Lewis v. International Insurance

73 So. 629, 198 Ala. 411, 1916 Ala. LEXIS 242

• Court: Supreme Court of Alabama
• Decided: November 23, 1916
• Status: Published

Opinions

. GARDNER, J.

Suit on a fire insurance policy issued by the defendant company to plaintiff in Geneva county. The defendant appeared and pleaded specially in abatement of the suit (which was brought in the city court of Montgomery) that the contract sued on was made in Geneva county, and “at that time, since, and to the time of the filing of said suit this defendant was a corporation, and at the time mentioned was not doing business by agent or otherwise in Montgomery county, Ala.”

On demurrer to the plea being overruled, plaintiff filed a replication thereto, setting up in substance that at the time the cause of action arose and at the time of the institution of this suit defendant was not engaged in business in Geneva county and had ceased to do business in the state of Alabama; that the insurance commissioner of the state of Alabama, whose residence was in Montgomery, was the true and lawful attorney for the defendant, upon whom all lawful process in any legal proceeding against it might be served, as provided by section 4560, Code 1907. Demurrer to the replication was sustained, and on motion of plaintiff nonsuit was entered..

The question of prime importance on this appeal arises upon the sufficiency of this replication. It discloses that the plaintiff rests the question of jurisdiction and venue on the provisions of said Code section, which reads as follows:'

“An insurance company shall, by a duly executed instrument filed in the office of the secretary of state, constitute and appoint the insurance commissioner, or his successor, its true and lawful attorney, upon whom all lawful process in any action or legal proceeding against it may be served, and therein shall agree that any lawful process against it which may be served upon its ■said attorney, shall be of the same force and validity as if served on the company, and that the authority thereof shall continue in force irrevocably as long as any liability of the company remains outstanding in this state. Any process issued by any court of record in this state, and served upon such commissioner by the proper officer of the county in which said commissioner may have his office, shall be deemed a sufficient service of process on said .company; and it is hereby made the duty of the insurance commissioner, promptly after such service of process by any claimant, to forward by registered mail an exact copy of such notice to the company.”

The replication shows that the defendant has ceased to do business in this state, and that the insurance commissioner, who, by virtue of the above cited statute, is the true and lawful attorney of the defendant company, resides in the city of Montgomery.

(1) The validity of the said statute is conceded by counsel for appellee in brief. Legislative enactments of like character have met with the approval of both the state and federal courts, as will appear from an examination of the following authorities: Magoffin v. Mut. L. Ass’n, 87 Minn. 260, 91 N. W. 1115, 94 Am. St. Rep. 699; Woodward v. Mut., etc., Co., 178 N. Y. 485, 71 N. E. 10, 102 Am. St. Rep. 519; Mut. Reserve Ass’n v. Phelps, 190 U. S. 147, 23 Sup. Ct. 707, 47 L. Ed. 987; Conn. Mut. L. I. Co. v. Spratley, 172 U. S. 602, 19 Sup. Ct. 308, 43 L. Ed. 569; Hill v. Empire, etc., Co. (C. C.) 156 Fed. 797; Hunter v. Mut., etc., L. I. Co., 184 N. Y. 136, 76 N. E. 1072, 30 L. R. A. (N. S.) 677, and note, 6 Ann. Cas. 291.

(2) The above-quoted statute provides that the authority of the insurance commissioner as attorney in such cases shall continue in force irrevocably as long as any liability of the company remains outstanding in this state. It is clear that the Legislature intended by the above language to provide a way by which suits could be maintained on contracts made by insurance companies, even when such companies had ceased to do business in the state. Speaking of a similar statute of the state of Kentucky, the Supreme Court of the United States, in the case of Mut. Reserve Ass’n v. Phelps, 190 U. S. 158, 23 Sup. Ct. 709, 47 L. Ed. 987, said: “This and other kindred statutes enacted in various states indicate the purpose of the state that foreign corporations engaging in business within its limits shall submit the controversies growing out of that business to its courts, and not compel a citizen having such a controversy to seek for the purpose of enforcing his claims the state in which the corporation has its home. Many of those statutes simply provided that the foreign corporation should name some person or persons upon whom service of process could be made. The insufficiency of such provision is evident; for the death or removal of the agent from the state leaves the corporation without any person upon whom process can be served. In order to remedy this defect some states, Kentucky, among the number, having passed statutes, like the one before us, providing that the corporation shall consent that service may be made upon a permanent official of the state, so that death, removal, or change of officer will not put the corporation beyond the reach of the process of the courts. It would obviously thwart this purpose if this association, having made, as the testimony shows it had made a multitude of contracts with citizens of Kentucky, should be enabled, by simply withdrawing the authority it had given to the insurance commissioner, to compel all these parties to seek the courts of New York for the enforcement of their claims.”

The Minnesota court, in Magoffin v. Mut. Reserve Ass’n, 87 Minn. 260, 91 N. W. 1115, 94 Am. St. Rep. 701, discussing a statute of that state, said: “But our statute fixes a limitation to the term of the power, which is ‘irrevocable [only] so long ás any liability of the company remains outstanding in this state/ The only question, then, in this case is whether this provision of the statute is to be given any effect. The construction given •to it and the stipulation by the defendant render both of no practical effect for the protection of resident policy holders who accept their policies and part with their money while the stipulation is in force. Whether the stipulation is a power coupled with an interest within the technical meaning of that term it is unnecessary to inquire; for it is certainly an agreement relating to the remedy which policy holders might have for the enforcement-of any liability of the company growing out of its policies issued while the stipulation is in force. The stipulation was not intended for the benefit of the insurance commissioner or of the state, but it was an agreement exacted by the state for the benefit of its citizens, as a condition precedent to the right of the company to do business in this state. It entered into and became a part of every policy which the company issued in the state while it was in force, and the insured acquired an interest therein to the same extent as if it were written into each policy; for the parties are deemed to have contracted with reference to the statute.”

To like effect is the language of the New York Court of Appeals in Woodward v. Mut. Reserve L. I. Co., 178 N. Y. 485, 71 N. E. 10, 102 Am. St. Rep. 521, wherein is found the following : “When defendant commenced issuing policies in that state after having complied with the conditions of the statute, its obligations toward its policy holders in that regard were precisely the same as if its promises to the state had been incorporated in the policies, and thereafter, whether the company continued to do business in the state or not, policy holders could commence actions by service of process upon the secretary of state.”

It seems to have been the insistence of counsel for appellee that, conceding the validity of Code, § 4560, its provisions were intended merely to affect the question of jurisdiction, and not that of venue, and that, if appellee is suable in Alabama, the suit cannot be maintained in Montgomery county, for the reason that it is not now doing business in said county. This insistence is based on the provisions of section 232 of the state Constitution, together with section 6112 of the Code. The portion of section 232 here pertinent reads as follows: “No foreign corporation shall do any business in this state without having at least one known place of business and an authorized agent or agents therein, and without filing with the secretary of state a certified copy of its articles of incorporation or association. Such corporation may be sued in any county where it does business, by service of process upon an agent anywhere in the state.”

And the Code section in point referred to provides that: “A foreign or domestic corporation may be sued in any county in which it does business by agent.”

The meaning of the above-quoted provision of the Constitution, the changes it was intended to make, and the scope and extent of its provisions will be found fully discussed in the case of Sullivan v. Sullivan Tbr. Co., 103 Ala. 371, 15 South. 941, 25 L. R. A. 543. The section itself and the opinion in the Sullivan Case disclose that it is applicable to corporations which have a known place of business and an authorized agent or agents in the state. As said in that opinion: “The first clause of the section of the Constitution which is under consideration prescribes inflexibility, as the condition upon which a foreign corporation may do business within this.state, that it shall have ‘at least one known place of business and an authorized agent or agents therein.’ The succeeding clause declares that ‘such corporation,’ by which we understand not any every foreign corporation, but the corporation which has designated for itself ‘a known place of business and an authorized agent or agents therein/ may be sued in any county where it does business.”

So long as the defendant company had its known place of business and its authorized agent or agents doing business in this state, doubtless the provisions of the Constitution as construed in the Sullivan Case would have room for application. But legisla--tive wisdom foresaw that some insurance companies, after transacting much profitable business, might withdraw from the state leaving outstanding liabilities and with neither an agent nor a known place of business in the state. For the protection of policy holders and to prevent the inconvenience and expense of their having to bring suit in a jurisdiction foreign to their residence and the place where the transaction occurred, the Legislature enacted' what is now section 4560 of the Code of 1907. Its very language indicates that it was intended to meet just the situation here presented; for it provides that the authority of the insurance commissioner shall continue in force irrevocably as long as any liabilities of the company remain outstanding in this state.

The insurance commissioner is a resident of the city of Montgomery, where this suit is brought. Under the provisions of section 4560 he is the true and lawful attorney of the defendant company, its duly authorized agent for the purpose of service of process in legal proceedings, and, by the express language of the statute, the service of process upon him “shall have the same force and validity as if served on the company.”

In the case of Equitable L. I. Co. v. Vogel, 76 Ala. 448, 52 Am. Rep. 344, is the following language: “A corporation has its domicile, as to debts due by it, in the state where it is chartered, for the reason that ‘there only can it be sued, or found for the service of process.’ This general rule has an exception ; and a corporation, like a natural person, is suable wherever it can be found for the service of process, as provided by law. When, therefore, a- corporation has voluntarily subjected itself to suit in another state, and appointed an agent there, upon whom process may be legally served, as a condition of doing business, it has a domicile in such state for the purposes of suit, and can be found there for the service of process.—New Eng. Mut. L. I. Co. v. Woodworth, 111 U. S. 138 [4 Sup. Ct. 364, 28 L. Ed. 379].”

The following quotation from Lafayette Ins. Co. v. French, 18 How. 404, 15 L. Ed. 451, is found quoted in Hill v. Empire St. Min. Co. (C. C.) 156 Fed. 797: “A corporation may sue in a foreign state by its attorney there, and, if it fails in the suit, be subject to a judgment for costs. And so if a corporation, though in Indiana, should appoint an attorney to appear in an action brought in Ohio, and the attorney should appear, the court would have jurisdiction to render a judgment in all respects as obligatory as if the defendant were within the state. The inquiry is not whether the defendant was personally within the state, but whether he, or some one authorized to act for him in reference to the suit, had notice and appeared, or, if he did not appear, whether he was bound to appear or suffer a judgment by default.”

The action in the present case is personal and transitory. Speaking of such.suits and the question of jurisdiction, this court, in Smith v. Gibson, 83 Ala. 284, 3 South. 321, said: “The general rule is that every country has jurisdiction over all persons found within its territorial limits, for the purposes of actions in their nature transitory. It is not a debatable question, that such actions may be maintained in any jurisdiction in which the defendant may be found, and is legally served with process. However transiently the defendant may have been in the state, the summons having been legally served upon him, the jurisdiction of his person was complete, in the absence of a fraudulent inducement to come.—Peabody v. Hamilton, 106 Mass. 217.”

See, also, Lee v. Baird, 139 Ala. 526, 36 South. 720.

In the instant case the insurance commissioner, residing in Montgomery, represents the company, and under the statute the company is also here domiciled for the purposes of bringing suit, etc. Were the defendant a nonresident individual and served with process, the above authorities clearly demonstate that suit could be brought in the county where service was had. The provisions of the above-quoted section of the Code place the defendant company in like situation, and we are unable to see any sound reason why the same principle should not be applied. The construction placed upon this statute, in our opinion, is but the natural result of the language used. To construe it otherwise would leave many of its provisions, though forcibly expressed, without effect and useless.

Counsel for appellee in argument seem to indicate that the pleadings here show the defendant still engaged in insurance business in Geneva county. Such an inference cannot be drawn from the language of the plea, and is expressly denied in the .replication.

(3) We have treated the sufficiency of the replication as being the important question on this appeal, and consider it unnecessary to treat the demurrer to the plea further than to note that the only objection urged thereto is as to the failure of the plea to designate in what county the defendant was doing business by agent at the time of the institution of this suit.

We need not determine the sufficiency of the plea, but note in passing that it is still the rule in this state that such a plea “must give the plaintiff a better writ.”—Mohr v. Chaffe Bros., 75 Ala. 387; Sloss-S. S. & I. Co. v. Milbra, 173 Ala. 658, 55 South. 890.

We are of the opinion that the replication herein discussed was not subject to the demurrer. The judgment of the court below is therefore reversed, and the cause remanded.

Reversed and remanded.

Anderson, C. J., and Sayre, Somerville, and Thomas, JJ., ■concur. ...... ,