Corbett v. Physicians' Casualty Ass'n of America

115 N.W. 365, 135 Wis. 505, 1908 Wisc. LEXIS 110

• Court: Wisconsin Supreme Court
• Decided: May 8, 1908
• Status: Published

Opinion

The following opinion was filed March 10, 1908:

MaRshai/l, J.

At the threshold in the consideration of this case is presented the question of whether a defendant can challenge the jurisdiction of the court in which he is cited to appear, upon the ground that the summons in the action was not efficiently served, and failing in that can submit to* a trial upon the merits and in case of an adverse decision can, on appeal, have the benefit of the objection made at the start. 'Counsel for appellant refer to our statute and that of the ■state of Nebraska and decisions in respect to the latter and ■draw the conclusion therefrom that such a course is proper.

'As we view the case we need not follow and endeavor to answer counsel’s argument in detail .on the jurisdictional question, because it is firmly settled in respondent’s favor by numerous decisions of this court. Lowe v. Stringham, 14 Wis. 222; Grantier v. Rosecrance, 27 Wis. 488; Blackwood v. Jones, 27 Wis. 498; Anderson v. Coburn, 27 Wis. 558; Ins. Co. of N. A. v. Swineford, 28 Wis. 257; Alderson v. White, 32 Wis. 308; Dikeman v. Struck, 76 Wis. 332, 45 N. W. 118. The following language by Dixon, O. J., in Alderson v. White, supra, referred to by counsel for respondent, is often quoted as an unmistakable indication of the doctrine prevailing in this state:

“The party seeking to take advantage "of want of jurisdic"tion in every such case, must object on that ground alone, and keep out of court for every other purpose. If he goes 'in for any purpose incompatible with the supposition that the court lias no power or jurisdiction on account of defective service of process upon Mm, lie goes in and submits for all the purposes of personal jurisdiction with respect to- himself, and cannot afterwards be heard to make the objection. It is a general appearance on his part, equivalent in its effect to proof of due personal service of process.”

It will be thus seen that the right to proceed to a trial on the merits after a decision against the defendant on the jurisdictional question, efficiently saving an objection to the ruling in that regard, is not recognized as having any place in our practice. The quoted language was only a reiteration, in effect, of what was said in Lowe v. Stringham, supra. There the doctrine which has from the start prevailed here; was-thus plainly stated in these words:

“We think it is also a waiver of such a defect for the-party, after making his objection, to plead and go to trial on the merits. To allow him to do this, would be to give him this advantage. After objecting that he was not properly in court, he could go in, take his chance of a trial on the merits, and if it resulted in his favor, insist upon the judgment as-good for his benefit, but if it resulted against him, he could, set it all aside upon the ground that he had never been properly got into court at all. If a party wishes to insist upon the objection that he is not in court, he must keep out for all purposes excejot to- make that objection.”

We recognize that there are very respectable authorities to the contrary of the foregoing, among which are the following: Harkness v. Hyde, 98 U. S. 476; Miner v. Francis, 3 N. Dak. 549, 58 N. W. 343; 2 Ency. PI. & Pr. 629, 630, and note 1. However, it is believed that the great weight of authority, or at least the better reasoning, is the other way. These ar*e but a few of the many cases that might be cited in support of that: In re Clarke, 125 Cal. 388, 392, 58 Pac. 22; Manhard v. Schott, 31 Mich. 234; Stevens v. Harris, 99 Mich. 230, 58 N. W. 230; Union Pac. R. Co. v. De Busk, 12 Colo. 294, 20 Pac. 152; Lord v. Hendrie & B. Mfg. Co. 13 , 22 Pac. 782; Ruby Chief M. & M. Co. v. Gurley, 37 Colo. 199, 29 Pac. 668; Stephens v. Bradley, 24 Fla. 201, 3 South. 415; Thayer v. Dove, 8 Blackf. 567; Kronski v. Mo. Pac. R. Co. 77 Mo. 362.

It should he noted in passing that in the early case of Lowe v. Stringham, 14 Wis. 222, one of the very early and leading cases on the subject, Thayer v. Dove, supra, was referred to for the correct practice, showing that this court considerately adopted such practice as the better one.

We note that early California cases are cited in 2 Ency. PL & Pr. 630, as opposed to the practice here favored. The author failed to note that such cases were considered and overruled in In re Clarke, supra. We may well quote the language of the court in respect to the matter, showing, as it does, that after adhering to the practice for which appellant contends for many years, it was abandoned as illogical:

“As a rule one cannot avail himself of the advantage of being a party and escape the responsibilities. Some early cases in this state (Deidesheimer v. Brown, 8 Cal. 339, and Lyman v. Milton, 44 Cal. 630) seem to hold that a defendant, having first objected to the process or service by which he was brought in, may then, if his objections are overruled, answer to the merits, and on appeal from the judgment still -avail himself of his objections to the jurisdiction of the court Overjhim. This rule seems unjust and illogical, and I thiuk does not prevail elsewhere. It gives the defendant, whose objections to the jurisdiction of the court have been erroneously overruled, an opportunity to go to trial, and if the judgment is favorable to abide by it, while if it is unfavor-able he can procure a reversal., The plaintiff would have no such advantage.”

The question is presented as to whether, independently of the rule above discussed, appellant is not precluded by the doctrine of estoppel from questioning the validity of the service upon the commissioner of insurance. There is ground in principle for holding, and considerable authority to the effect, that by making insurance contracts with citizens of this state, as the appellant did, it held itself out as haying complied with the law rendering the commissioner competent to receive service of a summons in an action against it in such a case as this; that such holding out as regards one not having knowledge of the facts nor being negligently ignorant thereof, is as effective as regards the status of such commissioner as such compliance in fact would be. We do' not need to decide, and therefore forego deciding, that question, though we will cite in passing the authorities called to our attention on the subject. Ehrman v. Teutonia Ins. Co. 1 Fed. 471; Knapp, Stout & Co. Co. v. Nat. Mut. F. Ins. Co. 30 Fed. 607; Dixon v. Order of Railway Conductors, 49 Fed. 910; Old Wayne Mut. Life Asso. v. McDonough, 204 U. S. 8, 27 Sup. Ct. 236, and cases therein referred to.

The language of the court, speaking by Mr. Justice Hab-lan, in the last case cited is quite significant if the making of insurance contracts using the United States mail as a medium of communication between the foreign and tire domestic party is, in a proper sense, the doing of business within the state under sec. 1978, Stats. (1898), which point we do not now decide:

“Undoubtedly, it was competent for Pennsylvania to declare that no insurance corporation should transact business within its limits without filing the written stipulation specified in its statute. ... It is equally true that if an insurance corporation of another state transacts business in Pennsylvania without complying with its provisions it will be deemed to have assented to any valid terms prescribed by that commonwealth as a condition of its right to do business there; and it will be estopped to say that it had not done what it should have done in order that it might lawfully enter that commonwealth and there exert its corporate powers.”

The next proposition requiring consideration is this: The contract of insurance being within the prohibition of sec. 1918, Stats. (1898), is it enforceable in tlie courts of this state ? Such statute is as follows:

“No corporation, association, partnership or individual shall do any business of insurance of any hind, or make any guaranty, contract or pledge for the payment of annuities or endowments of money to the families or representatives of any policy or certificate holder, or the like, in this state or with any resident of this state, except according to the conditions and restrictions of these statutes. . .

Thus it will be seen that since the appellant never qualified to do business in this state nor to make any contract of insurance with a citizen of this state, it violated the law. It is useless to argue that the act of contracting, using the United States mails as a medium of negotiation between the party without and the party within the state, did not constitute a wrong on appellant’s part because it was not the doing of business within this state. . We do .not need to discuss whether what occurred was or was not the doing of business. It is sufficient for the case that appellant was unequivocally prohibited from making any insurance contract with a resident of this state, except upon condition precedent of its having fully qualified itself to do business within the state. The making of the contract rendered appellant a lawbreaker whether there was any way of punishing it for its infraction or not, except by treating it as an outlaw upon its invoking the use of our courts for redress for some wrong to it growing out of, or connected with, the prohibitive transaction.

Very much of the argument on the part of appellant’s counsel is upon the theory that appellant in dealing, as it did, with many residents of this state, including the assured, must be regarded as perfectly innocent so far as our law is concerned, since, forsooth, it asks nothing of the state and is not amenable to its laws because it has never in fact submitted to the state jurisdiction as conditioned by statute. Counsel’s logic, it seems, is fallacious. It wholly overlooks the fact that the prohibition of the statute is directed against the assurer and covers precisely such acts as the one in question. It is wrongly assumed that such a violation is not a wrong at all because the guilty party in the transaction, named in the statute, was at the time thereof outside of our jurisdiction and' there is no express basis in the law for penalizing its act as-an offense against the public. There is no escaping the conclusion, it seems, applying one’s reason to the plain words of the law, that appellant in negotiating with the assured and issuing to him the beneficiary certificate held itself out as qualified to do so and by such false pretense committed a fraud upon the assured, if he was excusably an innocent participant in the transaction. It must be kept prominently in view, as indicated, that the prohibition of the statute is solely against the assurer. Therefore, in case of a violation, such as the one in question, the assurer is solely the guilty party, unless the assured knows, or is chargeable with knowledge, of the facts in regard to the capacity of the former to legally enter into the transaction. The admission counsel makes, and could not avoid making, that the association violated the,statute, in connection with the claim that it nevertheless commit* ted no wrong because it kept out of the reach of the state’s jurisdiction, is a «on sequiiur.

The foregoing suggests the importance in this case of several very familiar elementary principles to which we may well refer.

It is presumed that every one of the age of discretion and of sound mind knows the law. Ignoranbia legis non excusab. That applies to civil as well as to criminal cases, especially as regards wrongs involving fraud or violation of statutory prohibitions, wrongs which are malum prohibitum. Appellant cannot escape the full force of that principle upon the ground that the law of Wisconsin as to it was foreign, because state restrictions upon insurance business by foreign corporations are so universal that it must be presumed that one circumstanced as appellant was respecting the transaction under con■sideration knows, or at least bas reasonable ground to know, not only tbat statutory conditions exist regarding its capacity under the laws of the state to make such contracts, but that an assured, in the absence of information to the contrary, would reasonably expect the contract to be made with reference to the law bearing On its validity. Where a foreign makes a contract with a domestic person and the right to do ,-so is regulated by the law of the domicile of the latter, the former is presumed to know such law. Huthsing v. Bosquel, 3 McCrary, 569, 17 Fed. 54.

The next elementary principle applying significantly to the facts here, is that violations of civil as well as criminal law are presumed against. Norton v. Kearney, 10 Wis. 443; Law v. Grant, 37 Wis. 548; 22 Am. & Eng. Ency. of Law (2d ed.) 1280 — 1282. The text at the latter citation, supported by numerous authorities, so well states the rule that we cannot well do better than to quote it:

“As a general rule, the presumption is that persons act honestly and properly in their business and social relations; ■or, in other words, there is a presumption against misconduct -on the part of individuals. . . . Thus, in an action on a contract, where the- validity of the contract depends on the question whether one of the parties thereto was licensed to transact the particular business to wdiich the contract related, it will be presumed that he was duly licensed.”

The next significant principle, very obvious from the language of the statute under consideration, and so unequivocally recognized by courts -as to be now classed as elementary, is that the dominant purpose of such a law is to protect residents of the state who might be induced to patronize foreign insurance companies. To inflict a loss upon the citizen who has innocently contracted with such a company would be equivalent to holding that the legislature, while ostensibly extending protection to domestic persons, placed •one of the most efficient weapons that could have been designed in the hands of foreign parties to perpetrate frauds. Such a result-, manifestly, should not be held to be the one intended in the absence of plain unmistakable language to that effect, either in the literal sense of the words used or by necessary inference therefrom. That doctrine was clearly recognized and discussed at length in two recent cases decided by this court. Urwan v. N. W. Nat. L. Ins. Co. 125 Wis. 349, 103 N. W. 1102, and Laun v. Pac. Mut. L. Ins. Co. 131 Wis. 555, 111 N. W. 660. In the latter case, in harmony with familiar principles and the general trend of decisions elsewhere, this court, speaking by Mr. Justice Tim-liit, laid down the rule to be applied to such statutes as the one in question, in these words:

“The subject matter ,of the legislation must also be considered and the effect upon innocent third parties of holding the contract void. It is then considered whether to hold the resulting contract void would not rather encourage than discourage violations of the statute by allowing the guilty party who alone is subject to the sanction of the statute to profit by his breach of the law. And further the court should consider what class of persons or interests the statute is intended to protect, and whether that protection is defeated by holding the contract void. From all these considerations, aided by sound rules of interpretation wherever applicable, the court deduces and gives effect to the legislative intention in this, respect in all cases in which the statute has not expressly declared the contract to be void.”

Up to this point, under the facts of this case, it seems to-be established that appellant in entering into the relations it did with the assured, knew that it was violating the law of this state. By the plain words of the law, and on principle, it was inexcusably a wrongdoer. At the same time the as- ’ sured, so far as the record shows, had a right to assume that appellant had complied with the law. As we have indicated, there being no express prohibition in the statute as to him,, there could have been no wrong on his part except by knowingly or negligently co-operating with the appellant to violate-it. It does not seem that the mere circumstance that thp communications between the parties were by means of the United States mail efficientlydmpairs the presumption, from 'the standpoint of the assured, that appellant was what it assumed to he in entering into the contract, to wit, a duly licensed corporation to transact such business.

It has been expressly held in many jurisdictions that when a foreign insurance corporation offers to contract with the citizen of a state the latter has a right to rely upon the former having complied with the law and so is not obliged to make any investigation in that regard. Principle, illustrated by the authorities cited in the able brief of respondent’s counsel and many others, very conclusively supports that. Swan v. Watertown F. Ins. Co. 96 Pa. St. 37; Lasher v. Stimson, 145 Pa. St. 30, 22 Atl. 552; Union Mut. L. Ins. Co. v. McMillen, 24 Ohio St. 61, 79; Ehrman v. Teutonia Ins. Co. 1 Fed. 471; Berry v. Knights Templars’ & M. L. Ind. Co. 46 Fed. 439; Diamond P. G. Co. v. Minneapolis Mut. F. Ins. Co. 55 Fed. 27; Ganser v. Firemen’s Fund Ins. Co. 34 Minn. 372, 25 N. W. 943; Seamans v. Christian Bros. M. Co. 66 Minn. 205, 68 N. W. 1065; Watertown F. Ins. Co. v. Bust, 141 Ill. 85, 30 N. E. 772; Brooklyn L. Ins. Co. v. Bledsoe, 52 Ala. 538; Sparks v. Nat. M. Acc. Asso. 100 Iowa, 458, 69 N. W. 678; Marshall v. Reading F. Ins. Co. 78 Hun, 83, 29 N. Y. Supp. 334.

Erom these authorities and the elementary principles they illustrate we deduce this as the rule governing this class of cases as regards sec. 1978, Stats. (1898) : A resident of this state while in this state, with whom a foreign insurance company offers to contract, in the absence of actual or constructive knowledge to the contrary, may safely rely upon the pretense involved in such offer that such company is competent to so contract. In case of a contract of insurance'being made with a resident of this state while therein, and maturing, the corporation cannot avoid complying with it by putting up as a shield its own violation of the statute prohibiting it from making such contract.

From the foregoing no reason is perceived why, on grounds of public policy, judicial assistance should be refused respondent to enforce the insurance contract in question. The policy of tire statute is, as indicated, to safeguard domestic persons. Therefore, it is satisfied rather than violated by lending judicial aid to one of such persons who would otherwise be most grievously defrauded in the name of the law. Courts cannot look, otherwise than with disfavor upon the act of a foreign insurance company which has knowingly violated the domestic law by making a contract of insurance with a resident of this state in the face of a plain prohibition and expressly against it only, the assured not being within the inhibition except, as we have stated, by implica: tion that he shall neither knowingly nor negligently participate in the transaction, and in the given case being free from actual or constructive knowledge of the violation, and :after taking the money from its victim from time to time till the maturity of the contract, invokes the very law it has set at defiance to escape its obligation to the beneficiary, for the protection of whom the assured, no longer at hand to safeguard, in good faith paid. A legislative purpose favorable to such a resplt would so offend against one’s sense of justice that anything short of an unmistakable legislative command to that effect could enable us to appreciate it to be the will of the lawmaking power. The command in this case by reasonable inference goes no further than that judicial recognition of the prohibited contract shall not be given to aid the assurer adversely to the assured in any case, nor recognition of the contract as enforceable upon either side in case of the parties being in pari delicio', which status can only exist by actual or constructive knowledge on the part of the assured at the time of making the contract of incompetency on the part of the assurer to make the same. If the legislature intended the law to go further it could easily have done so. It could have expressly prohibited the assured as well as the •assurer from entering into sucb a. transaction as the one tinder consideration, except upon condition precedent of the latter having complied with the laws of this state on the subject, and provided that the former should be chargeable with knowledge of the fact as to such competency. It could have provided that the prohibited contract should be wholly void as to both parties to the transaction. It could have in other ways rendered unmistakable, disability of the assured under any circumstances to enforce the prohibited contract in the ■courts of this state. It has done neither, nor done anything indicating, reasonably, or raising a well-grounded suspicion of, a purpose to close the portals of the courts to residents of this state, under such circumstances as we have here, thus enabling a foreign corporation to receive and retain from one of -such residents consideration for a’promise and escape rendering the agreed equivalent therefor.

There being no ground of public policy, as we have seen, why the court should, on its own initiative or upon suggestion, refuse to lend judicial aid for the enforcement of such a contract as the one in hand, the plainest principle of estoppel operates to prevent appellant from invoking its own wrong to relieve itself from liability, — that supreme equity in the law which stands guard, so to speak, in all courts, that one shall not be permitted to falsely assume one character for the purpose of entering into contractual relations with another, reasonably calculated to-, and which 'does, deceive such other without his fault into efficiently co-operating to produce such result, and then shift to an inconsistent attitude for the purpose of avoiding his obligation, to that other’s injury. The law will not recognize any such change of position, but will strictly hold such person responsible according to the pretenses which induced such other to- act.

On both the question of public policy and the one of es-toppel under such a statute and in face of such facts as we have to deal with here we fully approve of this text in Judge Thompson’s -work on Corporations at sec. 7960, deduced from authorities cited, and quoted to us by respondent’s counsel:

“The plaintiff may rightfully presume that the defendant has complied with the statutes entitling it to do business within the state. It has been observed that one of the objects of such statutes is the protection of the people against worthless foreign companies; and that, as the domestic citizen is not required to see that the foreign corporation has observed the laws before he enters into a contract with it, there is no-reason, founded in public policy, which will enable a solvent foreign corporation which has violated the domestic law in making contracts and receiving the consideration therefor from an innocent citizen, to escape liability for its performance by setting up its own turpitude.”

The result of the foregoing is that the contract in question was valid at its inception and was enforceable in this state at .the time of the commencement of this action if Corbett was a member of the association in good standing at the time he was injured, and that the court obtained jurisdiction, both as to the person of appellant and the subject matter involved.

We now come to tire questions respecting whether Corbett kept-the insurance certificate in force up to the time he was fatally injured. If he did, questions of waiver discussed in the briefs of counsel need not be considered.

At this point we repeat to some extent what is shown by the statement. Mr. Elliott, the secretary and treasurer of appellant, whose duty it was, according to the evidence, to receive all dues upon memberships and in fact did receive at the home office in Omaha, Nebraska, the payments on the membership in question, including that due December 10, 1905, visited this state after Corbett’s death, duly authorized to investigate the merits of respondent’s claim. He was called for the respondent on the trial as an adverse witness. In the course of his testimony he stated that a letter dated December 13, 1905, purporting to have been written and signed, all in typewriting, by Corbett, indos-ing a cheek purporting to have.been drawn and signed by him, December 10, 1905, for payment of bis membership fee due on that date, was received by appellant at Ornaba, Nebraska, December 16, 1905, and was in due course collected, appellant having no knowledge of the injury to Cor-bett till after the check was used as its property. The envelope was not produced and that circumstance was accounted for upon the ground that it was destroyed as was customary. Under the insurance contract and the custom of doing business by the appellant, as is conceded, if the letter containing the check was deposited in the postoffice at Corbett’s home in Wisconsin and received by appellant at Omaha, Nebraska, before he was injured, as the jury found, barring questions which have been decided in respondent’s favor, she was entitled to recover. In that respéct the evidence of Elliott had a very material bearing on the case. A witness was permitted to testify in respondent’s behalf under ''"objection and on the assurance of respondent’s counsel that the evidence was offered for purposes of impeachment only, that Elliott stated to him on the occasion of the aforesaid visit to this state, that Corbett’s letter containing the check was received by appellant at the home office on the 14th day of December, 1905. A second witness was permitted to testify under objection to1 thé same effect. We are satisfied from the record that appellant’s counsel is correct in the claim that the evidence of both witnesses was.offered and received for purposes of impeachment only and that it was so understood at the close of .the trial by all participants therein. So the question of whether such evidence was competent to prove admissions by the corporation need not be considered.

Viewing the evidence as before indicated as to Elliott’s declaration inconsistent with his evidence that the check was received December 16, 1905, counsel for appellant insist that the court erred in admitting the same, but we must hold to the contrary under sec. 4068, Stats. (1898), pursuant to ■which Elliott was called to testify, -which provides as follows:

“Any party to the record in any civil action ... or the president, secretary or other principal managing agent of any corporation which is such a party . . . may he examined upon the trial ... at the instance of the adverse party . . . hut the party calling for such examination shall not be concluded thereby and may rebut the evidence given thereon by counter or impeaching testimony.”

Errors are assigned upon the ground that with the evidence out of the case, except for purposes of impeachment, as to Elliott’s statements that he received Corbett’s letter and check December 14, 1905, the verdict of the jury as to when such receipt occurred and when the letter was mailed is not supported by the evidence. We have carefully examined all of the evidence in relation to those points. There was much circumstantial evidence proving, or tending to prove, that Corbett drew and signed the check; that according to his custom he made a stub in his check book corresponding to the •check; that he wrote the letter with which the check was transmitted, three days before he was injured; that the letter was written on the day of its date; that Corbett deposited the letter in the postoffice; that he must have done so before he was injured because he was unconscious thereafter till he died; that if the letter was so deposited it must have reached Omaha in the regular course of the mail before the time testified to by Elliott, and that his testimony as to the postmark upon the envelope was false. There was. evidence warranting the jury in rejecting all of Elliott’s testimony as untrue. 'There was still other circumstantial evidence, sufficient in the whole, as it seems to us, notwithstanding the conflicting •evidence, which we need not take time to detail, to carry the questions under discussion to the jury, and that precludes us .from disturbing the verdict.

As before indicated, in view of the conclusions already reached we need not proceed further. The points decided justify the judgment, irrespective of any other question discussed by counsel. Since such other questions are thus rendered unimportant we forego considering them.

By the Court.' — The judgmentis'affirmed.

A motion for a rehearing was denied May 8, 1908.