43 Del. 298 | Del. | 1945
In 1934, The Capitol Mutual Benefit Association, a corporation of Colorado, predecessor to the plaintiff in error, upon the application of one Peter Portscheller, issued to him a certificate of insurance by which it agreed, upon his death, to pay to Helen Portscheller, the defendant in error, a certain amount of money, not exceeding $1,000.00. The insured died; the association declined to pay the stipulated benefits; and the beneficiary sued the association in the Circuit Court of Wayne County in Chancery, in the State
The cause was heard upon a stipulation of facts, and exhibits, consisting of a form of certificate issued to the insured and the by-laws of the Colorado association. It was stipulated that the association authorized one Koch to solicit applications for insurance in the State of Michigan and supplied him with its printed forms of application, and printed forms of receipts; that Koch solicited in Michigan Peter Portscheller, the husband of the plaintiif below, who on September 10, 1934, signed an application for membership and paid to Koch the sum of $6.00; that of this amount Koch retained $4.00 as his commission, and forwarded to the association at its office in Denver, Colorado, the signed application and a receipt, together with the sum of $2.00, of which $1.00 represented an application fee, and $1.00 a contribution for the first month’s benefit; that Koch also solicited and obtained the application for membership in the association of one other person, a resident of Michigan, likewise receiving, receipting and accounting for the sum of $6.00 paid by the applicant; that Koch failed to obtain any other applications for membership although he solicited numerous other persons in Michigan for a period of approximately thirty days, after which time he had no further connection with the' association; and that at the time of the death of the insured he was in good standing
It was further stipulated that, with respect to a foreign corporation, the laws of the State of Michigan did not define what constituted doing business in the State; and, further, that the judgment of the Michigan Court sued upon was a legally valid and binding judgment upon the defendant below, if the Court should determine from the facts stipulated that the defendant’s predecessor was doing business in the state so as to subject itself to the process of the Michigan Court on or about September 10, 1934, when the certificate of insurance was issued.
The certificate of insurance was executed by the association at its home office in Denver, Colorado. The by-laws of the Association were incorporated in and made a part of the certificate. The association’s promise to pay benefits was made in consideration of the membership fee and of the contents and representations in the application for membership. All payments of benefits were conditioned upon full performance of the member in making his payments, time being of the essence, and the receipt at the home office determined all questions of time.
It was provided by the by-laws that, to become a member, the applicant and beneficiaries must be of good moral character, in good health, free from any disease or disability, and not over eighty years of age; that an applicant might apply for membership by signing an application and paying in advance the required membership fee and one regular monthly payment of $1.00, receivable at the home office before midnight of the last day of the calendar month; that the certificate of insurance was based on the truth of the warranties contained in the application, which was required to be signed personally by the applicant; that all
No agent was empowered to make or modify a certificate of membership, or to bind the association by making any promise or representation. It was the duty of the Secretary-Treasurer, inter alla, to give notice of all death claims, to issue and sign all vouchers, and to look after the payment of all benefit claims. Members were required to notify the Secretary of any change of address, failing which a notice mailed to the last known address was to be considered as a lawful notice.
The sole question presented to the Court below was whether, under the stipulated facts, the defendant’s predecessor was “doing business” in the State of Michigan on or about September 10, 1934, so as to be answerable to the process of the Michigan Court.
The Court below, in an opinion reported in 38 A.2d 607, Judge Terry dissenting, answered the question in the affirmative. Judgment was given for the plaintiff. This writ of error followed; and the assignments of error challenge the correctness of the decision of the Court below, and assert that the decree of the Michigan Court, if enforced, would deprive the plaintiff in error of the benefit of due process of law under Section 1, Article XIV of the Federal Constitution as amended.
We find ourselves in disagreement with the decision of the trial Court.
We disagree with the trial Court in its holding that, as no express place of payment of loss was mentioned in the policy, the loss was payable in Michigan. Bothwell v. Buckbee-Mears Co., 275 U.S. 274, 48 S.Ct. 124, 72 L.Ed. 277, cited by the court in support of its statement, referred, in turn, to Pennsylvania Lumberman’s Mutual Fire Insurance Co. v. Meyer, 197 U.S. 407, 25 S.Ct. 483, 486, 49 L.Ed. 810; and it may be assumed that there was no intention to depart from the rule announced in that case where, upon the question whether a debtor must follow his creditor out of the state where the contract was made in order to pay, or make tender of payment of the debt, it was said "that depends upon the contract, and what inference of the place of payment may be drawn from its contents, when it does not state in so many words where payment is to be made.” Weyand v. Park Terrace Co., 202 N.Y. 231, 95 N.E. 723,
The business of insuring lives is, of course, different from that of supplying goods or services. It is quite true that a contract of life insurance initiated by the
.And finally, we think, questions relating to due process of law under the Federal Constitution should be resolved in accordance with decisions of the Supreme Court of the United States and other federal courts, rather than
A foreign corporation is amenable to process to enforce a personal liability, in the absence of consent, only if it is doing business within the state in such manner and to such extent as to warrant the inference that is present there. Philadelphia & Reading Ry. Co. v. McKibbin, 243 U.S. 264, 37 S.Ct. 280, 61 L.Ed. 710; Bell v. Viavi Co., 4 W.W.Harr. (34 Del.) 76, 143 A. 255, rehearing denied, 4 W.W.Harr. (34 Del.) 176, 146 A. 605. This is no more than a reiteration of an earlier statement by the Supreme Court that it has decided each case of this character upon the facts before it, and has laid down no all-embracing rule by which it may be determined what constitutes the doing of business by a foreign corporation in such manner as to subject it to a given jurisdiction. Davega, Inc., v. Lincoln Furniture Mfg. Co., Inc., (2 Cir.) 29 F. 2d 164.
Corporate presence in a state as the basis of subjection to process rests, we think, upon the continuity and extent of business actually done within the state and not merely put in motion there. The word “present,” as used in the pronouncement of the Supreme Court, is a cryptogram. It is used, not literally, but as suggestive of something else. Taken literally, it would admit of the argument that a corporation is required to defend any controversy arising out of a transaction entered into where the suit was brought; but this would impose too severe a burden. There must be some continuity of business activity on the part of the corporation in the State of the forum, “enough to demand a trial away from its home.” This is the important, if not controlling, consideration expressed shortly by the
Presence in a state manifested by business actually done there, as opposed to solicitation of business, as a basis of amenability of a foreign corporation to local process is inherent in the decision in International Harvester Co. v. Commonwealth of Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479, for there the emphasis was placed on the authority of the corporate agents, not only to solicit orders for farm machinery, but also to receive payment therefor in money, checks, drafts, or notes payable and collectible at Kentucky banks. The same may be said of Pennsylvania Lumberman’s Mutual Fire Insurance Co. v. Meyer, supra, where the appellant, a Pennsylvania corporation, summoned to defend in New York, solicited its business largely by mail, but had about one-third of its total fire risks ,in the state of New York, amounting to approximately $900,000, and its practice was to send its adjusters into that state for the purpose of adjusting losses. Such acts were character
These decisions of the Supreme Court of the United States, referred to by the trial court, do not support its position, and, indeed, they may have been cited generally, and not for any specific application.
The federal authority mainly relied upon was Sparks v. National Masonic Accident Association, (8 Cir.) 73 F. 277. There the defendant, an Iowa corporation, was subjected to the process of a Missouri Court by service made on the Insurance Commissioner of the State. A default judgment was obtained which was sued upon in Iowa. Upon the facts of the case it was held that the defendant had been transacting business in Missouri within the meaning of the statute. The general agent and a soliciting agent of the association had been in Missouri for about two months engaged in soliciting insurance in several towns. Sixty-six applications for insurance were obtained upon which the defendant issued membership certificates. Ten of the applications were procured by the general agent, among them that of the plaintiff’s husband. All applications were sent
McNeeley v. Fidelity Mutual Benefit Association, 178 S.C. 247, 182 S.E. 425, Merchants & Bankers Guaranty Co. v. Washington, 185 Okl. 532, 94 P.2d 930, 137 A.L.R. 1123, Dixon v. Northwestern National Life Ins. Co., 189 Iowa 1268, 179 N.W. 885, Union Mutual Life Co. v. Bailey, 99 Colo. 570, 64 P.2d 1267, and State v. United States Mutual Accident Association, 67 Wis. 624, 31 N.W. 229, in varying circumstances and under local statutes, may be said to sup
In addition to the decisions cited by the trial court, the appellee offers others.
Hoopeston Canning Co. et al. v. Cullen, 318 U.S. 313, 63 S.Ct. 602, 87 L.Ed. 1722, 145 A.L.R. 1113, seems to have been cited for some expressions in the opinion with respect to the theory that a state may have a substantial interest in the business of insurance regardless of what was termed the “isolated factors” of the place of contracting or place of performance. The appellants were reciprocal insurance associations insuring against fire and related risks with attorneys-in-fact located in Illinois. During a period of years the reciprocals seem to have been annually licensed to do business in New York, and had executed over 50,000 contracts affecting risks in that State, with gross premiums of over $2,000,000.00. The issue was whether the appellants might constitutionally be made subject to the regulatory statutes of state. The facts of the case, in essence, were the same as those in Pennsylvania Lumberman’s Mutual Fire Insurance Co. v. Meyer, supra. The case of Commercial Mutual Accident Co. v. Davis, 213 U.S. 245, 29 S.Ct. 445, 53 L.Ed. 782, involved the sufficiency of service of process in an action in a Missouri Court against a Pennsylvania corporation, under a statute which authorized summons against an insurance company not incorporated or authorized to do business in the state, by delivering a copy to any person within the state who, on behalf of the insurance company, should, inter alla, adjust or settle or pay a loss. With knowledge of the statute imputed to it the company sent
Minnesota, Commercial Men’s Association v. Benn, 261 U.S. 140, 43 S.Ct. 293, 67 L.Ed. 573, cited by the appellee, will be noticed later. Other decisions of state courts, likewise cited, have been examined and have been found to be either distinguishable on the facts or not persuasive.
The appellant relies strongly upon Old Wayne Mutual Life Association v. McDonough, supra, and Green v. Chicago Burlington & Quincy R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916. The first case involved a default judgment obtained in Pennsylvania, service having been made on the Insurance Commissioner. The judgment was subsequently sued on in Indiana, where the association was domiciled, and judgment was obtained. The plaintiffs were citizens of Pennsylvania, and were beneficiaries under an insurance policy issued on the life of a Pennsylvania citizen by the defendant association. To what extent and how the association operated in Pennsylvania do not appear. Probably as suggested in Farmers’ & Merchants’ Bank of Catlettsburg, Ky. v. Federal Reserve Bank, (D.C.) 286 F. 566, 608, the association sent its agent into Pennsylvania to solicit the application which was forwarded by him to the home
In the Green case, the plaintiff sued the defendant railway company, a corporation of Iowa, in Pennsylvania, to recover damages for personal injuries sustained in Colorado. Service of process was made upon the defendant’s agent, Heller. The validity of the service depended on whether the corporation was doing business in Pennsyl
The trial court declined as it seems to accept the decision as controlling, and cited criticisms of it by inferior Federal Courts. In the Harvester Company case, however, the Court expressly said that it had no desire to depart from the decision, although it referred to it as an “extreme
In Minnesota Commercial Men’s Association v. Benn, supra, the association, a Minnesota corporation, was sued in Montana. A default judgment was obtained which, thereafter, was sued upon in Minnesota. The plaintiff prevailed in the trial and Supreme Courts. The association’s method of transacting its business was quite similar to that of the association here, except that solicitation of business in other states was by members of the association who received no compensation other than occasional premiums or prizes. It was held, reversing the Minnesota Supreme Court, that the facts failed to disclose any evidence that the petitioner was doing business in Montana within the proper meaning of the words, and that the Montana Court was without jurisdiction.
Tomlinson v. Iowa State Traveling Men’s Association, supra, Baldwin v. Iowa State Traveling Men’s Ass’n, (8 Cir.) 40 F. 2d 357, Oliver v. Iowa State Traveling Men’s Ass’n, (8 Cir.) 76 F. 2d 963, Sasnet v. Iowa State Traveling Men’s Ass’n, (8 Cir.) 90 F. 2d 514, and Pembleton v. Illinois Commercial Men’s Association, supra, upon substantially similar facts, are in accord.
Other decisions cited by the appeTant and which are found to be in general support, of its contention are Hussey Tie Co. v. Knickerbocker Insurance Co., (8 Cir.) 20 F. 2d 892; Kasprzak v. Mutual Life Assurance Co. of Canada, (D.C.) 1 F. Supp. 915, and Rausch v. Commercial Travelers’ Mutual Accident Association, (8 Cir.) 38 F. 2d 766.
In Davega, Inc., v. Lincoln Furniture Mfg. Co., supra, suit was brought in a New York State Court and from thence removed to the Federal Court. The defendant was a manufacturer of furniture at Bristol, Va. It had a solicitor
As has been said, the case under review is similar in its facts to the Benn case, except that here the soliciting agent was compensated by way of a small commission. The circumstance, while not to be wholly disregarded, is not, we think, of controlling importance. An insurance association encouraging its members to solicit insurance for it stands, it would seem, pretty much in the same position so far as concerns doing business in a state as an association which compensates its solicitors. In either case business is put in action, and the activities, whether regularly or irregularly compensated, enure to the benefit of the association. In the Harvester Company case, the Green case,
There is presented the case of a Colorado corporation sued in the State of Michigan upon a contract of insurance made and performable in Colorado and sought to be made amenable to special statutory process in Michigan on the theory that it was doing business there in such manner and to such extent as to infer its presence there, upon an affirmative showing that it was represented in Michigan for about thirty days by a soliciting agent with no authority to conclude a contract or to bind the association in any way, or upon the completion of a contract in any way to act for it, during which short period of time the agent solicited numerous persons, but succeeded in obtaining only two applications for membership, he, in each case, retaining a commission. Except for the fact of compensation, which is not of paramount importance, there is an entire absence of those factors which some of the authorities, at least, seem to regard as significant in determining the question of corporate presence. There is nothing-in the record to show that the association ever had an office in Michigan, or displayed a sign there, or advertised its business there; or that any contribution or assessment was ever paid in Michigan to any representative except the two initial payments to the agent, Koch, which were not in furtherance of completed contracts; or that the association ever investigated or settled a claim for benefits in Michigan either through a local agent or through a representative sent there for the purpose; or that it ever had in Michigan an agent with authority to bind it in any way. In the circumstances shown we agree fully with the conclusion announced in the dissenting opinion below that the activities of the defend
The Michigan Court was without jurisdiction over the defendant’s predecessor, and its judgment, sued on below, was not entitled to faith and credit. It follows that the judgment of the Court below must be reversed with the direction that judgment be entered for the defendant.
Reversed and remanded, with direction to enter judgment for the defendant.