Smith v. Mutual Life Insurance Co. of New York , 96 Mass. 336 ( 1867 )

Wells, J.

The question of jurisdiction relates, not only to the parties, but also to the subject matter of the suit. Story Confl. L. § 586. Bissell v. Briggs, 9 Mass. 462.

In the present case it does not merely regard the powers of the court, but rather the extent of the state authority which underlies those powers. It is in the nature of a question of sovereignty.

The parties are a non-resident plaintiff against a foreign corporation. The defendant is not only non-resident, but incapable even of a temporary presence within the jurisdiction, otherwise than by representation.

The subject matter of the suit is not a present demand capable of enforcement and seeking satisfaction out of property or rights within the jurisdiction. Upon the plaintiff’s bill, it appears that there is not even an existing contract between the parties. The proceeding is based upon a past relation, growing out of a contract made without the jurisdiction, which, by its own terms, has ceased to be operative. The plaintiff seeks, through the equity powers of this court, not only to revive his contract as an executory obligation, but also, as incident thereto, to reinstate himself as a member of the defendant corporation.

A corporation, being a mere creature of local statutes, can, of right, have no existence nor recognition beyond the limits of the state wherein it is established. By comity such artificial persons are permitted to contract and to sue in other states. If they avail themselves of that comity, to sue or to make contracts in another state, they may become liable to its jurisdiction to the extent to which they have thus voluntarily subjected themselves. If they have property or rights within the limits of another state, suits can be maintained and judgments enforced against them, to the extent of such property and rights ; but this results from the authority of the state over whatever is within its limits, and not from any jurisdiction over the corporation itself. The judgment is operative only to the extent of such property and rights. As to these it is analogous in its effects to a proceeding in rem. Bissell v. Briggs, 9 Mass. 462. Blackstone Manuf. Co. v. Blackstone, 13 Gray, 488.

The more extended jurisdiction sought to be exercised in this case must stand, if at all, upon the provisions of the Gen. Stsc. 58, § 68.

The purpose of that statute, and of the accompanying sections, was manifestly to secure to our own citizens the benefit and protection of our own laws and tribunals, so far as practicable, in their contracts with insurance companies located elsewhere, but which avail themselves of the comity extended to them to prosecute their business within the limits of this state, through their agents here. The statute must therefore be con- . strued with reference to this apparent object. Whether, in order to make it applicable in any case, the concurrent facts of residence of the party, and a contract made or property or life insured within the state, or either of these facts, would be absolutely requisite, we need not now determine. In the case of the Lafayette Ins. Co. v. French, 18 How. 404, the court, in sustaining the jurisdiction of the state court under a similar statute in Ohio, seem to regard the facts that the contract was made in Ohio,. with a citizen of that state, and to insure property situated there, as of importance in giving to that state the right to exercise such authority over a corporation established in Indiana. But assuming, for the purposes of the present case, that the statute is available to all plaintiffs — non-residents as well as residents — and for all liabilities wherever contracted, and that it would give jurisdiction for a valid judgment for the amount due upon a policy actually in force as a contract, it would still fail to afford ground for exercise of the jurisdiction which the plaintiff’s bill requires.

The statute contains no provision except for the service of process. It does not touch the question of jurisdiction otherwise. It does not assume, nor attempt to confer upon the court, nor require the foreign corporation to concede, any right to exercise authority over the organization, the corporate functions, the by-laws, nor the relations between the corporation and its members ; nor to determine the rights and obligations of the corporation or its members, arising under the law of its creation, and depending on such local law. The requirements of the statute are fully answered, in respect to proceedings in the courts, when the corporation appears as defendant, and waives all question as to due service of process. The foreign corporation will not thereby stand differently in court from any other party who has appeared to defend without objecting to the jurisdiction over the person of the defendant. He may still plead a want of jurisdiction on the ground that the subject matter of the suit, or the remedy sought, is beyond the reach of the court, or not within the sovereign power of the state from which the court has its authority.

The provision that process may be served on the agent of the foreign corporation “ with like effect as if the company existed in this state ” accompanied by the stipulation that such service “ shall be of the same force and validity as if served on said company,” cannot transfer to the tribunals of this state any power which would not be acquired by the mere fact of actual service, or waiver of service, upon the defendant. It cannot obliterate the fact, nor change the consequences that result from the fact, of the non-resident character of the defendant. Such service upon a citizen of another state, casually or temporarily within the reach of process, does not ordinarily subject all his relations, rights and obligations to the cognizance of the courts of the state in which he happens to be found; but only such as have arisen therein, and such as are in their nature personal or transitory. His debts due upon contracts, and bis liability to damages for personal torts, under laws of general recognition, are of this transitory nature, and may be enforced wherever the person of the defendant can be found. All contracts carry with them the law of the place where they were made, to govern their interpretation and effect. In suits upon contracts made and causes of action arising elsewhere, the courts thus do, indeed, to some extent, administer the laws of other states. But in such cases the proceedings are only incidentally affected by them ; they do not depend upon such foreign laws. The rights and liabilities of parties under local laws do not always follow them into other jurisdictions. Many of those rights and liabilities, particularly under our federal system of government, are clearly beyond the reach of the sovereignty of another state. Others are of- such local concern, and so affect local administration only, or depend upon local statute law, that the tribunals of other states may and ought properly to refuse to exercise any jurisdiction in regard to them. It certainly would not be within the power of the state to subject a foreign corporation to the operation of its own insolvency laws; nor to authorize its courts to administer upon it the insolvency laws of the state of its location. And an agreement, in accordance with a statute requiring it, to submit, through its agent here, to all processes requisite for that purpose, would not give validity to such proceedings, even if our laws of insolvency were adapted to the case of a foreign corporation.

Actual service of trustee process upon a non-resident party is held not to subject such party to the jurisdiction of the court for the purpose of charging the property or funds in his hands. Tingley v. Bateman, 10 Mass. 343. Ray v. Underwood, 3 Pick. 302. Hart v. Anthony, 15 Pick. 445. Danforth v. Penny, 3 Met. 564. Gold v. Housatonic Railroad, 1 Gray, 424.

Liabilities growing out of usury laws, and other penal statutes, although in the nature of private and personal claims, will not support an action in other jurisdictions than that within which they arise. Gale v. Eastman, 7 Met. 14.

A trust will not be enforced here, if it arise under a will proved only abroad or in another state, although the parties are all subject to the jurisdiction of the court, and the trust relate exclusively to personal property. Campbell v. Sheldon, 13 Pick. 8. Campbell v. Wallace, 10 Gray, 162.

No proceeding at law nor in equity will lie to enforce the individual liability for corporate debts imposed upon officers or stockholders by the laws of another state in which the corporation is established. Erickson v. Nesmith, 4 Allen, 233. Halsey v. McLean, 12 Allen, 438.

A bill in equity will not be maintained, although jurisdiction is acquired by attachment of funds in the hands of a trustee, within the state, where the object of the bill is to compel a foreign corporation to declare and pay a preferred dividend due to parties here, the payment of which is guaranteed by the corporation. Williston v. Michigan Southern & Northern Indiana Railroad, 13 Allen, 400.

In the opinion of this court, the present suit falls within the range of this class of cases. Jurisdiction of the person alone, obtained by service of process, or rather by acknowledgment of service, does not warrant the court in assuming authority over the subject matter in reference to which the relief is sought. See Story Confl. L. § 543.

But aside from the question of power depending on the right of jurisdiction, we regard it as within the province of this court, sitting as a court of equity, in its discretion, to decline to exercise jurisdiction in such cases ; referring parties to the tribunals of the state upon whose laws their relations and rights peculiarly depend, and where alone they can be effectually and properly administered. This course is especially appropriate in the case of a foreign corporation, when the proceeding is such as not merely to affect its external relations, but also to involve its organic laws, which are necessarily local, and require local administration. We do not undertake at this time to define the limits of the power which the court may or ought to exercise in the case of a contract by a foreign corporation made within this state, with a citizen thereof, and insuring a life or property therein. The present case lacks every one of these three elements of jurisdiction; and, further than this, the plaintiff’s bill seeks, by a judgment of this court, to establish the artificial relation of membership in a foreign corporation, involving neces earily the peculiar local statute laws of another state.

Bill dismissed with costs.