Section 439 of the Penal Code of California, making it a
misdemeanor for a person in that state to procure insurance for a
resident in the state from an insurance company not incorporated
under its laws and which had not filed the bond required by the
laws of the state relative to insurance, is not a regulation of
commerce and does not conflict with the Constitution of the United
States when enforced against the agent of a New York firm in
California who, through his principals and by telegram, procured
for a resident in California applying for it there marine insurance
on an ocean steamer from an insurance company incorporated under
the laws of Massachusetts, and which had not filed the bond
required by the laws of California.
Section 623 of the Political Code of the State of California
provides as follows:
"The [insurance] commissioner must require every company,
association, or individual not incorporated under the laws of this
state and proposing to transact insurance business by agent or
agents in this state, before commencing such business to file in
his office a bond to be signed by the person or firm, officer or
agent, as principal, with two sureties to be approved by the
commissioner, in the penal sum of two thousand dollars for each
insurance company, association, firm or individual for whose
account it is proposed to collect premiums of insurance in this
state."
"The condition of such bond to be as follows:"
"1. That the person or firm, agent or officer named therein,
acting on behalf of the company, association, firm or individual,
named therein, will pay to the treasurer of the county, or city and
county in which the principal office of the agency is located such
sum per quarter, quarterly in advance, for a license to transact an
insurance business or such other license
Page 155 U. S. 649
as may be imposed by law as long as the agency remains in the
hands of the person or firm, agent or officer named as principal in
the bond."
"2.. That the person or firm, officer or agent will pay to the
state all stamp or other duties on the gross amounts insured
inclusive of renewals on existing policies."
"3.. That the person, firm, agent or corporation named therein
will conform to all provisions of the revenue or other laws made to
govern them."
Section 439 of the Penal Code of California is as follows:
"Every person who in this state procures or agrees to procure
any insurance for a resident of this state from any insurance
company not incorporated under the laws of this state, unless such
company or its agent has filed the bond required by the laws of
this state relative to insurance, is guilty of a misdemeanor."
On the 29th day of September, 1888, the plaintiff in error was
charged before a police court of the City and County of San
Francisco with having, on the first day of April, 1888, "in the
City and County of San Francisco," committed the misdemeanor of
procuring insurance on account of foreign companies that have not
complied with the laws of this state; with having
"then and there procured for a resident of this state insurance
from an insurance company not incorporated under the laws of this
state, to-wit, China Mutual Insurance Company of Boston, said
company or its agents not then or there having filed the bond
required by the laws of this state relative to insurance."
A jury having been waived, the case was tried by the court, and
the defendant, having been found guilty, was sentenced to pay a
fine of $5, and, in default thereof, to be imprisoned in the city
prison for twenty-four hours. Motions in arrest and for a new trial
were made on several grounds, among which it is necessary only to
state the following:
"Second. For that the statute, to-wit, sec. 439 of the Penal
Code of the State of California, amounts to and is a regulation of
commerce between the several states and foreign
Page 155 U. S. 650
nations, and is therefore in violation of paragraph 3, sec. 8,
of article 1 of the Constitution of the United States."
"Third. For that sec. 439 of the Penal Code of the State of
California is in violation of the constitutional right of the
defendant to transact any business in the State of California which
is not opposed to the good morals or health of the community."
"Fourth. That the said statute is not a police regulation."
"Fifth. For that said statute is in violation of the Fourteenth
Amendment."
The motions having been overruled, the cause was taken by appeal
to the superior court of the City and County of San Francisco, the
highest court to which an appeal was permissible under the
Constitution and laws of the State of California.
The facts were stated as follows:
"That the firm of Johnson & Higgins are average adjusters
and insurance brokers, residing and having their principal place of
business in the City of New York, State of New York."
"That as insurance brokers, they procure for other persons, of
whatever state resident, and on the request of such persons,
insurance on ships and vessels, cargoes and freights, from
insurance companies not incorporated under the laws of the State of
California or doing business therein as provided by the laws of
said state."
"That they receive from said companies the marine policies
issued by said companies so insuring said ships or vessels, and
deliver them to the party or parties for whom they have procured
the same."
"That the said firm of Johnson & Higgins at all the times
herein mentioned, had a place of business in the City and County of
San Francisco, State of California, and that the defendant had at
all the times herein mentioned charge of said business as the
employee and agent of said Johnson & Higgins, and not
otherwise."
"That on the 13th day of March, 1888, C. W. Mott, a resident of
the State of California, inquired of said defendant
Page 155 U. S. 651
if he, the said defendant, as the agent of Johnson &
Higgins, could procure the said Johnson & Higgins to place a
certain amount of insurance on the steamer
Alliance of San
Francisco at a certain named rate of premium; to which said
defendant replied he would see what could be done in respect to the
same."
"That thereupon the said defendant informed Johnson &
Higgins of the inquiry of said Mott, and requested them to advise
him, the said defendant, of what, if anything, they had done or
could do in the premises; that in compliance with the said request
of the said defendant, said Johnson & Higgins telegraphed to
said defendant as follows: '
Alliance, four thousand
dollars, done in American form,' but did not advise said defendant
of the name of the company in which said insurance had been
placed."
"The contents of the telegram above named were communicated by
the defendant to said Mott. In April, 1888, said firm of Johnson
& Higgins forwarded to the said defendant the policy of the
'China Mutual Insurance Company,' insuring four thousand dollars on
said steamer
Alliance."
"Said insurance company not then and there being a company
incorporated under the laws of the State of California, and not
then and there having by itself or its agent filed the bond
required by the laws of the said State of California relating to
insurance, this policy was delivered by the defendant to said Mott,
and thereupon said Mott paid to the said defendant, as agent of
Johnson & Higgins, the premium for said insurance. This premium
was deposited by the defendant in a bank in San Francisco to the
credit of Johnson & Higgins, and Johnson & Higgins were
duly advised by him that said premium had been collected, and the
amount deposited in the bank to their credit."
"All the said verbal acts by said Mott and also of said
defendant, and all acts of defendant as agent in said procuring,
were done in the City and County of San Francisco, State of
California."
On the foregoing statement, the judgment below was affirmed upon
the ground
"that the facts, as they appear
Page 155 U. S. 652
of record herein, bring the act of defendant within the true
intent and meaning of section 439 of the Penal Code of the State of
California,"
and that "on the facts in this case, said act is not repugnant
to any of the provisions of the Constitution of the United
States."
MR. JUSTICE WHITE, after stating the case, delivered the opinion
of the Court.
The principle that the right of a foreign corporation to engage
in business within a state other than that of its creation depends
solely upon the will of such other state has been long settled, and
many phases of its application have been illustrated by the
decisions of this Court.
Bank of Augusta v.
Earle, 13 Pet. 519;
Lafayette
Ins. Co. v. French, 18 How. 404;
Society
for Savings v. Coite, 6 Wall. 594;
Provident
Institution v. Massachusetts, 6 Wall. 611;
Hamilton Co. v.
Massachusetts, 6 Wall. 632;
Paul v.
Virginia, 8 Wall. 168;
Ducat v.
Chicago, 10 Wall. 410;
State Tax
on Railway Gross Receipts, 15 Wall. 284;
Railroad Co. v.
Peniston, 18 Wall. 5;
Delaware
Railroad Tax Cases, 18 Wall. 206;
State
Railroad Tax Cases, 92 U. S. 575;
Philadelphia & Southern Steamship Co. v. Pennsylvania,
122 U. S. 326;
California v. Central Pacific Railroad, 127 U. S.
1;
Home Insurance Co. v. New York, 134 U.
S. 594;
Maine v. Grand Trunk Railway,
142 U. S. 217;
Ashley v. Ryan, 153 U. S.
445.
While there are exceptions to this rule, they embrace only cases
where a corporation created by one state rests its right to enter
another and to engage in business therein upon the federal nature
of its business -- as, for instance, where it had derived its being
from an act of Congress, and has become a lawful agency for the
performance of governmental or
quasi-governmental
functions, or where it is necessarily an instrumentality
Page 155 U. S. 653
of interstate commerce, or its business constitutes such
commerce, and is therefore solely within the paramount authority of
Congress. In these cases, the exceptional business is protected
against interference by state authority. The reasons upon which the
exceptions to the general rule are based have been often explained.
Telegraph Co. v. Texas, 105 U. S. 460;
Gloucester Ferry Co. v. Pennsylvania, 114 U.
S. 196,
114 U. S. 205,
114 U. S. 211;
Phila. Steamship Co. v. Pennsylvania, 122 U.
S. 326,
122 U. S. 342;
McCall v. California, 136 U. S. 104,
136 U. S. 110;
Norfolk & Western Railroad v. Pennsylvania,
136 U. S. 114,
136 U. S. 118;
Pickard v. Pullman Southern Car Co., 117 U. S.
34;
Robbins v. Shelby County Taxing District,
120 U. S. 489;
Leloup v. Port of Mobile, 127 U.
S. 640;
Asher v. Texas, 128 U.
S. 129;
Stoutenburgh v. Hennick, 129 U.
S. 141;
Crutcher v. Kentucky, 141 U. S.
47.
In the case last cited, the precedents were fully reviewed and
the governing reasons of the law upon this subject were clearly
elucidated.
The contention here is that inasmuch as the contract was one for
marine insurance, it was a matter of interstate commerce, and as
such beyond the reach of state authority, and included among the
exceptions to the general rule. This proposition involves an
erroneous conception of what constitutes interstate commerce. That
the business of insurance does not generically appertain to such
commerce has been settled since the case of
Paul v. Virginia,
supra. See also Phila. Fire Ins. Co. v. New York,
119 U. S. 110, and
authorities there cited.
While it is true that in
Paul v. Virginia, and in most
of the cases in which it has been followed, the particular contract
under consideration was for insurance against fire, the principle
upon which these cases were decided involved the question of
whether a contract of insurance of any kind constituted interstate
commerce. The court, in reaching its conclusion upon this question,
was not concerned with any matter of distinction between marine and
fire insurance, but proceeded upon a broad analysis of the nature
of interstate commerce and of the relation which insurance
contracts generally bear
Page 155 U. S. 654
thereto. Thus, in
Paul v. Virginia, the Court, speaking
through MR. JUSTICE FIELD, said:
"Issuing a policy of insurance is not a transaction of commerce.
The policies are simply contracts of indemnity against loss by
fire, entered into between the corporations and the assured for a
consideration paid by the latter. These contracts are not articles
of commerce in any proper meaning of the word. They are not
subjects of trade and barter, offered in the market as something
having an existence and value independent of the parties to them.
They are not commodities to be shipped or forwarded from one state
to another and then put up for sale. They are like other personal
contracts between parties, which are completed by their signature
and the transfer of the consideration. Such contracts are not
interstate transactions, though the parties may be domiciled in
different states. The policies do not take effect -- are not
executed contracts -- until delivered by the agent in Virginia.
They are, then, local transactions, and are governed by the local
law. They do not constitute a part of the commerce between the
states any more than a contract for the purchase and sale of goods
in Virginia by a citizen of New York whilst in Virginia would
constitute a portion of such commerce."
This language was reiterated in the case of
Phila. Fire Ins.
Co. v. New York, supra. In
Crutcher v. Kentucky,
supra, the Court, in applying the exception to the general
rule, held that the State of Kentucky was without power to prevent
a corporation engaged in interstate commerce from entering that
state and carrying on its business therein, and also pointed out
the distinction between the making of contracts of insurance and
interstate commerce, or the necessary instrumentalities thereof, as
follows:
"The case is entirely different from that of foreign
corporations seeking to do a business which does not belong to the
regulating power of Congress. The insurance business, for example,
cannot be carried on in a state by a foreign corporation without
complying with all the conditions imposed by the legislation of
that state. So with regard to manufacturing corporations, and all
other corporations whose business is of a local and domestic
nature, which
Page 155 U. S. 655
would include express companies whose business is confined to
points and places wholly within the state. The cases to this effect
are numerous."
It is evident, then, as we have said above, that the attempt to
so distinguish between policies of marine insurance and policies of
fire insurance as to reach the deduction that there is a
constitutional difference between the business of a corporation
issuing policies of one kind and that of a corporation dealing in
policies of the other kind, which affects the question of a state's
authority to control the business of either, is based upon a
fundamental misconception of the nature of the constitutional
provision relied upon. It ignores the real distinction upon which
the general rule and its exceptions are based, and which consists
in the difference between interstate commerce or an instrumentality
thereof, on the one side, and the mere incidents which may attend
the carrying on of such commerce on the other. This distinction has
always been carefully observed, and is clearly defined by the
authorities cited. If the power to regulate interstate commerce
applied to all the incidents to which such commerce might give rise
and to all contracts which might be made in the course of its
transaction, that power would embrace the entire sphere of
mercantile activity in any way connected with trade between the
states, and would exclude state control over many contracts purely
domestic in their nature.
The business of insurance is not commerce. The contract of
insurance is not an instrumentality of commerce. The making of such
a contract is a mere incident of commercial intercourse, and in
this respect there is no difference whatever between insurance
against fire and insurance against "the perils of the sea."
The State of California has the power to exclude foreign
insurance companies altogether from her territory, whether they
were formed for the purpose of doing a fire or a marine business.
She has the power, if she allows any such companies to enter her
confines, to determine the conditions on which the entry shall be
made. And as a necessary consequence of her possession of these
powers, she has the right to
Page 155 U. S. 656
enforce any conditions imposed by her laws as preliminary to the
transaction of business within her confines by a foreign
corporation, whether the business is to be carried on through
officers or through ordinary agents of the company, and she has
also the further right to prohibit a citizen from contracting
within her jurisdiction with any foreign company which has not
acquired the privilege of engaging in business therein, either in
his own behalf or through an agent empowered to that end. The power
to exclude embraces the power to regulate, to enact and enforce all
legislation in regard to things done within the territory of the
state which may be directly or incidentally requisite in order to
render the enforcement of the conceded power efficacious to the
fullest extent, subject always, of course, to the paramount
authority of the Constitution of the United States.
In the argument at bar, it was admitted that if the contract is
to be considered as made in California, then this case is governed
by the foregoing principle unless the business of a foreign company
writing marine insurance is protected by the interstate commerce
clause of the constitution, which, as we have seen, is not the
case.
It is claimed, however, that irrespective of this clause, the
conviction here was illegal, first because the statute is, by its
terms, invalid in that it undertakes to forbid the procurement of a
contract outside of the state, and secondly because the evidence
shows that the contract was in fact entered into without the
territory of California. The language of the statute is not fairly
open to this construction. It punishes "every person who in this
state procures or agrees to procure for a resident of this state
any insurance," etc. The words "who in this state" cannot be read
out of the law in order to nullify it under the Constitution.
It is urged that the words "every person who agrees to procure
for a resident of this state" are inconsistent with the preceding
language "who in this state procures," etc. The argument is this:
the act punished is procuring for a resident. In order to procure
for another, the procurer must be agent of such other; hence the
contract of insurance was
Page 155 U. S. 657
procured by the agent of the insured, and not by the agent of
the foreign company, and inasmuch as the foreign company was not,
and under the law could not be technically within the state for the
purpose of giving its assent to the contract, the insurance must
have been procured without the state. The fallacy here is
ingenious, but it is easily exposed. The elementary rule is that
every reasonable construction must be resorted to in order to save
a statute from unconstitutionality.
Parsons v.
Bedford, 3 Pet. 433;
United
States v. Coombs, 12 Pet. 72;
Brewer's
Lessee v. Blougher, 14 Pet. 178;
Grenada County
v. Brogden, 112 U. S. 261;
Presser v. Illinois, 116 U. S. 252.
The admission that the insurance was procured for the resident
from a foreign company which had no agent in the state does not
exclude the possibility of its having been procured within the
state. If it were obtained for the resident by a broker who was
himself a resident, this would be a procuring within the state, and
be covered by the statute.
The business of a broker is to serve as a connecting link
between the party who is to be insured and the party who is to do
the insuring -- to bring about "the meeting of their minds" which
is necessary to the consummation of the contract. In the discharge
of his business, he is the representative of both parties to a
certain extent.
How v. Union Mut. Ins. Co., 80 N.Y. 32;
Monitor Mut. Ins. Co. v. Young, 111 Mass. 537;
Hartford Ins. Co. v. Reynolds, 36 Mich. 502.
Domat thus defines his functions:
"The engagement of a broker is like to that of a proxy, a
factor, or other agent, but with this difference: that the broker
being employed by persons who have opposite interests to manage, he
is, as it were, agent both for the one and the other to negotiate
the commerce and affair in which he concerns himself. Thus his
engagement is two-fold, and consists in being faithful to all the
parties in the execution of what every one of them entrusts him
with. And his power is not to treat, but to explain the intentions
of both parties and to negotiate in such a manner as to put those
who employ him in a condition to treat together personally."
1 Domat, bk. 1, tit. 17, § 1, Strahan's trans.
Page 155 U. S. 658
.
Story says this statement of the functions of a broker is "a
full and exact description according to the sense of our law."
Story's Agency, 31, note 3, 9th ed.
If the contention of the plaintiff in error were admitted, the
established authority of the state to prevent a foreign corporation
from carrying on business within its limits, either absolutely or
except upon certain conditions, would be destroyed. It would be
only necessary for such a corporation to have an understanding with
a resident that in the effecting of contracts between itself and
other residents of the state, he should be considered the agent of
the insured persons, and not of the company. This would make the
exercise of a substantial and valuable power by a state government
depend not on the actual facts of the transactions over which it
lawfully seeks to extend its control, but upon the disposition of a
corporation to resort to a mere subterfuge in order to evade
obligations properly imposed upon it. Public policy forbids a
construction of the law which leads to such a result unless
logically unavoidable.
The facts found here enforce the correctness of these views, and
illustrate the evil which the statute was doubtless intended to
prevent.
Johnson & Higgins were average adjusters and brokers in New
York City. Hooper, the plaintiff, as their agent, had a place of
business in San Francisco. As such broker, he applied for the
insurance to his principals in New York City. The policy came to
San Francisco for delivery, and the premium was there paid.
One more contention remains to be noticed. It is said that the
right of a citizen to contract for insurance for himself is
guarantied by the Fourteenth Amendment, and that therefore he
cannot be deprived by the state of the capacity to so contract
through an agent. The Fourteenth Amendment, however, does not
guarantee the citizen the right to make within his state, either
directly or indirectly, a contract, the making whereof is
constitutionally forbidden by the state. The proposition that
because a citizen might make such a contract for himself beyond the
confines of his state, therefore he
Page 155 U. S. 659
might authorize an agent to violate in his behalf the laws of
his state within her own limits involves a clear
non
sequitur, and ignores the vital distinction between acts done
within and acts done beyond a state's jurisdiction.
Judgment affirmed.
MR. JUSTICE HARLAN, with whom concurred MR. JUSTICE BREWER and
MR., JUSTICE JACKSON, dissenting.
Hooper, the plaintiff in error, was the agent at San Francisco
of the firm of Johnson & Higgins, average adjusters and
insurance brokers, doing business in the City of New York. In the
latter capacity, that firm procured for its customers, from
insurance companies wherever incorporated, insurance on ships,
vessels, cargoes, and freights.
C. W. Mott, a resident of California, inquired of Hooper if he
could procure a certain amount of insurance on a vessel named the
Alliance at a given rate of premium, no particular company
being specified by Mott. Hooper communicated with his principals,
and the latter telegraphed in reply, "
Alliance, four
thousand dollars, done in American form," but did not name the
company in which the insurance had been placed. Mott was informed
of this telegram. Johnson & Higgins procured and forwarded to
Hooper a policy of the China Mutual Insurance Company of Boston
insuring the
Alliance in the above sum. Hooper delivered
it to Mott, the latter paying to the former, as agent of Johnson
& Higgins, the amount of the premium. That amount was deposited
in bank at San Francisco to the credit of Johnson & Higgins,
the latter being notified of the deposit.
On account of what he did, as above stated, Mott was prosecuted
under a statute of California which provided that
"every person who in this state procures or agrees to procure
any insurance for a resident of this state from any insurance
company not incorporated under the laws of this state, unless such
company or its agent has filed the bond required by the laws of
this state relative to insurance, is guilty of a misdemeanor."
Penal Code, § 649.
Page 155 U. S. 660
The bond referred to is that prescribed by § 623 of the
Political Code of California, which makes it the duty of the
insurance commissioner to require every company, association, or
individual not incorporated under the laws of California "and
proposing to transact insurance business by agent or agents in this
state," before commencing such business, to file a bond, with
sureties, in the penal sum of two thousand dollars conditioned that
the person or firm, agent or officer, named therein would pay to
the treasurer of the county or city and county in which the
principal office of the agency is located such sum per quarter,
payable in advance, for a license to transact an insurance
business, or such other license as may be imposed by law, so long
as the agency remains in the hands of the person or firm, officer
or agent, named as principal in the bond, and that such person or
firm, officer or agent, would pay to the state all stamp or other
duties on the gross amounts so insured, inclusive of renewals on
existing policies, and conform to all the provisions of the revenue
and other laws made to govern them.
It is true, as stated in the opinion just delivered, that this
Court has held that a state may prescribe the conditions upon which
the corporations of other states, not engaged in interstate
commerce, may do business within its jurisdiction -- indeed, may
exclude such corporations altogether from its limits. In
Paul v.
Virginia, 8 Wall. 178, it was adjudged that a
corporation was not a citizen within the meaning of the clause of
the Constitution declaring that the citizens of each state shall be
entitled to all the privileges and immunities of citizens in the
several states, although, for purposes of suit in the courts of the
United States, it must be deemed a citizen of the state under whose
laws it was created. But no question like the one involved in that
case is now presented for decision. There is no question here as to
the rights of individual citizens of California and of New
York.
Section 623 of the Political Code of California applies only to
insurance companies not incorporated under the laws of that state,
and "proposing to transact business" within its limits. The
statement of the case on appeal shows that
Page 155 U. S. 661
defendant had charge of the business of Johnson & Higgins at
San Francisco as their employee and agent and not otherwise. There
is no suggestion in that statement that the China Mutual Insurance
Company of Boston proposed to do business in California by agent,
nor is it stated that Johnson & Higgins are or ever claimed to
be agents of the company, nor that that company ever recognized
them as its agents, or ever issued to a resident of California any
policy of insurance except the one delivered to Johnson &
Higgins, and which that firm obtained and forwarded to Hooper, and
by the latter was delivered to Mott. This single act of the company
cannot be held to prove that it proposed to transact business in
that state or that it contemplated the issuing of any other policy
to a resident of California. In
Cooper Manufacturing Co. v.
Ferguson, 113 U. S. 727,
113 U. S. 734,
this Court, referring to a statute of Colorado forbidding foreign
corporations from doing business there except upon complying with
certain regulations, said that it did not embrace a single or
isolated transaction by a foreign corporation. Indeed, the
prosecution in the present case manifestly had in mind the
difference between a single act of insuring property and "proposing
to transact insurance business by agent or agents;" for, as will be
seen, the complaint under which Hooper was prosecuted does not
allege, and, as I infer, purposely failed to allege, that the
company which issued the policy in question proposed to transact
business in California. So that we have before us a statute making
it a crime to procure, or agree to procure, in California for a
resident of that state a policy of insurance from a foreign
corporation which does not propose to do business there by agents,
and, so far as appears, has never issued to a resident of
California any policy but the one issued to Mott.
In my opinion, the statute, in its application to the case now
presented, is an illegal interference with the liberty both of Mott
and of Hooper, as well as an abridgement of the privileges, not of
a foreign corporation, but of individual citizens of other states
through whom the policy in question was obtained. Johnson &
Higgins are pursuing one of the ordinary callings of life in the
City of New York. It is a lawful calling,
Page 155 U. S. 662
as much so as that of a merchant, grocer, manufacturer, tailor,
or shoemaker. It cannot properly be characterized as, in itself or
by the necessary results of the business, hurtful to the community.
They have as much right to pursue their calling in California by
agent as they have to pursue it in New York. Of course this calling
-- indeed every calling of life -- is subject to the power of the
state within whose limits it is pursued to regulate it in any mode
that does not violate the essential rights of liberty and property
guarantied by the federal Constitution against hostile state
action. If it were conceded that California could require everyone
acting within its limits as an agent for others, whether insurance
brokers, merchants, grocers, manufacturers, tailors, or shoemakers,
to take out a license and pay a tax as such agent -- such
regulations being made applicable, in similar circumstances, to all
agents doing business in California -- it would not follow that it
could absolutely prohibit individual citizens of other states or
its own people from conducting there, by agents, an ordinary
calling not, in itself, immoral or dangerous to the public. The
enjoyment upon terms of equality with all others in similar
circumstances of the privilege of pursuing an ordinary calling or
trade is an essential part of liberty, as guarantied by the
Fourteenth Amendment.
Powell v. Pennsylvania, 127 U.
S. 678,
127 U. S. 684.
Among the inalienable rights possessed by American citizens is, as
MR. JUSTICE FIELD has said,
"the right of men to pursue their happiness, by which is meant
the right to pursue any lawful business or vocation in any manner
not inconsistent with the equal rights of others, which may
increase their prosperity or develop their faculties, so as to give
to them their highest enjoyment."
Butchers' Union Co. v. Crescent City Co., 111
U. S. 757. And in the same case, Mr. Justice Bradley
said: "I hold that the liberty of pursuit -- the right to follow
any of the ordinary callings of life -- is one of the privileges of
a citizen of the United States." So, in
Jacob's Case, 98
N.Y. 99, 106:
"One may be deprived of his liberty and his constitutional
rights without the actual imprisonment or restraint of his person.
Liberty, in its broad sense as understood in this country,
Page 155 U. S. 663
means the right, not only of freedom from actual servitude,
imprisonment, or restraint, but the right of one to use his
faculties in all lawful ways, to live and work where he will, to
earn his livelihood in any lawful calling, and to pursue any lawful
trade or avocation."
In many states there are individuals or firms whose business it
is to negotiate loans for others. Often, if not generally, the
money is in the hands of corporations for investment. These
corporations may not have agents outside of the state in which they
are located. What would be thought of a statute making it a crime
for anyone in the state which enacted it to procure for one of its
residents, and through a firm of brokers in New York, a loan of
money from a corporation of another state that did not propose to
do business by agent or elsewhere than at the place of its
creation? The state, it may be, could forbid any foreign
corporation whose business it is to invest money for itself and
others from doing business in California by agent, or could
require, as a condition of its doing business there by agent, that
the corporation or agent should give such bond with surety as may
be prescribed. But it could not be made a crime for one in that
state to procure a loan of money for a resident of that state
through individual citizens of another state, although the money
should be obtained from a foreign investment company not proposing
to transact business by agent in the state where the borrower
resides, and from which the application to borrow comes. And yet
the principle which the Court approves in its opinion would seem to
justify the contrary view.
Mott, for whom Hooper acted, could not be compelled to restrict
his application for insurance to foreign companies doing or
proposing to do business in California, and which had filed the
bond required by the statute of that state. If he preferred
insurance in a company that had no agent in California, he had a
right to that preference, and any interference with its free
exercise would infringe his liberty. Suppose he had himself
applied, by mail, directly to Johnson & Higgins for insurance
on his vessel, and that firm had delivered the policy in question
to an express company, with directions to deliver it
Page 155 U. S. 664
to Mott. Or suppose that Mott had made his application by mail
directly to the company. I cannot believe that a statute making his
conduct in either of the cases supposed a criminal offense would be
sustained as consistent with the constitutional guaranties of
liberty. But it seems from the opinion of the Court that a state is
at liberty to treat one as a criminal for doing for another that
which the latter might himself do of right and without becoming a
criminal. In my judgment, a state cannot make it a crime for one of
its people to obtain, himself or through the agency of individual
citizens of another state, insurance upon his property by a foreign
corporation that chose not to enter the former state by its own
agents.
The chief vice in the argument of counsel in support of the
California statute is found in the assumption that Hooper, as well
as his principals, Johnson & Higgins, acted as agents of the
insurance company. That assumption is unwarranted by the facts.
Hooper was the agent of Johnson & Higgins, and in that capacity
alone acted for Mott. What he said and did in California was said
and done for his principals. Neither Johnson & Higgins nor
Hooper acted as agents for the insurance company. The transaction,
in legal effect, is the same as it would have been if Mott had
himself applied by mail to Johnson & Higgins for insurance, and
had received the policy from them by mail or through someone in
California to whom it was entrusted by that firm for delivery to
him. If California could forbid Mott himself to obtain by mail a
policy from a foreign corporation having no agent or representative
of its own in California, and make it a crime for him to do so,
then the statute in question is not repugnant to the Constitution
of the United States. But in my judgment the power of excluding
foreign corporations from doing business within its limits by
agents cannot be exerted by the state so as to impair or destroy
the constitutional rights of its own people or of citizens of other
states. I think the judgment of the Court below should be
reversed.
MR. JUSTICE BREWER concurs in this opinion. MR. JUSTICE JACKSON,
now absent, participated in the consideration of this case. This
opinion has been submitted to him, and he concurs in the views here
expressed.