Knorr v. Home Insurance

Cole, J. This is- an application on the part of the defendant company for an order directing that this cause be removed to the circuit court of the United States for the district of Wisconsin for trial. The application' seems to be regular and in conformity to the law of congress upon that subject. The petition states that the defendant “is, and for more than two years last past hath been, a corporation created by, organized and existing under, the laws of the state of New York, having its principal business office in the city of New York, and is a citizen of the.State of New York,” and that the plaintiff is a citizen of this state. — 146 — A re-argument of the cause was ordered at the last term, upon the point whether the defendant, by complying with the laws of this state regulating foreign insurance companies, did not, to a certain extent, lose its citizenship, and become a domestic corporation, so that the circuit court of the United States for this district could not take jurisdiction of the cause. In our examinations our attention was called to the cases of Stevens v. The Phoenix Insurance Company (24 How. Pr. 517), and New York Piano Co. v. New Haven Steamboat Co. (2 Abb. Pr. [N. S.] 358), where quite analogous questions were raised and considered. In Stevens v.' The Phoenix Insurance Company, Mr. Justice Allen, at special term, gave quite an elaborate opinion, upon a motion by the defendant to remove the cause to the circuit court of the United States for the northern district of New York, uppn the ground that the plaintiff was a citizen of the state of New York, and the defendant was a corporation created by the laws of Connecticut and located and doing business in that state. And he held that a foreign insurance company, created by the laws of another state, but doing business in New York under and in compliance with the laws of that state, upon being sued by a citizen of New York could not remove the cause into the federal courts on the ground that it was a citizen of another state within the meaning of the clause of the constitution which confers j urisdiction upon the courts of the United States by reason of the citizenship of the parties. He states,in substance, as a reason for this conclusion, that while a foreign corporation cannot migrate or have any extra-territorial existence by force of the law creating it, yet it may, by the comity of other states, transact business in such states, establish agencies therein, sue and be sued, etc.; and that, when a corporation did avail itself of this comity, and of privileges thus conferred, in respect to the transaction of business, as to the business thus transferred it lost its' citizenship, and became to that ex — 147 — tent a citizen of the state under whose laws it transacted its business, and of whose governmental protection it availed itself. Another reason is given, that the company, by consenting to do business under and by authority of the laws of New York regulating foreign insurance companies, submitted itself to the jurisdiction of the courts of that state. In the case of the Piano Co. v. New Haven Steamboat Company, Robertson, C. J., held, that a corporation will 'not be deemed a non-resident of that state, although chartered by the laws of another state,, if it has a regular place of business within the state in which the action is pending, and has there an agent upon whom, by law, process may be served, and who has agreed to admit service of,process. He held that the locality where the principal part of its business is done, and where it exercises those functions of a corporation in the mode in which its existence is actually made known to the public, furnishes the best test to determine the citizenship of a corporation. The reasoning of both these cases is fully met and quite satisfactorily answered in the cases of Dennistoun v. New York & New Haven R. R. Co. (1 Hilton, 62), and Fisk v. the Chicago, Rock Island & Pacific R. R. Co. (3 Abb. Pr. [N. S.] 454). And if one concedes the validity of the twelfth section of the judiciary act, and adopts the rule laid down in the more recent decisions of the supreme court of the United States in respect to the criterion by which the citizenship of a corporation is-to be determined, for the purposes of jurisdiction, the doctrine of these cases last cited would seem to rest upon the better grounds. For it is difficult to perceive why a different result should follow in case of a foreign corporation doing business through agents in another state, even though such agents might be authorized to acknowledge service of process on behalf of the corporation, than in case of a natural person. It is very manifest that a citizen of another state might transact busi — 148 — ness here through, his agents, and still remain a non-resident. And if he should happen to be sued while temporarily within the jurisdiction of our courts, the fact .that he was transacting business in the state would not probably be relied on to show that he had lost the right to transfer the cause to the federal courts. It is very true that a foreign insurance company, on complying with our laws upon that subject, is permitted to take risks and transact the business of insurance in this state. That is, it is permitted to exercise here the powers conferred upon it by the state which incorporated it. But it transacts this business by means of agencies, as a non-resident person would do. The corporation is, however, not created by the law of this state. This state merely recognizes it as an already existing corporation, authorized by the sovereignty yddch created it to transact the business of insurance. And it is very apparent that the defendant corporation was organized and created by the law of New York, and not by the law of this state. That state alone confers upon it whatever powers it possesses under its charter. That state may at any time withdraw that charter, or otherwise dissolve the corporation, and, from the time it should do so, the corporation would cease to exist. It would no longer have the right to transact business of insurance in this state. These considerations clearly show that our laws relating to foreign insurance companies do not confer upon such companies any corporate powers, or render them domestic corporations. These laws do not, in any manner, attempt to create such corporations, and are only intended to regulate them, and prescribe upon what conditions they may do insurance business in the state. Nor does the fact that they are required to have agents here, who are authorized to acknowledge service of process for and on behalf of the company, affect the question of their citizenship, or render them domestic corporations. This is evidently a provision to relieve our — 149 — citizens from the necessity of resorting to the courts of the state which creates the corporation, to enforce their contracts. They may pursue their' legal remedies against such corporations.in our own courts, the means and way having been provided for obtaining' jurisdiction over them. But this ‘does not, deprive the company of the right, conferred upon it by the judiciary act, to apply to have the cause removed from the state court to the federal courts. And touching the question of the jurisdiction of the federal courts by reason of the citizenship of parties, the more recent doctrine of the supreme court of the United States is, that a suit by or against a corpo- . ration, in its corporate name, is to be' regarded as a suit by or against a citizen of the state which created the corporation. Ohio & Miss. R. R. Co. v. Wheeler, 1 Black, 286. Within that rule, the defendant is undoubtedly to be treated and regarded as a citizen of the state of New York. As stated by the chief justice, in the case of Moseley v. Chamberlain (18 Wis. 700), I have always been of the opinion that congress has no power to provide for the removal of a cause from a state to a federal court, and, consequently, that the twelfth section of the judiciary act is invalid. I shall not, however, attempt to give any reasons for that opinion at this time. Suffice it to say, as that opinion was maturely formed, after all the examination and reflection I could bestow upon the question, it remains unchanged. But my adhering to that opinion now would be of no earthly advantage, that I can see, to any person or any principle. On the contrary, it would only be productive of great embarrassment, trouble and expense to these parties, and others similarly situated: For we well know that the supreme court of the United States, in the' exercise of that jurisdiction which it assumes, would pronounce all the proceedings in the state court, after the application for removal was made, as coram nonjudice. I have, therefore, concluded to hold, with the chief — 150 — justice, that tbe order of tlie circuit court must be reversed, and tbe cause remanded, with directions to grant tbe order of removal.