Hartford Fire Ins. v. Doyle

HOPKINS, District Judge. The only matter discussed on the hearing before me was the constitutionality of the statutes on the subject There is a conflict upon the question of the constitutionality of this act between the state and federal courts. “ The supreme court of this state in Morse v. Home Ins. Co., 30 Wis. 496, decided that the provisions of the act of 1870, requiring the agreement not to remove to the federal court for trial, constitutional, but the supreme court of the United States, in same' case on error, 20 Wall. [87 U. S.] 445, reversed that decision, and held the act of the legislature requiring such restriction unconstitutional and void, and that the company could remove, notwithstanding their agreement not to do so, entered into under that act. So if the question presented here is substantially the same as that presented in that case, that decision is decisive of this motion. The attorney general on the hearing claimed that the question was different; that the state had a right to impose such terms as it might deem just on admitting foreign corporations to transact business here, and no court could inquire into the reasonableness of such terms; that the state could also provide that a forfeiture of the right to continue to do business should follow a breach of any conditions or restrictions they might exact or impose; in other words, that the state had the right to say when and for what cause or causes the license might be revoked, and that no court had the right to say that the cause or causes were insufficient. If this were the theory of the state, as manifested by this legislation, it might present a somewhat difficult question. But I am not prepared, however, in view of the authorities on the subject, to concede that such arbitrary and unlimited power resides in the states. In Lafayette Ins. Co. v. French, 18 How. [59 U. S.] 404, it is held that the consent may be upon such condition as the state may see • fit to impose, “provided they are not repugnant to the constitution and laws of the United States, or inconsistent with those rules of public law which secure the jurisdiction and authority of each state from encroachment by all others, or that principle of natural justice which forbids condemnation without opportunity” for defense. And in Ducat v. Chicago, 10 Wall. [77 U. S.] 415, it is said as to “the nature or degree of discrimination, it belongs to the state to determine, subject only to such limitations upon her sovereignty as may be found in the fundamental law of the Union.” “Parties cannot by any agreements confer jurisdiction when it is not given by an act of congress. When so given, they cannot oust the courts of the United States of the jurisdiction conferred upon them.” Hobbs v. Manhattan Ins. Co., 56 Me. 421. [If parties cannot do so, upon what principle can it be maintained that the state legislature can? If repugnant to fundamental authority, any attempt to enforce them should be restrained.] 2 Cobb v. New England Ins. Co., 6 Gray, 192; 6 Gray, 596; 6 Gray, 174; Davis v. Packard, 6 Pet. [31 U. S.] 41; Id., 7 Pet. [32 U. S.] 276. But in deciding this motion, in view of the decision of Morse v. Home Ins. Co., supra, it must be assumed that the power of the state to pass a law prohibiting a foreign corporation from removing a case for trial into a federal court, does not exist; and that all obligations and restrictions of that character imposed upon foreign corporations by the act of 1870, are not binding, but are absolutely void. Now, does the law of 1872, based upon that act, and directing certain proceedings for a violation of the provisions of that law, fall, also? Or, may the state rightfully pass acts imposing penalties for a violation of that act, which are obligatory upon the state officers, after the law requiring the company to perform them is held void? If this is a part of the scheme intended by the legislature to enforce the law, and the power to establish this condition is held not to exist, it seems to me that all the penalties, remedies and proceedings predicated upon its non-observance would fall with the power itself. It would be unreasonable to suppose that the legislature would pass an act requiring the secretary of state to cancel the license for want of compliance with a requirement that they had not the power to impose. Chief Justice Marshall, in Wayman v. Southard, 10 Wheat. [23 U. S.] 1, says: “It is a general rule that what cannot be done directly from defect of power cannot be done indirectly.” And Chief Justice Dixon, in Morse v. Home Ins. Co., supra, says: “It may be conceded that any state legislation intended or calculated of itself or by its own mere force to defeat or prevent the exercise of the right of removal when it exists, is unconstitutional and void.” The supreme court of the United States has decided that the right of removal does exist here, so that it follows, according to Judge Dixon’s opinion, that this legislation, so far as it was “intended or calculated” to “defeat or prevent’” the exercise of the right of removal, is void. The provision of both acts are to be construed together; the last founded upon the first, declaring the consequences or penalty of a violation of the first, and making the secretary of state the instrument to enforce the penalty for a violation of the first. The title of the last act shows this. It is entitled “an act to provide for the enforcement of the laws in certain cases,” and those laws, so far as applicable to this case, having been held null and void, all laws providing for their enforcement must be inoperative, and [704] no court or officer can enforce any penalty or forfeiture for their non-observance. If I am right in this view, this case does not call for a decision on the general doctrine contended for by the attorney general. For it is plain to my mind that our legislature did not intend to forfeit the license of foreign companies, except for a violation of what they deemed a valid requirement or condition of law. There is no reason for supposing that the state intended or wished to annul a license, or to exclude a company from doing business here, except for a breach of a legal duty, and when it is settled that this company has not violated any legal duty, the power to vacate the license vested in the secretary of state, 'terminates. I have not deemed it necessary to consider the general question of the constitutional right of the complainant to a removal. That is settled and does not admit of or require any argument in its support. The provision in the act of 1870, requiring the agreement not to remove, having been declared unconstitutional, that part of the act of 1872, directing the secretary of state to vacate a license in case of removal, is inoperative, and he has no authority under it to revoke or vacate the complainant’s license to transact business for that cause. I, therefore, order and direct that an injunction issue against the defendant,, restraining him from so doing, as prayed in the bill. Footnotes [2] [From 3 Cent. Law J. 41.]