119 Ky. 321 | Ky. Ct. App. | 1904
Lead Opinion
Opinion op tiib court by
In the first of tbe above cases the Security Mutual Life Insurance Company filed its petition in equity, alleging- that in the year 1900 it began business in Kentucky, having complied with the requirements of the statutes of the State applicable to foreign insurance companies, the plaintiff being a corporation organized under the laws of the State of New York; that the commissioner then granted it permission to transact the business of life insurance in this State, and it employed a large number of agents, established a large number of agencies throughout the State, expended large sums of money in advertising its business, and acquired a large and profitable business in the State; that in June, 1904, it removed to the circuit court of the United States for the Eastern District of Kentucky, without the consent of the other party, a suit brought against it in one of the circuit courts of the State; and that on September 29, 1904, the
In the other cases the petition is very similar, except that it is there averred that the commissioner has not yet revoked the plaintiff’s license, but that he threatens to do so, and, unless enjoined by the court, will revoke it, to the plaintiff’s irreparable injury; it being a foreign corporation created under the laws of the State of Connecticut. The defendant demurred to the petition, his demurrer was sustained, and, the plaintiff declining to plead further, its petition was dismissed. Both the appeals raise the same question and will he considered together.
By section 63.3, Kentucky Statutes, 1903, licenses to agents of foreign companies must be renewed annually, and any person acting as the agent of such a company without procuring a license, or after the license has expired, or has been suspended or revoked, shall he guilty of a misdemeanor and fined not less than $50 nor more than $100 for each offense. By section 634 every foreign insurance company, before transacting any business in this State, must return to the commissioner a copy of its charter or organic law, and the commissioner, upon being satisfied that the. company has complied with the laws of the State and is possessed with the legal reserve shall furnish to such agents as the company di
Section 631, Kentucky Statutes, 1903, is in these words: “Before authority is granted to any foreign insurance company to do business in this 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; but 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 court of this State, remove said suit or proceeding to any federal court, or sihall 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.”
The validity of the latter clause of the section is the only question to be determined upon the appeal. It is insisted
The next case relied on is Doyle v. Continental Insurance Company, 94 U. S., 535, 24 L. Ed., 148; the opinion being also written ¡by Judge Hunt. In that case there wras. a State statute corresponding to section 631 above quoted^ and the State officer under it was about to cancel the license of the insurance company. The plaintiff made, in substance the •same allegations as are made in the case before us, and prayed an injunction as in these cases. The supreme court, reversing the court below, dismissed the bill. After distinguishing the case from the Morse Case, the court said: “The cases of Bank v. Earle 13, Pet., 519 [10 L. Ed., 274], Ducat v. Chicago, 10 Wall., 410 [19 L. Ed., 972], Paul v. Virginia, 8 Wall., 168 [19 L. Ed., 357], and Insurance Company v. French, 18 How., 404 [15 L. Ed., 451], establish the principle that a State may impose upon a foreign corporation, as a condition of coming into or doing business within its ter
It is conceded by counsel that if this case is still authority,
We do not understand this to overrule the Doyle case; for certainly, if the State can not withdraw the license it has once granted, any court of competent jurisdiction may so decide. If the State statute withdrawing the license was un
The case of Commonwealth v. East Tennessee Coal Company, 97 Ky., 238, 17 R., 139, 30 S. W., 608, did not involve the revocation of a license granted by the State, but was in effect similar to Barron v. Burnside, above cited, being a proceeding to impuse a fine on the defendant after it removed a ■ case from the State courts. The naked question presented here is, may the State, without cause, revoke a license it has once granted, for a bad reason is no worse than none at all. The distinction is a narrow one, but none the less sound, unless the w’hole doctrine that the State may grant or with
The judgment in the first case is therefore reversed, for further proceedings consistent herewith.
The judgment in the second case is affirmed.
Dissenting Opinion
Dissenting opinion of
Believing that the conclusion reached by the majority of the court in these cases can not be justified either by reason or upon authority, I feel it my duty to present my views in a dissenting opinion. I do this with great modesty and with great reluctance' — the first, from solicitude lest I fail to do justice to the importance of the subject, and the second, from my disinclination to differ from the opinions of those whose attainments I hold in so high esteem.
The question presented 'by these records is whether a State may enact a valid law, which shall present to a foreign corporation the alternative either of surrendering its right, under the provisions of the Constitution and laws of the United States, to remove to the federal court an action in
When our complex form of government was established, the national Constitution and the laws enacted in pursuance thereto, were made the supreme law of the land (Const. U., S., art. 6); and i't must necessarily follow, as a logical and legal sequence, that whenever a State law comes in conflict with a national law the former must give way — it is void. The statutes of the United States, in pursuance of a settled national policy of affording to citizens of each State the means of escaping the dangers of local prejudice in favor of home litigants, prescribe the' condition® and! terms under which such actions may he removed to the federal courts. This is done in the interest of fair and impartial trials, or, in other words, in the interest of justice.
The laws of our Commonwealth hearing upon the question under investigation are divided into two branches, although the intent of each is the same; the divergence being merely in the particular 3nanne-r of enforcing the same principle against different classes of corporations. Sections 572 and 573 of the Kentucky Statutes of 1903 apply to all foreign corporations doing business in the State, except insurance companies, and are as follows:
“Sec. 572. .If any foreign corporation shall, without the consent of the adverse party, remove to the federal court any action pending against it in any court of this State, or institute an action against a citizen of this State in a federal court of this State, such action on the part of the corporation shall forfeit its right to transact or carry on any bust
“Sec. 573. The provisions of all charters and articles of incorporation, whether granted by special act of the General Assembly or obtained under any general incorporation law, which are inconsistent with the provisions' of this chapter concerning similar corporations, to' the extent of such conflict,' and all powers, privileges or immunities of any .such corporation which could not be obtained under the provisions of this chapter, shall stand repealed on September' 28, 1897; and if 'the officers, managers or agents, of such corporation shall, after said date, exercise any powers, privileges or immunities x*epealed by this section o)r inconsistent with the provisions of this chapter, relating to similar corporations, or which could not be obtained under this chapter, the officer, manager or agent so offending, and the corporation for which he acts, shall each, be guilty of a misdemeanor, and fined for each offense not less than one hundred nor more than one .thousand dollars, and upon the conviction of the corporation, the trial jury may, at their discretion, direct the forfeiture of its charter or articles of incorporation, in which case the « court .shall ,so adjudge. After the twenty-eighth day of September, 1897, the provisions of this chapter shall apply to all corporations, created or organized under the laws of
The statute applicable to foreign imsurancé corporations is to be found in sections 631 and 633 of the Kentucky Statutes of 1903, and is as follows:
“Sec. 831. Before authority is granted to any foreign insurance company to do business in this 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 i.n any court of 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 Sítate, and to publish such revocation in some' newspaper of general circulation published in, the State.”
“Sec. 633. Licenses to agents of foreign companies must be renewed annually in the same manner as original licenses, upon a finding by thei commissioner that the company represented by the agent has fully complied with the law, and maintains its required capital or reserve; and whoever solicits and receives application for insurance on behalf of any insurance company, or transmits for any person other
The question involved here was presented for adjudication in this State for the first time in Commonwealth v. East Tennessee Coal Co., 97 Ky., 238, 17 R., 139, 30 S. W., and Commonwealth v. Jellico Coal Co., 97 Ky., 246, 17 R., 109, 30 S. W., 611. These eases arose under section 572 of the Kentucky Statutes of 1903; the two corporations, as their names import, being coal companies. The opinions in both were delivered by the court through .Judge Eastin, and contain a learned and thorough discussion of the question at bar. In both, section 572, which, as said before, applies) to foreign corporations (except insurance) doing business in the State, was held to be void, because in contravention of the Constitution and laws of the United States. These cases are both practically overruled by the opinion of the: majority, although this ha® not been done in express language; the court, as it seems to' me; unsuccessfully seeking to distinguish them
These cases, and especially the first one, so far as the principle involved is concerned, are identical with tihat in' the oases at bar. Of course, I recognize the inutility of pointing out a conflict between older and later opinions of the same court on the same question. The last is always the law. Bur I deeply regret than an opinion showing .such painstaking labor and learning as does that in Commonwealth v. East Tennessee Coal Company should receive no better fate at tbe hands of the court, as at present constituted, than to he silently ignored, or, worse still, should only have been thought worthy of a casual line, which wholly misstates the question involved. But there are cases which can not be so lightly thrust aside, being the utterances of the supreme court of the United .States, which is the final expositor of all ques
The question in hand, so far as I am advised, was adjudicated by the supreme court of the United States for the first time in Insurance Co. v. Morse, 87 U. S. (20 Wall.) 445, 22 L. Ed., 365. This case went up from the State of Wisconsin under a statute, the pertinent part of which is as- follows: “It shall not be lawful for any fire insurance company, association, or partnership, incorporated by or organized under the laws of 'any other State of the United States, or any foreign government, for'any of the purposes .specified in this act, directly or indirectly to take risks or transact any business of ihsurance in this State, unless possessed of the amount1 :of actual capital inquired of similar companies formed under the provisions of this act; and 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.” The question arose in this way: The Home Insurance Company of New York, having been sued in Wisconsin by a citizen of that State, undertook to remove the action, under the federal statute, to the federal court. This was resisted because the company had agreed in compliance Avith the statute. above quoted, not to remove such actions to the federal courts; and this fact being established, the State court refused to permit the removal, and entered judgment on final hearing against the company. The supreme
The case of Doyle v. Continental Insurance Company, 94 U. S., 535, 24 L. Ed., 148, afterward went up from the supreme court of Wisconsin to the supreme court of the United States on a different phase of the same statute. In that case the insurance company removed tihe cause, and the State authorities undertook to revoke the license to do business in the Station for this violation of tlie statute. The company instituted a suit in equity for an injunction restraining the Secretary of State from this alleged wrongful act. A temporary restraining order was entered, and, upon final hearing, was made perpetual. On appeal the supreme court held, that
/‘Sec. 3. Any foreign corporation sued or impleaded in any of the courts of this State upon any contract made or executed in this State or to be performed in this State or for any act or omission, public or private, arising, originating, or happening in the State, who shall remove any such cause from such State court into any of the federal courts held or sitting in this State, for the cause that such corporation is a non-resident of this State or a. resident of another State than that of the adverse party, or of local prejudice against such corporation, shall thereupon forfeit and render null and void any permit issued or authority granted to such corporation to transact business in this State; such forfeiture to be determined from the record of removal, and to date from the date of filing of the application on which such removal is affected, and -whenever ia,ny corporation shall thus forfeit its said permit no new permit shall be issued to it for the space
“Sec. 4. Any foreign corporation that shall carry on its business and transact the same ion and after September 1, 1886, in the State of Iowa by its officers, agent, or otherwise, without, having complied wiith this statute, and taken out, and having a valid permit shall forfeit and pay to the • State for each and every day in which such business is transacted and carried on the sum of one hundred dollars ($100), to be recovered by suit in any court having jurisdiction. And any agent, 'officer or employe who shall knowingly act or transact such business for such corporation when it has no valid permit as provided herein shall be guilty of a misdemeanor and for each offense shall be fined, not to exceed ■ one hundred dollars ($1001, or imprisoned in the county jail, not to exceed thirty days, and pay all costs of prosecution.”
The Chicago & Northwestern Railroad Company was an Illinois corporation doing business in Iowa without the permit or license required by the statute. One of its engineers was arrested and fined for carrying on the business of the corporation when it had no permit to do business in the State. When this case came to the supreme court, both of its former adjudications on this subject were, reviewed,, and the conclusion reached that the whole statute was void, because of the unconstitutionality of that part which undertook to prohibit foreign corporations from removing causes against them to the federal court. On the subject of Doyle v. Continental Insurance Company, after thoroughly discussing it, the court said (page 199, 121 U. S., page 936, 7 Sup. Ct., 30 L. Ed., 915) : “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 inherent infirmity of the majority -opinion lies in the effect it gives to an unconstitutional statute. Thé supreme court, in the ease of Norton v. Shelby County, 118 U. S., 442, 6 Sup. Ct., 1125, 30 L. Ed., 178, on this subject says:- “An uneomsti tutional act is not-a law. It confers no right. It imposes no duty. It affords no protection. It creates no office. It is, in legal contemplation, as inoperative asi though it had never been passed.” In Cooley’s Constitutional Limitations (page 188) it is said: “When a statute is adjudged to be unconstitutional, it is as if it has never been. Rights can not be built up under it. Contracts which depend upon it for their consideration are void. It constitutes a protection to no one who has acted under it, and no one can be punished for having refused obedience to it before the decision was made.” If this be the law, then so much of the statute under consideration as is admitted to be unconstitutional is as if it had never been enacted by the Legislalature. Where, then, is the warrant of the Insurance Commissioner for the revocation of the licenses in -these cases? It is no answer to say that if a State may refuse to permit a foreign corporation to do business in the State, or to arbitrarily revoke its license so to do (or, in other Avords, revoke it for no reason), therefore it may do this for an invalid reason, or under the authority of an unconstitutional statute. A State can only speak through its laws, and, if the law is invalid, then the State has not spoken at all. The Commonwealth has not undertaken to prevent foreign corporations
No practical difference can be pointed out between the statutes of Wisconsin, Iowa, or Kentucky on the subject under discussion. They were all enacted for the same purpose, and even the verbiage is remarkable in its similarity. Tn the cases at bar the corporations bear the same attitude toward the laws of the Htate of Kentucky as did the corporation toward the laws of the State of Iowa, and the analogy is complete when the license is revoked by the Commissioner, for a corporation whose license is revoked is in precisely the same relation toward the law as- one which never had a- license. If this be so (and it seems axiomatic), of what avail-
The opinion of the majority, as said heretofore, is not only contrary to authority, but also to reason. The policy of the national law under discussion is to place, as far as possible, a citizen of one State engaged in litigation with a citizen of another State on a plane of equality before the law; in other words, to make it possible that the stranger may defend his property or rights free from the. bias of local prejudice or passion. Xo disinterested mind will deny that this is a just policy. The question, 1hen, is whether this beneficent policy in the interest of a fair and impartial trial to the foreign citizen may be nullified by a statute enacted for the selfish purpose of giving the citizen the advantage of a trial close to his home (to put the most favorable construction on it), without any regard to the still greater distance of tho stranger from his home, and his inconvenience on that score, or of the danger of his suffering from local prejudice or passion in a suit with the citizen. The State statute considers only the convenience of the citizen as measured by the additional distance to the place of tria.1 after removal of the case to the federal court, and ignores the danger to tne foreigner of a miscarriage of justice on the merits of the controversy, arising from local prejudice or passion in the State tribunal. The existence of such a statute, in. itself,
It may not be altogether impertinent to the subject in hand to say, in conclusion’, that it would be well to remember that it is a narrow and provincial view to regard these national laws as harsh and severe edicts imposed by a foreign suzerain, instead of benignant laws imposed by ourselves in the interest of a broad and national justice, and that, in their practical operation, many more of our own citizens are benefited by them in their litigation in other States than are inconvenienced by them in favor of citizens of foreign States litigating in our Commonwealth.
For the foregoing reasons, I dissent from the opinion of the majority of the court in these oases.