and (in the words of the statute) c thereby to have agreed to comply with the same.’ The answer to this suggestion is that the acceptance of a license, in whatever form, will not impose upon the licensee an obligation to respect or comply with any provisions of the statute or with any regulations prescribed by the state Railroad and Warehouse Commission that are repugnant to the Constitution of the United States. A license will give the defendant full authority to carry on its business in accordance with the valid laws of the State and the valid rules and regulations prescribed by the Commission. If the Commission refused to grant a license, or if it sought to revoke one granted, because the applicant in the one case, or the licensee in the other, refused to comply with statutory provisions or *335with rules or regulations inconsistent with the Constitution of the United States, the rights of the applicant or the licensee could be protected and enforced by appropriate judicial proceedings.”
In the case before us, the defendant company was doing business in Texas under a license issued by the State. By accepting such license, the company did not agree to submit to any local regulation that was repugnant to the Constitution of the United States. It could resist the enforcement of any regulation or statutory provision that was inconsistent with rights secured to it by that instrument.
The court says that the ground for placing life and health insurance companies in a different class from fire, marine and inland insurance companies is obvious. The only reason assigned for that statement is “ the necessity of the prompt payment of the insurance money in very many cases in order to provide the means of living of which the beneficiaries had been deprived by the death of the insured.” But the same reasons exist for prompt payment by a fire insurance company when the house which shelters the insured and his family is destroyed by fire. And yet, under the statute, a fire, marine or inland insurance company, if it resists a claim for loss, is not liable, when its defence is unsuccessful, to pay any special damages or special attorney’s fee. It can defend any suit brought against it under the same conditions accorded to individual citizens or to corporate bodies generally. But a different and most arbitrary rule is prescribed for life and health insurance companies. Their good faith in refusing to pay a claim for loss, or in defending an action brought to enforce payment of such a claim, is not ••taken into account. If, in any case, they do not, within a specified time, pay the amount demanded of them, no matter what may be the reason for their refusal to pay, and if they do not succeed in their defence, they must pay not only the principal sum, with ordinary interest, but, in addition, twelve per cent damages on the amount of the principal, and all reasonable attorney’s fees for the prosecution and collection of the loss. Thus the State, in effect, forbids a life or health insurance company to appear in a court.of justice and defend a suit brought *336against it, except subject to the harsh condition that if the jury does not sustain the defence, the company must pay speciál damages and special attorney’s fees that are not exacted from any other defendant, corporate or individual, who may be sued for money.
This is such an arbitrary classification of corporations and such a discrimination against life and health insurance companies as brings the statute within the decision in the Ellis case, which has been often referred to by this court with approval. Magoun v. Illinois Trust and Sawings Bank, 170 U. S. 294; St. Louis, Iron Mountain &c. R. R. Co. v. Paul, 173 U. S. 409; Nicol v. Ames, 173 U. S. 521; W. W. Cargill Co. v. Minnesota, above cited.
In my opinion, the statute in question comes within the constitutional prohibition of the denial by a State of the equal protection of the laws and should be held void.