Western Massachusetts Mutual Fire Insurance v. Girard Point Storage Co.

Opinion by

Porter, J.,

This is an appeal from the court below, discharging the rule for judgment for want of a sufficient affidavit of defense.

The plaintiff is a corporation organized under the laws of the state of Massachusetts. The defendant is a Pennsylvania cor poration, to whom two policies of fire insurance were issued by the plaintiff, covering property in Philadelphia. These policies were alleged by the statement of claim and admitted by the affidavit of defense, to have been “issued and delivered to the defendant at Springfield, Massachusetts.” The insurance was to cover the period from June 25, 1894, to June 25, 1895. On April 25, 1895, the policies were canceled and the defendant received a return premium. On May 25, 1895, an assessment was sought to be imposed upon the defendant for losses and expenses incurred by the plaintiff company while the policies were in force. The affidavit of defense denies liability on the ground that: “ the said plaintiff being a foreign insurance company, had not prior to the placing of the said insurance complied with the acts of assembly of the state of Pennsylvania regulating and directing the way and manner in which foreign insurance companies should undertake the insurance of property in the State of Pennsylvania.” And “ that the placing of the said insurance and the issuing of the said policies by the plaintiff on the property of the defendant situated in the State of Pennsylvania as aforesaid was contrary to the provisions of the said statute” and “avers that under such circumstances the plaintiff is not entitled to recover from. the defendant the assessments,” etc.

It is not necessary to a decision of this case to quote the numerous provisions of the several acts of assembly. The purpose of the system of legislation in Pennsylvania respecting fire insurance has been, to limit the business to corporations created under the laws of the commonwealth and to foreign corporations which have complied with certain expressed regulations.

The objects of the legislation have been for revenue and to protect the citizens of the commonwealth from irresponsible and unsupervised insurers. The methods of enforcing the legislative provisions are by the imposition of punishment upon the persons (principals or agents) who fail to regard the prohibitions ; by imposing personal liability on agents attempting to represent foreign insurance companies not complying with the law, and by declaring void, contracts made in violation of the several acts.

In the case now before us there is nothing to indicate that the plaintiffs were doing an insurance business in Pennsylvania. They had neither office nor agent within the commonwealth. The policies in the present case are admitted to have been “ issued and delivered in Massachusetts.”

True, the property insured was located in Pennsylvania. This, however, does not in our opinion bring the contract of insurance within the prohibitions of the statutes. The illustration used in Story on Conflict of Laws, sec. 278a, is applicable. He says : “ So a policy of insurance executed in England on a French steamship for the French owner on a voyage from one French port to another, would be treated as an English contract, and in cases of loss the debt would be treated as an English debt. Indeed all the rights and duties and obligations growing out of such a policy would be governed by the law of England and not by the law of France, if the laws respecting insurance were different in the two countries.”

The issuance and delivery of the policies in Massachusetts made the contract a Massachusetts contract to be governed by the law of Massachusetts, free from taint of illegality by reason of the existence of penal or prohibitive legislation in Pennsylvania. To hold otherwise would be to give to these acts extraterritorial effect, and to deprive the citizen of his constitutional right to make such contracts as he may desire beyond the boundaries of Pennsylvania: Allgeyer v. Louisiana, 165 U. S. 578.

In reaching the conclusion herein expressed we are guided by the opinion of the Supreme Court in the case of Commonwealth v. Biddle, 139 Pa. 605. It is true that there the case required only a construction of the penal acts. The expressions used, however, have direct application to the present case: “ It may be readily conceded that an act which should attempt to prevent a non-resident owner of property in this state or a resident owner not at the time within its territory, from insuring his property in any manner lawful in the place of contract, would be void as extra-territorial. So, also, it may be conceded that if a citizen of Pennsylvania has, by a contract validly made outside of its boundaries, incurred a liability, no law of this state can, under the constitution of the United States, prevent his fulfilling that obligation, even by an act done within the state. But, beyond the limitation imposed by the constitution, the power of the legislature to declare any acts done within the territory of the state unlawful or criminal cannot be questioned, and all considerations of wisdom or policy, of hardship, of difficulty or even impossibility of general enforcement, must be addressed to the law-making branch of the government.”

The case of McBride v. Rinard, 172 Pa. 548, has been cited, as expressing a conclusion adverse to that reached by us in the present cause. That, however, was an action brought to hold a local agent of a foreign corporation personally liable as principal, and the remark contained in the opinion palpably refers to companies having an agency within the state. It cannot apply, in our opinion, to companies who have never come within the boundaries of the commonwealth, who have neither office nor agent here and who have but issued and delivered policies in another state in a particular instance to a citizen of Pennsylvania.

Neither precedent nor authority can be found in the cases cited by the defendant for holding that the transaction in this case comes within the statutes forbidding the doing of business in Pennsylvania.

The assignments of error are sustained; the judgment of the court below is reversed, and the record is remitted with direction to the court below to enter judgment against the defendants for such sum as to right and justice may belong unless other legal or equitable cause be shown to the said court why such judgment should not be so entered.