Court Opinion

ID: 7943772
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:17:55.451059+00
Date Added: 2024-06-11T16:33:49.961919
License: Public Domain

Ostrander, J.
(dissenting). It is contended for appellant that this case and Swing v. Lumber Co., 140 Mich. 344 (see, also, Swing v. Munson, 191 Pa. 582 [58 L. R. A. 223]), are to be distinguished by the fact that in this case the evidence fails to show any act of the insurance company within the State of Michigan. The further contention is made that no notice was given by defendants of an intention to prove or to rely upon the fact that the insurance company was not authorized to do business in Michigan. The case made by plaintiff was, in *183substance, the same as the one made in Swing v. Lumber Co., supra, so far as the nature of the claim and the character and authority of plaintiff are concerned. It appeared, however, and the court found, that the policies of insurance were issued in Ohio upon applications made by citizens of Illinois, who paid the premiums and received the policies. It does not appear that any act in effecting the insurance was done within this State. The policies were made payable to Cameron Bros., who are residents of Michigan, and the property insured was situated in Michigan. Defendants proved, over objection, that the insurance company never complied with the laws of Michigan, and had not authority to do business therein, and offered no testimony in denial of that presented by plaintiff. The trial court found as matter of law that plaintiff could not maintain his action, and that it was the duty of the court sua sponte to notice the fact that the policies were issued by a company not anthorized to do business in this State. As to the last point, appellants rely upon Warner v. Delbridge & Cameron Co., 110 Mich. 590 (34 L. R. A. 701), where it is held that the suggestion that it was not proved that a foreign insurance company had authority to' do business in this State, made for the first time in this court, came too late. In the case at bar the defendants .made the proof, the court received it, and the question is whether we shall reverse the judgment because defendants gave no notice of the intention to introduce the proof. Plaintiff was not surprised by the evidence. The fact is not a disputable one. Upon a new trial, if one was ordered, an amendment of the notice, if required, would be permitted as of course, so that there is involved the question of costs of this appeal only. But I am of opinion that the court was right in admitting the evidence and in giving it effect, if satisfied that upon the facts which were found the courts of this State were closed to the plaintiff. The statutory prohibition is intended, primarily, to make effectual a State policy, and not to afford -to individuals a method of defending suits. Much-that is *184said in the opinions in Richardson v. Buhl, 77 Mich. 632 (6 L. R. A. 457), and in Heffron v. Daly, 133 Mich. 615, upon the subject, is in point here.
As to the meritorious question: By section 5136, 2 Comp. Laws, it is provided that “ no insurance company, or officer, or agent, or agents of any insurance company, unincorporated or incorporated in any other State, shall transact any business of insurance in this State, unless,” etc. By sections 10466, 10467, 3 Comp. Laws, it is provided that a foreign corporation may prosecute in the courts of this State in the same manner as corporations created under the laws of this State, but that when by the laws of this State an act is forbidden to be done by any corporation without express authority by law, and such act shall have been done by a foreign corporation, it shall not be authorized to maintain any action founded upon such act, or upon any liability or obligation, express or implied, arising out of or entered into in consideration of such act.
It is contended for the appellant that the facts conclusively'show that the insurance company did not transact “ any business of insurance in this State ” within the proper meaning of section 5136; that, the original contract being valid and binding and entered into without this State, the courts of this State cannot lawfully be closed to the enforcement of a liability arising out of it; that a construction of our statutes which will have the effect of bringing the acts done, in effecting this insurance, within the prohibition of the statute, is forbidden by the Federal Constitution, and if such a construction is required by the terms of the statute, it results in a denial of rights guaranteed by section 1 of the Fourteenth Amendment of the Constitution of the United States. It has been settled by repeated ajudications of the Supreme Court of the United States that foreign corporations do business in a State as a matter of grace and not of right, and the State may prescribe such rules as it may see fit to regulate the privilege granted and to protect its citizens. *185It seems to be equally well settled that a corporation of any State, lawfully organized, may contract within that State with any person, firm, or corporation, agreeably with the statute requirements of its domicile, in carrying on the business it is organized to do; that, the contracts being personal, the residence of the persons with whom it makes them is not important or controlling as to the lawfulness of the bargain or its enforcement by either party.
The case Allgeyer v. Louisiana, 165 U. S. 578, is decisive of the question. An act of the legislature of Louisiana was entitled: “An act to prevent persons, corporations or firms from dealing with marine insurance companies that have not complied with law,” and provided:
* ‘ Any person, firm or corporation who shall fill up, sign or issue in this State any certificate of insurance under an open marine policy, or who in any manner whatever does any act in this State to effect, for himself or for another, insurance on property, then in this State, in any marine insurance company which has not complied in all respects with the laws of this State, shall be subject to a fine of one thousand dollars, for each offense, which shall be sued for in any competent court by the attorney, general for the use and benefit of the charity hospitals in New Orleans and Shreveport.” Act No. 66, Acts of 1894.
The State sought to recover against the defendants for three violations of the act. Defendants were exporters of cotton from the port of New Orleans to ports in Great Britain, selling cotton in New Orleans to purchasers in said ports. They had made with the Atlantic Mutual Insurance Company of New York a contract for an open policy of marine insurance. It was the custom of business to draw a bill of exchange against the purchaser of cotton, attaching to it the bill of lading and an order on the Atlantic Mutual Insurance Company for a new and sepárate policy of insurance, under the said open policy, which covered cotton in bales purchased and shipped by them, shipments being reported to the company by mail or telegraph. The bill of exchange, with the bill of lading and order for insurance attached, was *186presented to the insurance company, which issued and delivered to the holder of the bill of lading and the bill of exchange, if it had been negotiated, or to the agent of defendant if not negotiated, a new and separate policy of insurance in accordance with the contract under the open policy. The Atlantic Mutual Insurance Company was a corporation created by the laws of New York, domiciled and carrying on business in that State. It had no agent-in the State of Louisiana, and had not complied with the conditions imposed by the laws of that State for doing business therein. The supreme court of the State of Louisiana gave judgment in favor of the plaintiff as for one violation of the statute, to review which judgment an appeal was taken to the Supreme Court of the United States. The constitution of Louisiana provided (Act 264), also:
“No foreign -corporation shall do any business in this-State without having one or more known places of business, and an authorized agent or agents in the State, upon whom process may be served.”
It was held that the statute in question was, as applied, a violation of the Federal Constitution, and afforded no justification for the judgment awarded against the plaintiffs in error. The case distinguishes Hooper v. California, 155 U. S. 648, in which the conviction of an insurance agent in the State courts was affirmed, from the opinion in which case the following excerpt, indicative of the ground of the decision, is taken:
“ It is said that the right of a citizen to contract for insurance for himself is guaranteed by the Fourteenth. Amendment, and that, therefore, he cannot be deprived by the State of the capacity to so contract through an agent. The Fourteenth Amendment, however, does not guarantee the citizen the right to make within his State, either directly or indirectly, a contract the making whereof is constitutionally forbidden by the State. The proposition, that, because a citizen might make such a contract for himself beyond the confines of his State, therefore he might authorize an agent to violate in his behalf the laws of his *187State within her own limits, involves a clear non sequitur and ignores the vital distinction between acts done within and acts done beyond a State’s jurisdiction.”
The supreme court of Louisiana held that the act of writing within that State the letter of notification to the insurance company in New York was an act done to effect insurance on property then in the State and was therefore prohibited by the statute. It is said in the opinion of the Supreme Court of the United States:
“ It was a valid contract, made outside of the State, to be performed outside of the State, although the subject was property temporarily within the State. As the contract was valid in the place where made and where it was to be performed, the party to the contract upon whom is devolved the right or duty to send the notification in order that the insurance provided for by the contract may attach to the property specified in the shipment mentioned in the notice, must have the liberty to do that act and to give that notification within the limits of the State, any prohibition of the State statute to the contrary notwithstanding. The giving of the notice is a mere collateral matter. It is not the contract itself, but is an act performed pursuant to a valid contract which the State had no right or jurisdiction to prevent its citizens from making outside the limits of the State.
“The Atlantic Mutual Insurance Company of New York has done no business of insurance within the State of Louisiana, and has not subjected itself to any provisions of the statute in question. It had the' right to enter into a contract in New York with citizens of Louisiana for the purpose of insuring the property of its citizens, even if that property were in the State of Louisiana, and cor-relatively the citizens of Louisiana had the right without the State of entering into contract with an insurance company for the same purpose. Any act of the State legislature which should prevent the entering into such a contract, or the mailing within the State of Louisiana of such a notification as is mentioned in this case, is an improper and illegal interference with the conduct of the citizen, although residing in Louisiana, in his right to contract and to carry out the terms of a contract validly entered into outside and beyond the jurisdiction of the State.”
*188See, also, Lamb v. Bowser, 7 Biss. (U. S.) 315; Marine Ins. Co. v. Railway Co., 41 Fed. 643; Com. v. Biddle, 139 Pa. 605 (11 L. R. A. 561); Swing v. Hill, 165 Ind. 411; Swing v. Storage Co. (Ind. App.), 76 N. E. 1117; Swing v. Brister (Miss.), 40 So. 146.
There is language used in the opinion in Seamans v. Temple Co., 105 Mich. 400 (28 L. R. A. 430), which, if controlling here, will require us to hold that the issuing of the policy was an act forbidden to be done without express authority of our law. That case did not call for a determination of the question; it being expressly found that the insurance company had agents in the State and was in fact, through its agents, and without compliance with the statute, doing businsss in this State. So, in People’s Mut. Ben. Society v. Lester, 105 Mich. 716, it was found, expressly, that defendant was an agent of the plaintiff, doing business for it in this State. In both of those cases the right of the plaintiff to maintain its action is expressly denied. But, if the acts of the insurance company in the case at bar can be held violative of the statute only by giving the statute a construction opposed to the Federal Constitution, it must be determined that there was no violation of the statute, and that the issuing of the policies was not prohibited by the statute and was not an act forbidden to be done without express authority of law. It follows that the provisions of section 10467, 3 Comp. Laws, have no application. See Clay Fire & Marine Ins. Co. v. Manufacturing Co., 31 Mich. 346, 354.
It remains to consider whether for any other reasons plaintiff should be denied the right to maintain his action. The general policy of the State in this regard is declared in section 10466, 3 Comp. Laws, already referred to. There is nothing vicious, immoral, or criminal in the nature of the contracts of insurance which were made. It cannot reasonably be said that evidences of State policy may be created by giving to a statute a construction which nullifies the Federal Constitution. The case, as *189presented, is one in which plaintiff is seeking to enforce, in the courts of this State, obligations arising out of contracts which were valid, and the making of which was not prohibited by the laws of this State. I am of opinion that no good objection has been made.
The case was tried by the court without a jury, and findings of fact and of law were made. The court gave judgment for defendants, for the reason that in his opinion plaintiff was prohibited the use of the courts of the State. Appellant asks that the judgment be reversed, and one entered here in his favor. This may be done if the facts found will sustain such a judgment. It is stated in the finding of facts that there is no evidence upon certain material points, “excepting such inference as may be, drawn from entries upon the books of the insurance company.” These entries are set out, but the inference is not drawn. The court does not, by inference or otherwise, find an ultimate fact essential to a recovery by the plaintiff. For this reason, we are obliged to order & new trial.
Judgment should be reversed, and a new trial granted.
Grant and Blair, JJ., concurred with Ostrander, J.