Court Opinion

ID: 7368924
Source: CourtListenerOpinion
Date Created: 2022-07-27 23:54:24.850191+00
Date Added: 2024-06-11T16:20:51.159856
License: Public Domain

MAYFIELD, J.—
(dissenting). — I cannot concur in this decision. It is contrary to the Constitution and the statutes of this .state, and is, in my judgment, without precedent in this or any other state. The decision and opinion are made to rest solely upon section 4560 of the Code, which has nothing whatever to do with the question decided by the court below, whose decision is .here reversed. The question decided in the court below was ■one’of jurisdiction, or, more accurately speaking, of venue. Section 4560 of the Code was not intended to relate, and does not now, and never has related to or had anything to do with jurisdiction of courts or venue of actions, whether transitory or otherwise; it purports (and, of course, was intended) to relate solely to service of process on foreign corporations.
To give the statute the effect which this decision accords it would be to render it unconstitutional and void. The statute with the construction now placed upon it would violate section '232 of our Constitution, which provides that foreign corporations may be sued in any county where they do business. This is •tantamount to saying that they cannot be sued in any other «county. This being a constitutional provision, the Legislature tcould not, if it desired, provide otherwise; and the Legislature *419has not attempted to provide otherwise. It has provided a statute or statutes declaratory of the constitutional provision. Section 6112 of the Code is the statute as to venue of actions against, all foreign corporations, and, so far as the case is concerned, it. follows the constitutional provisions that foreign corporations-shall be sued in the county or counties in which they do business, by agent. It is true the statute and the Constitution use the word “may,” and not the word “must” or “shall;” but the word “may,” when so used, has the effect and meaning of “must” or ‘shall.” To.hold that section 4560 of the Code has the effect of allowing all suits against foreign insurance companies to be brought in Montgomery county, or the county in which the' insurance commissioner resides, when the insurance company is not. doing business in such county, and has not done any business in such county, clearly would be to hold in conflict with the constitutional provision and the statute, and also would be to violate the-Fourteenth Amendment .of the Federal Coustitution. Such statute would be an unwarranted discrimination, against such foreign corporations. This court has both confused and confounded service of process upon foreign corporations with venue of actions against them, and has made the statute as to the service of' process only do the service of fixing the venue of an action and. the jurisdiction of a court.
Strange to say, and unusual as it is, our Constitution provides for both the venue of, and service of process upon, foreign corporations. It provides that they shall be sued in the county or counties in which they do business, but also provides that, process may be served on their agents anywhere within the state. —Const. § 232. Section 6112 of the Code follows the Constitution as to venue against all corporations, domestic or foreign,, insurance or otherwise. Section 4560 follows the Constitution,, as to service of process upon insurance companies, whether foreign or domestic. If all foreign insurance companies can be sued!in Montgomery county, when not doing business in that county^, in spite of section 232 of the Constitution and section 6112 of the Code, which provide a different venue in such cases, then all. domestic insurance companies may be sued in such county. Section 4560 of the Code makes no distinction as between domestic- and foreign corporations. Likewise section 6112 of the Code makes no distinction as to venué between foreign and domestic; corporations.
*420When a court is dealing with and deciding a question of venue, why it should follow or be controlled by a statute which deals solely with the service of process rather than by constitutional and statutory provisions dealing with venue is more than I can understand. As I have above pointed out, to make section 4560 of the Code serve as a venue statute would render it unconstitutional and void — would cause it to violate both the state and the federal Constitution.
The court has fallen into the same error into which counsel for plaintiff fell in drafting his replication which this court holds to be a sufficient answer to the defendant’s plea in abatement. The replication goes upon the fallacious theory or supposition that, because the defendant company was not, at the time of the accrual of the cause of action sued upon or of the bringing of the suit, actually engaged in writing other insurance by agent in the county of venue, or in any other county, it was not doing business in such co'unty in such sense as to make section 232 of the Constitution and section 6112 of the Code applicable. In other words, according to this theory, constitutional and statutory provisions as to venue do not apply, because the defendant was a foreign corporation, and was not at the time the suit was brought doing business in the state. This is an erroneous view of both the facts and’the law. When a corporation goes into another state to do business therein, it thereby submits and commits itself to the jurisdiction of the courts of that state, as well as to its laws touching venue and to the same end as if it were a domestic or resident corporation, and it cannot avoid the jurisdiction or the laws as to venue or service of process by ceasing to do business in the state; nor does it lose its rights as to venue or as to service of process by ceasing to do business in the state. It is to this end that section 232 of the Constitution and section 6112 of the Code provide for the venue of suits against such corporations, and that the same section of the Constitution and sections 3642 and 4560 of the Code provide for agents, and the designation of known places of business, so that the service of process may be perfected on such corporations, as if they were domestic or resident corporations.
If section 4560 of the Code had provided that foreign insurance companies should have a place of business at the place of office or of residence of the insurance commissioner, instead of merely that a particular agent should be designated as the agent *421upon whom service should be had, and the replications had averred this fact, I concede that the decision would be correct, if the statute were valid. But the statute does not so provide, nor does the replication so aver.
It was pointed out in Sullivan’s Case, 103 Ala. 371, 15 South. 941, 25 L. R. A. 543, that the mere fact that an agent of the corporation resided within a given county did not authorize suit in such county. In that case it was said: ‘The mere presence of an agent within the state, or within a particular county, authorized to transact particular business, not involving an exercise of the corporate powers or franchises, not a part of the business the corporation was created and organized to transact, is not within the proper meaning of the phrases ‘do business’ or ‘does business.’ ”
To recapitulate and digest: The Constitution and the venue statutes provides that foreign corporations must be sued in the county or counties in which they do business. This is to deny that they can be sued elsewhere, because “may,” as used in the Constitution and the statutes, has the legal effect of “must” or “shall.”—Ex parte Choice, 43 Ala. 303. The majority hold that notwithstanding this mandatory provision — on the one hand, of the Constitution, and, on the other, of a statute — section 4560 of the Code authorizes suits in counties in which the corporation is not doing business. I do not think that this section was by the Legislature intended to have this effect, and that, even had they so intended, the effort would have been abortive, because it would have rendered the section in conflict with section 232 of the Constitution, which this court has repeatedly held to be both mandatory and self-executing. — See Annotations to Constitution.
The trial court has evidently overlooked the history and the purpose of section 232 of the Constitution. Some of its history and its objects are well expressed by Brickell, C. J., in Sullivan’s Case, supra, as may be seen by the following excerpts:
“By the common law, to maintain a personal action against a corporation, there must have been service of process upon its head or principal officer within the jurisdiction of the sovereignty from which corporate existence was derived. The officer upon whom, in the sovereignty of its creation, service could be legally effected, binding the corporation, it may be, could be found in another jurisdiction, but he was not deemed to bear with him his official functions, and service upon him there effected *422would not bind or affect the corporation. Whatever of legal proceedings could be pursued against the corporation, elsewhere than within the sovereignty of its creation, must have been authorized by legislation of the forum in which such proceedings were instituted.—St. Clair v. Cox, 106 U. S. 354 [1 Sup. Ct. 354, 27 L. Ed. 221]"—103 Ala. at pages 373, 374, 15 South, at page 941.
“The modification or relaxation of the common-law principle was rested upon the theory that the corporation' by entering the state by its agents, engaging in the transaction of its corporate business, gave to itself ‘a species of locality in the nature of a domicile, ‘and was presumed to have assented to be sued in the courts of the state, as if it were a domestic corporation.” — 103 Ala. at page 375, 15 South, at page 942.
“Every attempt on the part of one nation or state, by its Legislature, to grant jurisdiction to its courts over persons or property not within its territory, is regarded elsewhere as mere usurpation; and all judicial proceedings in virtue thereof are held utterly void. This proceeds upon the known maxim: ‘Extra ter-ritorium jus dicenti impune non paretur.’ The presence of the corporation by its agents, engaged in the transaction of corporate business, was the essential fact which drew it within the jurisdiction of the courts of a state other than the state of its creation to entertain a personal action against it.” — 103 Ala. at page 376, 15 South, at page 942.
“When'the Constitution is read in the light of pre-existing law, we understand what were the defects and mischiefs it is intended to supply and correct, the changes it is intended to make, and the scope and extent of its provisions. ' By comity or mere acquiescence a foreign corporation may not now make contracts from which it can derive rights or benefits, or transact any part of the business for which it was organized. The condition upon which it may do business, fixed and prescribed by the Constitution, is inflexible, and is unalterable by legislation.—Farrior v. New England Mortgage Security Co., 88 Ala. 275 [7 South. 200]; New England Mortgage Security Co. v. Ingram, 91 Ala. 337 [9 South. 140]; Nelms v. Edinburg American Land Mortgage Co., 92 Ala. 157 [9 South. 141].”—103 Ala. at pages 376, 377, 15 South, at page 943.
So far as the replication replied to the plea that defendant company was not doing business in Geneva county, it was pro tanto a mere traverse of the plea.
*423The complaint was on an insurance policy. The complaint and the plea, construed together, showed that the contract was made in Geneva county, that the property covered was situated in Geneva county, and that the contract as to the payment of premiums and of loss was to be performed in that county. Collecting premiums and adjusting and settling losses is always held to be the carrying on of insurance, and as much so as soliciting, other insurance by agents. The plea therefore alleged, not in terms, but in legal effect, that the company was then, and is now, engaged in the business of insurance in Geneva county. So the replication was a mere traverse of the plea; and sustaining a demurrer to it was without injury, because the general issue would have raised the same issue.
This has been held by many courts, and by the Supreme Court of the United States, which is the final arbiter as to what constitutes ‘doing business’ in a state by a foreign corporation. In the case of Connecticut Mutual Life Insurance Co. v. Spratley, 172 U. S. 602, 19 Sup. Ct. 308, 43 L. Ed. 569, at the time of suit brought in the state court the insurance company was not writing, had ceased to write, insurance, and had withdrawn its agents from the state, and had so notified the insurance commissioner; but the Supreme Court of the United States held that the company was still doing business because it was collecting premiums and paying losses. In the case the court, speaking through Peckham, J., said: “It cannot be said with truth, as we think, that an insurance company does no business within a state unless it have agents therein who are continuously seeking new risks and it is continuing to issue new policies upon such risks. Having succeeded in taking risks in the state through a number of years, it cannot be said to cease doing business therein when it ceases to obtain or ask for new risks or to issue new policies, while at the same time its old policies continue in force and the premiums thereon are continuously paid by the policy holders to an agent residing in another state, and who was once the agent in the state where the policy.holders resided. This action on the part of the company constitutes doing business within the state, so far as is necessary, within the meaning of the law upon this subject.”—172 U. S. at page 611, 19 Sup. Ct. at page 311 (43 L. Ed. 569).
Mr. Justice Field, speaking on the same subject (jurisdiction of a state court over foreign corporations), said: “It is suf*424ficient to observe that we are of opinion that, when service is made within the state upon an agent of a foreign corporation, it is essential, in order to support the jurisdiction of the court to render a personal judgment, that it should appear somewhere in the record, either in the application for the writ, or accompanying its service, or in the pleadings or in the finding of the court, that the corporation was engaged in business in the state.”—172 U. S. at page 615, 19 Sup. Ct. at page 313 (43 L. Ed. 569).
“In United States v. American Bell Telephone Co. [C. C.] 29 Fed. 517, Judge JACKSON stated the three conditions necessary to give a court jurisdiction in personam over a foreign corporation : First, it must appear that the corporation was carrying on its business in the state where process was served on its agent; second, that the business was transacted or managed by some agent or officer appointed by or representing the corporation in such state; third, the existence of some local law making such- corporation amenable to suit there as a condition, express or implied, of doing business in the state.”—172 U. S. at page 618, 19 Sup. Ct. at page 314 (43 L. Ed. 569).
The above excerpts have been often approved and reaffirmed by the Supreme Court of the United States.
It follows that, if a judgment should be rendered for the plaintiff on the replication in question, it would conclusively appear by affirmative matter of record that a state court had rendered judgment against a foreign corporation which was not doing business in the state. The judgment itself would proclaim its own invalidity. If the corporation is not doing business in the state when the suit is brought, then no action can be brought in the state against it, no matter what state statutes provide. It is the doing of business in the state alone which confers jurisdiction on the state courts to render personal judgments against foreign corporations.—Sullivan’s Case, 103 Ala. 376, 15 South. 941, 25 L. R. A. 543.
The replication alleges that the defendant corporation was not doing business in the state. That denies the jurisdiction of any court in this state.
McClellan, J., concurs in the dissent.