Case: PHILADELPHIA FIRE ASSOCIATION v. NEW YORK
Abbreviation: Philadelphia Fire Ass'n v. New York
Decision Date: 1886-11-15
Docket Number: 
Citation: 119 U.S. 110
Volume: 119
Reporter: United States Reports
Court: Supreme Court of the United States
Jurisdiction: United States
Parties: PHILADELPHIA FIRE ASSOCIATION v. NEW YORK.
Judges: 
Pages: 110–129

Head Matter:
PHILADELPHIA FIRE ASSOCIATION v. NEW YORK.
■ ERROR TO THE SÜPREME COURT OK THE STATE OP NEW YORK.
Argued October 26, 1886.
Decided November 15, 1886.
A. Pennsylvania fire insurance corporation began doing business in New York in 1S72, and continued it afterwards till 1882, receiving from year to year certificates of authority from the proper officer, under a statute of New York passed in 1853. Chapter 694- of the laws of New York, of 1865 as amended by c. 60 of the laws of 1875, provided that whenever the laws of any other State should require from a New York fire insurance com- „ pany. a greater license fee than the laws of New York should then require from the fire insurance companies of sucli other State, all such companies of such.other State should pay in New York a license fee equal to that imposed by such other State on New York companies. In'1873,. Pennsylvania passed a law requiring fro-m every insurance company of another State, as a prerequisite to a certificate of authority, a yearly „tax of 3 per cent, on the premiums received by it in Pennsylvania during the preceding year. In 1882, the insurance officer of New York required the Pennsylvania corporation to pay, as a license fee, a tax of 3 per cent, on the premiums received by it in New York in 1881. In a suit against such corporation, in a court of New York, to recover such tax, it was set up as a defence, that the tax was unlawful, because the corporation yvas. a “person” within the “jurisdiction” of New York, and “the equal protection of the laws ” had been denied to it, in violation of a clause in the Fourteenth Amendment to the Constitution of the United States. On a writ of error to review the judgment of the highest court -of New York, overruling such defence: Held, that such clause had no application, because, the defendant, being a foreign corporation, was not within the jurisdiction of New York, until admitted by the State on a compliance with the condition of admission imposed, namely, the payment of the . tax required as a license fee.
The business carried on by the corporation in New York was not a transaction of commerce.
The opinion of the highest court of New York, duly authenticated by the proper officer, and transmitted to this court with the record, in compliance with the 8th Pule, -was examined to aid in determining whether that court decided such Federal question against the defendant.
This was a writ of error to the Supreme Court of the State of New York. Under the provisions of § 1279 of the Code of Civil Procedure of New York, the People of the State of New York and the Fire Association of Philadelphia, a Pennsyl vania corporation, being parties to a question in difference which might be the subject of an action, agreed upon a case containing a statement of the facts on which the controversy depended, and presented a -written submission of it to the Supreme Court of New York, so that the controversy became an action. The material facts set forth in the case were these: ' !
“ The defendant, The Fire Association of Philadelphia, is a corporation created and organized in the year 1820, by and under the laws of the State of Pennsylvania, for the transaction of the business of fire insurance, and having its principal place of business in the City of Philadelphia. In the • year 1872 it established, an agency in the State of New York, which it has ever since maintained. No question is here raised but that it has uniformly complied with all the requirements and conditions imposed by the laws of this State upon fire insurance companies from other States' establishing and maintaining agencies in this State, except the payment of the 'tax now in dispute, upon premiums received by it in 1881 upon risks located wthinthe State of New York, and which .is the subject of this controversy, and has received from year to year certificates of authority from the Superintendent of the Insurance Department of this State, as provided to be issued under ' the Actj c. 46& of the laws of 1853, and the subsequent Acts amendatory thereof.
“ The Act of the People of the State of New York, passed May 11, 1865, three fifths being" present, being c. '694 of the laws of 1865, entitled ‘An Act in relation to the deposits required to be made, and the taxes, fines, fees, and other charges -payable by insurance' companies of sister States,’ as amended by the Act of 1875, c. 60, provides as follo-ws, viz. : ‘ Whenever the existing or future laws of any other State of the United States shall require of insurance companies, incorporated by or organized under the laws of this State, and having agencies in such other States, or of the agents thereof, any deposit of securities in such State for the. protection of policy-holders or otherwise,. or any payment for taxes, fines, penalties, certificates of authority, license fees, or otherwise, greater than, the amount required for such purposes from similar companies of other States by the then existing laws of this State, then, and in every such case, all companies of such States establishing, or having heretofore established, an agency or agencies in the State, shall be and are hereby required to make the same deposit for a like purpose in the Insurance Department of the State, and to pay the Superintendent of said Department for taxes, fines, penalties; certificates of authority, license fees, and otherwise, an amount equal to the amount of such charges and payments imposed by the laws of such State upon the companies of this State and the agents thereof; and the Superintendent of the Insurance Department is hereby authorized to remit any of the fees and charges which he is required to collect by existing laws, except such as he is required to collect under and by virtue of this Act, provided, however, that no discrimination shall be made in favor of one company over any other from the same State.’
“The State of Pennsylvania, by an Act passed April 4,18v3, and ever since in force, enacted as follows, viz.: ‘ Section 10. No person shall act as agent or solicitor in this state of any insurance company of another state, or foreign government, in any manner whatever relating to risks, until the provisions of this Act have been complied with on'the part of the company or association, and there has been granted to said company or association, by the commissioner, a certificate of authority, showing that the company or association is authorized to transact business in this state; and it shall be the duty of every such company or association, authorized to transact business in this State, to make report to the commissioner in the month of January of each year, under oath of the president or secretary thereof, showing the entire amount of premiums of every character and description received by said company or association in this state, during the year or fraction of a year ending with the thirty-first day of December preceding, whether said premiums were received in money or in the form of notes, credits or any other substitute for money, and pay into the state treasury a tax of three per centum upon said premiums; and the commissioner shall not have po>ver to grant, a renewal of “the certificate of said company or association until the tax aforesaid is paid into the state treasury;’
“In the year 1881 the defendant, through its authorized agents in the State of New York, received for insurance against loss or injury by fire, upon property located within the State of New York, premiums to the aggregate amount of $196,170.22. The Superintendent of the Insurance Department of New York claimed that the defendant ought to pay, as a tax, for the year 1881, $1818.45, with proper interest, being the amount arrived at by deducting from $5885.10, (which would be a tax of three per cent, on $196,170.22,) the sum of $4036.65, which the defendant, as a Pennsylvania corporation, had paid as a tax on premiums, during 1881, under laws of New York in force in 1881, . other than the Act of 1865, as amended by the Act of 1875. The case then states, that ‘the controversy between the parties is, as to whether the defendant is hable to., pay any tax to the Superintendent of the Insurance Department of the State, upon the said premiums received by it in the year 1881, and, if any, what amount; ’ that £ the defendant, claims that it is not liable to the plaintiffs for any amount, insisting, first, that the said Act of 1865, as amended by the Act of 1875, is unconstitutional and void, and not a. legitim-fie exercise of legislative power,’ and making further claims as to the amount due from it if the Act in question, is- valid; that ‘the question submitted to the court for decision upon the foregoing statement of facts is, whether the defendant is. hable- to pay to the plaintiffs, or to the superintendent, the whole, or any, and, if ai-y, what parr of the’ $1848.45; and that judgment is. to be entered according to its decision.”
The agreed case having been heard by the Supreme Court in general term, as required by law, it rendered a judgment to the effect -that the defendant was not hable to pay any part of such amount claimed by the superintendent. - Two-of the three judges holding the court concurred in that judg ment. The third dissented. The opinions of the majority and minority accompany the record. The majority held that the statutes of New York in question were void because in conflict with the Constitution of New York, and did not discuss any question arising under the Constitution of the United States. The dissenting judge differed with -the majority as to the question adjudged by them, and further Said: “Nor can I agree with the claim that this statute is contrary to the Fourteenth Amendment to. the Constitution of the United States.” . .
The plaintiffs having appealed to the Court of Appeals of New York, that court reversed the judgment of the Supreme Court, and rendered judgment for the plaintiffs for $1848.45, with interest and costs, and remitted the record to the Supreme Court, where a judgment to that .effect was entered,. .to review which the . defendant brought a writ of error. The Court of Appeals, in its decision, 92 N. Y. 4511, after overruling the view 'taken by the majority of the judges of the Supreme Court as to the validity of the statute under the Constitution of New York, proceeded to consider its constitutionality under that clause of the Fourteenth Amendment to the Federal Constitution which commands that no State shall “deny to any person within its- jurisdiction the equal protection of the laws.” It held that that clause' had no application to the rights of the defendant, because, being a foreign corporation, it was not within the jurisdiction of New York, until it was admitted by the State, upon a compliance with the conditions of admission which the State imposed, and had the right to impose.
Mr. Joseph II. Ghoate, for plaintiff in
cited: Santa Olara County v. Southern Pacific Pail/road, 118 U. S. 394, 396; San Mateo County v. Southern Pacific Railroad, 13 Fed. Hep. 122; County of Santa Clara v. Southern Pacific Railroad, 18 Fed. Eep. 385, 391-404; Eentuchy RaAl'oad > Tax Cases, 115 U. S. 321; Barbier v. Connolly, 113 U. S. 21; Soon. Iling v. Crowley, 113 U. S. 103; Tick Wo v. Ilopkvns, 118 U. S. 356; Lafayette Ins. Co. v. Frmch, 18 How. 404; Ex parte Schollenberger, 96 U. S. 369; Railroad Go. v. Koontz, 104 U. S. 5, 10-13 ; St. Clair v. Cox, 106 U. S. 35Ó; Ex parte Siebold, 100 U. S. 371, 376; Boydy. United States, 116 U. S. 616, 635; Missouri v. Lewis, 101 U. S. 22, 31; Pearson y.Portland, 69 Maine, 278; Portland y. Bangor, 65 Maine; 120; Northwestern Fertilizer Co. v. Hyde Park, 3 Bissell, 480;’ ■Sbrauder V. West Virginia, 100 U. S. 303, 311; Burean Co. v. Chicago, Burlington, & Quincy Railroad, 44 Ill. 229All-hands y. People, 82 Ill. 234; Hughes Y. Cairo, 92 Ill. 339; State Railroad Tax- Cases, 92 II. S. 575; Missouri Pacific\ Railway v. Humes, 115 U. S. 512, 523; Lexington y. Me Quil-lan, 9 Dana, 513; S. C. 35 Am. Dee. 159; Doyle y. Continental Lns. Co., 94 TJ. S. 535; Lns. Co. v. Morse, 20 Wail. 445; Ducat y. Chicago, 10 Wall. 410.
Mr. Denis O’Brien, Attorney General of New York, foi defendant in error, cited; Elmwood V. Money, 92 U. S. 289; Fairfield y. Gallatin County, 100 U. S. 47; Post v. Supervisors, 105 XT. S. 667; Bank of Augusta y. Earle, 13 Pet. 519; Paul y. Virginia, 8 Wall. 168; Liverpool Lns. Co. Y. Massar chusetts, 10 Wall. 566; (Jooper Mfg Co. y. Ferguson, 113 IT. S. 727; Nathan y. Louisiana, 8 How. 73; Morse v. Home Lns. Co., 30 Wis. 496; S. C. in error, 20 Wad. 445; Drake v, Doyle, 40 Wis. 175; Continental Co. v. Doyle, 40 Wis. 220; Doyle y. Continental Lns. Co., 94 U. S. 535; Runyan y. Coster, 14 Pet. 122; Covington Dra/w Bridge Co. v. Shepherd, 20 How. 233; Railroad Co. y. Koontz, 104 U. S. 5; McCullough v. Maryland, 4 Wheat. 316, 430; State Tana on Foreign LLeld Bonds, 15 Wall. 300; Ex parte Kinney, 3 Hughes, 9; Missouri v. Lewis, 101 H. S. 22, 31; Kentucky Railroad Tux Cases, 115 U. S. 321, 337.

Opinion:
MR. Justice Blatchford,
after stating the case .as. above reportedj delivered the opinion of the court.
The defendant claims here the. benefit of the Fourteenth Amendment, and a question has occurred as to whether the record presents that point for our review. There being no pleadings, the obvious place to look for the claim would be the . agreed statement of facts. But all that is there said is, that the defendant insists that the statute is "unconstitutional and void and not a legitimate exercise of legislative power." The question was considered, in both the Supreme Court and the Court of Appeals, as to the validity of the statute, under the Constitution of New York, as being a law made to depend for its operation on the legislation of a foreign state, and thus an illegitimate exercise of legislative power. This contention is fairly within the words of the agreed statement, and, if it depended-wholly on that statement to determine whether the record raises a Federal question, some doubt might exist. But in view of what was said in Murdock v. Memphis, 20 Wall. 590, 633, in Gross v. United States Mortgage Co., 108 U. S. 477, and in Adams County v. Burlington & Missouri Railroad Co., 112 U. S. 123, we think that we are at liberty to look into the-opinion of the Court of Appeals^ a copy of which, duly authenticated by the proper officer, is transmitted to us with the record, in compliance with our 8th Buie, for the purpose of aiding in determining what was decided by that court. From that opinion it appears that the court not only decided against the defendant all the questions other than Federal which were raised, including two under the Constitution of New York, but also decided against it the Federal question referred to. If the court had decided in its favor any one of the other questions wdiich went to the whole cause of action, there would have been no necessity for considering the Federal question. But as it was, the decision'of that question became necessary to the disposition of the case, and was fully considered, not sua sgoonte, but as a point presented by the defendant.
The provision of the Fourteenth Amendment, which went into effect in July, 1868, is, that no State shall " deny to any person within its jurisdiction the equal protection of the laws." The first question which arises is, whether this coi'poration ivas a person within the jurisdiction of the State of New York, Avith reference to the subject of controversy and Avithin the meaning of the Amendment.
The defendant, on the assumption that if it was Avithin the jurisdiction of the State of Ne>v Yoik, it was, though a foreign corporation, "a person," and so entitled to the benefit of the Amendment, contends that it was within such jurisdiction. The argument is, that-it established an agency within the State in 1872, which it had ever since maintained; that it complied, from year to year, with all the requirements and conditions imposed by the laws of the State on foreign fire insurance companies doing business in the State; that it received from year to year certificates of authority from the Superintendent of the Insurance Department, as provided by statute; that, under those circumstances, it was legally within the State and within its jurisdiction; that, being in the State, by permission of the State, continuously from 1872 to. 1882, the State imposed on it, while there, in 1882, an unequal and unlawful burden; and that the New York Act of 1865' did not come into effect as to Pennsylvania corporations until the Pennsylvania Act of 1878 was passed, at which time the defendant had already been a year in the State.
But we are unable to take that view of the case. In Paul v. Virginia, 8 Wall. 168, at December Term, 1868, a statute of Yirginia required that every insurance company not incorporated by Yirginia should, as a condition of carrying on business in Yirginia, deposit securities with the State treasurer, and afterwards obtain a license; and another statute made it a penal offence for a person to act in Yirginia as agent - for an insurance company not incorporated by Yirginia, without such license. A person having acted as such agent without a license, and been convicted and fined under the statute, this Court held that there had been no violation of that clause of Article 4, § 2, of the Constitution of the United States which provides that " the citizens of each State shall be entitled to all privileges and immunities of citizens in the several' States;" nor any violation of the clause in Article 1, § 8, giving power to Congress "to regulate commerce with foreign nations and among the several States." ' The view announced was, that corporations are not citizens within the clause first cited, on the ground that the privileges and immunities secured to the citizens of each State in the several States, are those which are common to the citizens of the latter States, under tbeir Constitutions and laws, by virtue of their being citizens; and that, as a corporation created by a- State is a mere creation of local law, even the recognition of its existence by other States, and the - enforcement of its contracts made therein, depend purely on the comity of those States —a comity which is never extended where the existence of the cor- , poration or the exercise of its powers is "prejudicial to their interests or repugnant to their, policy." And the court, speaking by Mr. Justice Field, said: "Having no absolute right of recognition in other States, but depending for such recognition and the enforcement ,of its contracts upon their assent, it follows,. as a matter of course, -that' such assent may be granted upon, such terms- -and conditions as those States may think proper to impose. They may exclude the foreign corporation entirely, they may restrict its business to particular localities, or they may exact such security for the performance- of its contracts with their citizens as in their judgment will best promote the public interest. The whole matter rests in their discretion." As to the power of Congress to regulate commerce among the several States, the court said, that while the power conferred included commerce carried on by corporations as well as that carried on by individuals, " issuing a' policy of insurance is not a transaction of commerce." This decision only followed the principles laid down in the earlier cases of Bank of Augusta v. Earle, 13 Pet. 519, 588, and Lafayette Ins. Co. v. French, 18 How. 404.
The same rulings were followed in Ducat v. Chicago, 10 Wall. 410, where it was said that the power of a State to discriminate between her own corporations and those of other States desirous of transacting business within her jurisdiction being clearly established, it belonged to the State to determine as to the nature or degree of discrimination, "subject only to such limitations on her sovereignty as may be found in the fundamental law of the Hnion."
Other cases to the same effect are Liverpool Ins. Co. v. Massachusetts, 10 Wall. 566; Doyle v. Continental Ins. Co., 94 U. S. 535; and Cooper M'fg Co. v. Ferguson, 113 U. S. 727.
As early as 1853, the State of New York, by a statute,'c. 466, required of every fire insurance company incorporated by any other State or any foreign government, as a prerequisite to doing business in the State, that it should file an appointment of an attorney on whom process'was to be served, 'and a statement of its .pecuniary condition, and procure from a designated public officer a certificate of authority stating' that the company had complied with all the requisitions of the statute, ' and also required the renewal from year to year of the state-ment and evidence of investments; and provided that such1, public officer, on being satisfied that the capital of the company and its securities and in vestments-remained secure, should furnish a renewal of the certificate of authority. A violation of the provisions was made a penal offence. This act, with immaterial amendments, is- still in force.
This Pennsylvania corporation came into the State of New York to do business by the consent of the State, under this Act of 1853, with a license granted for a year, and has received such license annually, to run for a year. It is within the State for any given year under such license, and subjéct to the conditions prescribed by statute. The State, having the power to exclude entirely, has the power to change the conditions of admission at any time, for the future, and to impose as a condition the payment of a hew tax, or a further tax, as a license fee. If it imposes such license, fee as a prerequisite for the future, the foreign corporation, until it pays such licensé fee, is not admitted within the State or within its jurisdiction. It is outside, at the threshold, seeking admission, with consent not yet given. The Act of 1865 had been passed when the corporation first established an agency in the State. The amend-mént of 1875 changed the Act- of 1865 only by giving to the superintendent the power of remitting the fees and charges required to be collected by then existing laws. Therefore, the corporation was at all times, after 1812, subject, as a prerequisite to its power to do business in New York, to the same license fee its own. State might thereafter impose on New York companies doing business in Pennsylvania. By going into the State of New York in 1872, it assented to such prerequisite as a. condition of its admission within' the jurisdiction of New York. It could not be of right within such jurisdiction, until it should receive the consent of the State to its entrance therein under the new provisions, and such consent, could not be given until the tax, as a license fee for the future, should be pa id.
It is not to be implied, from anything we have said, that the power of a. State to exclude a foreign corporation from doing business within its limits is to be regarded as extending to an interference with the transaction of. commerce between that State and other States by a corporation created by one of such other States.
Judgment affirmed.