Lycoming Fire Insurance ex rel. Beeber v. Langley

Miller, J., delivered the opinion of the Court. The appellant was incorporated under the laws of Pennsylvania as a Mutual Eire Insurance Company. After doing business with success for many years, it met with heavy losses and the corporation was dissolved in October, 1881, by a decree of the Court of Common Pleas of Lycoming County, and J. Artley Beeber, was appointed receiver ■of its estate and effects, with power “ to collect the debts and property due and belonging to it, and under the direction of the Court to do all matters and things pertaining to his said office, and in accordance with the Act of Assembly in such case made and provided.” In May, 1883, this suit was brought in the name of the corporation for the use of the receiver against the appellee, a Maryland policy holder, to recover certain assessments upon his premium note. The trial resulted in a verdict and judgment for the defendant and the plaintiff has appealed- ²⁰² By this appeal and the exceptions taken at the trial, three principal questions are presented. 1st.

Has the company the right to bring this action in a Maryland Court? 2nd. Was the note of the defendant rendered void by reason of the representations made to him by Selby, the agent of the Company, at the time it was given and the insurance of his property effected, as stated in the defendant’s sixth prayer ? 3rd. Can the recovery be defeated on account of the mode in which the assessments were made, as stated in the defendant’s eleventh prayer ? First.

This is not a case where the action is brought by a receiver in his official capacity, and hence it does not fall within the general rule that such an officer has no extra-territorial jurisdiction, and cannot go into a foreign State or jurisdiction, and there institute a suit for the recovery of demands due the person or estate subject to his receivership. The generally accepted doctrine in this country is, that his functions and powers for the purpose of litigation, are limited to the Courts of the State within which he is appointed, and the principles of comity between nations and States which recognize the judicial decisions of one tribunal as conclusive in another, do not apply in such a case, and will not warrant a receiver in bringing an action in a foreign Court or jurisdiction. Booth vs. Clark, 17 Howard, 322 ; High on Receivers, sec. 239.. But here the plaintiff in the action is the corporation, and the suit is brought in its name.

It has long-been settled law that though a corporation must dwell in the place of its creation, and cannot migrate to another sovereignty, yet it may do business in all places where its charter allows, and local laws do not forbid, and in the absence of such prohibition by local laws, may institute suits in the Courts of States other than those under whose laws it has been established. Angell & Ames on Corpora ²⁰³ tions, secs. 372, 373. But it is said the decree of the Pennsylvania Court appointing the receiver also dissolved the corporation, and therefore no suit in its name can he maintained, and if the effect of that decree and the law of Pennsylvania under which it was passed, was to wort an absolute and total dissolution of the corporation, the argument would be unanswerable. But has such a dissolution been effected ?

It is true the decree declares the Company to be dissolved, but at the same time it refers to the “Act of Assembly,” under which it was passed, and by reference to that Act we find it provided, that when an insurance corporation is dissolved, the Court, decreeing such dissolution, may appoint; a receiver to take charge of its effects and collect the debts and property due and belonging to it “with power to prosecute and defend suits in the name of the corporation, or otherwise, and to do all other acts which might be done by such corporation, if in being, that are necessary for the final settlement of the unfinished business of the corporation.” Purdon’s Annual Digest, (1873-78,) page 2026, sec. 54. Similar provisions are almost invariably introduced into statutes, providing for the dissolution by judicial decrees of corporations of this character; and this is done in order to avoid the unjust operation upon the rights of both creditors and stockholders, of the harsh rule of the common law as to the effect of dissolution upon the property and debts of such corporations. The object and effect of such provisions, are to continue the corporation in existence for the special and limited purpose of collecting its assets, preparatory to the payment of its debts and distribution of the surplus, if any, to the stockholders, and to this end, suits are allowed to be brought “in the name of the corporation,” in the same manner as if no decree of dissolution had been passed. Why should not such a law, upon principles of comity, be recognized in other jurisdictions, as well as the original law creating the corporation?

In ²⁰⁴ "both cases, the foreign law authorizes suits to he brought in the name of the corporation, and we see no good reason why the Courts of other States should sustain an action in ■the one case, and deny it in the other. No decision has been referred to in which the question has been directly adjudicated, but the doctrine announced by the Supreme Court in the recent case of The Canada Southern Railroad Co. vs. Gebhard, 109 U. S., 527 , would seem to be all that is needed in the way of authority upon the subject. In that case, the Court after stating the general rule that a corporation must dwell in the place of its creation, and cannot migrate to another jurisdiction, though it may do business in all places where its charter allows, and the local laws do not forbid, proceeds thus: “ But wherever it goes for business it carries its charter, •as that is the law of its existence, and the charter is the same abroad that it is at home. Whatever disabilities are placed upon the corporation at home -it retains abroad, and whatever legislative control it is subjected to at home must be recognized and submitted to by those who deal with it elsewhere.

A corporation of one country may be excluded from business in another country, but if admitted, it must, in the absence of legislation equivalent to making it a corporation of the latter country, be taken both by the government and those who deal with it, as a creature of the law of its own country, and subject to all the legislative control and direction that may be properly exercised over it at the place of its creation.” There is no statute in this State forbidding the bringing of such suits in our Courts, and we have no difficulty in sustaining this action. Second. By granting the defendant’s sixth prayer, the Court instructed the jury that if they find from the evidence that Joseph Selby, Jr., was the general agent of. the plaintiff, and that at the time the insurance was •effected for which the defendant gave his premium note, ²⁰⁵ he, the said Selby, represented to the defendant that' he had made special arrangements with the Company,, whereby the defendant would'be liable to be assessed on his said note to the amount of five per centum thereof, and no-more during any one year that the contract of insurance was in force, and that the first assessment of five per cent, would not be made until the 1st of March, 1881, and that the defendant gave his note on the faith of this representation, then the plaintiff is not entitled to recover. The oral testimony which the Court below allowed to go to the jury showed that such representations were in fact made by Selby to the defendant, as well as to all the other Maryland policy holders, before, or at the time their insurances, were effected.

But this testimony was taken subject to exception, and the plaintiff by a special prayer asked the Court to exclude it from the consideration of the jury, so that the real cpiestion presented, is, was such testimony admissible in face of the terms of the written contract between the parties evidenced by the defendant’s premium note, and application for insurance, or was the Company bound by such representations, assuming them to have been made by their agent? The premium note which was executed by the defendant on the 24th of February, 1880,in as follows: “($561.) For value received in policy No. 513, (risk commencing the 1st day of March, 1880,. issued by the Lycoming Fire Insurance Company,) I promise to pay to said Company or their Treasurer for the time being, the sum of five hundred and sixty-seven dollars, in such portions and at such time or times as the directors of said Company may agreeably to their Act of incorporation require.” The Act of incorporation provides that all persons insuring with the corporation thereby become members thereof during the period they remain so insured, and every such member, before he receives his policy, shall deposit his promissory note for such sum as shall he determined by the directors, and a part, not ex- ²⁰⁶ ceeding ten per cent, of such note shall he immediately paid, “and the remainder of said deposit note shall he payable in part or the whole at any time when the directors shall deem the same requisite for the payment of losses by fire, and such incidental expenses as shall he necessary for the transaction of the business of said corporation, and at the expiration of the time of insurance, the said note or such part of the same as shall remain unpaid after deducting all losses and expenses during said term, shall be relinquished and given up to the maker thereof.” And in the defendant’s written application for membership, and insurance of his property to the amount of $8385, bearing the same date as the premium note, and immediately above his signature, and so printed as to attract notice, is the following covenant or agreement: “And the undersigned, applicant for the proposed insurance, hereby covenants •and agrees to accept the policy of the said Lycoming Eire Insurance Company, in accordance with and subject to its charter and by-laws. And it is expressly understood and agreed, that the said Company will not be bound by any act or statement made to or by the agent, restricting its rights or varying its written or printed contract, unless inserted in this application in writing.” Now treating the representations made by Selby as amounting to a parol agreement between him, as the agent of the company, and the defendant, it is manifest they are in direct conflict with the cotemporaneous or subsequent written contract contained in and evidenced by the premium note, which must in a Court of law be taken as expressing the final agreement of the parties, and as merging all previous verbal stipulations. An arrangement to the effect that the defendant.should he assessed to the amount of five per cent, of the note and no more during any one year, is utterly at variance with the promise and obligation to pay the whole or any part of it whenever the directors of the company should deem the same ²⁰⁷ requisite for the payment of losses and expenses.

The admission of such evidence so evidently infringes the salutary rule that the written contract must prevail over previous verbal arrangements, that it is scarcely necessary to refer to authorities upon the subject. The case, however, of Thompson vs. Insurance Co., 104 U. S., 252 , is directly in point. In that case the assured gave his note payable at nine months, for value received, in premium on his policy, “ which policy is to he void in case this note is not paid at maturity, according to contract in said policy.” The note was not paid at maturity, and in order to get rid of the forfeiture relied on by the defendant company, the plaintiff set up a parol agreement of the defendant made on receiving the note, that the policy should not become void on the non-payment of the note alone, at maturity, but was to become void at the instance, and election of the defendant, which election had never been made. But the Court held that as this supposed agreement was in direct contradiction to the express terms of the policy and the note itself, it cannot affect them, hut is itself void, and said: “ An insurance company may waive a forfeiture or may agree not to enforce a forfeiture ; hut a parol agreement made at the time of issuing a policy, contradicting the terms of the policy itself, like any other parol agreement inconsistent with a written instrument made contemporary therewith, is void, and cannot he set up to contradict the writing.

So, in this case, a parol agreement supposed to he made at the time of giving and accepting the premium note cannot he set up to contradict the express terms of the note itself, and of the policy under which it was taken.” But it is said the defendant was induced to enter into the contract by these representations thus made to him by this general agent, and that the Company is therefore hound by them. The authority mainly relied on in support of this position is, Lycoming F. I. Co. vs. Wood- ²⁰⁸ worth, 83 Penn. St., 223, where this same company was the plaintiff, and where the suit was also for an assessment upon a premium note. But in that case, the evidence was to the effect that when the defendant applied for his policy, he was told by the agent that, the company was purely mutual, and issued no stock policies on a cash basis, that it did business only in Pennsylvania, and never took large risks in large cities, all of which statements, were untrue at the time they were made.

In other words, the representations upon which the defendant relied were false statements in regard to matters of fact — to a present or past state of things — and not, as in the present case, mere promises or assurances as to what the company would do in the future with respect to rights to he acquired under a contract not executed at the time they were given or made. This distinction is very clearly stated by the Supreme Court in Insurance Co. vs. Mowry, 96 U. S., 544 . In that case, the policy declared that it was made and accepted upon the express condition that if the amount of any annual premium was not fully paid on the day and in the manner provided therein, the policy should he “null and void and wholly forfeited,” and it further declared that no agent of the company, except the president and secretary, could waive such forfeiture, or alter that or any other condition of the policy. In order to overcome the effect of a failure to pay a premium when it matured, the plaintiff sought to show that the agent who induced him to apply for the policy, told him the company would notify him in season to pay them, and that he need give himself no uneasiness on that subject, that no such notification was given before the maturity of the premium in question, and for that reason he did not pay it at the time required.

But the Court not only held that all previous verbal arrangements were merged in the written agreement, and that the entire engagement of the parties, must he conclusively presumed to be there' ²⁰⁹ stated, but also