Philadelphia Fire Ass'n v. New YorkAnnotate this Case
119 U.S. 110 (1886)
U.S. Supreme Court
Philadelphia Fire Ass'n v. New York, 119 U.S. 110 (1886)
Philadelphia Fire Association v. New York
Argued October 26, 1886
Decided November 15, 1886
119 U.S. 110
A Pennsylvania fire insurance corporation began doing business in New York in 1872, and continued it afterwards till 1882, receiving from year to year certificates of authority from the proper officer under a statute of New York passed in 1853. Chapter 694 of the laws of New York of 1865, as amended by c. 6O of the laws of 1870, provided that whenever the laws of any other state should require from a New York fire insurance company a greater license fee than the laws of New York should then require from the fire insurance companies of such other state, all such companies of such other state should pay in New York a license fee equal to that imposed by such other state on New York companies. In 1873, Pennsylvania passed a law requiring from every insurance company of another state, as a prerequisite to a certificate of authority, a yearly tax of three percent on the premiums received by it in Pennsylvania during the preceding year. In 1882, the insurance officer of New York required the Pennsylvania corporation to pay, as a license fee, a tax of three percent on the premiums received by it in New York in 1881. In a suit against such corporation in a court of New York to recover such tax, it was set up as a defense that the tax was unlawful because the corporation was a "person" within the "jurisdiction" of New York, and "the equal protection of the laws" had been denied to it in violation of a clause in the Fourteenth Amendment to the Constitution of the United States. On a writ of error to review the judgment of the highest court of New York overruling such defense, held that such clause had no application, because, the defendant, being a foreign corporation, was not within the jurisdiction of New York until admitted by the state on a compliance with the condition of admission imposed -- namely the payment of the tax required as a license fee.
The business carried on by the corporation in New York was not a transaction of commerce.
The opinion of the highest court of New York, duly authenticated by the proper officer and transmitted to this Court with the record in compliance with the 8th Rule, was examined to aid in determining whether that court decided such federal question against the defendant.
This is a writ of error to the supreme court of the State of New York. Under the provisions of § 1279 of the Code of Civil Procedure 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.,"
" Section 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 percent 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 three percent 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 controversy 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;"
" 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.
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