Blackmarr v. City Court of Salt Lake City , 86 Utah 541 ( 1934 )

The sole question presented in this case is the constitutionality of Comp. Laws Utah 1917, § 3287, which provides:

"Every society, whether domestic or foreign, now transacting business in this state, within ninety days after the passage of this chapter, and every such society hereafter applying for admission, shall before being licensed, appoint in writing the commissioner of insurance and his successors in office to be its true and lawful attorney, upon whom all legal process in any action or proceeding against it shall be served, and in such writing shall agree that any lawful process against it which is served upon such attorney shall be of the same legal force and validity as if served upon the society and that the authority shall continue in force so long as any liability remains outstanding in this state. Copies of such appointment, certified by said commissioner of insurance, shall be deemed sufficient evidence thereof and shall be admitted in evidence with the same force and effect as the original thereof might be admitted. Service shall only be made upon such attorney, must be made in duplicate upon the commissioner of insurance or in his absence upon the person in charge of his office, and shall be deemed sufficient service upon such society; provided, however, that no such service shall be valid or binding against any such society when it is required thereunder to file its answer, pleading, or defense in less than thirty days from the date of mailing the copy of such service to such society. When legal process against any such society is served upon said commissioner of insurance he shall forthwith forward by registered mail one of the duplicate copies prepaid and directed to its secretary or corresponding officer. Legal process shall not be served upon any such society except in the manner provided herein."

Plaintiff claims that the foregoing statute is inhibited by subdivision 6 and a part of subdivision 18, § 26, art. 6, of our state Constitution, which provide:

"The Legislature is prohibited from enacting any private or special laws in the following cases: * * *

"6. Regulating the practice of courts of justice. * * *

"18. * * * In all cases where a general law can be applicable, no special law shall be enacted."

The particulars wherein it is urged that section 3287 above quoted is private or special within the meaning of the Constitution are that such section grants to fraternal benefit societies "thirty days from the date of mailing the copy of such service to such society," in which to plead to an action brought against it in a city court, while other defendants in an action brought in a city court must appear and plead within ten days if served within the county in which the action is brought, otherwise within twenty days after being served with summons. Section 1714, Comp. Laws Utah 1917, as amended by Laws Utah 1919, c. 34, pp. 61 and 62. Also that the act is unconstitutional because it provides that, in case of service upon a fraternal benefit society, service of summons shall be made in "duplicate," while in case of service of summons upon any other defendant only one copy of the summons need be left with the defendant served.

The case is brought to this court in the manner following: Plaintiff in this proceeding brought an action in the city court of Salt Lake City, Utah, against the Woodmen of the World, a corporation. The action, consisting of two causes, was to recover for extra assessments which plaintiff alleged he and his assignor paid to the defendant under protest. Plaintiff further alleged that the assessments sued for were collected wrongfully, unlawfully, and in violation of an injunction issued by the district court of Denver, Colo.

After the action was commenced by filing the complaint, summons was issued, and service thereof was had upon E.B. Heagren, cashier and agent of defendant corporation, and also upon J.G. McQuarrie, state insurance commissioner of Utah. In each instance the sheriff's return shows that service was had by leaving a copy of the summons and a copy of the complaint with the person served. The summonses so served directed the defendant to appear within 10 days after service, if served within the county in which the action was brought, otherwise within 20 days after such service. The summonses were served in Salt Lake county on August 23d. On September 4th following, default of the defendant was entered for its failure to answer or otherwise plead to the complaint within the time specified in the summons. On the day following the entry of the default of the defendant, that is, September 5th, a default judgment was entered in favor of the plaintiff and against the defendant. On September 14th following, notice was served upon counsel for plaintiff informing him that on September 23d defendant would move the city court of Salt Lake City to "set aside the judgment entered against it in favor of the plaintiff * * * for the reason that the said judgment is taken illegally and said attempted service is not made in compliance with the laws of Utah." The city court granted the motion to vacate the judgment rendered against the defendant for the reason that the service of summons in the cause was not had as provided by law. Thereupon plaintiff sued out a writ of certiorari in the district court of Salt Lake county. The writ was denied by that court, and plaintiff prosecutes this appeal from the order denying the writ.

It will be noted from the facts recited that the city court judgment was entered in less than 30 days from the date that the state insurance commissioner mailed to the defendant a copy of the summons served upon him. In fact there is nothing in the record which is brought here for review which shows that the insurance commissioner ever mailed a copy of the summons to the defendant. It will also be noted that the sheriff's return fails to show that summons was served in duplicate upon the state insurance commissioner. Thus, if section 3287, Comp. Laws Utah 1917, is constitutional, admittedly the action of the city court in vacating the judgment rendered in favor of plaintiff and against the Woodmen of the World was proper. There is no question raised as to a proceeding for a writ of certiorari being the proper remedy to test the matter which divides the parties. Therefore we shall dispose of the cause by determining whether section 3287, supra, is or is not unconstitutional. In support of plaintiff's claim that the section is unconstitutional, the following cases are cited: State ex rel. Ramsey, CountyAttorney, v. Deming, 98 Kan. 420, 158 P. 34; McClain v.Williams, 11 S.D. 60, 75 N.W. 391; People v. Budd, 24 Cal. App. 176,140 P. 714; Bear Lake County v. Budge, 9 Idaho 703,75 P. 614, 108 Am. St. Rep. 179; Gulf, Colo. Santa Fe Ry. Co. v. Ellis, 165 U.S. 150, 17 S. Ct. 255, 41 L. Ed. 666; Board of Education of Ogden City v.Hunter, 48 Utah 373, 159 P. 1019, 1024. Counsel for plaintiff also call our attention to the following cases: People v.Hibernian Banking Ass'n, 245 Ill. 522, 92 N.E. 305; Wallace v. Leiter, 76 Ohio St. 185, 81 N.E. 187; City of Tulare v.Hevren, 126 Cal. 226, 58 P. 530; People v. Cosmopolitan FireIns. Co., 246 Ill. 442, 92 N.E. 922; O'Connell v. MenomineeBay Shore Lumber Co., 113 Mich. 124, 71 N.W. 449; Kaufman v.West, 133 Wash. 192, 233 P. 321; Fountain Park Co. v.Hensler, 199 Ind. 95, 155 N.E. 465, 50 A.L.R. 1518; DavisConstr. Co. v. Board of Commissioners, 192 Ind. 144,132 N.E. 629, 21 A.L.R. 557; Crisman v. State, 93 Tex.Crim. R.,248 S.W. 343; Jones v. Paxton (D.C.) 27 F.2d 364; Sorenson v. Webb, 111 Miss. 87, 71 So. 273.

Defendant cites, in support of the claim that the law in question is constitutional, the following cases and authorities: 6 R.C.L. 359, and cases there cited; State v. Condon,108 Tenn. 82, 65 S.W. 871; Union Central Life Ins. Co. v. Black,67 Utah 268, 247 P. 486, 47 A.L.R. 372; Pickering v.Industrial Comm., 59 Utah 35, 201 P. 1029; Board of MedicalExaminers v. Blair, 57 Utah 516, 196 P. 221; Stillman v.Lynch, 56 Utah 540, 192 P. 272, 278, 12 A.L.R. 552; State v.Garness, 83 Wash. 699, 144 P. 929; Union Sulphur Co. v.Reed (D.C.) 249 F. 172; Hill v. Rae, 52 Mont. 378,158 P. 826, L.R.A. 1917A, 495, Ann. Cas. 1917E, 210; In re Opinion ofJustices, 251 Mass. 569, 147 N.E. 681; City of Louisville v.Coulter, 177 Ky. 242, 197 S.W. 819, L.R.A. 1918A, 811; People v. Jordan, 172 Cal. 391, 156 P. 451; Hunsaker v. Harris,37 Utah 226, 109 P. 1; Ex parte Stephan, 170 Cal. 48, 148 P. 196, Ann. Cas. 1916E, 617; State v. Cannon, 125 Wash. 515,217 P. 18; Hawthorn v. People, 109 Ill. 302, 50 Am. Rep. 610;Vogel v. Pekoc, 157 Ill. 339, 42 N.E. 386, 30 L.R.A. 491;Cincinnati, H. D. Ry. Co. v. McCullom, 183 Ind. 556,109 N.E. 206, Ann. Cas. 1917E, 1165; Saylor v. Duel, 236 Ill. 429,86 N.E. 119, 19 L.R.A. (N.S.) 377; Fawcett v. Ball,80 Cal. App. 131, 251 P. 679; Grigsby v. King, 202 Cal. 299, 260 P. 789; OldHomestead Bakery v. Marsh, 75 Cal. App. 247, 242 P. 749;State v. Richcreek, 167 Ind. 217, 77 N.E. 1085, 5 L.R.A. (N.S.) 874, 119 Am. St. Rep. 491, 10 Ann. Cas. 899; Eddington v. Union Portland Cement Co., 42 Utah 274, 130 P. 243; JohnHancock Mutual Life Ins. Co. v. Warren, 181 U.S. 73,21 S. Ct. 535, 45 L. Ed. 755; Ozan Lumber Co. v. Bank, 207 U.S. 251,28 S. Ct. 89, 52 L. Ed. 195; State v. Fraternal Knights Ladies,35 Wash. 338, 77 P. 500; Pasadena City High School District ofLos Angeles County v. Upjohn, 206 Cal. 775, 276 P. 341, 63 A.L.R. 408; Yamhill Electric Co. v. City of McMinnville,130 Or. 309, 274 P. 118, 280 P. 504; In re Lake, 89 Cal. App. 390,265 P. 325; State v. Quigg, 94 Fla. 1056, 114 So. 859; BigWood Canal Co. v. Chapman, 45 Idaho, 380, 263 P. 45; Manos v. City of Seattle, 146 Wash. 210, 262 P. 965; 12 C.J. 1135; 12 C.J. 113.

That the issuance and service of summons is embraced within the constitutional provision with respect to "the practice of courts of justice" may well be conceded. 1 Such is the effect of the decisions: Branch v.McCormick's Estate, 72 Or. 608, 143 P. 915, 144 P. 425;Hoffman v. Paradis, 259 Ill. 111, 102 N.E. 253.

In the main, the authorities cited by the respective parties discuss one or more principles of law somewhat analogous to the question involved in the case in hand, but none of them deal with a state of facts such as are presented in the instant case. The general rules to be applied in testing whether a statute does or does not offend against constitutional provisions prohibiting the enactment of special or private laws are well established, but difficulty is frequently experienced in applying the rules to particular facts. This court, in a number of cases, has had occasion to refer to and apply some of such rules in testing the constitutionality of legislative enactments in cases somewhat analogous to the case now under review. In the case of Board ofEducation of Ogden City v. Hunter, supra, it is said:

"While courts do not lightly interfere with the Legislature in choosing or selecting methods of classification, yet they do not, and may not, shut their eyes to classifications that clearly and manifestly operate unequally, unjustly, and unfairly upon those who come within the same class."

In the case of Stillman v. Lynch, supra, it is said:

"Every presumption is in favor of the constitutionality of a statute, and in case of a doubt the statute must be held to be valid."

In the case of Eddington v. Union Portland Cement Co., supra, it was held that our statute which dispenses with a bond on appeal where the appellant is unable to pay the costs on appeal is not unconstitutional as discriminating against litigants. While no constitutional question was raised in the case of Hunsaker v. Harris, supra, this court in that case held that it was competent for the Legislature to fix a period of ten days in which an appeal may be taken in an action relating to forcible entry and detainer, notwithstanding the fact that under our Code relating to civil actions an appeal may be taken at any time within six months after the entry of judgment. In State v.Packer Corporation, 77 Utah 500, 297 P. 1013, 1019, the members of this court were divided upon the results that should be reached, but they were all agreed that a "classification, to be valid, ``must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly circumstanced shall be treated alike.'"

It will be noted that the section, the provisions of which are here brought in question, is a part of title 52, c. 2, Comp. Laws Utah 1917. In section 3271 a fraternal benefit society is defined as "any corporation, society, order, or voluntary association, without capital stock, organized and carried on solely for the mutual benefit of its members and their 2, 3 beneficiaries, and not for profit, and having a lodge system with ritualistic form of work and representative form of government, and which shall make provision for the payment of benefits in accordance with § 3275." As thus defined, a fraternal benefit society is essentially an eleemosynary organization. It, however, is vested with the right to enter into contracts of insurance against death and disability not unlike contracts for life and accident insurance written by companies organized for profit. The act, of which the section under review is a part, contains comprehensive provisions for the supervision and control of fraternal benefit societies doing business in this state. It was evidently enacted to protect the residents of this state in rights which they might acquire under contracts between them and fraternal benefit societies for the payment of death and disability benefits. It would also seem that one of the purposes of the act was to enable residents of this state who desired death and disability benefits to secure the same at the minimum cost consistent with safety. The act permits corporations, societies, orders, and voluntary associations, both domestic and foreign, which comply with its provisions, to engage in business in this state. Foreign fraternal benefit societies are required to file with the state insurance commissioner a certified copy of their charters or articles of association. The certificate must be made by the proper officer of the home state, province, or country where the society is legally organized. No requirement is made by the act that any officer or process agent of such organization, whether domestic or foreign, shall be a resident of this state other than that all such organizations, whether domestic or foreign, shall "appoint in writing the commissioner of insurance and his successors in office to be its true and lawful attorney, upon whom all legal process in any action or proceeding against it shall be served." The powers and duties of regulating and supervising such organizations are, in a number of particulars, placed by the act on the insurance commissioner. From what has been said, it will be observed that fraternal benefit societies as defined in our statute have characteristics which are common to other legal entities, but that they also have other characteristics peculiar to themselves. While the difference between fraternal benefit societies and some other forms of entities recognized by law may not be as marked, as for example the difference between a bank and an insurance company, still the Legislature has by the act clearly fixed the characteristics of such societies. We have no serious difficulty in reaching the conclusion that it was competent for the legislative authority to place fraternal benefit societies in a class by themselves. Nor, as we understand plaintiff's position, does he complain because fraternal benefit societies are placed in a separate and distinct class from other legal entities. His complaint is that the Legislature, because of constitutional provision prohibiting the enactment of any private or special law regarding the practice of courts, was without authority to enact a law making the manner of service of summons upon, and the time for answer given to, a fraternal benefit society different from that of other defendants. It will be observed that by the provisions of the act all fraternal benefit societies, whether foreign or domestic, are required to be served in the same manner, and are given the same length of time after service in which to answer. The test of whether or not a given enactment of the Legislature regarding the practice of courts of justice is inhibited by our Constitution must be tested by the same principles that are applied to classifications generally. As "the classification to be valid must rest upon some ground of difference having fair and substantial relation to the object of the legislation," so also must a law to be valid providing for a departure from the general law regulating the service of summons upon a defendant "rest upon some ground of difference having a fair and substantial relation to the object of the legislation so that all persons similarly circumstanced shall be treated alike."

By the provisions of the act now under review, the defendant, being a fraternal benefit society, was precluded from doing any business in this state until it appointed the state insurance commissioner its process agent. The requirement is the same whether the defendant is organized in this state 4, 5 or in some other state of the Union or in a foreign country. In either event service of summons to be legal must be had upon the state insurance commissioner. It is reasonable to assume that the state insurance commissioner would not, in most instances, be a member of, or have any personal interest in, all of the fraternal benefit societies operating in this state. Obviously a summons served upon him would not, in most instances, advise the defendant society that an action had been commenced against it until he in turn so advised the society. If the defendant society was organized under the laws of another state or foreign country, and there resided its officers, considerable time might be required for the copy of the summons to reach the society after it was mailed as directed by the act. Even in the case of a domestic society, some time would be required for the summons to reach the defendant after it had been served upon the state insurance commissioner. It would therefore seem clear that, so long as the act under review requires fraternal benefit societies to appoint the state insurance commissioner their process agent, there is very good reason, if indeed justice does not require, that such societies have a longer period in which to answer than is allowed when a defendant or its officers are personally served. A defendant served with summons outside of the county where the action is lodged is given a longer time to answer than when served within such county. The law which provides for such discrimination may not be said to offend against the constitutional provision here under review. For similar reasons, a defendant served with summons as provided in the act in question may be given a longer time to answer than in case of personal service without offending against the constitutional provision relied upon by plaintiff in this proceeding. One served with summons has a constitutional right to a reasonable time after service in which to answer an action brought against him. What is a reasonable time may well be affected by the manner as well as by the place of service. So also may it be said that the requirement that two copies of the summons be left with the state insurance commissioner is not without reason. By the service of two copies of the summons the commissioner may retain one for his own reference and mail the other to the defendant society.

One further question is suggested with respect to the act under review, viz.: Does that provision of the act which requires that all fraternal benefit societies doing business in this state shall appoint the state insurance commissioner their process agent offend against the provision of the Constitution which prohibits the enactment of special or private legislation? That phase of the law is not urged in the briefs of counsel, but would seem to be involved in the matters which are urged. We have heretofore indicated some of the characteristics which are peculiar to fraternal benefit societies as defined in the act. Such an organization may be a corporation, society, an order, or other voluntary association. It must be without capital stock and carried on solely for the mutual benefit of its members and their benficiaries. The act does not require that any officer or other agent of such society be a resident of this state. In the absence of the provision requiring that a fraternal benefit society must appoint the state insurance commissioner its process attorney, it may well be that in a given case no personal service of summons could be had upon such a society. Had the act required that a fraternal benefit society have one or more of its officers or a process agent, other than the state insurance commissioner, a resident of this state, such provision might well add to the cost of maintaining such a society and thus reduce the amount available for death and disability benefits. The requirement that all summonses in actions brought against a fraternal benefit society be served upon the state insurance commissioner would tend to keep him informed concerning the business of such society and thus assist him to better perform his duties with respect to the supervision thereof. Whatever may have prompted the Legislature in enacting the law here questioned, we are of the opinion that it falls within the rule heretofore indicated. We can perceive of no good reason why the rule with respect to the authority of the Legislature to make classifications should not apply to the manner of serving summonses as well as other treatment accorded a particular class. We are less reluctant in reaching this conclusion because the plaintiff herein, and others similarly situated, cannot well sustain any pecuniary loss by reason of the fact that fraternal benefit societies are given 30 days after service of summons in which to plead to actions brought against them while other defendants are required to plead in a somewhat shorter period.

The order dismissing the writ is affirmed. Costs are awarded respondents.

FOLLAND and EPHRAIM HANSON, JJ., concur.