Court Opinion

ID: 5393535
Source: CourtListenerOpinion
Date Created: 2022-01-08 10:03:13.662517+00
Date Added: 2024-06-11T08:30:20.071239
License: Public Domain

Dore, J. P.
(dissenting). Plaintiff, insured, sues defendant, a Pennsylvania insurance company not authorized to do business in the State of New York, on a contract of fire insurance covering property located in the State of New Hampshire. Service of process in the action was made on the New York Superintendent of Insurance and on defendant by registered mail addressed to and received by it in Pennsylvania pursuant to section 59-a of the New York Insurance Law. The issue is whether Special Term properly denied defendant’s motion to *495vacate such service and dismiss the complaint on the ground that the court thereby had gained no jurisdiction of defendant in personam.
To protect residents of this State who hold policies of insurance issued by foreign insurers unauthorized to do business in the State, section 59-a of the Insurance Law provides for substituted service of process on such insurers if they effect in this State any of certain enumerated “ acts e.g., delivery of insurance contracts by mail or otherwise to residents of this State; solicitation of applications for such contracts; collection of premiums or any other transaction of business in this State.
In our opinion when the facts disclosed bring the suit within the terms of section 59-a, that section provides a proper and legal method of substituted service of process upon an unauthorized foreign insurer and is not in violation of due process or otherwise unconstitutional. Similar statutes have been sustained when the facts establish that the foreign corporation had certain minimum contacts with the State in question such that the maintenance of the suit did not offend traditional notions of fair play and substantial justice (Travelers Health Assn. v. Virginia, 339 Uy. S. 643; Internat. Shoe Co. v. Washington, 326 U. S. 310; Ace Grain Co. v. American Eagle Fire Ins. Co., 95 F. Supp. 784, 785-786). Thus in the Travelers case (supra) the facts established that the foreign association there in question, did not engage in mere isolated or short lived transactions, but its insurance certificates were systematically and widely delivered in Virginia following solicitations based on recommendations of Virginians and it caused claims to be investigated in Virginia. In the International Shoe Co. case (supra) the court pointed out that the activities of the foreign corporation in the State of Washington were neither irregular nor casual and resulted in a large volume of interstate commerce. In the Ace Grain Company case (supra) the court found that the foreign insurer had a telephone listing and an address at 44 Wall Street where it had maintained its office while authorized to do business, and by calling the New York number one could be connected to the defendant’s Philadelphia office at the rate of a local New York call; it had a “ settling ” agent in New York to whom the proof of loss was delivered and who on behalf of the insurer denied liability; two contracts were delivered in New York; premiums were paid in New York, and the defendant had continued to do business in New York through two controlled corporations up to September 6, 1949.
*496In. contrast with the facts shown in the above-cited cases sustaining process, the only facts established in this record are (1) delivery of a single fire insurance contract of defendant by mail in New York to plaintiff, a resident here through plaintiff’s broker, and (2) payment of a single premium to the broker here, transmission by him to defendant in Philadelphia and deposit of check by defendant in payment of the premium.
The ultimate and narrow issue before us therefore is: are such “ acts ” sufficient to bring this case within section 59-a? Scrutiny of section 59-a indicates in paragraph (a) of subdivision 2 that any of the following “ acts in this state ”, effected by mail or otherwise, subject the unauthorized foreign insurer to process:
(1) delivery of contracts of insurance to residents.
(2) solicitation of applications for such contracts.
(3) collection of premiums, fees, assessments or other considerations for such contracts; or
(4) any other transaction of business. (Italics ours.)
In the plural are the references to contracts, premiums, fees and solicitations and accordingly (4) referring to any “ other transaction ” must be read in pari materia and in its context of plurals was not intended to refer to a single isolated transaction such as is shown in this record.
The conclusory statement in a reply affidavit of an attorney for plaintiff that inspection of statements filed with the Superintendent of Insurance of Pennsylvania reveals that in the calendar year 1951, five companies, including this defendant, delivered by mail policies in substantial sums to numerous States including New York, states nothing to show what policies, if any, in addition to the one in question, were transmitted by mail in New York by this defendant and there is no proof of solicitation in New York. On the contrary in this case an excess line broker acting for the insured solicited the policy by mail from defendant in Philadelphia pursuant to restrictions imposed on such broker by subdivision 6 of section 122 of the Insurance Law, which provides that the insured and the broker must show they were unable after diligent effort to procure from any authorised insurer or insurers the full amount of insurance required to protect the interest of such insured before a policy of insurance can be lawfully procured from an outside insurer not authorized to transact business in this State.
Shushereba v. Ames (255 N. Y. 490) and Leighton v. Roper (300 N. Y. 436) holding section 52 of the Vehicle and Traffic *497Law constitutional are limited by the rule that the State’s power to regulate the use of its highways extends to their use by nonresidents as well as by residents; and, in advance of the operation of a motor vehicle on its highways by a nonresident, the State may require him to appoint one of its officials as his agent on whom process may be served in accidents growing out of such use. It is recognized in such cases that the State has power to exclude a nonresident until the formal appointment is made and having the power so to exclude the court may declare that the use of the highways by the nonresident is the equivalent of the appointment of the Secretary of State upon whom process may be served (Leighton v. Roper, supra). Then, too, in cases arising under section 52, the cause of action arose in this State and the person causing the injury had given an irrevocable consent in consideration of the privilege of using our highways which the State might otherwise have denied him. He and his auto are here and actually involved here in an accident that is claimed to have caused loss and injury here. Of course, no such state of facts or anything like it is herein disclosed. The foreign insurer is not here; it issued its policy from Pennsylvania covering a hotel in New Hampshire. That it issued the policy to a resident of the State of New York was not against the laws of the State of New York which had provided a means whereby foreign unauthorized insurers could issue policies to New York residents without being authorized to do business here (Insurance Law, § 122). Any construction that section 59-a applies to a single transaction between a resident and a foreign insurer, to that extent, would render the statute unconstitutional, for a State may not exercise jurisdiction and authority over persons without its territory, and “ proceedings in a court of justice to determine the personal rights and obligations of parties over whom that court has no jurisdiction do not constitute due process ”. (Pennoyer v. Neff, 95 U. S. 714, 733.)
The State has no power to regulate a single fire insurance transaction between a resident and a foreign unauthorized insurer not otherwise present in the State. In no cited case sustaining the process here in question are the “ contracts ” with the State so slim and so meagre and isolated as in the case before us. Absent here are the minimum factual requirements necessary to gain jurisdiction. Section 59-a is undoubtedly constitutional but plaintiff does not factually show that his suit is within its coverage.
*498Accordingly, we dissent and vote to reverse the order appealed from, vacate the service of process and dismiss the complaint.
Bbeitel and Van Vooehis, JJ., concur with Bebgan, J.; Dobe, J. P., dissents and votes to reverse in opinion, in which Cohn, J., concurs.
Order affirmed, with $20 costs and disbursements to the respondent. [See post, p. 1019.]