Chicago Life Insurance Co. v. Needles

Last updated
Chicago Life Insurance Co. v. Needles
Seal of the United States Supreme Court.svg
Argued January 29, 1885
Decided March 2, 1885
Full case nameChicago Life Insurance Co. v. Needles
Citations113 U.S. 574 ( more )
5 S. Ct. 681; 28 L. Ed. 1084
Court membership
Chief Justice
Morrison Waite
Associate Justices
Samuel F. Miller  · Stephen J. Field
Joseph P. Bradley  · John M. Harlan
William B. Woods  · Stanley Matthews
Horace Gray  · Samuel Blatchford
Case opinion
MajorityHarlan, joined by unanimous

Chicago Life Insurance Co. v. Needles, 113 U.S. 574 (1885), was a decision by the United States Supreme Court. It involved the writ of error regarding a denial of a motion and final judgment rendered perpetually enjoining Chicago Life Ins. Co. from further prosecution of its business. From that judgment, a writ of error was prosecuted to the supreme court of the state, where, among other things, was assigned for error the refusal of the court of original jurisdiction to adjudge that the said statutes of Illinois were in violation of the Constitution of the United States. The judgment of the inferior court was in all things affirmed by the supreme court of the state, and from that judgment of affirmance the present writ of error is prosecuted. [1]

Contents

An Act of the General Assembly of Illinois created a body politic and corporate by the name of the Travelers Insurance Company, with authority to carry on the business of insuring persons against the accidental loss of life or personal injury sustained while traveling by railways, steamers, and other modes of conveyance. Another Act formally accepted by the company, its name was changed to that of the Chicago Life Insurance Company, and was invested with power to make insurance upon the lives of individuals, and of persons connected by marital relations, to those applying for insurance, or in whom the applicant had a pecuniary interest as creditor or otherwise, "to secure trusts, grants, annuities, and endowments, and purchase the same in such manner and for such premiums and considerations as the board of directors or executive committee shall direct." A general law of the state, approved March 26, 1869, and which took effect July 1, 1869, entitled "An act to organize and regulate the business of life insurance"

Under the authority conferred by the latter statute, the auditor caused an examination to be made by the chief clerk of the insurance department of the state into the condition of this company. That officer reported that it had been doing a losing business for several years, was insolvent within the meaning of the statute, and that immediate steps should be taken to appoint a receiver, to the end that the affairs of the company be wound up as quickly as possible, as being for the best interests of its policyholders. As the result of that examination, the present proceedings were commenced by the auditor in the Circuit Court of Cook County under the said act of 1874. The petition filed by him shows that in his opinion the condition of the company rendered its further continuance in business hazardous to the insured. He prayed that the company be enjoined from further prosecuting its business; that a receiver be appointed to take charge of its real estate and effects, and that such other relief be granted as should be meet. An injunction was issued and a receiver appointed with authority to take possession of the property of the company, the latter being directed to execute all conveyances necessary to vest in him full title to all its property, assets, and choses in action. The company, by its answer, put the plaintiff on proof of all the material allegations of the petition.

At the final hearing, it moved the court, upon written grounds, for a final decree in its behalf; one of which was that the statutes of the state under which these proceedings were had were in violation of the Constitution of the United States in that they impaired the obligation of the contract between the state and the company, as well as of the contracts between the company and its policyholders and creditors. This motion was denied and a final judgment rendered perpetually enjoining the company from further prosecution of its business.

The whole argument in behalf of the company proceeds upon the erroneous assumption that this Court has authority to determine whether the facts make a case under the statutes of 1869 and 1874, and if it be found that they did not, that it must enforce the right of the company to continue in business, despite the final judgment to the contrary by the courts of the state which created it, whereas we have only to inquire whether the statutes in question impair the obligation of any contract which the company has with the state or violate any other provision of the national Constitution. Being of opinion that they are not open to any objection of that character, the judgment must be affirmed without any reference to the weight of the evidence upon any issue of fact made by the pleadings.

The judgment was affirmed.

See also

Related Research Articles

A writ of coram nobis is a legal order allowing a court to correct its original judgment upon discovery of a fundamental error that did not appear in the records of the original judgment's proceedings and that would have prevented the judgment from being pronounced. The term coram nobis is Latin for "before us" and the meaning of its full form, quae coram nobis resident, is "which [things] remain in our presence". The writ of coram nobis originated in the courts of common law in the English legal system during the sixteenth century.

Ayotte v. Planned Parenthood of Northern New England, 546 U.S. 320 (2006), was a decision by the Supreme Court of the United States involving a facial challenge to New Hampshire's parental notification abortion law. The First Circuit had ruled that the law was unconstitutional and an injunction against its enforcement was proper. The Supreme Court vacated this judgment and remanded the case, but avoided a substantive ruling on the challenged law or a reconsideration of prior Supreme Court abortion precedent. Instead, the Court only addressed the issue of remedy, holding that invalidating a statute in its entirety "is not always necessary or justified, for lower courts may be able to render narrower declaratory and injunctive relief."

Insurance bad faith is a tort unique to the law of the United States that an insurance company commits by violating the "implied covenant of good faith and fair dealing" which automatically exists by operation of law in every insurance contract.

Paul v. Virginia, 75 U.S. 168 (1869), is a U.S. corporate law decision by the United States Supreme Court. It held that a corporation is not a citizen within the meaning of the Privileges and Immunities Clause. Of greater consequence, the Court further held that "issuing a policy of insurance is not a transaction of commerce," effectively removing the business of insurance beyond the United States Congress's legislative reach.

Polleys v. Black River Improvement Co., 113 U.S. 81 (1885), was a writ of error in the circuit court of Wisconsin for La Crosse County, and a motion was made to dismiss it.

Bicknell v. Comstock, 113 U.S. 149 (1885), was an action to recover the cost paid for a tract of land in Iowa and the value of the improvements made by the defendant. The complaint alleged a conveyance by Bicknell to one Bennett, the subsequent transfer to the defendant by sundry mesne conveyances, valuable improvements on the premises made by Bennett and his grantees, and a failure of title in Bicknell when the deed was made by reason of a superior title in the State of Iowa under a land grant. Judgment below for plaintiff, to reverse which this writ of error was brought.

Price v. Pennsylvania Railroad Co., 113 U.S. 218 (1885), was a case where the plaintiff sued the defendant for the loss of her husband by a death which the jury found, by a special verdict, to be caused by the negligence of the company's servant or servants.

Baylis v. Travelers' Insurance Company, 113 U.S. 316 (1885), was a case where after close of testimony in a trial, the defendant moved to dismiss on the ground of the insufficiency of the evidence to sustain a verdict. This motion was denied and the plaintiff asked that the case be submitted to the jury to determine the facts on the evidence. The court refused this, and plaintiff excepted. The court then ordered a verdict for plaintiff, subject to its opinion, whether the facts proved were sufficient to render defendant liable to plaintiff on the cause of action stated. Plaintiff moved for judgment on the verdict, and defendant moved for judgment on the pleadings and minutes of trial. Judgment was rendered for defendant upon an opinion of the court as to the effect of the evidence and as to the law on the facts as deduced from it by the court. Held that the plaintiff was thereby deprived of his constitutional right to a trial by jury, which he had not waived, and to which he was entitled.

Ex parte Bigelow, 113 U.S. 328 (1885), was an application for a writ of habeas corpus to release the petitioner from imprisonment in the District of Columbia jail where he was held, as he alleges, unlawfully by John S. Crocker, the warden of the jail. He presents with the petition the record of his conviction and sentence in the Supreme Court of the District to imprisonment for five years under an indictment for embezzlement, and this record and the petition of the applicant present all that could be brought before the court on a return to the writ, if one were awarded.

Quincy v. Jackson, 113 U.S. 332 (1885), was a writ of error brought to reverse a judgment by the court below by Jackson, a relator, who recovered a judgment against the City of Quincy, Illinois, for the sum of $9,546.24, with costs of suit.

Chicago & Northwestern R. Co. v. Crane, 113 U.S. 424 (1885), was a suit brought by a taxpayer and resident in the Town of Polk City, Iowa, on behalf of himself and all other resident voters, taxpayers and property holders, commenced suit in a state court of Iowa against two companies, praying for a peremptory writ of mandamus to compel the reconstruction and operation of the old line after the Chicago and North Western Railway, an Illinois corporation. changed the line and made it avoid the city, constructing a branch to the latter. C&NW Railway was leased the line by the D&M Railroad Company, an Iowa Corporation, who had received from a township in Iowa, in consideration of its agreement to construct and maintain a railroad to a city in the township, the proceeds of a special tax and a conveyance of a large amount of swamp lands. It constructed the railroad and operating it for a time before leasing it to C&N Railway.

Chase v. Curtis, 113 U.S. 452 (1885), was a suit brought under the provisions of §12 of the Act of the Legislature of New York of February 17, 1848, as amended June 7, 1875, where trustees of corporations formed for manufacturing, mining, mechanical, or chemical purposes are made liable for debts of the company on failure to file the reports of capital and of debts required by that section, is penal in its character, and must be construed with strictness as against those sought to be subjected to its liabilities. Suit was brought to recover from the trustees of such a corporation the amount of a judgment against the corporation, the judgment roll is not competent evidence to establish a debt due from the corporation to the plaintiff.

A claim in tort against a corporation formed under that act, as amended, is not a debt of the company for which the trustees may become liable jointly and severally under the provisions of the Act. In a proceeding to enforce a liability created by a state statute, the courts of the United States give to a judgment of a state court the same effect, either as evidence or as cause of action, which is given to it in like proceedings in the courts of the state whose laws are invoked in the enforcement.

The complaint in this action, after alleging that the plaintiff in error was a citizen of Pennsylvania, and the defendants citizens of New York, proceeded as follows:

"Wherefore the plaintiffs demand judgment against the above-named defendants in the sum of $40,828.97, with interest on $40,500.00 from the 30th day of July, 1874, and on $328.97 from the 3d day of October, 1874, besides the costs and disbursements of this action."

To this complaint the defendants severally demurred on the ground that it did not state facts sufficient to constitute a cause of action. The demurrer was sustained and judgment rendered in favor of the defendants dismissing the complaint, to reverse which this writ of error is prosecuted.

The statute on which the action is founded is as follows:

"SECTION 1. The twelfth section of the 'Act to authorize the formation of corporations for manufacturing, mining, mechanical, or chemical purposes,' passed February 17, 1848, as said section was amended by chapter 657 of the Laws of 1871, is hereby further amended, so that section 12 shall read as follows:"

"§ 12. Every such company shall, within twenty days from the first day of January, if a year from the time of the filing of the certificate of incorporation shall then have expired, and if so long a time shall not have expired, then within twenty days from the first day of January in each year after the expiration of a year from the time of filing such certificate, make a report, which shall be published in some newspaper published in the town, city, or village, or, if there be no newspaper published in said town, city, or village, then in some newspaper published nearest the place where the business of the company is carried on, which shall state the amount of capital, and of the proportion actually paid in, and the amount of its existing debts, which report shall be signed by the president and a majority of the trustees, and shall be verified by the oath of the president or secretary of said company, and filed in the office of the clerk of the county where the business of the company shall be carried on, and if any of said companies shall fail so to do, all the trustees of the company shall be jointly and severally liable for all the debts of the company then existing, and for all that shall be contracted before such report shall be made. But whenever under this section a judgment shall be recovered against a trustee severally, all the trustees of the company shall contribute a ratable share of the amount paid by such trustee on such judgment, and such trustee shall have a right of action against his co-trustees, jointly or severally, to recover from them their proportion of the amount so paid on such judgment, provided that nothing in this act contained shall affect any action now pending.

It is finally insisted that a judgment against the corporation, although founded upon a tort, becomes ipso facto a debt by contract, being a contract of record or a specialty in the nature of a contract. But we have already seen that the settled course of decision in the New York Court of Appeals rejects the judgment against the corporation as either evidence or ground of liability against the trustees, and founds the latter upon the obligation of the corporation on which the judgment itself rests. And it was decided by this Court in the case of Louisiana v. New Orleans, 109 U. S. 285, that a liability for a tort, created by statute, although reduced to judgment by a recovery for the damages suffered, did not thereby become a debt by contract in the sense of the Constitution of the United States forbidding state legislation impairing its obligation, for the reason that the term 'contract' is used in the Constitution in its ordinary sense as signifying the agreement of two or more minds, for considerations proceeding from one to the other, to do or not to do certain acts. Mutual assent to its terms is of its very essence."

The same definition applies in the present instance, and excludes the liability of the defendants, as trustees of the corporation, for its torts, although reduced to judgment.

The court found no error in the judgment of the circuit court, and it was accordingly affirmed.

Richards v. Mackall, 113 U.S. 539 (1885), was an appeal from the Supreme Court of the District of Columbia to the High Court on whether or not an appeal from that Court to this Court may be allowed by that Court sitting in special term.

Gumbel v. Pitkin, 113 U.S. 545 (1885), was a case brought in error to the Circuit Court of the United States for the District of Louisiana to dismiss a writ of error.

Kansas Pacific R. Co. v. Dunmeyer, 113 U.S. 629 (1885), was a writ of error to the Supreme Court of Kansas. The action was brought in that court on a covenant of warranty of title to two pieces of land in a deed of conveyance made by the Kansas Pacific Railroad Company to Dunmeyer. The Pacific Railroad Acts generally allowed railroads to sell public land adjacent to their routes as part of a land grant to raise funds but made an exception for land that already had a homestead filed. G. B. Dunmeyer claimed he purchased land that already had an existing claim.

Cooper Manufacturing Co. v. Ferguson, 113 U.S. 727 (1885), was a suit regarding the legitimacy of a sale of a steam engine and other machinery in the State of Ohio.

<span class="mw-page-title-main">Anti-Injunction Act</span> US federal statute (28 U.S.C. § 2283)

The Anti-Injunction Act, is a United States federal statute that restricts a federal court's authority to issue an injunction against ongoing state court proceedings, subject to three enumerated exceptions. It states:

New York Life Ins. Co. v. Dunlevy, 241 U.S. 518 (1916), was a decision by the Supreme Court of the United States in which the Court held that a court can exert personal jurisdiction over a nonresident party in an interpleader if that party is served with process while physically present within the state.

O'Gorman & Young, Inc. v. Hartford Fire Ins. Co., 282 U.S. 251 (1931), was a case in which the United States Supreme Court held that a state statute limiting the commissions allowable by insurers against loss by fire to local agents will be deemed a valid exercise of the police power in the absence of facts showing it to be unreasonable.

Metropolitan Life Insurance Co. v. Ward, 470 U.S. 869 (1985), was a case in which the Supreme Court of the United States held that a state cannot tax out-of-state insurance companies at a greater rate than domestic insurance companies under the Privileges and Immunities Clause of Article Four of the United States Constitution.

References

  1. Chicago Life Ins. Co. v. Needles, 113 U.S. 574 (1885).