Philadelphia Fire Assn. v. New York, 119 U.S. 110 (1886)
Filed: 1886-11-15Precedential Status: PrecedentialCitations: 119 U.S. 110Docket: Decided November 15, 1886
Content
30 L.Ed. 342
7 S.Ct. 108
119 U.S. 110
FIRE ASS'N OF PHILADELPHIA
v.
PEOPLE OF THE STATE OF NEW YORK.
November 15, 1886.
This is a writ of error to the supreme court of the state of New York.
Under the provisions of section 1279 of the Code of Civil Procedure
cedure of New York, the people of the state of New York and the Fire
Association of Philadelphia, a Pennsylvania corporation, being parties to a
question in difference which might be the subject of an action, agreed
upon a case containing a statement of the facts on which the controversy
depended, and presented a written submission of it to the supreme court of
New York, so that the controversy became an action. The material facts
set forth in the case are these:
'The defendant, the Fire Association of Philadelphia, is a corporation
created and organized in the year 1820, by and under the laws of the state
of Pennsylvania, for the transaction of the business of fire insurance, and
having its principal place of business in the city of Philadelphia. In the
year 1872 it established an agency in the state of New York, which it has
ever since maintained. No question is here raised but that it has uniformly
complied with all the requirements and conditions imposed by the laws of
this state upon fire insurance companies from other states establishing and
maintaining agencies in this state, except the payment of the tax now in
dispute, upon premiums received by it in 1881 upon risks located within
the state of New York, and which is the subject of this controversy, and
has received from year to year certificates of authority from the
superintendent of the insurance department of this state as provided to be
issued under the act, chapter 466 of the Laws of 1853, and the subsequent
acts amendatory thereof.
'The act of the people of the state of New York, passed May 11, 1865,
three-fifths being present, being chapter 694 of the Laws of 1865, entitled
'An act in relation to the deposits required to be made, and the taxes, fines,
fees, and other charges payable by insurance companies of sister states,' as
amended by the act of 1875, c. 60, provides as follows, viz.: 'Whenever
the existing or future laws of any other state of the United States shall
require of insurance companies incorporated by or organized under the
laws of this state, and having agencies in such other states, or of the agents
thereof, any deposit of securities in such state for the protection of policyholders or otherwise, or any payment for taxes, fines, penalties,
certificates of authority license fees or otherwise, greater than the amount
required for such purposes from similar companies of other states by the
then existing laws of this state, then, and in every such case, all companies
of such states establishing, or having heretofore established, an agency or
agencies in the state, shall be, and are hereby, required to make the same
deposit for a like purpose in the insurance department of the state, and to
pay the superintendent of said department, for taxes, fines, penalties,
certificates of authority, license fees, and otherwise, an amount equal to
the amount of such charges and payments imposed by the laws of such
state upon the companies of this state, and the agents thereof; and the
superintendent of the insurance department is hereby authorized to remit
any of the fees and charges which he is required to collect by existing
laws, except such as he is required to collect under and by virtue of this
act: provided, however, that no discrimination shall be made favor of one
company over any other from the same state.'
'The state of Pennsylvania, by an act passed April 4, 1873, and ever since
in force, enacted as follows, viz.: 'Sec. 10. No person shall act as agent or
solicitor in this state of any insurance company of another state, or foreign
government, in any manner whatever, relating to risks, until the provisions
of this act have been complied with on the part of the company or
association, and there has been granted to said company or association, by
the commissioner, a certificate of authority showing that the company or
association is authorized to transact business in this state; and it shall be
the duty of every such company or association, authorized to transact
business in this state, to make report to the commissioner, in the month of
January of each year, under oath of the president or secretary thereof,
showing the entire amount of premiums of every character and description
received by said company or association in this state, during the year or
fraction of a year ending with the thirty-first day of December preceding,
whether said premiums were received in money or in the form of notes,
credits, or any other substitute for money, and pay into the state treasury a
tax of three per centum upon said premiums; and the commissioner shall
not have power to grant a renewal of the certificate of said company or
association until the tax aforesaid is paid into the state treasury."
In the year 1881, the defendant, through its authorized agents in the state
of New York, received for insurance against loss or injury by fire, upon
property located within the state of New York, premiums to the aggregate
amount of $196,170.22. The superintendent of the insurance department
of New York claimed that the defendant ought to pay, as a tax, for the
year 1881, $1,848.45 with proper interest, being the amount arrived at by
deducting from $5,885.10 (which would be a tax of 3 per cent. on
$196,170.22) the sum of $4,036.65, which the defendant, as a
Pennsylvania corporation, had paid as a tax on premiums, during 1881,
under laws of New York in force in 1881, other than the act of 1865, as
amended by the act of 1875. The case then states that 'the comtroversy
between the parties is as to whether the defendant is liable to pay any tax
to the superintendent of the insurance department of the state upon the
said premiums received by it in the year 1881, and, if any, what amount;'
that 'the defendant claims that it is not liable to the plaintiffs for any
amount, insisting, first, that the said act of 1865, as amended by the act of
1875, is unconstitutional and void, and not a legitimate exercise of
legislative power,' and making further claims as to the amount due from it
if the act in question is valid; that 'the question submitted to the court for
decision upon the foregoing statement of facts is whether the defendant is
liable to pay to the plaintiffs, or to the superintendent, the whole, or any,
and, if any, what part, of the' $1,848.45; and that judgment is to be entered
according to its decision.
The agreed case having been heard by the supreme court in general term,
as required by law, it rendered a judgment to the effect that the defendant
was not liable to pay any part of such amount claimed by the
superintendent. Two of the three judges holding the court concurred in
that judgment. The third dissented. The opinions of the majority and
minority accompany the record. The majority held that the statutes of
New York in question were void because in conflict with the constitution
of New York, and did not discuss any question arising under the
constitution of the United States. The dissenting judge differed with the
majority as to the question adjudged by them, and further said: 'Nor can I
agree with the claim that this statute is contrary to the fourteenth
amendment to the constitution of the United States.'
The plaintiffs having appealed to the court of appeals of New York, that
court reversed the judgment of the supreme court, and rendered judgment
for the plaintiffs for $1,848.45, with interest an costs, and remitted the
record to the supreme court, where a judgment to that effect was entered,
to review which the defendant has brought a writ of error. The court of
appeals, in its decision, (92 N. Y. 311,) after overruling the view taken by
the majority of the judges of the supreme court as to the validity of the
statute under the constitution of New York, proceeds to consider its
constitutionality under that clause of the fourteenth amendment to the
federal constitution which commands that no state shall 'deny to any
person within its jurisdiction the equal protection of the laws.' It holds that
that clause has no application to the rights of the defendant, because,
being a foreign corporation, it was not within the jurisdiction of New
York until it was admitted by the state upon a compliance with the
conditions of admission which the state imposed and had the right to
impose.
Jos. H. Choate, for plaintiff in error.
D. O'Brien, for defendant in error.
BLATCHFORD, J.
1
The defendant claims here the benefit of the fourteenth amendment, and a
question has occurred as to whether the record presents that point for our
review. There being no pleadings, the obvious place to look for the claim
would be the agreed statement of facts. But all that is there said is that the
defendant insists that the statute is 'unconstitutional and void, and not a
legitimate exercise of legislative power.' The question was considered, in both
the supreme court and the court of appeals, as to the validity of the statute
under the constitution of New York, as being a law made to depend for its
operation on the legislation of a foreign state, and thus an illegitimate exercise
of legislative power. This contention is fairly within the words of the agreed
statement, and, if it depended wholly on that statement to determine whether
the record raises a federal question, some doubt might exist. But, in view of
what was said in Murdock v. Memphis, 20 Wall. 590, 633, in Gross v. United
States Mortg. Co., 108 U. S. 477; S. C. 2 Sup. Ct. Rep. 940; and in Adams Co.
v. Burlington & M. R. R. Co., 112 U. S. 123, S. C. 5 Sup. Ct. Rep. 77,—we
think that we are at liberty to look into the opinion of the court of appeals, a
copy of which, duly authenticated by the proper officer, is transmitted to us
with the record, in compliance with our eighth rule, for the purpose of aiding in
determining what was decided by that court. From that opinion it appears that
the court not only decided against the defendant all the questions other than
federal which were raised, including two under the constitution of New York,
but also decided against it the federal question referred to. If the court had
decided in its favor any one of the other questions which went to the whole
cause of action, there would have been no necessity for considering the federal
question. But, as it was, the decision of that question became necessary to the
disposition of the case, and was fully considered, not sua sponte, but as a point
presented by the defendant.
2
The provision of the fourteenth amendment, which went into effect in July,
1868, is that no state shall 'deny to any person within its jurisdiction the equal
protection of the laws.' The first question which arises is whether this
corporation was a person within the jurisdiction of the state of New York with
reference to the subject of controversy, and within the meaning of the
amendment.
3
The defendant, on the assumption that, if it was within the jurisdiction of the
state of New York, it was, though a foreign corporation, a 'person,' and so
entitled to the benefit of the amendment, contends that it was within such
jurisdiction. The argument is that it established an agency within the state in
1872, which it had ever since maintained; that it complied, from year to year,
with all the requirements and conditions imposed by the laws of the state on
foreign fire insurance companies doing business in the state; that it received
from year to year certificates of authority from the superintendent of the ins
rance department, as provided by statute; that, under those circumstances, it
was legally within the state and within its jurisdiction; that, being in the state,
by permission of the state, continuously from 1872 to 1882, the state imposed
on it, while there, in 1882, an unequal and unlawful burden; and that the New
York act of 1865 did not come into effect as to Pennsylvania corporations until
the Pennsylvania act of 1873 was passed, at which time the defendant had
already been a year in the state.
4
But we are unable to take that view of the case. In Paul v. Virginia, 8 Wall.
168, at December term , 1868, a statute of Virginia required that every
insurance company not incorporated by Virginia should, as a condition of
carrying on business in Virginia, deposit securities with the state treasurer, and
afterwards obtain a license; and another statute made it a penal offense for a
person to act in Virginia as agent for an insurance company not incorporated by
Virginia without such license. A person having acted as such agent without a
license, and been convicted and fined under the statute, this court held that
there had been no violation of that clause of article 4, § 2, of the constitution of
the United States, which provides that 'the citizens of each state shall be entitled
to all privileges and immunities of citizens in the several states;' nor any
violation of the clause in article 1, § 8, giving power to congress 'to regulate
commerce with foreign nations and among the several states.' The view
announced was that corporations are not citizens within the clause first cited,
on the ground that the privileges and immunities secured to the citizens of each
state, in the several states, are those which are common to the citizens of the
latter states under their constitutions and laws, by virtue of their being citizens;
and that, as a corporation created by a state is a mere creation of local law, even
the recognition of its existence by other states, and the enforcement of its
contracts made therein, depend purely on the comity of those states,—a comity
which is never extended where the existence of the corporation or the exercise
of its powers is 'prejudicial to their interests or repugnant to their policy.' And
the court, speaking by Mr. Justice FIELD, said: 'Having no absolute right of
recognition in other states, but depending for such recognition and the
enforcement of its contracts upon their assent, it follows, as a matter of course,
that such assent may be granted upon such terms and conditions as those states
may think proper to impose. They may exclude the foreign corporation
entirely, they may restrict its business to particular localities, or they may exact
such security for the performance of its contracts with their citizens an in their
judgment will best promote the public interest. The whole matter rests in their
discretion.' As to the power of congrees to regulate commerce among the
several states, the court said that, while the power conferred included
commerce carried on by corporations as well as that carried on by individuals,
'issuing a policy of insurance is not a transaction of commerce.' This decision
only followed the principles laid down in the earlier cases of Bank of Augusta
v. Earle, 13 Pet. 519, 588, and Lafayette Ins. Co. v. French, 18 How. 404.
5
The same rulings were followed in Ducat v. Chicago, 10 Wall. 410, where it
was said that the power of a state to discriminate between her own corporations
and those of other states desirous of transacting business within her jurisdiction
being clearly established, it belonged to the state to determine as to the nature
or degree of discrimination, 'subject only to such limitations on her sovereignty
as may be found in the fundamental law of the Union.' Other cases to the same
effect are Liverpool Ins. Co. v. Massachusetts, 10 Wall. 566; Doyle v.
Continental Ins. Co., 94 U. S. 535; and Cooper Manuf'g Co. v. Ferguson, 113
U. S. 727; S. C. 5 Sup. Ct. Rep. 739.
6
As early as 1853, the state of New York, by a statute, (chapter 466,) required of
every fire insurance company incorporated by any other state or any foreign
government, as a prerequisite to doing business in the state, that it should file an
appointment of an attorney on whom process was to be served, and a statement
of its pecuniary condition, and procure from a designated public officer a
certificate of authority stating that the company had complied with all the
requisitions of the statute; and also required the renewal, from year to year, of
the statement and evidence of investments; and provided that such public
officer, on being satisfied that the capital of the company and its securities and
investments remained secure, should furnish a renewal of the certificate of
authority. A violation of the provisions was made a penal offense. This act,
with immaterial amendments, is still in force.
7
This Pennsylvania corporation came into the state of New York to do business,
by the consent of the state, under this act of 1853, with a license granted for a
year, and has received such license annually, to run for a year. It is within the
state for any given year under such license, and subject to the conditions
prescribed by statute. The state, having the power to exclude entirely, has the
power to change the conditions of admission at any time for the future, and to
impose as a condition the payment of a new tax, or a further tax, as a license
fee. If it imposes such license fee as a prerequisite for the future, the foreign
corporation, until it pays such license fee, is not admitted within the state, or
within its jurisdiction. It is outside, at the threshold, seeking admission, with
consent not yet given. The act of 1865 had been passed when the corporation
first established an agency in the state. The amendment of 1875 changed the act
of 1865 only by giving to the superintendent the power of remitting the fees
and charges required to be collected by then existing laws. Therefore the
corporation was at all times after 1872 subject, as a prerequisite to its power to
do business in New York, to the same license fee its own state might thereafter
impose on New York companies doing business in Pennsylvania. By going into
the state of New York in 1872, it assented to such prerequisite as a condition of
its admission within the jurisdiction of New York. It could not be of right
within such jurisdiction until it should receive the consent of the state to its
entrance therein under the new provisions, and such consent could not be given
until the tax, as a license fee for the future, should be paid.
8
It is not to be implied from anything we have said that the power of a state to
exclude a foreign corporation from doing business within its limits is to be
regarded as extending to an interference with the transaction of commerce
between that state and other states by a corporation created by one of such other
states. Judgment affirmed.
HARLAN, J., (dissenting.)
9
Under the decision just rendered, the state of New York is permitted to subject
a corporation of another state, within her limits by her consent, to higher taxes
in respect to its business than is imposed there upon similar corporations of
other states. At the last term of this court, when counsel were about to enter
upon the argument of the case of Santa Clara Co. v. Southern Pac. R. Co., 118
U. S. 396, S. C. 6 Sup. Ct. Rep. 1132, involving the validity of a system
devised by one of the states for the taxation of railroad corporations of a certain
class, the chief justice observed: 'The court does not wish to hear argument on
the question whether the provision in the fourteenth amendment to the
constitution, which forbids a state to deny to any person within its jurisdiction
the equal protection of the laws, applies to these corporations. We are all of
opinion that it does.' This, it is true, was said in regard to corporations of the
particular state whose legislation was assailed as uncon titutional; but it is
equally clear that a corporation of one state, doing business in another state by
her consent, is to be deemed, at least in respect to that business, a 'person'
within the jurisdiction of the latter state, in the meaning of the fourteenth
amendment.
10
The denial of the equal protection of the laws may occur in various ways. It
will most often occur in the enforcement of laws imposing taxes. An individual
is denied the equal protection of the laws if his property is subjected by the
state to higher taxation than is imposed upon like property of other individuals
in the same community. So, a corporation is denied that protection when its
property is subjected by the state under whose laws it is organized to more
burdensome taxation than is imposed upon other domestic corporations of the
same class. So, also, a corporation of one state, doing business by its agents in
another state, by the latter's consent, is denied the equal protection of the laws,
if its business there is subjected to higher taxation than is imposed upon the
business of lkie corporations from other states within her jurisdiction. These
propositions seem to me to be indisputable. They are necessarily involved in
the concession that corporations, like individuals, are entitled to the equal
protection of the laws.
11
The plaintiff in error is a corporation of Pennsylvania. In 1872 it established,
and has ever since maintained, an agency in the state of New York. It had its
agents there when the taxes for 1881, here in question, were assessed. The laws
of New York prescribe certain conditions precedent to the right of a fire
insurance company from another state to transact business there. It must
possess a certain amount of actual capital; appoint an attorney in the state,
service of process upon whom is to be 'deemed a valid personal service upon
the corporation' in any action 'upon a policy or liability issued or contracted
while such corporation transacted business' there; file in the insurance
department a certified copy of its charter, together with a statement, verified by
the oath of its chief officer and secretary, showing the name of the company;
place where located; amount of its capital and assets; the extent to which its
real estate is incumbered; the par and market value of all shares of stock held
by it; the estimated value of its bonds, mortgages, and other securities; the
extent of its indebtedness; the amount of its losses, adjusted and unpaid, or
incurred and in process of adjustment; the losses disputed; and the claims
existing against it. It is also provided that no business shall be transacted in the
state by the agent of any company from another state, while its capital is
impaired to the extent of 20 per cent. If further requires from such companies
an annual statement, showing in detail the items making up their capital, and
the deductions to be made therefrom. It was made the duty, first of the state
comptroller, and subsequently of the superintendent of insurance, these
requirements of the statute being first complied with,—to issue to the company
thus seeking admission into the state a certificate showing its lawful right to
transact business within her limits. Laws N. Y. 1853, c. 466; Laws 1862, c. 6, §
1; Id. c. 367, § 5; Laws 1871, c. 888; Laws 1874, c. 331, § 1; Laws 1875, c.
555, § 1.
12
That the plaintiff in error conformed to these statutory provisions, and was
admitted into New York for the transaction of business, is shown by the agreed
case, from which it appears that it 'has uniformly complied with all the
requirements and conditions imposed by the laws of this state upon fire
insurance companies from other states establishing and maintaining agencies in
this state, except the payment of the tax now in dispute, upon premiums
received by it in 1881 upon risks located within the state of New York, and
which is the subject of this controversy; and has received from year to year
certificates of authority from the superintendent of the insurance department of
this state, as provided to be issued under the act, (chapter 466, Laws 1853,)
and the subsequent acts amendatory thereof.'
13
In view of these admitted facts, how can it be said that this Pennsylvania
corporation was not, in respect to its corporate business, within the jurisdiction
of New York during the year when the tax in dispute accrued? That a
corporation of one state, doing business in another state by the latter's consent,
evidenced by the official certificate given by her insurance department in
conformity with her laws, and liable, precisely as domestic corporations are, to
be brought into her courts, through service of process upon its dulyappointed
attorney or agent, in reference to any business transacted or liability incurred by
it there, is to be deemed within the jurisdiction of that state, seems to me
entirely clear. In Ex parte Schollenberger insurance company, doing business in
Pennsylvania, under the authority of a statute of that common wealth requiring,
as a condition precedent to its being there, an agreement that judicial process
served upon its agent should have the same effect as if served upon the
corporation, was, within the meaning of the act of congress of 1875, 'found' in
that state so as to give jurisdiction to the courts of the United States sitting in
that state of suits brought there against such company, accompanied by service
of process upon its agent. The subject was again considered in St. Clair v. Cox,
106 U. S. 357, S. C. 1 Sup. Ct. Rep. 354, where it was said that there was no
sound reason why, in the case of an insurance company doing business in
another state, by an agent, under statutes such as those referred to, should not be
deemed to be represented in the latter by such agent, and held responsible for
its obligations and liabilities there incurred. See, also, Railroad Co. v. Harris,
12 Wall. 65; Railway Co. v. Whitton, 13 Wall. 285.
14
It was said in argument that the plaintiff in error entered New York with the
knowledge, derived from the act of 1865, that if Pennsylvania thereafter
subjected New York insurance companies to higer taxes than the latter state
imposed upon Pennsylvania corporations of the same class, doing business in
New York, the taxes levied upon it would be correspondingly increased;
therefore, it is argued, the entrance of the plaintiff in error into New York was
subject to the reserved right of that state thus to increase the taxes upon its
business. The same idea is embodied in the suggestion that New York made it a
prerequisite, from and after 1865, to the right of a fire insurance corporation of
another state to transact business in New York, that it should pay such increased
taxes, however much they might be in excess of the taxes imposed there upon
corporations of the same class from the remaining states. Now, it is submitted
(1) that no such obligation was imposed by the statute upon the plaintiff in
error as a prerequisite to its right to enter New York, and transact business
there. The agreed case shows, not only that the insurance department of New
York has certified its right to do business in that state, but that the certificate
was made as provided in the act of 1853, and the acts amendatory thereof.
Besides, there is no clause in the statute directing that department to withhold
or to revoke a certificate upon the failure or refusal of the company to pay these
increased taxes. The regularity and validity of that certificate was not
questioned in argument, is not now disputed, and there is not a word in the
statute to the effect that the payment of these increased taxes is a prerequisite to
the right of the company to remain in the state and transact business. Indeed, it
is evident that the state purposely avoided establishing any such prerequisite to
the right to enter her limits. She only seeks, after admitting the plaintiff in error,
and certifying its right to do business, to subject it to the taxation in question.
(2) The power of New York to impose this increased tax surely cannot depend
upon the fact that she gave notice of what she would do in the contingency
expressed in the act of 1865. Such notice neither creates a power to do that
which the state could not otherwise constitutionally do, nor makes it the duty of
the plaintiff in error to submit to an illegal exaction. At last, the real question
presented is whether Pennsylvania corporations can be subjected to higher taxes
in New York than are imposed there upon corporations of the same class from
other states.
15
It is said that a state may exclude altogether from its borders a corporation of
another state, or may admit it upon such terms or conditions as she may elect to
prescribe. It is quite true that general language to that effect was employed in
Paul v. Virginia, 8 Wall. 168, where the only question necessary to be
determined was as to the validity of a statute of Virginia providing that before
an insurance company, not incorporated by that state, should carry on business
there, it must obtain a license therefor, and deposit with the state treasurer, as
security for its engagements, bonds of a specified character and amount. In the
course of the opinion which disposed of that question, it was said that a
corporation of one state, 'having no absolute right of recognition in other states,
but depending for such recognition and the enforcement of its contracts upon
their assent, it follows, as a matter of course, that such assent may be granted
upon such terms and conditions as those states may think proper to impose.
They may exclude the foreign corporation entirely. They may restrict its
business to particular localities, or they may exact such security for the
performance of its contracts with their citizens as in their judgment will best
promote the public interests. The whole matter rests in their discretion.' But I
submit that it is the settled doctrine of this court that the terms and conditions
so prescribed must not be repugnant to the constitution of the United States, or
inconsistent with any right granted or secured by that instrument.
16
In Ducat v. Chicago, 10 Wall. 415, it was said by Mr. Justice NELSON,
speaking for the court, that, in respect to the nature or degree of discrimination
which a state may make between her own corporations and those of other
states, 'it belongs to the state to determine, subject only to such limitations on
her sovereignty as may be found in teh fundamental law of the found in the
fundamental law of the
17
It was so decided in Insurance Co. v. Morse, 20 Wall. 445, 455, 456, where the
question was as to the validity of a statute of Wisconsin relating to the
admission into that state of fire insurance companies incorporated by other
states. Besides the condition that they should designate some attorney in
Wisconsin upon whom process against the company could be served, it
imposed the further one that it should file in the proper office an agreement
stipulating that it would not remove to the courts of the United States any suit
brought against it in the local courts. An insurance company of New York
established an agency in Wisconsin, and complied in all respects with these
conditions; it filed the required agreement. In support of the validity of those
conditions, the state relied upon the very language above quoted from Paul v.
Virginia. But the court was careful to say that that language must be understood
with reference to the facts in the case, and to the question to be decided, which
was stated to be simply 'whether the state might require a foreign insurance
company to take a license for the transaction of its business, giving security for
the payment of its debts.' Care was taken to further announce that the general
language employed in Paul v. Virginia was not intended to impair the language
in Lafayette Ins. Co. v. rench, 18 How. 407, where the court, speaking by Mr.
Justice CURTIS, said: 'A corporation created by Indiana can transact business
in Ohio only with the consent, express or implied, of the latter state. This
consent may be accompanied by such conditions as Ohio may think fit to
impose, and these conditions must be deemed valid and effectual by other
states, and by this court: provided, they are not repugnant to the constitution
and laws of the United States, or inconsistent with those rules of public law
which secure the jurisdiction and authority of each state from encroachment of
all others, or that principle of natural justice which forbids condemnation
without opportunity for defense.' Upon these grounds it was held in Insurance
Co. v. Morse that the Wisconsin statute, so far as it required insurance
companies of other states to stipulate that they would not exercise the right to
have suits against them removed to the national courts, was void, equally
because it created an obstruction to the exercise of a privilege granted by the
constitution and laws of the United States, and tended to oust the courts of the
Union of a jurisdiction conferred upon them. Much that was said in that case is
pertinent to the present one. After observing that the courts would not enforce
an agreement between a citizen of New York and a citizen of Wisconsin; that
the former would, in no event, resort to the federal courts sitting in Wisconsin
for the protection of his rights of property, or an agreement between the same
parties, upon whatever consideration; that the citizen of New York would in no
case, when called into the courts, either of Wisconsin or of the federal courts
sitting in that state, demand a jury to determine his rights of property, but would
submit such rights to arbitration or to the decision of a single judge,—the court
said: 'We see no difference in principle between the cases supposed and the
case before us. Every citizen is entitled to resort to all the courts of the country,
and to invoke the protection which all the laws or all those courts may afford.'
The court further said that the right of the insurance company to remove the
suit was 'denied to it by the state court on the ground that it had made the
agreement referred to, and that the statute of the state authorized and required
the making of the agreement. We are not able to distinguish this agreement and
this requisition, on principle, from a similar one made in the case of an
individual citizen of New York. A corporation has the same right to the
protection of the laws as a natural citizen, and the same right to appeal to all the
courts of the country. The rights of an individual are not superior, in this
respect, to that of a corporation. The state of Wisconsin can regulate its own
corporations, and the affairs of its own citizens, in subordination, however, to
the constitution of the United States. The requirement of an agreement like this
from their own corporations would be brutum fulmen, because they possess no
such right under the constitution of the United States. A foreign citizen,
whether natural or corporate, in this respect possesses a right not pertaining to
one of her own citizens. There must necessarily be a difference between the
status of the two in this respect.'
18
The only difference between Insurance Co. v. Morse and the present case is
that in the former the New York corporation expressly agreed, in writing, that it
would not exercise its constitutional privilege of removing suits against it into
the courts of the Union, while the Pennsylvania corporation received an official
certificate of its right to transact business in New York with notice, derived
from the act of 1865, that that state would after 1873—the date of the
Pennsylvania statute—claim from it higher taxes than she imposed upon like
corporations from the remaining states doing business in her limits by her
consent. If the plaintiff in error, by merely maintaining its agencies in New
York, is to be hel to have impliedly agreed to submit to such increased taxation,
is that anything more than an implied agreement that it would not assert a right
secured to it by the constitution of the United States? Can it be that a
corporation is estopped to claim the benefit of the constitutional provision
securing to it the equal protection of the laws simply because it voluntarily
entered and remained in a state which has enacted a statute denying such
protection to it, and to like corporations from the same state? Is the right to that
protection any less valuable or fundamental than the right to remove a suit into
the courts of the Union for trial? Will it be held that an express agreement by a
corporation not to exercise the latter right is void and not enforceable, but that a
local statute denying the equal protection of the laws to a corporation of the
state which because that corporation came within the jurisdiction of the state
which assumed to make such denial, and received from her officers, acting in
conformity with her laws, a certificate of its right to transact business there?
Will effect be given in one case to what (erroneously, I think) is called an
implied agreement to surrender a constitutional right, while an express
agreement in the other to surrender a constitutional right is held to be invalid?
19
Even if it were conceded that a state which provides for the organization, under
her own laws, of corporations for the transaction of every kind of business,
could arbitrarily exclude from her limits similar corporations from the
remaining states, and declare all contracts made within her jurisdiction with
corporations from other states to be void,—concessions to be made only for the
purposes of this case,—it would not follow that she could subject corporations
of other states, doing business within her limits under a license from the proper
department, to higher taxes than she imposes upon other corporations of the
same class from the remaining states. The plaintiff in error having been, in
1881, lawfully within New York, by its agents, cannot be denied there the
equal protection of the laws because the state which created it may have
adopted a system of taxation different from that devised by New York. The
case, in its legal aspects, is precisely the same as if Pennsylvania had never
passed the statute of 1873, but New York had, in that year, imposed upon fire
insurance companies from Pennsylvania higher taxes than she imposed upon
similar corporations from other states.
20
It would seem to be the result of the decision in this case that New York may
prescribe such varying rates of taxation upon insurance corporations of the
remaining 37 states, within her jurisdiction, as she chooses; the rate for
corporations from each state differing from the rate established for corporations
of the same class from all other states, and the rate in respect to corporations of
other states being higher than she imposes upon her own corporations of the
same class. Such legislation would be a species of commercial warfare by one
state against the others, and would be hostile to the whole spirit of the
constitution, particularly the fourteenth amendment, securing to all persons
within the jurisdiction of the respective states the equal protection of the laws.
21
For the reasons which have been stated I feel obliged to withhold my assent to
the opinion and judgment of the court.
7 S.Ct. 108
119 U.S. 110
FIRE ASS'N OF PHILADELPHIA
v.
PEOPLE OF THE STATE OF NEW YORK.
November 15, 1886.
This is a writ of error to the supreme court of the state of New York.
Under the provisions of section 1279 of the Code of Civil Procedure
cedure of New York, the people of the state of New York and the Fire
Association of Philadelphia, a Pennsylvania corporation, being parties to a
question in difference which might be the subject of an action, agreed
upon a case containing a statement of the facts on which the controversy
depended, and presented a written submission of it to the supreme court of
New York, so that the controversy became an action. The material facts
set forth in the case are these:
'The defendant, the Fire Association of Philadelphia, is a corporation
created and organized in the year 1820, by and under the laws of the state
of Pennsylvania, for the transaction of the business of fire insurance, and
having its principal place of business in the city of Philadelphia. In the
year 1872 it established an agency in the state of New York, which it has
ever since maintained. No question is here raised but that it has uniformly
complied with all the requirements and conditions imposed by the laws of
this state upon fire insurance companies from other states establishing and
maintaining agencies in this state, except the payment of the tax now in
dispute, upon premiums received by it in 1881 upon risks located within
the state of New York, and which is the subject of this controversy, and
has received from year to year certificates of authority from the
superintendent of the insurance department of this state as provided to be
issued under the act, chapter 466 of the Laws of 1853, and the subsequent
acts amendatory thereof.
'The act of the people of the state of New York, passed May 11, 1865,
three-fifths being present, being chapter 694 of the Laws of 1865, entitled
'An act in relation to the deposits required to be made, and the taxes, fines,
fees, and other charges payable by insurance companies of sister states,' as
amended by the act of 1875, c. 60, provides as follows, viz.: 'Whenever
the existing or future laws of any other state of the United States shall
require of insurance companies incorporated by or organized under the
laws of this state, and having agencies in such other states, or of the agents
thereof, any deposit of securities in such state for the protection of policyholders or otherwise, or any payment for taxes, fines, penalties,
certificates of authority license fees or otherwise, greater than the amount
required for such purposes from similar companies of other states by the
then existing laws of this state, then, and in every such case, all companies
of such states establishing, or having heretofore established, an agency or
agencies in the state, shall be, and are hereby, required to make the same
deposit for a like purpose in the insurance department of the state, and to
pay the superintendent of said department, for taxes, fines, penalties,
certificates of authority, license fees, and otherwise, an amount equal to
the amount of such charges and payments imposed by the laws of such
state upon the companies of this state, and the agents thereof; and the
superintendent of the insurance department is hereby authorized to remit
any of the fees and charges which he is required to collect by existing
laws, except such as he is required to collect under and by virtue of this
act: provided, however, that no discrimination shall be made favor of one
company over any other from the same state.'
'The state of Pennsylvania, by an act passed April 4, 1873, and ever since
in force, enacted as follows, viz.: 'Sec. 10. No person shall act as agent or
solicitor in this state of any insurance company of another state, or foreign
government, in any manner whatever, relating to risks, until the provisions
of this act have been complied with on the part of the company or
association, and there has been granted to said company or association, by
the commissioner, a certificate of authority showing that the company or
association is authorized to transact business in this state; and it shall be
the duty of every such company or association, authorized to transact
business in this state, to make report to the commissioner, in the month of
January of each year, under oath of the president or secretary thereof,
showing the entire amount of premiums of every character and description
received by said company or association in this state, during the year or
fraction of a year ending with the thirty-first day of December preceding,
whether said premiums were received in money or in the form of notes,
credits, or any other substitute for money, and pay into the state treasury a
tax of three per centum upon said premiums; and the commissioner shall
not have power to grant a renewal of the certificate of said company or
association until the tax aforesaid is paid into the state treasury."
In the year 1881, the defendant, through its authorized agents in the state
of New York, received for insurance against loss or injury by fire, upon
property located within the state of New York, premiums to the aggregate
amount of $196,170.22. The superintendent of the insurance department
of New York claimed that the defendant ought to pay, as a tax, for the
year 1881, $1,848.45 with proper interest, being the amount arrived at by
deducting from $5,885.10 (which would be a tax of 3 per cent. on
$196,170.22) the sum of $4,036.65, which the defendant, as a
Pennsylvania corporation, had paid as a tax on premiums, during 1881,
under laws of New York in force in 1881, other than the act of 1865, as
amended by the act of 1875. The case then states that 'the comtroversy
between the parties is as to whether the defendant is liable to pay any tax
to the superintendent of the insurance department of the state upon the
said premiums received by it in the year 1881, and, if any, what amount;'
that 'the defendant claims that it is not liable to the plaintiffs for any
amount, insisting, first, that the said act of 1865, as amended by the act of
1875, is unconstitutional and void, and not a legitimate exercise of
legislative power,' and making further claims as to the amount due from it
if the act in question is valid; that 'the question submitted to the court for
decision upon the foregoing statement of facts is whether the defendant is
liable to pay to the plaintiffs, or to the superintendent, the whole, or any,
and, if any, what part, of the' $1,848.45; and that judgment is to be entered
according to its decision.
The agreed case having been heard by the supreme court in general term,
as required by law, it rendered a judgment to the effect that the defendant
was not liable to pay any part of such amount claimed by the
superintendent. Two of the three judges holding the court concurred in
that judgment. The third dissented. The opinions of the majority and
minority accompany the record. The majority held that the statutes of
New York in question were void because in conflict with the constitution
of New York, and did not discuss any question arising under the
constitution of the United States. The dissenting judge differed with the
majority as to the question adjudged by them, and further said: 'Nor can I
agree with the claim that this statute is contrary to the fourteenth
amendment to the constitution of the United States.'
The plaintiffs having appealed to the court of appeals of New York, that
court reversed the judgment of the supreme court, and rendered judgment
for the plaintiffs for $1,848.45, with interest an costs, and remitted the
record to the supreme court, where a judgment to that effect was entered,
to review which the defendant has brought a writ of error. The court of
appeals, in its decision, (92 N. Y. 311,) after overruling the view taken by
the majority of the judges of the supreme court as to the validity of the
statute under the constitution of New York, proceeds to consider its
constitutionality under that clause of the fourteenth amendment to the
federal constitution which commands that no state shall 'deny to any
person within its jurisdiction the equal protection of the laws.' It holds that
that clause has no application to the rights of the defendant, because,
being a foreign corporation, it was not within the jurisdiction of New
York until it was admitted by the state upon a compliance with the
conditions of admission which the state imposed and had the right to
impose.
Jos. H. Choate, for plaintiff in error.
D. O'Brien, for defendant in error.
BLATCHFORD, J.
1
The defendant claims here the benefit of the fourteenth amendment, and a
question has occurred as to whether the record presents that point for our
review. There being no pleadings, the obvious place to look for the claim
would be the agreed statement of facts. But all that is there said is that the
defendant insists that the statute is 'unconstitutional and void, and not a
legitimate exercise of legislative power.' The question was considered, in both
the supreme court and the court of appeals, as to the validity of the statute
under the constitution of New York, as being a law made to depend for its
operation on the legislation of a foreign state, and thus an illegitimate exercise
of legislative power. This contention is fairly within the words of the agreed
statement, and, if it depended wholly on that statement to determine whether
the record raises a federal question, some doubt might exist. But, in view of
what was said in Murdock v. Memphis, 20 Wall. 590, 633, in Gross v. United
States Mortg. Co., 108 U. S. 477; S. C. 2 Sup. Ct. Rep. 940; and in Adams Co.
v. Burlington & M. R. R. Co., 112 U. S. 123, S. C. 5 Sup. Ct. Rep. 77,—we
think that we are at liberty to look into the opinion of the court of appeals, a
copy of which, duly authenticated by the proper officer, is transmitted to us
with the record, in compliance with our eighth rule, for the purpose of aiding in
determining what was decided by that court. From that opinion it appears that
the court not only decided against the defendant all the questions other than
federal which were raised, including two under the constitution of New York,
but also decided against it the federal question referred to. If the court had
decided in its favor any one of the other questions which went to the whole
cause of action, there would have been no necessity for considering the federal
question. But, as it was, the decision of that question became necessary to the
disposition of the case, and was fully considered, not sua sponte, but as a point
presented by the defendant.
2
The provision of the fourteenth amendment, which went into effect in July,
1868, is that no state shall 'deny to any person within its jurisdiction the equal
protection of the laws.' The first question which arises is whether this
corporation was a person within the jurisdiction of the state of New York with
reference to the subject of controversy, and within the meaning of the
amendment.
3
The defendant, on the assumption that, if it was within the jurisdiction of the
state of New York, it was, though a foreign corporation, a 'person,' and so
entitled to the benefit of the amendment, contends that it was within such
jurisdiction. The argument is that it established an agency within the state in
1872, which it had ever since maintained; that it complied, from year to year,
with all the requirements and conditions imposed by the laws of the state on
foreign fire insurance companies doing business in the state; that it received
from year to year certificates of authority from the superintendent of the ins
rance department, as provided by statute; that, under those circumstances, it
was legally within the state and within its jurisdiction; that, being in the state,
by permission of the state, continuously from 1872 to 1882, the state imposed
on it, while there, in 1882, an unequal and unlawful burden; and that the New
York act of 1865 did not come into effect as to Pennsylvania corporations until
the Pennsylvania act of 1873 was passed, at which time the defendant had
already been a year in the state.
4
But we are unable to take that view of the case. In Paul v. Virginia, 8 Wall.
168, at December term , 1868, a statute of Virginia required that every
insurance company not incorporated by Virginia should, as a condition of
carrying on business in Virginia, deposit securities with the state treasurer, and
afterwards obtain a license; and another statute made it a penal offense for a
person to act in Virginia as agent for an insurance company not incorporated by
Virginia without such license. A person having acted as such agent without a
license, and been convicted and fined under the statute, this court held that
there had been no violation of that clause of article 4, § 2, of the constitution of
the United States, which provides that 'the citizens of each state shall be entitled
to all privileges and immunities of citizens in the several states;' nor any
violation of the clause in article 1, § 8, giving power to congress 'to regulate
commerce with foreign nations and among the several states.' The view
announced was that corporations are not citizens within the clause first cited,
on the ground that the privileges and immunities secured to the citizens of each
state, in the several states, are those which are common to the citizens of the
latter states under their constitutions and laws, by virtue of their being citizens;
and that, as a corporation created by a state is a mere creation of local law, even
the recognition of its existence by other states, and the enforcement of its
contracts made therein, depend purely on the comity of those states,—a comity
which is never extended where the existence of the corporation or the exercise
of its powers is 'prejudicial to their interests or repugnant to their policy.' And
the court, speaking by Mr. Justice FIELD, said: 'Having no absolute right of
recognition in other states, but depending for such recognition and the
enforcement of its contracts upon their assent, it follows, as a matter of course,
that such assent may be granted upon such terms and conditions as those states
may think proper to impose. They may exclude the foreign corporation
entirely, they may restrict its business to particular localities, or they may exact
such security for the performance of its contracts with their citizens an in their
judgment will best promote the public interest. The whole matter rests in their
discretion.' As to the power of congrees to regulate commerce among the
several states, the court said that, while the power conferred included
commerce carried on by corporations as well as that carried on by individuals,
'issuing a policy of insurance is not a transaction of commerce.' This decision
only followed the principles laid down in the earlier cases of Bank of Augusta
v. Earle, 13 Pet. 519, 588, and Lafayette Ins. Co. v. French, 18 How. 404.
5
The same rulings were followed in Ducat v. Chicago, 10 Wall. 410, where it
was said that the power of a state to discriminate between her own corporations
and those of other states desirous of transacting business within her jurisdiction
being clearly established, it belonged to the state to determine as to the nature
or degree of discrimination, 'subject only to such limitations on her sovereignty
as may be found in the fundamental law of the Union.' Other cases to the same
effect are Liverpool Ins. Co. v. Massachusetts, 10 Wall. 566; Doyle v.
Continental Ins. Co., 94 U. S. 535; and Cooper Manuf'g Co. v. Ferguson, 113
U. S. 727; S. C. 5 Sup. Ct. Rep. 739.
6
As early as 1853, the state of New York, by a statute, (chapter 466,) required of
every fire insurance company incorporated by any other state or any foreign
government, as a prerequisite to doing business in the state, that it should file an
appointment of an attorney on whom process was to be served, and a statement
of its pecuniary condition, and procure from a designated public officer a
certificate of authority stating that the company had complied with all the
requisitions of the statute; and also required the renewal, from year to year, of
the statement and evidence of investments; and provided that such public
officer, on being satisfied that the capital of the company and its securities and
investments remained secure, should furnish a renewal of the certificate of
authority. A violation of the provisions was made a penal offense. This act,
with immaterial amendments, is still in force.
7
This Pennsylvania corporation came into the state of New York to do business,
by the consent of the state, under this act of 1853, with a license granted for a
year, and has received such license annually, to run for a year. It is within the
state for any given year under such license, and subject to the conditions
prescribed by statute. The state, having the power to exclude entirely, has the
power to change the conditions of admission at any time for the future, and to
impose as a condition the payment of a new tax, or a further tax, as a license
fee. If it imposes such license fee as a prerequisite for the future, the foreign
corporation, until it pays such license fee, is not admitted within the state, or
within its jurisdiction. It is outside, at the threshold, seeking admission, with
consent not yet given. The act of 1865 had been passed when the corporation
first established an agency in the state. The amendment of 1875 changed the act
of 1865 only by giving to the superintendent the power of remitting the fees
and charges required to be collected by then existing laws. Therefore the
corporation was at all times after 1872 subject, as a prerequisite to its power to
do business in New York, to the same license fee its own state might thereafter
impose on New York companies doing business in Pennsylvania. By going into
the state of New York in 1872, it assented to such prerequisite as a condition of
its admission within the jurisdiction of New York. It could not be of right
within such jurisdiction until it should receive the consent of the state to its
entrance therein under the new provisions, and such consent could not be given
until the tax, as a license fee for the future, should be paid.
8
It is not to be implied from anything we have said that the power of a state to
exclude a foreign corporation from doing business within its limits is to be
regarded as extending to an interference with the transaction of commerce
between that state and other states by a corporation created by one of such other
states. Judgment affirmed.
HARLAN, J., (dissenting.)
9
Under the decision just rendered, the state of New York is permitted to subject
a corporation of another state, within her limits by her consent, to higher taxes
in respect to its business than is imposed there upon similar corporations of
other states. At the last term of this court, when counsel were about to enter
upon the argument of the case of Santa Clara Co. v. Southern Pac. R. Co., 118
U. S. 396, S. C. 6 Sup. Ct. Rep. 1132, involving the validity of a system
devised by one of the states for the taxation of railroad corporations of a certain
class, the chief justice observed: 'The court does not wish to hear argument on
the question whether the provision in the fourteenth amendment to the
constitution, which forbids a state to deny to any person within its jurisdiction
the equal protection of the laws, applies to these corporations. We are all of
opinion that it does.' This, it is true, was said in regard to corporations of the
particular state whose legislation was assailed as uncon titutional; but it is
equally clear that a corporation of one state, doing business in another state by
her consent, is to be deemed, at least in respect to that business, a 'person'
within the jurisdiction of the latter state, in the meaning of the fourteenth
amendment.
10
The denial of the equal protection of the laws may occur in various ways. It
will most often occur in the enforcement of laws imposing taxes. An individual
is denied the equal protection of the laws if his property is subjected by the
state to higher taxation than is imposed upon like property of other individuals
in the same community. So, a corporation is denied that protection when its
property is subjected by the state under whose laws it is organized to more
burdensome taxation than is imposed upon other domestic corporations of the
same class. So, also, a corporation of one state, doing business by its agents in
another state, by the latter's consent, is denied the equal protection of the laws,
if its business there is subjected to higher taxation than is imposed upon the
business of lkie corporations from other states within her jurisdiction. These
propositions seem to me to be indisputable. They are necessarily involved in
the concession that corporations, like individuals, are entitled to the equal
protection of the laws.
11
The plaintiff in error is a corporation of Pennsylvania. In 1872 it established,
and has ever since maintained, an agency in the state of New York. It had its
agents there when the taxes for 1881, here in question, were assessed. The laws
of New York prescribe certain conditions precedent to the right of a fire
insurance company from another state to transact business there. It must
possess a certain amount of actual capital; appoint an attorney in the state,
service of process upon whom is to be 'deemed a valid personal service upon
the corporation' in any action 'upon a policy or liability issued or contracted
while such corporation transacted business' there; file in the insurance
department a certified copy of its charter, together with a statement, verified by
the oath of its chief officer and secretary, showing the name of the company;
place where located; amount of its capital and assets; the extent to which its
real estate is incumbered; the par and market value of all shares of stock held
by it; the estimated value of its bonds, mortgages, and other securities; the
extent of its indebtedness; the amount of its losses, adjusted and unpaid, or
incurred and in process of adjustment; the losses disputed; and the claims
existing against it. It is also provided that no business shall be transacted in the
state by the agent of any company from another state, while its capital is
impaired to the extent of 20 per cent. If further requires from such companies
an annual statement, showing in detail the items making up their capital, and
the deductions to be made therefrom. It was made the duty, first of the state
comptroller, and subsequently of the superintendent of insurance, these
requirements of the statute being first complied with,—to issue to the company
thus seeking admission into the state a certificate showing its lawful right to
transact business within her limits. Laws N. Y. 1853, c. 466; Laws 1862, c. 6, §
1; Id. c. 367, § 5; Laws 1871, c. 888; Laws 1874, c. 331, § 1; Laws 1875, c.
555, § 1.
12
That the plaintiff in error conformed to these statutory provisions, and was
admitted into New York for the transaction of business, is shown by the agreed
case, from which it appears that it 'has uniformly complied with all the
requirements and conditions imposed by the laws of this state upon fire
insurance companies from other states establishing and maintaining agencies in
this state, except the payment of the tax now in dispute, upon premiums
received by it in 1881 upon risks located within the state of New York, and
which is the subject of this controversy; and has received from year to year
certificates of authority from the superintendent of the insurance department of
this state, as provided to be issued under the act, (chapter 466, Laws 1853,)
and the subsequent acts amendatory thereof.'
13
In view of these admitted facts, how can it be said that this Pennsylvania
corporation was not, in respect to its corporate business, within the jurisdiction
of New York during the year when the tax in dispute accrued? That a
corporation of one state, doing business in another state by the latter's consent,
evidenced by the official certificate given by her insurance department in
conformity with her laws, and liable, precisely as domestic corporations are, to
be brought into her courts, through service of process upon its dulyappointed
attorney or agent, in reference to any business transacted or liability incurred by
it there, is to be deemed within the jurisdiction of that state, seems to me
entirely clear. In Ex parte Schollenberger insurance company, doing business in
Pennsylvania, under the authority of a statute of that common wealth requiring,
as a condition precedent to its being there, an agreement that judicial process
served upon its agent should have the same effect as if served upon the
corporation, was, within the meaning of the act of congress of 1875, 'found' in
that state so as to give jurisdiction to the courts of the United States sitting in
that state of suits brought there against such company, accompanied by service
of process upon its agent. The subject was again considered in St. Clair v. Cox,
106 U. S. 357, S. C. 1 Sup. Ct. Rep. 354, where it was said that there was no
sound reason why, in the case of an insurance company doing business in
another state, by an agent, under statutes such as those referred to, should not be
deemed to be represented in the latter by such agent, and held responsible for
its obligations and liabilities there incurred. See, also, Railroad Co. v. Harris,
12 Wall. 65; Railway Co. v. Whitton, 13 Wall. 285.
14
It was said in argument that the plaintiff in error entered New York with the
knowledge, derived from the act of 1865, that if Pennsylvania thereafter
subjected New York insurance companies to higer taxes than the latter state
imposed upon Pennsylvania corporations of the same class, doing business in
New York, the taxes levied upon it would be correspondingly increased;
therefore, it is argued, the entrance of the plaintiff in error into New York was
subject to the reserved right of that state thus to increase the taxes upon its
business. The same idea is embodied in the suggestion that New York made it a
prerequisite, from and after 1865, to the right of a fire insurance corporation of
another state to transact business in New York, that it should pay such increased
taxes, however much they might be in excess of the taxes imposed there upon
corporations of the same class from the remaining states. Now, it is submitted
(1) that no such obligation was imposed by the statute upon the plaintiff in
error as a prerequisite to its right to enter New York, and transact business
there. The agreed case shows, not only that the insurance department of New
York has certified its right to do business in that state, but that the certificate
was made as provided in the act of 1853, and the acts amendatory thereof.
Besides, there is no clause in the statute directing that department to withhold
or to revoke a certificate upon the failure or refusal of the company to pay these
increased taxes. The regularity and validity of that certificate was not
questioned in argument, is not now disputed, and there is not a word in the
statute to the effect that the payment of these increased taxes is a prerequisite to
the right of the company to remain in the state and transact business. Indeed, it
is evident that the state purposely avoided establishing any such prerequisite to
the right to enter her limits. She only seeks, after admitting the plaintiff in error,
and certifying its right to do business, to subject it to the taxation in question.
(2) The power of New York to impose this increased tax surely cannot depend
upon the fact that she gave notice of what she would do in the contingency
expressed in the act of 1865. Such notice neither creates a power to do that
which the state could not otherwise constitutionally do, nor makes it the duty of
the plaintiff in error to submit to an illegal exaction. At last, the real question
presented is whether Pennsylvania corporations can be subjected to higher taxes
in New York than are imposed there upon corporations of the same class from
other states.
15
It is said that a state may exclude altogether from its borders a corporation of
another state, or may admit it upon such terms or conditions as she may elect to
prescribe. It is quite true that general language to that effect was employed in
Paul v. Virginia, 8 Wall. 168, where the only question necessary to be
determined was as to the validity of a statute of Virginia providing that before
an insurance company, not incorporated by that state, should carry on business
there, it must obtain a license therefor, and deposit with the state treasurer, as
security for its engagements, bonds of a specified character and amount. In the
course of the opinion which disposed of that question, it was said that a
corporation of one state, 'having no absolute right of recognition in other states,
but depending for such recognition and the enforcement of its contracts upon
their assent, it follows, as a matter of course, that such assent may be granted
upon such terms and conditions as those states may think proper to impose.
They may exclude the foreign corporation entirely. They may restrict its
business to particular localities, or they may exact such security for the
performance of its contracts with their citizens as in their judgment will best
promote the public interests. The whole matter rests in their discretion.' But I
submit that it is the settled doctrine of this court that the terms and conditions
so prescribed must not be repugnant to the constitution of the United States, or
inconsistent with any right granted or secured by that instrument.
16
In Ducat v. Chicago, 10 Wall. 415, it was said by Mr. Justice NELSON,
speaking for the court, that, in respect to the nature or degree of discrimination
which a state may make between her own corporations and those of other
states, 'it belongs to the state to determine, subject only to such limitations on
her sovereignty as may be found in teh fundamental law of the found in the
fundamental law of the
17
It was so decided in Insurance Co. v. Morse, 20 Wall. 445, 455, 456, where the
question was as to the validity of a statute of Wisconsin relating to the
admission into that state of fire insurance companies incorporated by other
states. Besides the condition that they should designate some attorney in
Wisconsin upon whom process against the company could be served, it
imposed the further one that it should file in the proper office an agreement
stipulating that it would not remove to the courts of the United States any suit
brought against it in the local courts. An insurance company of New York
established an agency in Wisconsin, and complied in all respects with these
conditions; it filed the required agreement. In support of the validity of those
conditions, the state relied upon the very language above quoted from Paul v.
Virginia. But the court was careful to say that that language must be understood
with reference to the facts in the case, and to the question to be decided, which
was stated to be simply 'whether the state might require a foreign insurance
company to take a license for the transaction of its business, giving security for
the payment of its debts.' Care was taken to further announce that the general
language employed in Paul v. Virginia was not intended to impair the language
in Lafayette Ins. Co. v. rench, 18 How. 407, where the court, speaking by Mr.
Justice CURTIS, said: 'A corporation created by Indiana can transact business
in Ohio only with the consent, express or implied, of the latter state. This
consent may be accompanied by such conditions as Ohio may think fit to
impose, and these conditions must be deemed valid and effectual by other
states, and by this court: provided, they are not repugnant to the constitution
and laws of the United States, or inconsistent with those rules of public law
which secure the jurisdiction and authority of each state from encroachment of
all others, or that principle of natural justice which forbids condemnation
without opportunity for defense.' Upon these grounds it was held in Insurance
Co. v. Morse that the Wisconsin statute, so far as it required insurance
companies of other states to stipulate that they would not exercise the right to
have suits against them removed to the national courts, was void, equally
because it created an obstruction to the exercise of a privilege granted by the
constitution and laws of the United States, and tended to oust the courts of the
Union of a jurisdiction conferred upon them. Much that was said in that case is
pertinent to the present one. After observing that the courts would not enforce
an agreement between a citizen of New York and a citizen of Wisconsin; that
the former would, in no event, resort to the federal courts sitting in Wisconsin
for the protection of his rights of property, or an agreement between the same
parties, upon whatever consideration; that the citizen of New York would in no
case, when called into the courts, either of Wisconsin or of the federal courts
sitting in that state, demand a jury to determine his rights of property, but would
submit such rights to arbitration or to the decision of a single judge,—the court
said: 'We see no difference in principle between the cases supposed and the
case before us. Every citizen is entitled to resort to all the courts of the country,
and to invoke the protection which all the laws or all those courts may afford.'
The court further said that the right of the insurance company to remove the
suit was 'denied to it by the state court on the ground that it had made the
agreement referred to, and that the statute of the state authorized and required
the making of the agreement. We are not able to distinguish this agreement and
this requisition, on principle, from a similar one made in the case of an
individual citizen of New York. A corporation has the same right to the
protection of the laws as a natural citizen, and the same right to appeal to all the
courts of the country. The rights of an individual are not superior, in this
respect, to that of a corporation. The state of Wisconsin can regulate its own
corporations, and the affairs of its own citizens, in subordination, however, to
the constitution of the United States. The requirement of an agreement like this
from their own corporations would be brutum fulmen, because they possess no
such right under the constitution of the United States. A foreign citizen,
whether natural or corporate, in this respect possesses a right not pertaining to
one of her own citizens. There must necessarily be a difference between the
status of the two in this respect.'
18
The only difference between Insurance Co. v. Morse and the present case is
that in the former the New York corporation expressly agreed, in writing, that it
would not exercise its constitutional privilege of removing suits against it into
the courts of the Union, while the Pennsylvania corporation received an official
certificate of its right to transact business in New York with notice, derived
from the act of 1865, that that state would after 1873—the date of the
Pennsylvania statute—claim from it higher taxes than she imposed upon like
corporations from the remaining states doing business in her limits by her
consent. If the plaintiff in error, by merely maintaining its agencies in New
York, is to be hel to have impliedly agreed to submit to such increased taxation,
is that anything more than an implied agreement that it would not assert a right
secured to it by the constitution of the United States? Can it be that a
corporation is estopped to claim the benefit of the constitutional provision
securing to it the equal protection of the laws simply because it voluntarily
entered and remained in a state which has enacted a statute denying such
protection to it, and to like corporations from the same state? Is the right to that
protection any less valuable or fundamental than the right to remove a suit into
the courts of the Union for trial? Will it be held that an express agreement by a
corporation not to exercise the latter right is void and not enforceable, but that a
local statute denying the equal protection of the laws to a corporation of the
state which because that corporation came within the jurisdiction of the state
which assumed to make such denial, and received from her officers, acting in
conformity with her laws, a certificate of its right to transact business there?
Will effect be given in one case to what (erroneously, I think) is called an
implied agreement to surrender a constitutional right, while an express
agreement in the other to surrender a constitutional right is held to be invalid?
19
Even if it were conceded that a state which provides for the organization, under
her own laws, of corporations for the transaction of every kind of business,
could arbitrarily exclude from her limits similar corporations from the
remaining states, and declare all contracts made within her jurisdiction with
corporations from other states to be void,—concessions to be made only for the
purposes of this case,—it would not follow that she could subject corporations
of other states, doing business within her limits under a license from the proper
department, to higher taxes than she imposes upon other corporations of the
same class from the remaining states. The plaintiff in error having been, in
1881, lawfully within New York, by its agents, cannot be denied there the
equal protection of the laws because the state which created it may have
adopted a system of taxation different from that devised by New York. The
case, in its legal aspects, is precisely the same as if Pennsylvania had never
passed the statute of 1873, but New York had, in that year, imposed upon fire
insurance companies from Pennsylvania higher taxes than she imposed upon
similar corporations from other states.
20
It would seem to be the result of the decision in this case that New York may
prescribe such varying rates of taxation upon insurance corporations of the
remaining 37 states, within her jurisdiction, as she chooses; the rate for
corporations from each state differing from the rate established for corporations
of the same class from all other states, and the rate in respect to corporations of
other states being higher than she imposes upon her own corporations of the
same class. Such legislation would be a species of commercial warfare by one
state against the others, and would be hostile to the whole spirit of the
constitution, particularly the fourteenth amendment, securing to all persons
within the jurisdiction of the respective states the equal protection of the laws.
21
For the reasons which have been stated I feel obliged to withhold my assent to
the opinion and judgment of the court.
