Court Opinion

ID: 9418039
Source: CourtListenerOpinion
Date Created: 2023-08-02 20:47:19.667013+00
Date Added: 2024-06-11T17:21:54.612452
License: Public Domain

Mr. Justice Peckham
delivered the opinion of the court.
Motions for rehearing.have been presented by plaintiffs in error. The cases were commenced in the proper state court in Kentucky, and were argued here on their merits in January of this term, and the writs of error were dismissed, 200 U. S. 446, because, as appeared from the record, only abstract questions remained to be decided, the licenses to do business within the State of Kentucky in both cases, which had been granted. on July 1, 1904, for one' year, having expired since issuing the writs of error.
In No. 178 the petition stated that the permission or authority to continue to do business in Kentucky had been renewed and extended from year to year by the State Insurance Commissioner, and that he had, on July 1, 1904, “continued the authority to. the Security Mutual to transact the business of life insurance,” as evidenced by the permit “ for a period of one year from July 1, 1904.” It was also averred that the permit had been revoked in September, 1904, and the company asked to have the revocation cancelled.
In No. 184 the petition stated that the company had been granted authority to transact business in the State of Kentucky for the period of one year then next ensuing, that is, from July 1, 1904. The petition showed that the permit had not then (October, 1904) been revoked, but it was alleged that the Superintendent of Insurance threatened to revoke it (on grounds substantially similar to those set forth in the Security case, in 200 U. S. supra, viz., the removal to a Federal court of a ease commenced against the company in' the state court), and an injunction was asked to prevent the revocation of the permit on that account.
On these motions for a rehearing it is now shown, what did *248not appear in the records, that the permits in fact had been renewed for another year, from July 1, 1905, to July 1, 1906, for the purpose, as it would seem, of having the point involved reviewed by this court. Neither party, adverted to this fact on the argument, and the cases were fully presented by counsel on both sides, on the merits, and the question treated as still existing.
As the dismissal was ordered on a mistaken assumption of fact, justified by the records, that the permits had expired by lapse of time and had not been renewed, the applications for rehearing are granted and the judgments of dismissal set aside, and the cases will be decided upon the arguments already made in fhll by counsel for both parties.
The facts upon the main question sufficiently appear in the report in 200 U. S. 446. The Court of Appeals of Kentucky held the statute valid. 26 Ky. Law Rep. 1239, dissenting opinion, 27 Ky. Law Rep. 77. See also 83 S. W. Rep. 611; 84 S. W. Rep. 527.
The matter to be now determined is whether a State has the right to provide that if a foreign insurance company shall remove a case to the Federal court, which has been commenced in a state court, the license of such company to do business within the State shall be thereupon revoked.
The statute under which the question arises is known as section 631 of the Kentucky Statutes, and reads as follows:
“Before authority is granted-to any foreign insurance company to do business in the State, it must file with the Commissioner a resolution adopted by its board of directors, consenting that service of process upon any agent of such company in this State, or upon the Commissioner of Insurance of this State, in any action brought or pending in this State, shall be a valid service upon said company; and if process is served upon the Commissioner it shall be his duty to at once send it by mail, addressed to the company at its principal office; and if any company shall, without the consent of the other party to any suit or proceeding brought by or against it in any couit *249of this State, remove said suit or proceeding to any Federal court, or shall institute any suit or proceeding against any citizen of this State in any Federal court, it shall be the duty of the Commissioner to forthwith revoke all authority to such company and its agents to do business in this State, and to publish such revocation in some newspaper of general circulation published in the State.”
A State has the right to prohibit a foreign corporation from doing business within its borders, unless such prohibition is so conditioned as to violate some provision of the Federal Constitution. Among the later authorities on that proposition are. Hooper v. California, 155 U. S. 648; Allgeyer v. Louisiana, 165 U. S. 578, 583; Orient Insurance Company v. Daggs, 172 U. S. 557; Waters-Pierce Oil Co. v. Texas, 177 U. S. 28; New York-Life Insurance Company v. Cravens, 178 U. S. 389, 395; Hancock Mutual Life Insurance Company v. Warren, 181 U. S. 73.
Having the power to prevent a foreign insurance company from doing business at all within the State, we think the State can enact a statute such as is above set forth.
The question is, in our opinion, settled by the decisions of this court. In Insurance Company v. Morse, 20 Wall. 445, a statute of Wisconsin, passed in 1870, in relation to fire insurance companies, after providing for certain conditions upon which the foreign company might do business within the State, continued:
• “Any such company desiring to transact any such business as aforesaid by any agent or agents in this State, shall first appoint an attorney in this State on whom process of law can be served, containing an agreement that such company will not remove the suit for trial into the United States Circuit ■ Court or Federal courts, and file in the office of the Secretary of State a written instrument, duly signed and sealed, certifying such appointment, which shall continue until another attorney be substituted.”
While that statute was in force the Home Insurance Company of the State of New York established an agency in Wis*250consin, and, in compliance with the provisions of the statute, the company duly filed in the office of the Secretary of State of Wisconsin the appointment of one' Durand as its agent, upon whom process might be served. The power of attorney was filed, containing the following agreement: “ Said company agrees that suits commenced in the state courts of.Wisconsin shall not be removed by the.acts of said company into the United States Circuit or Federal courts.”
After doing business in the State for some time the company issued a policy to Morse, and a' loss having occurred, Morse sued the company in one of the state courts of Wisconsin to recover'the amount alleged to be due on the policy. The company entered its appearance in the suit and filed its petition to remove the case, which petition was in proper form, and was accompanied by the required bond and bail. Being presented to the state court of Wisconsin, in which the suit was brought, that court held that the-statute justified the denial of the petition to remove the case into the Federal court, and a trial having been had in the state court, it gave judgment for the plaintiff on a verdict found in his favor. Upon a review of the judgment by the Supreme Court of Wisconsin it was affirmed.' Thereupon the insurance company sued out a writ of error from this court, and the sole question was, whether the statute and agreement were sufficient to justify the state court in refusing to permit the removal of the case to the Federal court, and proceeding to judgment therein. This court held that the agreement was void, inasmuch as, if'carried out, it would oust the Federal courts of a jurisdiction given them by the Constitution and statutes of the United States. It was said that the statute of Wisconsin was an obstruction to the right of removal provided for by the Constitution of the United States and the laws made in pursuance thereof, and that the agreement of the insurance company derived no support from the unconstitutional statute, and it was void as it would have been had no such statute been passed. The Chief Justice, with whom concurred Mr. Justice Davis, dissented, holding that, as *251the State had the right to exclude foreign insurance companies from the transaction of business within its jurisdiction, it had the right to impose conditions upon- their admission, which was a necessary consequence from the right to exclude altogether.
It will be seen the statute provided that in the power of attorney, appointing an agent for the company within the State, there should be an agreement that the company would not remove a case to a Federal court, and the statute was held to be void.
Subsequently the case of Doyle v. Continental Insurance Company, 94 U. S. 535, involving thé same statute,- came before this court. In that case the court reaffirmed the decision of the Morse case, supra, -as to the invalidity of the agreement. But in distinguishing' the - two cases it yras said in the course ■ of the opinion that, as the State had the right to entirely exclude such company from doing business iri the State, the means by which it caused such exclusion or the motives of its 'action were not the subject of judicial inquiry; that the conclusion reached in the Morse case that the statute of Wisconsin was illegal was to be understood as spoken of the provision of the statute then under review, viz., that portion thereof requiring a stipulation against transferring cases to the courts of the United States; that the decision was upon that portion of the statute only, and that other portions thereof, when pre-' sented, must be- judged on their merits. The court further said that the Morse case had not undertaken to decide what the powers of the State of Wisconsin were in revoking a license previously granted, as no such question had arisen upon the facts therein, and was neither argued by counsel nor referred to in the opinion, but that in the case then before the court (that of Doyle) the point as to the power of the State to revoke a license was distinctly presented. It is stated in the opinion, as follows:
"We have not decided that the State of Wisconsin had not the power to impose terms and conditions as preliminary to the right of an insurance company to appoint agents, keep *252offices, and issue policies in that State. On the contrary, the case of Paul v. Virginia, 8 Wall. 168, where it is held that such conditions may be imposed, was cited with approval in Insurance Company v. Morse.”
The opinion concludes as follows:
“ It is said that we thus indirectly sanction what we condemn when presented directly; to wit, that we enable the State of Wisconsin to enforce an agreement to abstain from Federal courts. This is an ‘inexact statement.’ The effect of our decision in this respect is that the State may compel the foreign company to abstain from the Federal courts, or to cease to do business in the State. It gives the company the option. This is justifiable, because the complainant has no constitutional right to do business in that State; that State has authority at any time to declare that it shall not transact business there. This is the whole point of the case, and, without reference to the injustice, the prejudice, or the wrong that is alleged to exist, must determine the question. No right of the complainant under the laws or Constitution of the United States, by its exclusion from the State, is infringed; and this is what the State now accomplishes. There is nothing, therefore, that will justify the interference of this court. ”
In these two cases this court decided that any agreement made by a foreign insurance company not to remove a cause to the Federal court was void, whether made pursuant to a statute of the State providing for such agreement, or in the absence of such statute; but that the State, having power to exclude altogether a foreign insurance company from doing business within the State, had power to enact a statute which, in addition to providing.for the agreement mentioned, also provided that if the company did remove a case from the state to a' Federal court, its right to do business within the State should cease, and its permit should be revoked. It was held there was a distinction between the two propositions, and one might be held void and the other not.
The case of Barron v. Burnside, 121 U. S. 186, has been cited *253as overruling the Doyle case, and as holding that a statute of the nature of the one in question here is void as a violation of the Federal Constitution. In that casé a statute of Iowa was under consideration. It is set out in the report. The first section provides for an application by the foreign company to the Secretary of State, requesting that a permit may be issued to the corporation to transact business in the State. It also provides that the application shall contain a stipulation that the permit shall be subject to each of the provisions of the act. The third section provides that if any cases commenced in a state court were removed by the corporation into a Federal court, the corporation should thereupon forfeit any permit issued or authority granted to it to transact business in the State. The fourth section provides for punishing the agents, officers or servants of the corporation for doing business as such in the State, if the corporation had not complied with the statute and taken out and retained a valid permit to do business within the State. The corporation had not, in fact, taken out a permit. Barron, the plaintiff in error, was a servant of the corporation, and was engaged as engineer in running a train of the corporation, which started from Chicago and was running in the State of Iowa. He was arrested in Iowa for acting as the agent of the company in that State, while the company had no permit. Having been arrested, he applied to .the Supreme Court of the State for a writ of habeas corpus, which was issued and a return made, and the case heard upon an agreed statement, containing the above facts. The state court upheld the validity of the statute, and the case was brought to this court by writ of error, where the judgment was reversed and the statute held invalid.
In the opinion delivered in this court it will be observed that the agreement or stipulation provided for in the statute was the material fact upon which the court proceeded, and it was •held that the statute did require such agreement. The various requirements mentioned in the first section of the statute were referred to as forming in fact but one proceeding and as indis*254solubly bound up with' the application for a permit that could not be issued, unless the stipulation was given which made the permit specially subject- to each of the provisions of the act, including the provision not to remove. It is clear from the whole case that the stipulation not to remove was- regarded as the material part, and the case was decided on that foundation. Mr. Justice Blatchford said: ■
“The statute is not.separable into parts. An affirmative provision requiring the- filing by a foreign corporation, with the Secretary of State, of a copy of its articles of incorporation, and of an authority for the service of process upon a designated officer or agent in-the State, might not be an unreasonable or objectionable requirement, if standing-alone; but the manner in which, in this statute, the provisions on those subjects are coupled with the application for the permit, and with the stipulation referred to, shows that the real and ¡only object of the statute, and its substantial provision, is the requirement of the stipulation not to remove the suit into the Federal court. ” For this reason the statute was held void.
Reference is then made in the opinion to the Morse case, 20 Wall, supra, wherein it was stated that agreements in advance to oust the court of a jurisdiction conferred by law were illegal and void, and that parties could not bind themselves in advance by such an agreement thus to forfeit their rights at all times and on all occasions, whenever the case might be,presented.
The Doyle case, 94 U. S. supra, was also referred to, .and Mr. Justice Blatchford said in regard to it as follows:
“The point of the decision seems to have been, that, as the State had granted the license, its officers would not be restrained by injunction, by a- court of the United States, from withdrawing it. All that there is in the case beyond this, and all that is said in the opinion which appears to be in conflict with the adjudication in Insurance Co. v. Morse, must be regarded as not in judgment.”
This is the language which it is contended overrules the Doyle *255case. We do not think so. A reference to the Doyle pase will show that the first part of the above-quoted statement is inaccurate, as the case does not seem to have been decided upon •the proposition that an injunction was improper from a court of the United States to state officers.. The Morse case was referred to and approved, and the court held there was nothing inconsistent between the two cases. The Doyle opinion proceeds upon that theory.
If it had been the intention of the court in Barron v. Burnside to overrule the Doyle case, it was easy to have said so. Instead of that, the opinion rests upon the ground of the agreement to be exacted as a condition of granting the permit, and that the statute was not separable into parts, and it was. held that the requirement of such a stipulation was void. It was not held that such a statute as the one of Kentucky now.under consideration was void. Such statute exacts no agreement or stipulation in any form or in any part of the statute.
In Southern Pacific Co. v. Denton, 146 U. S. 202, 207, the same- principle was stated, although the question was not directly involved, as the case was brought in the Federal court and the corporation contended it was not served with process in the proper district and that the court was on that account without jurisdiction. The court, per Mr. Justice Gray, in the course of the opinion, remarked that a statute requiring the corporation as a condition precedent to obtaining a permit to do business within the State, to surrender a right and privilege secured by the Federal Constitution and laws, was unconstitutional and void. (Page 207.) It was the same, in substance, as the Iowa statute, which was. held void on account of the exaction of the agreement.
In Barrow Steamship Co. v. Kane, 170 U. S. 100, Justice Gray, in delivering, the opinion of the court, again stated what was regarded as-the holding in the two cases of Insurance Co. v. Morse and Barron v. Burnside, and said that “statutes requiring foreign corporations, as a condition of being permitted to do business within the State, to stipulate not to remove into *256the courts of the United States suits brought against them in the courts of the State, have been adjudged to be unconstitutional and void.” It was the exaction of a stipulation or agreement that rendered the statute illegal.
It is also said in Blake v. McClung, 172 U. S. 239, 255, that a statute providing that a stipulation should be made that the company would not remove a case into a Federal court was void because it made the right to do business under the license or permit depend upon the surrender by the corporation of a privilege secured to it by the Constitution.
It is urged that the Iowa and Texas statutes do not require an agreement not to remove. But those statutes do require such agreement. The Iowa statute provided that the application for a permit should contain a stipulation that the permit should be subject to each of the provisions of the act, among which was one that the corporation should forfeit the permit if it should remove the case. This was held to be, in effect, a stipulation not to remove, exacted as a condition for granting the permit. And so the court said:
“As the Iowa statute makes the right to a permit dependent upon the surrender by the foreign corporation of a privilege secured to it by the Constitution and laws of the United States, the statute requiring the permit must be held to be void.” Barron v. Burnside, supra, page 200.
In other words, the statute was regarded as exacting an agreement in advance not to remove a case, and such being the fact it was held that the statute was void. The Texas statute is to the same effect as that of Iowa.
The most that can be contended for is that the Barron case holds that where -the statute exacts a stipulation in advance, as a condition of granting a permit, and the statute is not separable into parts, the whole statute is void, and a provision for withdrawing the permit, if a case is removed, is not saved. That principle, as we have said, does not touch this case, as there is no exaction of a stipulation at any time.
It has not been decided that a statute which has no require*257ment for a stipulation or agreement not to remove is void, if there be simply a provision therein for a revocation of the permit, such as is contained in the statute under review.
As a State has power to refuse permission to a foreign insurance company to do business at all within its confines, and as it has power to withdraw that permission when once given, without stating any reason for its action, the fact that it may give what some may think a poor reason or none for a valid act is immaterial.
Counsel for the companies, in- their brief admit that the State “has the right at any time to pass a statute expelling a company or revoking its license, and the validity of the statute of expulsion would not be affected by the motives of the State in so doing — even though the preamble expressly recited that the license was revoked because the company had removed a case. The statute would be valid — for the company had no constitutional right to remain in the State any longer than it chose to allow; and the statute would not abridge any right of removal — for as the case had already been fully removed before the statute was in existence, the right of removal could not be said to have been hindered or abridged by a statute not even in existence.”
Thus it is admitted that a State has power to prevent a company from coming into its domain, and that it has power to take away its right to remain after having been permitted once to enter, and that right may be exercised from good or bad motives; but what the companies deny is the right of a State to enact in advance that if a company remove a case to a Federal court its license shall be revoked.
We think this distinction is not well founded. The truth is that the effect of the statute is simply to place foreign insurance companies upon a par with the domestic ones doing business in Kentucky. No stipulation or agreement being required as a condition for coming into the State and obtaining a permit to do business therein, the mere enactment of a statute which, m substance, says if you choose to exercise your right to re*258move a case into a Federal court, your right to further do business within the State shall cease and your permit shall be withdrawn, is not open to any constitutional objection. The reasoning in the Doyle case we think is good.
The orders heretofore entered dismissing the writs of error in these cases are set aside, and the judgments of the Court of Appeals of Kentucky are

Affirmed.