Life Insurance Co. v. Spratley

99 Tenn. 322
CourtTennessee Supreme Court
DecidedSeptember 20, 1897
StatusPublished
Cited by13 cases

This text of 99 Tenn. 322 (Life Insurance Co. v. Spratley) is published on Counsel Stack Legal Research, covering Tennessee Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Life Insurance Co. v. Spratley, 99 Tenn. 322 (Tenn. 1897).

Opinion

Beard, J.

The complainant is a corporation organized under the laws of the State of Connecticut to carry on a life insurance business, and has its principal situs in Hartford, in that State. For many years prior, to the year 1894, it actively prosecuted its work in the State of Tennessee, soliciting applications for life insurance and issuing policies upon such applications as were approved by its officers. In the year 1889, and afterwards in 1893, an agent of this company was in the State of Tennessee, and, by his solicitations, induced one B. R. Spratley, a citizen of this State, to apply for insurance on his own life, and upon these applications the complainant [324]*324issued two policies, one of which was for $5,000 and the other for $3,000, payable at his death to his wife, the defendant, Linda J. Spratley. Both policies were delivered in this State.

In the year 1896, B. B. Spratley died, and proof of his death was forwarded to the company. Very soon thereafter complainant sent O. N. Chaffee, one of its employes, into the State to investigate this claim, and the conditions under which this 'death occurred. He came, and had interviews with the beneficiary, Mrs. Spratley, her brother, and other parties, of all of which he made report to his home company. Upon receiving this report, the complainant, through its vice president, wired the agent as follows: “We think case” (referring to Spratley’s death claim), ‘'should be settled for reserves or thereabouts.” After receiving this telegram, Chaffee visited Mrs. Spratley, and submitted an offer to settle on the terms indicated in it; this offer, however, was rejected. While in this State on the business and occasion referred to, suit was instituted by the beneficiary against the insurance company for the amount alleged to be due' on these policies, in the Circuit Court of Shelby County, and process was served on Chaffee, as the agent of the company. At the same time all the requirements of Chapter 226 of the Session Acts of 1887, with regard to the giving other and further notice of the bringing and pendency of this suit, were complied with.

[325]*325The insurance ' company ignoring this action, in due time judgment by default was taken against it, upon which an execution was subsequently issued. Thereupon, the bill in this cause, attacking the judgment upon the ground that it was taken without valid service of process, the complainant alleging that it had not, at the time of the institution of the suit in the Circuit Court, nor had had for several years prior thereto, any office or agency in Tennessee; that Chaffee, upon whom service was attempted, was a special agent, for a special purpose, only temporarily in Memphis, and that, as such special agent, he was not amenable to process issued against the complainant company; and, further, that Chapter 226 of the Acts of the Legislature of 1887, upon which the Circuit Court procedure rested, was void, because it violated Article 5 of the amendments to the Constitution of the United States, and also the Fourteenth Amendment to the Constitution of the United States, in that, under the provisions of this Act, a defendant was “deprived of property without due process of law;” and it also violated so much of Section 17 of the Article of the Constitution of the State of Tennessee as provides that ‘ ‘ every man . . . shall have remedy by due course of law.” The first ground of attack will be hereafter noticed. We will at once examine the question raised upon the constitutionality of this Act.

Sections 2831-2834 of the Code (M. & V.), corresponding with §§ 4539-4542 of Shannon’s new code, [326]*326regulate the mode of suing corporations, and apply equally to foreign and domestic corporations. Chi. & A. C. R. R. v. Walker, 9 Lea, 475; Peters v. Neely, 16 Lea, 280. But they did not cover the case of a foreign corporation having no resident agent in the State. Chi. & A. C. R. R. v. Walker, supra. This defect in the law, disclosed by this last named case, led to the passage of the Act which is assailed for unconstitutionality by the complainant. The provisions of this Act are embodied in §§ 4543-4546 of Shannon’s new code. By the first section it is provided that “any corporation claiming existence under the law of any other State, found doing business in this State, shall be subject to suit here to the same extent that corporations of this State are, by the laws thereof, liable to the same, so far as " relates to any transaction had in whole or in part within this State, or any cause of action arising here, but not otherwise.” Section 2 defines what is meant by the term ‘'found doing business ■ .in this State,” and in these words: “Any corporation having any -transaction with persons, or having any transaction concerning any property, situated in this State, through any agency whatever acting for it within this State, shall be held to be doing business within the meaning of Section 1.” Section 3 provides that ‘'process may be served upon any agent of said corporation found within the county where the suit is brought, no matter what character of agent such person may be, and, in the absence of [327]*327such an agent, . it shall be sufficient to serve the process upon any person, if found within the county where the suit is brought, who represented the corporation at the time the transaction out of which the suit arising took place,” etc.

In Telephone Co. v. Turner, 4 Pickle, 265, it is held that this Act did not apply to any foreign corporation having resident agents in the county where the suit is brought, but that the case presented in this record is one within its provisions, we think is clear. The question is, is it constitutional ?

It may be said that in this legislation Tennessee is only following in the footsteps of many other States of the Union. So diversified and widespread have been the operations of corporations, that possibly every State has, for the protection of its own citizens, found it necessary to adopt similar laws. In Lafayette Ins. Co. v. French, 18 Howard, 404, with regard to a judgment obtained in a Court of Ohio against an Indiana corporation, in a suit where service was had on a resident agent in Ohio, the Supreme Court of the United States said: “It cannot be deemed unreasonable that the State of Ohio should endeavor to secure to its citizens a remedy in their domestic forum upon this important class of contracts, made and to be performed within that State, and fully subject to its laws; nor that proper means should be used to compel foreign corporations transacting their business of insurance within the [328]*328State for their benefit and profit, to answer there for the breach of their contracts of insurance there made and to be performed.”

For a long period it has been settled that a corporation created in one State has no right, under the Constitution of the United States, to transact business in another State, save by the consent, express or implied, of that State, and this consent may be given on such terms as the State may see proper to impose, and the terms so imposed are binding on the corporation. Paul v. Virginia, 8 Wall., 168. The only limitation upon this right is that the conditions imposed must not be repugnant to the Constitution or laws of the United States, or to “that principle of natural justice which forbids condemnation without opportunity for defense.” Lafayette Ins. Co. v. French, supra.

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Bluebook (online)
99 Tenn. 322, Counsel Stack Legal Research, https://law.counselstack.com/opinion/life-insurance-co-v-spratley-tenn-1897.