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Opinion of the Court.
and of prohibition above quoted, by which, in sec. 5983, ‘no policy of insurance' issued by any life insurance company authorized to do business in this state 'shall, after the payment of two full annual premiums, be forfeited or become void by reason of the non-payment of premium thereon ; but it shall be subject to the following rules of commutation;' and in sec. 5985, that if the assured dies within the term of temporary insurance, as determined in the former section, the company shall be bound to pay the amount of the policy,''anything in the policy to the contrary notwithstanding.'”
And after stating the cases in which the terms of the policy are permitted to differ from the plan of the statute, it was further said:
“ It follows that the insertion, in the policy, of a provision for a different rule of commutation from that prescribed by the statute, in case of default of payment of premium after three premiums have been paid; as well as the insertion, in the applica. tion, of a clause by which the beneficiary purports to 'waive and relinquish all right or claim to any other surrender value than that so provided, whether required by a statute of any State or not;' is an ineffectual attempt to evade and nullify the clear words of the statute.”
In Orient Insurance Company v. Daggs, 172 U. S. 557, the insurance company contended it had the constitutional right to limit by contract its liability to actual damages caused by fire against the provision of the statute which made, in case of total loss, the amount for which the property was insured the measure of damages. We sustained the statute independently of the ground that it was a condition of the permission of the company to do business in the State. We sustained it on the ground of the clear right of the State to pass it, and to accomplish its purpose by limiting the right of the insurer and insured to contract in opposition to its provisions.
Further comment on this head may not be necessary, and we only continue the discussion in deference to the insistence of counsel upon the interstate character of the policy in suit. It is the basis of every division of their argument, and an immunity from control is based upon it for plaintiff in error, which, it
Opinion of the Court.
seems to be conceded, the State can exert over corporations of its own creation.
An interstate character is claimed for the policy, as we understand the argument, because plaintiff in error is a New York corporation and the insured was a citizen of Missouri, and because, further, the plaintiff in error did business in other States and countries. Does not the argument prove too much? Does it depend upon the residence of plaintiff in error in New York? If so, it would seem that every contract between citizens of different States becomes at once an interstate contract, and may be removed from the control of the laws of the State at the choice of parties. If the argument does not depend on the residence of the plaintiff in error, but on the other elements, a Missouri insurance corporation can have the same relation to them as plaintiff in error, and can be, as much as plaintiff in error claims to be, “the administrator of a fund collected from the policy holders in different States and countries for their benefit”—the condition which plaintiff in error claims demonstrates the necessity of a uniform law to be stipulated by the parties exempt from the interference or the prohibition of the State where the insurance company is doing business. And yet plaintiff in error seems to concede that such power of stipulation Missouri corporations do not have, while it, a foreign corporation and because it is a foreign corporation, does have.
After stating the necessity of a uniform law and an equal necessity that parties may stipulate for it, counsel for plaintiff in error say:
“ It necessarily follows, therefore, that the insurance policy contracts of foreign insurance companies, as contracts of other foreign corporations, made by them with the citizens of a State, when doing business in that State through the comity of the State, are like the contracts of natural persons, subject to the limitations of their own charters, and the situs of such contracts is to be determined by the fundamental rules of 'universal law.'
“As will be hereafter seen, this status as foreign corporations does not mean that they were not subject to the laws of the State enacted in the full plenitude of the police power of the State. The State doubtless could limit their contractual power by prohibiting the making of certain contracts. But unless the
Opinion of the Court.
foreign corporation is reincorporated as a domestic corporation, it remains a foreign corporation, and its contracts with citizens of the State are interstate contracts, subject to the right of choice of law thereof, which is inherent in the law of interstate contracts."
A foreign corporation undoubtedly is not a domestic corporation, and the distinction must often be observed, but the deduction from it by plaintiff in error cannot be maintained.
The power of a State over foreign corporations is not less than the power of a State over domestic corporations. No case declares otherwise. We said in Orient Ins. Co. v. Daggs, supra:
“That which a State may do with corporations of its own creation it may do with foreign corporations admitted into the State. This seems to be denied, if not generally, at least as to plaintiff in error. The denial is extreme and cannot be maintained. The power of a State to impose conditions upon foreign corporations is certainly as extensive as the power over domestic corporations, and is fully explained in Ilooper v. California, 155 U. S. 648, and need not be repeated.”
2. Is the statute an attempted regulation of commerce between the States? In other words, is mutual life insurance commerce between the States?
That the business of fire insurance is not interstate commerce is decided in Paul v. Virginia, 8 Wall. 168; Liverpool Ins. Co. v. Mass., 10 Wall. 566; Phila. Fire Asso. V. New York, 119 U. S. 110. That the business of marine insurance is not is decided in Hooper v. California, 155 U. S. 648. In the latter case it is said that the contention that it is “involves an erroneous conception of what constitutes interstate commerce.”
We omit the reasoning by which that is demonstrated, and will only repeat, “The business of insurance is not commerce. The contract of insurance is not an instrumentality of commerce. The making of such a contract is a mere incident of commercial intercourse, and in this respect there is no difference whatever between insurance against fire and insurance against the 'perils of the sea.'' And we add, or against the uncertainty of man's mortality.
Judgment affirmed. VOL. CEXXVIII-26
Statement of the Case.
BANHOLZER v. NEW YORK LIFE INSURANCE COM
ERROR TO THE SUPREME COURT OF THE STATE OF MINNESOTA.
No. 277. Argued and submitted April 27, 1900.– Decided May 28, 1900.
This case is dismissed for want of jurisdiction, as the Supreme Court of Minnesota did not deny the validity of the New York statute with regard to insurance, but only construed it, and even granting that its construction was erroneous, faith and credit were not denied to the statute.
This action was brought in the District Court of the Second Judicial District of the State of Minnesota upon a life insurance policy for $20,000, issued by defendant in error to William Banholzer, husband of the plaintiff in error, dated the 16th of September, 1895, payable upon the death of Banholzer to plaintiff in error, or to Banholzer himself on the 16th of September, 1915, if he should be living then
The premiums were to be paid annually in advance on the 16th day of September of every year, until twenty full years' premiums should be paid.
The first premium was paid, which continued the policy in force until the 16th of September, 1896.
The policy contained the following provisions :
“If any premium is not paid on or before the day when due, this policy shall become void, and all payments previously made shall remain the property of the company, except as hereinafter provided.
“A grace of one month will be allowed in payment of subsequent premiums after this policy shall have been in force three months, subject to an interest charge at the rate of five per cent per annum for the number of days during which the premium remains due and unpaid. During the month of grace this policy remains in force, the unpaid premium, with interest, as above, remains an indebedtedness to the company, which will be deducted from the amount payable under this policy if the death of the insured shall occur during the month.”
Statement of the Case.
On the 6th day of October, 1896, Banholzer paid the defendant the sum of $286 in cash, and executed and delivered to the defendant the following note:
“St. Paul, Minn., 9-16, 1896. “Without grace, six months after date, I promise to pay to the order of the New York Life Insurance Company, eight hundred and sixty dollars, at Second National Bank, St. Paul, Minn. Value received, with interest at the rate of five per cent per annum.
“This note is given in part payment of the premium due 9–16–96, onthe above policy, with the understanding that all claims to further insurance and all benefits whatever which full payment in cash of said premium would have secured, shall become immediately void and be forfeited to the New York Life Insurance Company, if this note is not paid at maturity, except as otherwise provided in the policy itself. (Signed)
( WILLIAM BANHOLZER." The following receipt was given for the note:
“St. Paul, MINN., 10–6–96. “Note six months, after date 9-16-'96, due 3-16–97, without grace, made by William Banholzer, payable at Second National Bank, St. Paul, Minn. Received from the owner of policy No. 692,465, $286 in cash, and his note at six months for $860, which continues said policy in force until the 16th day of September, 1897, at noon, in accordance with its terms and conditions, provided the above note is paid at maturity, and this receipt is signed by
“J. A. CAMPBELL, Cashier." The note matured March 16, 1897, when it was surrendered to Banholzer, and he paid to the defendant $241.50 in cash, and executed and delivered to the defendant a new note in terms exactly similar to the first note, except that it was payable in sixty days from date. This note was never paid.
On May 28, 1897, Banholzer was taken sick, and died on July 5, 1897.
On June 18, 1897, Banholzer, through his attorney, sent a