274 N.Y. 312 | NY | 1937
The question presented is whether the relator, Sea Insurance Company, a foreign insurance company, was doing a marine reinsurance business in this State, and, therefore, subject to a tax under section
The question here is, can such a tax for the privilege of doing business in New York be legally assessed against the relator? That depends upon whether the relator did business in New York. Was it in any way a party to the insurance contracts entered into in New York by the Hartford and Federal Insurance Companies directly with the parties to whom they issued policies? In actual practice, a line of insurance is frequently offered larger than any one company may desire to assume. In such a case one method is to accept the line offered and reinsure the whole or a part of it with some other company or companies.
The contract made by the original insurance company with the other company or companies for its protection as to the whole or a portion of the risk is known as a reinsurance contract.
"The contract that one insurer makes with another to protect the first from a risk he has already assumed." (Iowa Life Ins.Co. v. Eastern Mut. Life Ins. Co.,
Of that form of reinsurance contract, SANFORD, J., in Hone Bokee v. Mutual Safety Ins. Co. (1 Sandf. 137, 145; affd.,
That practice is the usual practice and a contract so made is known as reinsurance. There is, however, another practice by which two or more companies enter into an agreement by which they agree that each will and does in advance reinsure any line taken by any one of the companies in the future to an amount equal to a certain per cent of the line taken by that one of the original insuring companies. To illustrate, the Home, AEtna and Hartford may agree that each will reinsure one-third of any line taken by each of the others. That *316 is reinsurance in advance. The obligation attaches automatically upon the acceptance of a risk by any one of the three companies. The contract is a self-executing contract. It may provide and usually does that upon acceptance of a risk by one of the companies, notice shall be given to each of the reinsuring companies including a survey and a statement of all necessary information in regard to the risk. That was the method employed in the case at bar. (9 Cooley, Briefs on the Law of Insurance [2d ed.], pp. 6741-6760; Imperial Fire Ins. Co. v. Home Ins. Co., 68 Fed. Rep. 698.)
The agreement for the latter type of reinsurance is sometimes called a "reinsurance compact." (German American Ins. Co. v.Commercial Fire Ins. Co.,
It is also known as "open policy or contract of reinsurance." (Continental Ins. Co. v. AEtna Ins. Co.,
The similarity between the two types of reinsurance contracts is of importance because of the contention by appellant that reinsurance in the case at bar was effected when the principal risks insured directly in New York by the Hartford and Federal resulted in premiums being paid by those companies to relator. The appellants concede that where a risk is written in New York and a reinsurance policy covering the particular risk is written in another State, the business of reinsurance is done in the State where the reinsurance policy is written and hence that such a transaction would not be taxable as business done in the State of New York under section
The premiums received by relator were contracted for in New Jersey and were received there. Its capacity to *318
make and perform its contract was not derived from the laws of New York. (Alaska Packers Assn. v. Industrial AccidentCommission,
Appellants rely upon the case of Palmetto Fire Ins. Co. v.Conn (
The order should be affirmed, with costs.
CRANE, Ch. J., LEHMAN, O'BRIEN, LOUGHRAN, FINCH and RIPPEY, JJ., concur.
Order affirmed. *319