The classification of life and health insurance companies
separately from fire, marine, and inland insurance companies, and
mutual benefit and relief organizations doing business through
lodges and mutual benefit associations, made by the Texas in
respect of insurance is not so arbitrary and destitute of
reasonable basis as to be obnoxious to constitutional
objection.
In an action on a life insurance policy, it is not necessary to
prove the fact of death beyond a reasonable doubt. A verdict for
the party in whose favor the weight of evidence preponderates will
be sustained.
The inference of death may arise from disappearance under
circumstances inconsistent with a continuation of life.
The belief of the family of an assured that he is dead is not
admissible on the trial of an action on a policy of insurance on
his life as independent evidence of the fact of his death, but the
entertainment of such belief may be proven as tending to show
innocence of fraud. And, in this case, the evidence which was
admitted cannot be presumed, the entire record considered, to have
had any influence whatever on the verdict except from the point of
view in which it was admissible.
No other objection urged constituted reversible error or
requires particular mention.
This was an action brought by Jennie M. Mettler in the District
Court of Dallas County, Texas, December 2, 1897, and removed to the
Circuit Court of the United States for the Northern District of
Texas, against the Fidelity Mutual Life Insurance Association of
Philadelphia, to recover on three policies of insurance upon the
life of one William A. Hunter, payable to his widowed sister,
Jennie M. Mettler, each stipulating for the payment of $5,000 in
case of Hunter's death. The policies were dated in October, 1896,
and Hunter paid at the time of their delivery the sum of $32.55 on
each policy, and agreed to pay on each a like sum semi-annually
thereafter, on the 28th day of the
Page 185 U. S. 309
months of April and October, for the period of ten years from
October 28, 1896.
At the commencement of the trial,
"defendant admitted that all matters of proof relating to the
death of the insured -- all formal proofs -- are sufficient, and
that the only question to be tried and involved is the question of
whether or not W. A. Hunter is dead as claimed in plaintiff's
petition, and whether he died in the manner and form as alleged
therein."
The evidence tended to show that Hunter left Mrs. Mettler's
house on the third of December, 1896, announcing his intention to
go to Mentone, in Loving County, for the purpose of making proof of
a section of land in that county belonging to him, and which he had
occupied for three years; that he left with a team consisting of a
wagon and two horses, with hay, provisions, camping outfit, cooking
utensils, and a gun, and that he expected to be absent a week or
ten days, intending at a later period, after having returned from
Mentone, to go back to that place; that, shortly before leaving, he
handed to a lawyer a package of papers sealed in a large envelope,
which he asked should be kept in a vault, and which packages
contained the policies of insurance, and that Mrs. Mettler did not
know that the policies had been taken out in her name.
The evidence further tended to show that Mrs. Mettler, not
hearing anything of her brother for fifteen days after his
departure, sent twice to ascertain whether he had arrived, but
found that he had not; a searching party then went out; this party
followed the trail of the wagon, and found it and hay, provisions,
harnesses, etc., abandoned where Hunter had camped near the banks
of the Pecos River, some miles distant from Pecos; a bed on the
ground, which some one had slept in, cooking utensils, remains of a
fire, a skillet in which meat had been fried, some bread, some
tomatoes were there, and a gun was leaning against the wagon wheel.
One of the horses was lying dead; it had been tied to a mesquite
bush with an inch rope, and had struggled to get to the hay, but
could not reach it; there were signs of the other horse, which was
elsewhere seen wandering about with a rope on its neck. Footprints,
identified by Mrs. Mettler as those of her brother, were found
leading
Page 185 U. S. 310
to the river, but not returning; two water buckets were near;
some of the foot tracks were at the edge of the river, and there
were marks of the slipping of one of the feet, and a broken
mesquite root in the bank.
*
Page 185 U. S. 311
There was conflicting evidence as to quicksands in the river,
its depth, rapidity, and dangerous character. Two of defendant's
witnesses gave testimony tending to show that sometime after the
alleged death, they had seen a person whom they identified as
Hunter by photographs.
In the course of the examination of plaintiff, the following
occurred:
" Q. state what is the general reputation in the family -- your
father, brothers, and sisters -- as to the death of your brother,
W. A. Hunter."
"To which defendant objected because it is incompetent and
hearsay; (2) family reputation cannot establish or prove death,
especially where it is 1,500 miles away; (3) it is competent for no
purpose, especially when that reputation has been established since
the institution of this cause of action, which objection the court
overruled, and said:"
"I think the question is one of weight to be given the evidence.
It is a question for the jury to say whether or not family belief
tends to prove his death."
"To which ruling defendant then and there excepted for the
reasons stated in the objection, and the witness thereupon
testified: 'My father, brothers, and sisters all believe
Page 185 U. S. 312
my brother to be dead.' Witness further testified, over the same
objections made by defendant, which objections were overruled by
the court, and then and there excepted to by defendant,"
"that the family believed he was drowned in the Pecos River, out
in the West, and that this family belief has existed ever since I
wrote them about it."
"The witness was here handed a letter, which she recognized as
written by herself and addressed to her father, dated December 30,
1896."
"I think I wrote it the day I came back from the camp, from
where we found my brother's camping outfit. . . . I reported that
my brother was dead. I know he wrote to and received some letters
from the family. The very best relations existed between my father
and brother. Never was any disagreement between them. The very
closest of friendship existed between my brother and me; brotherly
and sisterly love."
Plaintiff introduced the depositions of W. A. Hunter, Sr., the
father of the insured, Charles E. Hunter, his brother, and five
sisters, all residing in Homer, Ohio. The father, testified that
plaintiff and W. A. Hunter, Jr., lived at Homer until they went to
Texas in 1885; that a family correspondence had been kept up with
both of them regularly until the fall of 1896, when he disappeared,
and was still kept up with her; that the family relationship was
happy and affectionate; that his son's habits were good, and that
he possessed the confidence of his family and of his friends; that
he
"seemed thoroughly contented with life, and I know of no reason
to cause any change in his disposition. I could not tell exactly
when any member of the family at Homer last received a letter from
said William A. Hunter, Jr., but a short time before his
disappearance. I last heard of him through Jennie M. Mettler, about
the time he disappeared, and he was living at Mentone, Texas, I
believe."
The following question was propounded to the witness, W. A.
Hunter, Sr., and to the other members of the family:
"Q. If you know, state what is the general reputation and repute
in the family as to whether said William A. Hunter is dead or
alive? How do you know the general repute in the family as to
whether he is dead or alive? If you know, what
Page 185 U. S. 313
is the general repute in the family as to what has become of
said William A. Hunter? As to the 'family,' who do you mean?"
To this question and the answer thereto of each witness
defendant then and there objected, which was overruled, and
defendant excepted. The answer was:
"A. That the general repute in the family is that William A.
Hunter, Jr., is dead. He is supposed by the family to have drowned
in the Pecos River; that is the general belief. By the 'family' is
meant the father and the brothers and sisters of William A. Hunter,
Jr."
Each of the other witnesses testified in substance as their
father, and the same objection was made to their testimony, and the
same ruling had and exception preserved. The father testified
"in answer to cross-interrogatories propounded by defendant that
he never offered any reward or took any steps to find W. A. Hunter,
Jr., either dead or alive, after he heard of his disappearance;
that he made no inquiry concerning the said W. A. Hunter, Jr., save
through his daughter, Mrs. Mettler; that he did not have the Pecos
River seined, and made no search either of the river or elsewhere,
or any effort to find him or his body. Newark, Licking County,
Ohio, is sixteen miles from witness' home. When witness saw the
articles published in the Newark Advocate about the disappearance
of W. A. Hunter, Jr., he did not go there to see the editor of said
paper. The town is not connected by rail with witness' residence.
The same facts as to failure to offer reward or to make any search
or inquiry for W. A. Hunter, Jr., were elicited by
cross-interrogatories from Charles E. Hunter, brother of the
plaintiff and W. A. Hunter, Jr."
The jury was charged, among other things:
"Reputation in his [insured's] family on the part of his father,
sisters, and brothers of his death is proper evidence for your
consideration, but not the opinion of anyone."
The policies were stated to be made in consideration of written
application of Hunter therefor, and a copy of the application was
attached. Hunter therein agreed
"that the truthfulness of the statements above made or
contained, by whomsoever
Page 185 U. S. 314
written, is material to the risk, and is the sole basis of the
contract with the said association; . . . that I will not without
the written consent of the president engage in any occupation or
employment more hazardous than that above mentioned, and that, if
any concealment, or untrue statement, or answer be made or
contained herein, then the policy of insurance issued hereon and
this contract shall be
ipso facto null and void, and all
moneys paid hereon shall be forfeited to said association."
And the applications showed, among other things, that Hunter, in
answering questions as to his occupation, said: "That my present
occupation is real estate and farming; prior was bookkeeping."
There was evidence that Hunter had occupied a section of land in
Loving County for three years; that he was in the real estate and
farming business; that he planted corn, grain, potatoes, and so on;
that the farming was experimental, the land requiring irrigation;
that he and Mr. Mettler, then deceased, had been connected with an
irrigation company and the construction of a ditch, and that he
resided at Mentone, Loving County, "where he engaged in the real
estate and farming business, and looked after their irrigation
business in Loving County." That he was bookkeeping in 1888 and
1889, and two years, deputy clerk, etc. Defendant introduced
evidence in reference to forfeitures of Hunter's claims to public
lands entered in February, 1897, and the testimony of a
photographer that Hunter was in his employ two or three months one
summer at Fort Worth, which he thought was in 1896. Defendant's
agent who took the application testified that he had known Hunter
since 1888, at which time he was keeping books; that Hunter stated
when he applied that he was in the real estate business and
farming, and that witness had a talk with him about irrigation
matters in connection with his farming.
This witness testified for defendant that, when Hunter made the
application he said:
"That he and his brother-in-law had gotten into an irrigation
scheme, and had bought a good deal of Pecos Valley land, and owed a
good deal of money on the land, and his brother-in-law had
afterwards died, and he thought if he should happen to die, his
sister would lose what they had
Page 185 U. S. 315
paid. For this reason, he thought of taking some insurance so
that she could pay the land out in the event of his death."
The constitutionality of the statute of Texas allowing twelve
percent damages and reasonable attorneys' fees was denied and duly
put in issue by defendant.
The verdict was for plaintiff for
"$15,000 as principal; $2,250 as interest at rate six percent
from December 2, 1897, to June 2, 1900; $5,175, the same being
twelve percent damages on the amount of $15,000 and interest
thereon at six percent; $2,500 as reasonable attorneys' fees."
Plaintiff remitted the sum of $3,375 of said $5,175, "leaving
$1,800 on the item of twelve percent damages, on the amount of the
loss," and judgment was thereupon entered.
The writ of error was allowed directly from this Court, and a
motion to dismiss for want of jurisdiction was made, the
consideration of which was postponed to the merits.
MR. CHIEF JUSTICE FULLER delivered the opinion of the Court.
Inasmuch as the validity of the statute of Texas authorizing the
recovery of damages and attorneys' fees for failure by life and
health insurance companies to pay losses was seasonably drawn in
question by defendant below as being in contravention of the
Constitution of the United States, we think the case comes within
Loeb v. Columbia Township Trustees, 179 U.
S. 472;
American Sugar Refining Company v. New
Orleans, 181 U. S. 277, and
that the writ of error may be maintained. The motion to dismiss is
therefore overruled.
Four propositions are relied on as grounds of reversal, which we
will consider in the reverse order in which they are stated in the
brief for plaintiff in error.
I. "The court erred in not charging the jury to find a verdict
in favor of the defendant because of the failure to offer
sufficient evidence from which an inference of Hunter's death could
be drawn."
Page 185 U. S. 316
In our opinion, the evidence was sufficient to justify the
inference that Hunter was drowned in the Pecos River on December 4,
1896, and the court below properly refused to peremptorily instruct
the jury to find for defendant.
The question of Hunter's death was a question of fact to be
determined on all relevant facts and circumstances disclosed by the
evidence. The evidence tended to show that he was last seen alive
on December 3d, when he parted from his sister and started for
Mentone with the intention of returning in a few days. He did not
arrive nor return, but disappeared. He camped on the banks of the
Pecos River, and the abandoned wagon, harnesses, and gun, the
starved horse, the ashes of the fire, the used cooking utensils,
the fragments of food, the bed with its imprint of the sleeper bore
testimony that he cooked, ate, and slept there, and that he went no
farther. The footsteps to the river's brink, going but not
returning, the water buckets, the mark of slipping, the fractured
root, the flowing stream -- indicated what might have happened, and
the fact that he was not seen nor heard from thereafter, although
his relations with his family were intimate and cordial, and he had
always kept up a correspondence with them, so that one or more of
them would have been likely to hear from him unless his life had
abruptly terminated or its habitual course been suddenly changed,
rendered the inference of fatal accident reasonable.
The record does not set forth the general charge of the court in
full, but, among others, this instruction was given:
"While death may be presumed from the absence, for seven years,
of one not heard from where news from him, if living, would
probably have been had, yet this period of seven years during which
the presumption of continued life runs, and at the end of which it
is presumed that life ceases, may be shortened by proof of such
facts and circumstances connected with the disappearance of the
person whose life is the subject of inquiry, and circumstances
connected with his habits and customs of life, as, submitted to the
test of reason and experience, would show to your satisfaction by a
preponderance of the evidence that the person was dead."
Defendant excepted to the giving of this instruction and
Page 185 U. S. 317
requested the court to instruct that
"the circumstances proven must exclude, to a reasonable and
moral certainty, the fact that such person is still living, and
each fact in the chain of facts from which the death of the party
is to be inferred must be proved by competent evidence and by the
same weight and force of evidence as if each one were the main fact
in issue, and all the facts proven must be consistent with each
other and consistent with the main facts in issue -- that is, the
death of the party."
The court did not err in giving the one and refusing the other
instruction. This was not a criminal case, and it was not necessary
that the death should be proven beyond a reasonable doubt. The
party on whose side the weight of evidence preponderated was
entitled to the verdict. Proof to a "moral certainty" is an
equivalent phrase with "beyond a reasonable doubt." Gray, C.J.,
Commonwealth v. Costley, 118 Mass. 1. In civil cases, it
is sufficient if the evidence on the whole agrees with and supports
the hypothesis that it is adduced to prove, but in criminal cases,
it must exclude every other hypothesis but that of the guilt of the
party. It has been held in some cases that when a criminal act is
alleged, the rule of reasonable doubt is applicable in establishing
that act, but this is not such a case. 1 Greenleaf, Ev. (15th ed.)
ยง 13
a, note.
The court also instructed the jury as follows:
"If from the evidence in this case you should come to the
conclusion that Hunter has been continuously absent since December
3, 1896, without being heard from by his relatives and friends, it
should have due weight with you in arriving at your verdict. . . .
Absence alone cannot establish the death of Hunter, for the law
presumes an individual shown to be alive and in health at the time
of his disappearance continues to live. While the death of Hunter
is not to be presumed from absence alone, yet it is a circumstance
which should be taken into consideration with all the other
evidence in the case, and the conclusion of life or death arrived
at from all the facts and circumstances, including his continued
absence."
To this defendant excepted, and it is now argued that there was
error because the court did not call the attention of the
Page 185 U. S. 318
jury to defendant's contention that Hunter's continued absence
might be attributed to the desire to obtain the insurance money.
But it nowhere appears that defendant requested the court to modify
the instruction in that particular, and, as given, it was
correct.
The jury were not left to infer death from the mere fact of
disappearance, but were specifically told that that was not, in
itself, sufficient, and that all the facts and circumstances must
be considered.
Defendant asked the court to give this instruction:
"If you believe from the evidence that William A. Hunter, Jr.,
has been seen or heard from by anyone at any time since his
disappearance, you will find for the defendant."
This the court refused, and gave the following instruction:
"The evidence of witnesses is also before you tending to show
that William A. Hunter has been seen on two occasions and at two
places since the date of his alleged disappearance on December 4,
1896. You should carefully consider this evidence in relation to
his having been seen since the date of his alleged disappearance,
and if you believe from the evidence that he was seen by the
witnesses who have testified to this, then, of course, it would be
your duty to find for the defendant."
There was some evidence that Hunter had been seen, but none that
he had been otherwise heard from. The request of defendant was
rightly rejected, and the instruction given was sufficient. The
criticism that the jury may have supposed that they were instructed
that they must be satisfied that be had been seen by both
witnesses, or on two occasions, is without merit. It was impossible
to have misunderstood what the learned judge of the circuit court
intended. If, as matter of fact, Hunter was seen alive, whether
once or twice, then, of course, he did not die as contended by
plaintiff.
It is further argued that the court erred in not instructing the
jury as requested by defendant that
"unless the jury believe from the evidence that William A.
Hunter, Jr., when last seen, was in a position of peril, such as
that it is more probable that he then and there lost his life than
that he extricated himself from such perilous position alive, you
must find for the defendant.
Page 185 U. S. 319
Such an instruction was uncalled for, and calculated to mislead.
There was no evidence that Hunter was in a position of peril when
last seen. The evidence did, indeed, tend to show that he probably
fell into the river, and so came in contact with a specific peril,
and there was evidence regarding the depth, the rapidity, and the
quicksands of the river; but the instruction was objectionable in
that it assumed that he was seen in a perilous position of such a
character as to afford the basis for speculation as to the
probabilities of his extrication."
In
Davie v. Briggs, 97 U. S. 634,
MR. JUSTICE HARLAN said:
"If it appears in evidence that the absent person, within the
seven years, encountered some specific peril, or within that period
came within the range of some impending or immediate danger which
might reasonably be expected to destroy life, the court or jury may
infer that life ceased before the expiration of the seven
years."
But it was not thereby ruled that the inference of death might
not arise from disappearance under circumstances inconsistent with
a continuation of life, even though exposure to some particular
peril was not shown, and the evidence indicated that Hunter came
within the range of immediate danger.
II. "The court erred in not charging, as requested, that, if
Hunter, at the time of making application for insurance, was not a
farmer and real estate agent, there could be no recovery."
This relates to the refusal to instruct that
"the jury must believe from the evidence that W. A. Hunter, Jr.,
at the time of making application for insurance to defendant, on
which policies of insurance were issued and are herein involved,
was at the time he made such application both a farmer and real
estate agent, and unless you so believe, you will find for the
defendant."
The entire charge of the court is not in the record, and there
is nothing to show that the subject of Hunter's answer as to his
occupation was not covered by it. Again, Hunter did not say that he
was "a farmer and real estate agent," but that his occupation when
he made the application was "real estate and farming," and the
evidence of the truthfulness of that statement was so plenary, and
the evidence from which to infer the contrary
Page 185 U. S. 320
was so slight, that we think the refusal was justified on that
ground.
Treating the statement of occupation as a warranty, the evidence
that Hunter was behind in his payments on the land in Loving
County, and that forfeitures were entered in February, 1897, and
that he may have been engaged with a photographer for two or three
months, even in the summer of 1896, did not so impugn the
substantial truth and good faith of his answer as to demand an
instruction so worded.
III. "The court erred in admitting the testimony of a repute in
the family of Hunter concerning his death and the manner
thereof."
Hunter had parted with his sister and started for Mentone
December 3, with the intention of returning within a week or ten
days. "After he had been gone ten days, and did not come back, and
then two weeks and did not come back," his sister sent a man to
make inquiry, who reported that Hunter had not been to Mentone. A
few days later, she sent again, and received a similar reply. The
searching party went out, found the abandoned camp, and reported,
and Mrs. Mettler then went herself. She described the condition of
things at the camp and the brink of the river. This was December
29, and December 30, the day after she returned, she wrote her
father in Ohio about it, and that her brother was dead, drowned in
the Pecos River, and she testified that her father, brothers, and
sisters, all believed that this was so, because of what she had
written; while they testified that this was the belief of the
family, based on the information she furnished. If this testimony
should not have been admitted, it is difficult to see that it could
have been so prejudicial as to be fatal to the verdict, for it
amounted to nothing more than the assertion of Mrs. Mettler's
belief and the acceptance by the family of that belief as their
own. In other words, it cannot be supposed that the jury regarded
the evidence as tending to establish the fact of death when it
purported only to state Mrs. Mettler's belief and the family's
concurrence.
Moreover, in the aspect of showing the entertainment of such
belief in good faith the evidence was admissible if it had been
Page 185 U. S. 321
offered at the proper time. Hunter had suddenly disappeared.
Search was made, but was not prosecuted after the discovery of the
deserted camp. The father was sharply interrogated as to failure to
offer reward, to seine the river, to make "effort to find him or
his body." And so was the brother Charles. The theory of the
insurance company was that the disappearance was voluntary, and
that the conduct of Mrs. Mettler and the family was consistent with
the belief that he was yet alive, and was indicative of a
combination to defraud the company. This inference the family were
entitled to repel by testifying to their conviction of his death.
As to the fact of death, it was mere matter of opinion, but as to
their belief it was matter of fact showing innocence of fraud.
Reasonable inquiry is frequently a prerequisite to the inference of
death from disappearance, as well as other effort, but no inquiry
or effort was made here after discovery of the camp, because the
belief of death and lapse of time rendered it useless. Whether that
belief was well founded was for the jury, but that there was such
belief was a relevant fact.
New York Life Insurance Company v.
Hillmon, 145 U. S. 285,
145 U. S. 296;
Wallace v. United States, 162
U. S. 477.
But we do not think the evidence was competent to establish the
fact of death under the circumstances of the case. To illustrate:
in
Scott v.
Ratliffe, 5 Pet. 81, it was held that the testimony
of a witness that "she was told that Mr. Madison was dead" was
admissible, and in
Secrist v.
Green, 3 Wall. 744,
70 U. S. 751,
it was said that "it is competent to prove death and heirship by
reputation." But these and similar rulings and expressions in other
cases must be taken in connection with the particular facts and
circumstances. In this case, no question of pedigree; of birth,
marriage, or death as bearing on legitimacy, descent, or
relationship; of ancient rights; of past events prior to
controversy, was involved, nor was there any pretense that this was
evidence of tradition, or historical fact, or general reputation in
the community participated in by the family. If evidence of death,
it would be evidence of the particular fact on which recovery was
sought, and inadmissible as such. The ruling was incorrect that
"[i]t is a question for the jury to say
Page 185 U. S. 322
whether or not family belief tends to prove his death," although
that was qualified by the learned judge charging the jury:
"Reputation in his [insured's] family on the part of his father,
sisters, and brothers of his death is proper evidence for your
consideration, but not the opinion of anyone."
But, the entire record considered, we are of opinion that it
cannot be presumed that the evidence affected the verdict
injuriously to defendant, if at all, and, on the contrary, that it
affirmatively appears that, if it could have had any influence
whatever, it was solely from the point of view which rendered it
admissible.
IV. "The statute of Texas which directs that life and health
insurance companies who shall default in payment of their policies
shall pay twelve percent damages, together with reasonable
attorneys' fees, is in violation of the Constitution of the United
States."
The statute referred to is article 3071 of the Revised Statutes
of Texas of 1895, which reads as follows:
"In all cases where a loss occurs and the life or health
insurance company liable therefor shall fail to pay the same within
the time specified in the policy after demand made therefor, such
company shall be liable to pay the holder of such policy, in
addition to the amount of the loss, twelve percent damages on the
amount of such loss, together with all reasonable attorneys' fees
for the prosecution and collection of such loss."
Article 3072 provided that if any life or health insurance
company failed to pay off and satisfy any execution issued on final
judgment against it within thirty days of demand of payment, the
commissioner of insurance should declare the company's certificate
of authority to do business null and void.
These articles were sections of chapter three, Title LVIII,
Insurance, and had been brought forward from the Revised Statutes
of 1879, arts. 2953, 2954, chapter three Title LIII, Insurance. And
the same provisions as to foreign life insurance companies and
those incorporated outside of the State of Texas were contained in
the first general insurance statute of Texas, which was passed on
May 2, 1874. 2 Paschal's Dig., art. 7116
o.
Under this title, no insurance company was permitted to do
Page 185 U. S. 323
business in Texas without first obtaining a permit from the
commissioner of insurance, and compliance with the law was required
before permission could be granted, while, by the terms of article
3060, the commissioner was required to revoke the certificate of
authority to do business in the state in case any company failed
for thirty days to pay any execution issued against it on any valid
judgment.
The provisions of chapter three embodied many conditions on
which business was permitted to be done. By article 3061, it was
made unlawful for any person to act within the state as agent or
otherwise for any insurance company for soliciting business unless
the company had procured authority to do it from the commissioner.
Article 3062 provided that any life or health insurance company
desiring to do business in the state should furnish a sworn
statement to the commissioner as prescribed, which by article 3063
was to be accompanied by a copy of its charter or the law creating
it. Article 3064 required the company to designate an agent or
attorney in fact on whom service might be had in case of suit, and
article 3065 declared that no life or health insurance company
incorporated in Texas or any other state should transact business
in Texas with less capital than $100,000 actually invested. Article
3066 required insurance companies of other states to make such
deposit in Texas as the laws of their home state required of Texas
companies doing business there, and article 3067 provided that all
foreign companies should deposit $100,000 with the state treasurer
before doing business in Texas; which deposit, by article 3068, was
to be applied to the payment of judgments in favor of
policyholders; but article 3069 provided that it should be
sufficient if the deposit required by section 3067 was made in any
other state. Article 3070 provided that suits might be brought in
any county where loss occurred or where the policyholder
resided.
By article 3073, it was made unlawful for any life or health
insurance company to take any kind of risks or issue any policies
of insurance except those of life or health, and the business of
life and health insurance in the state was forbidden to be
"in any wise conducted or transacted by any company which,
Page 185 U. S. 324
in this or any other state or country, is engaged or concerned
in the business of marine, fire, inland, or other insurance."
Articles 3074, 3075, 3076, 3077, 3078, 3079, 3080, 3083, 3084
related to marine, fire, or inland insurance companies.
Articles 3081, 3082, 3086, 3087, 3089 applied to insurance
companies generally.
Article 3092 read:
"The provisions of this chapter shall in nowise apply to mutual
benefit organizations doing business in this state through lodges
or councils, such as the Order of Chosen Friends, Knights of Honor,
or kindred organizations."
Article 3096 read:
"Nothing in this title shall be construed to affect or in any
way apply to mutual relief associations organized and chartered
under the general incorporation laws of Texas, or which are
organized under the laws of any other state, which have no capital
stock, and whose relief funds are created and sustained by
assessments made upon the members of said associations in
accordance with their several bylaws and regulations,"
but an annual statement under oath to the department of
insurance was required, and the article concluded:
"And should any such benevolent organization refuse or neglect
to make an annual report as above required, it shall be deemed an
insurance company conducted for profit to its officers and amenable
to the laws governing such companies."
Article 3092 was taken from an Act of April 3, 1889,
entitled
"An Act to Provide for the Admission from Other states of
Companies or Associations Carrying on the Business of Life or
Casualty Insurance on the Assessment or Natural Premium Plan,"
and certain conditions were affixed to their right to do
business in the state, which should not apply to mutual benefit
organizations doing business through lodges or councils. Laws 1889,
p. 98.
Article 3096 was taken from an Act of March 28, 1885, which
amended chapter three, Title LIII, of the Revised Statutes of 1879,
by adding an article thereto couched in similar terms. Laws 1885,
p. 62.
In the revision of 1895, these two laws were assigned to their
appropriate place under the title of insurance. Such were the
conditions which for many years had been imposed on life
insurance
Page 185 U. S. 325
companies doing business in Texas when the policy sued on in
this case was issued. But it is now contended that article 3071 is
in conflict with the Constitution of the United States in that it
denies the equal protection of the laws because the same conditions
are not imposed on fire, marine, and inland insurance companies,
and on mutual benefit and relief organizations doing business
through lodges and mutual relief benevolent associations, more
particularly the latter.
In other words, the contention is that the classification is so
arbitrary, so destitute of reasonable basis, as to be obnoxious to
constitutional objection.
In
Union Central Life Insurance Company v. Chowning, 86
Tex. 654, the Supreme Court of Texas held that the statute, in
providing for the recovery of damages and attorneys' fees, was not
in violation of the Constitution of Texas or of the United States,
and was a valid law. This decision was rendered in May, 1894, but
section 2953 of the Revised Statutes of 1879 was the same as
section 3071 of the Revised Statutes of 1895, and the acts of March
28, 1885, and April 3, 1889, were in force, which were subsequently
brought forward as sections 3092 and 3096. The supreme court held
that, as all corporations embraced in the classes named were
affected alike by the provision, it did not deny the equal
protection of the laws, and the court said that the twelve percent
was given as damages for a failure to comply with the contract by
payment, and the attorneys' fees were allowed as compensation for
the costs of collecting the debt. The court was further of opinion
that, even if the twelve percent was a penalty for failure to pay
when due, there was no provision of the Constitution of Texas which
forbade such legislation, and that it was for the legislature to
determine when the public was so interested in the enforcement of
contracts as to justify that enforcement by penalties.
In
Fidelity &c. Company v. Allibone, 15
Tex.Civ.App. 178, this ruling was repeated by the court of civil
appeals of Texas, and affirmed by the supreme court in
Fidelity
&c. Company v. Allibone, 90 Tex. 660. Both these courts
held that the constitutional question involved was distinguishable
from that ruled by this Court in
Railway Company v. Ellis,
165 U. S. 150.
Page 185 U. S. 326
In
New York Life Insurance Company v. Orlopp, 61 S.W.
336, the same conclusion was reiterated, on the ground that the
state legislature had the right to provide the terms on which
foreign corporations of that class might do business in the state,
and that, being a valid exercise of such power and right, the
statute formed a part of the contract of every life and health
insurance company issued and made in Texas since the date of its
enactment. The Circuit Court of Appeals for the Fifth Circuit, in
Merchants' Life Association v. Yoakum, 98 F. 251, held the
section to be valid on full discussion.
It is apparent from the various sections of the title relating
to insurance, to which we have before referred, that this
particular liability amounted to one of the conditions on which
life and health insurance companies were permitted to do business
in Texas, and the power of the state in the matter of the
imposition of conditions on its own and foreign corporations has
been repeatedly recognized by this Court. If, however,
notwithstanding the acceptance of these conditions, the
constitutionality of the particular condition were nevertheless
open to question, we must decline to sustain the objection. The
reasoning in
Railroad Company v. Matthews, 174 U. S.
96, applies, rather than that in
Railway Company v.
Ellis. The ground for placing life and health insurance
companies in a different class from fire, marine, and inland
insurance companies is obvious, and we think that putting them in a
different class from mutual benefit and relief associations doing
business through lodges, and benevolent associations of the
character mentioned in the Texas statutes, is not an arbitrary
classification, but rests on sufficient reason. The legislature
evidently intended to distinguish between life and health insurance
companies engaged in business for profit (and we are not called on
to refine as to the distribution of such profits) and lodges and
associations of a mutual benefit or benevolent character, having in
mind also the necessity of the prompt payment of the insurance
money in very many cases, in order to provide the means of living
of which the beneficiaries had been deprived by the death of the
insured.
Orient Insurance Company v. Daggs, 172 U.
S. 557;
Waters-Pierce
Page 185 U. S. 327
Oil Company v. Texas, 177 U. S. 28;
New York Life Insurance Company v. Cravens, 178
U. S. 394, are in point and are decisive.
In
Insurance Company v. Warren, 181 U. S.
73, a section of the Revised Statutes of Ohio provided
in effect that no answer to any interrogatory made by the applicant
to the policy should bar the right to recovery or be used in
evidence on a trial, unless it was clearly proved that such answer
was willfully false and was fraudulently made; that it was
material, and induced the company to issue the policy, and that but
for such answer the policy would not have been issued; and,
moreover, that the agent of the company had no knowledge of the
falsity or fraud of such answer, and this provision was only
applicable to life insurance companies. The constitutionality of
that act was upheld by the Supreme Court of Ohio, and this Court
affirmed its judgment, and in the opinion the language used in
Waters-Pierce Oil Company v. Texas was quoted:
"A corporation is the creature of the law, and none of its
powers are original. They are precisely what the incorporating act
has made them, and can only be exerted in the manner which that act
authorizes. In other words, the state prescribes the purposes of a
corporation and the means of executing those purposes. The purposes
and means are within the state's control. This is true as to
domestic corporations. It has even a broader application to foreign
corporations."
And we added:
"It was for the legislature of Ohio to define the public policy
of that state in respect of life insurance, and to impose such
conditions on the transaction of business by life insurance
companies within the state as was deemed best. We do not perceive
any arbitrary classification or unlawful discrimination in this
legislation, but at all events, we cannot say that the federal
Constitution has been violated in the exercise in this regard by
the State of its undoubted power over corporations."
Our conclusion is that the record shows no reversible error, and
the judgment is therefore
Affirmed.
MR. JUSTICE BREWER concurred in the judgment.
Page 185 U. S. 328
* The county clerk of Reeves County, who headed the searching
party which left Pecos on the morning of December 27, testified in
respect of the abandoned camp thus:
"The wagon was standing with the tongue pointing to the
southwest and a little down the river. The harness for two horses
was found; two wooden water buckets, with a piece of rope tied in
the bail; off to the right of the wagon, about twelve feet from the
wagon, was a dead horse, tied to a mesquite bush with a rope about
twelve feet long. On the right side of the wagon was a pallet made
down. The spring seat had been taken off the wagon and turned
upside down, and the wagon sheet laid lengthwise. The sheet was a
tarpaulin; this was laid on the ground and spread out full length,
with one end resting on the wagon seat. One or two heavy cotton
comforts were doubled lengthwise and lay with the end on the wagon
seat. Lengthwise of the wagon sheet and on top were two comforts
spread out full size, and the wagon sheet had been drawn up over
the entire bed. To the left of that, about four feet south and away
from the edge, was where there had been a little fire, and there
was a skillet and lid. The skillet was setting right where the fire
had been built, as if in the middle of the fire, and the lid laying
against it. The skillet looked like it had been cooked in. Just
behind the front wheel of the wagon, leaning against the axle, was
a Winchester rifle. In the wagon were two bales of alfalfa hay and
some flour, some canned goods, some light bread, and several joints
of stove pipe, and I think, maybe, a stove in the wagon, and a few
other such things. The bread had been untied, and there was still
some of it in the paper. When I first saw the bed, the center of
the bed had the shape of a man in it; looked so much like it we
thought there was a man in it until we got right up, and when
George Mansfield started to raise the cover up he dropped it, and
turned and looked at me, his face as white as anything could be,
and I told him to raise it up; that, if there was a man in it, it
would not hurt him, and he raised the cover up. The appearance of
the bed was as I have described it; there was just the shape of a
man there, as if a man had lay in bed; the print of him was in bed.
I think both buckets had a piece of rope tied in the bail ten or
twelve feet long, and on the bottom two or three inches around; the
buckets had the prints of water having been in there and dried up,
and a little red sand; they were both dry. The dead horse could not
reach the wagon; it had been tied to a mesquite bush with an inch
rope, and it appeared that the horse had been struggling to get to
the hay in the wagon; he had gone out as far as he could with the
rope; there was considerable trail beat around where he was trying
to get to the wagon where the hay was. The trail was two or three
inches deep. There had been other stock about the wagon and camp;
there was the sign of another horse there, and we trailed that
horse away from the wagon and back to the wagon at about a half a
dozen places. I think one bale of hay had been eaten and tramped
down; there was a great deal of trash on the back end of the wagon
and laying on the ground."
The witness then described the tracing of the tracks of a man
"to the edge of the river and back to the wagon;" then later other
footprints
"going toward the bank of the river at a point higher up. . . .
We followed right up to the edge of the bank, and followed that,
until they went over a little slant; the top of the river bank was
a little sloping; these two footprints -- last two -- were standing
right on that slant, left foot a little behind the right. The
footprints had been about half facing the river. The left foot
seemed to have turned a little and slipped; the print of it was
there, and showed that it had slipped, and just in front and just
below where this bank dropped off perpendicular there was a
mesquite root that had been broken off, and a part of it was
sticking out of the ground. We could see none of these tracks were
going back and away from the river; we looked to determine whether
they did go away from it, and we could not see any going away from
there."
Mrs. Mettler, being informed of the discovery, went to the camp
with this witness December 29, and she identified the footprints
and testified to the same effect.
MR. JUSTICE HARLAN (with whom concurred MR. JUSTICE BROWN)
dissenting:
I cannot assent to that part of the opinion of the Court
relating to the constitutionality of the statute of Texas of 1895
which provides that a life or health insurance company, failing to
pay a loss within the time specified in the policy after demand
therefor, shall be liable, in addition to the amount of the loss,
to pay the holder of the policy "twelve percent damages on the
amount of such loss, together with all reasonable attorneys' fees
for the prosecution and collection of such loss."
The operation of the statute is well illustrated in the present
case, for the verdict of the jury was for $15,000 as principal,
$2,250 as interest, $5,175 as twelve percent damages (of which the
plaintiff remitted $3,375), and $2,500 as special attorneys' fees
for the plaintiff.
The rule embodied in the statute is not made applicable to fire
or marine insurance companies or to any other companies or
corporations doing business in Texas. Does not the state by the
statute deny to life and health insurance companies doing business
within its limits the equal protection of the laws which is secured
by the Fourteenth Amendment of the Constitution of the United
States?
It seems to me that this question must be answered in the
affirmative if any regard whatever be had to the principles
announced in
Gulf, Colorado & Santa Fe Railway v.
Ellis, 165 U. S. 150,
165 U. S.
153.
In that case, we had before us a statute declaring that any
person in Texas having
"a valid
bona fide claim for personal services rendered
or labor done, or for damages, or for overcharges on freight, or
claims for stock killed or injured by the train of any railway
company, provided that such claims for stock killed or injured
shall be presented to the agent of the company nearest to the point
where such stock was killed or injured, against any railway
corporation operating a railroad in this state, and the amount of
such claim does not exceed $50, may present the same, verified by
his affidavit, for payment to such corporation, by filing it with
any station agent of such
Page 185 U. S. 329
corporation in any county where suit may be instituted for the
same, and if at the expiration of thirty days after such
presentation, such claim has not been paid or satisfied, he may
immediately institute suit thereon in the proper court, and if he
shall finally establish his claim, and obtain judgment for the full
amount thereof, as presented for payment to such corporation in
such court, or any court to which the suit may have been appealed,
he shall be entitled to recover the amount of such claim and all
costs of suit,
and in addition thereto all reasonable
attorneys' fees, provided he has an attorney employed in his
case, not to exceed $10, to be assessed and awarded by the court or
jury trying the issue."
That statute being in force, an action was brought to recover
$50 for a colt killed by the railway company. There was a judgment
against the company for the amount claimed, and a special
attorney's fee of $10 in favor of the plaintiff was added, as
required by the above statute.
The contention in that case was that the statute made such an
arbitrary discrimination against railroad companies embraced by its
provisions as to bring it within the prohibition of the Fourteenth
Amendment. That view was sustained. This Court said:
"It is simply a statute imposing a penalty upon railroad
corporations for a failure to pay certain debts. No individuals are
thus punished, and no other corporations. The act singles out a
certain class of debtors and punishes them, when for like
delinquencies it punishes no others. They are not treated as other
debtors, or equally with other debtors. They cannot appeal to the
courts as other litigants under like conditions and with like
protection. If litigation terminates adversely to them, they are
mulcted in the attorneys' fees of the successful plaintiff; if it
terminates in their favor, they recover no attorneys' fees. It is
no sufficient answer to say that they are punished only when
adjudged to be in the wrong. They do not enter the courts upon
equal terms. They must pay attorneys' fees if wrong; they do not
recover any if right, while their adversaries recover if right and
pay nothing if wrong. In the suits, therefore, to which they are
parties, they are discriminated against, and are not treated as
others. They do not stand equal before the law.
Page 185 U. S. 330
They do not receive its equal protection. All this is obvious
from a mere inspection of the statute."
Referring to the Fourteenth Amendment of the Constitution, the
Court said:
"The rights and securities guaranteed to persons by that
instrument cannot be disregarded in respect to these artificial
entities called corporations any more than they can be in respect
to the individuals who are the equitable owners of the property
belonging to such corporations. A state has no more power to deny
to corporations the equal protection of the law than it has to
individual citizens."
Again:
"Neither can it be sustained as a proper means of enforcing the
payment of small debts and preventing any unnecessary litigation in
respect to them, because it does not impose the penalty in all
cases where the amount in controversy is within the limit named in
the statute. Indeed, the statute arbitrarily singles out one class
of debtors and punishes it for a failure to perform certain duties
-- duties which are equally obligatory upon all debtors -- a
punishment not visited by reason of the failure to comply with any
proper police regulations, or for the protection of the laboring
classes, or to prevent litigation about trifling matters, or in
consequence of any special corporate privileges bestowed by the
state. Unless the legislature may arbitrarily select one
corporation or one class of corporations, one individual or one
class of individuals, and visit a penalty upon them which is not
imposed upon others guilty of like delinquency, this statute cannot
be sustained. But arbitrary selection can never be justified by
calling it classification. The equal protection demanded by the
Fourteenth Amendment forbids this."
I do not perceive how the present decision can be upheld without
disregarding the principles of the
Ellis case. If a
railroad company, sued in Texas upon a claim of less than $50 for
killing or injuring stock, cannot be required, when unsuccessful in
its defense, to pay a special attorney's fee -- no such rule being
established in reference to other corporations or individuals, sued
for a like amount of money -- I cannot understand how life and
health insurance companies, alone of all corporations or companies
doing business in Texas, can be required to pay special damages and
special attorneys' fees when unsuccessful
Page 185 U. S. 331
in defending suits brought against them. The two statutes are
alike in this, that the defendant company or corporation, whether a
railroad corporation or a life or health insurance company, even if
successful in an action brought against it, could not recover
special attorneys' fees or special damages against its adversary.
Thus, the defendant company in a suit brought under either statute
is not permitted to appear in court upon terms of equality with the
party suing it, and is subjected to special burdens not imposed
upon other companies or other corporations refusing to pay money
demanded of them.
We are informed by the opinion of this Court that the courts in
Texas have held that the
Ellis case was distinguishable
from the present case, and we are referred to
Union Central
Life Ins. Co. v. Chowning, 86 Tex. 654;
Fidelity and
Casualty Company v. Allibone, 15 Tex.Civ.App. 178,
aff'd in
Fidelity &c. Company v. Allibone, 90
Tex. 660, and
New York Life Ins. Co. v. Orlopp, 61 S.W.
336. The first named of those cases was decided more than two years
before the
Ellis case was determined by this Court. The
first case in Texas in which the
Ellis case was referred
to was that of
Fidelity &c. Company v. Allibone. In
that case, the court of civil appeals of Texas, after referring to
certain prior decisions in that state sustaining the
constitutionality of the statute here in question, said:
"A late decision of the Supreme Court of the United States,
Railway Co. v. Ellis, construing a somewhat analogous
statute of this state and reversing the decision of our supreme
court approving its validity, may be at variance with the cases
just cited, but, until it is expressly so held either by our own
supreme court or that of the United States, we will adhere to the
decisions already made."
The judgment in the last case was affirmed, the Supreme Court of
Texas observing nothing more than that the case was
"distinguishable" from the
Ellis case.
Upon what grounds the two cases were distinguishable was not
stated. It is a very convenient mode for distinguishing two cases,
apparently in conflict, to say nothing more than that they are
distinguishable. In
New York Life Ins. Co. v. Orlopp, the
statute was sustained upon the ground that the state could
prescribe the terms on which foreign insurance companies might do
business within its limits.
Page 185 U. S. 332
This Court says that the particular liability imposed by the
statute in question
"amounted to one of the conditions on which life and health
insurance companies were permitted to do business in Texas, and the
power of the state in the matter of the imposition of conditions of
its own and foreign corporations has been repeatedly recognized by
this Court."
Of course, speaking generally, a state may impose conditions on
its own and foreign corporations. But will anyone say, or has this
Court ever directly held, that a provision of a state enactment
relating to corporations, foreign or domestic, was legally
operative or binding if such provision be inconsistent with the
Constitution of the United States?
It is one thing for a state to forbid a particular foreign
corporation, or a particular class of foreign corporations, from
doing business at all within its limits. It is quite another thing
for a state to admit or license foreign corporations to do business
within its limits, and then subject them to some statutory
provision that is repugnant to the Constitution of the United
States. If a corporation, doing business in Texas under its license
or with its consent, insists that a particular statute or
regulation is in violation of the Constitution of the United
States, and cannot therefore be enforced against it, the state need
only reply such seems to be the logical result of the present
decision -- that the statute or regulation is a condition of the
right of the corporation to do business in the state, and, whether
constitutional or not, must be respected by the corporation.
Corporations created by the several states are necessary to the
conduct of the business of the country, and it is a startling
proposition that a state may permit a corporation to do business
within its limits, and by that act acquire the right to subject the
corporation to regulations that may be inconsistent with the
supreme law of the land.
In
Home Insurance Company v.
Morse, 20 Wall. 445,
87 U. S.
455-456, a statute of Wisconsin, requiring insurance
companies of other states to stipulate, as a condition of their
right to do business in that state, that they would not remove into
the federal court any suit brought against them in the state courts
was held invalid not only because it tended to oust the courts of
the
Page 185 U. S. 333
United States of a jurisdiction conferred upon them by the
Constitution, but because it created an obstruction to the exercise
of a right granted by that instrument. The Court said: "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, in
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."
This question was presented in somewhat different form in
W.
W. Cargill Co. v. Minnesota, 180 U. S. 452,
180 U. S. 468.
That was an action by the state to prevent a Wisconsin corporation
from operating a warehouse owned by it until it should have
obtained a license from the Railroad and Warehouse Commission of
Minnesota, organized under a statute of that state, and relating to
elevators and warehouses. That statute provided:
"It shall be unlawful to receive, ship, store, or handle any
grain in any such elevator or warehouse, unless the owner or owners
thereof shall have procured a license therefor from the State
Railroad and Warehouse Commission, which license shall be issued
for the fee of one dollar per year, and only upon written
application under oath, specifying the location of such elevator
or
Page 185 U. S. 334
warehouse and the name of the person, firm, or corporation
owning and operating such elevator or warehouse, and the names of
all the members of the firm, or the names of all the officers of
the corporation owning and operating such elevator or warehouse,
and all moneys received for such licenses shall be turned over to
the state grain inspection fund. Such license shall confer upon the
licensee full authority to operate such warehouse or elevator in
accordance with the laws of this state and the rules and
regulations prescribed by said commission, and every person,
company, or corporation receiving such license
shall be held to
have accepted the provisions of this act, and thereby to have
agreed to comply with the same."
The Wisconsin corporation defended the suit brought against it
upon the ground that the statute there involved was repugnant to
the Constitution of the United States. This Court said:
"We cannot question the power of the state, so far as the
Constitution of the United States is concerned, to require a
license for the privilege of carrying on business of that character
within its limits, such a license not being required for the
purpose of forbidding a business lawful or harmless in itself, but
only for purposes of regulation."
Again -- and this is most pertinent here -- the Court said:
"The defendant, however, insists that some of the provisions of
the statute are in violation of the Constitution of the United
States, and if it obtained the required license, it would be held
to have accepted all of its provisions, and [in the same words of
the statute] 'thereby to have agreed to comply with the same.' . .
. The answer to this suggestion is that the acceptance of a
license, in whatever form, will not impose upon the licensee an
obligation to respect or to comply with any provisions of the
statute or with any regulations prescribed by the state railroad
and warehouse commission that are repugnant to the Constitution of
the United States. A license will give the defendant full authority
to carry on its business in accordance with the valid laws of the
state and the valid rules and regulations prescribed by the
commission. If the commission refused to grant a license, or if it
sought to revoke one granted, because the applicant in the one
case, or the licensee in the other, refused to comply with
statutory provisions or
Page 185 U. S. 335
with rules or regulations inconsistent with the Constitution of
the United States, the rights of the applicant or the licensee
could be protected and enforced by appropriate judicial
proceedings."
In the case before us, the defendant company was doing business
in Texas under a license issued by the state. By accepting such
license, the company did not agree to submit to any local
regulation that was repugnant to the Constitution of the United
States. It could resist the enforcement of any regulation or
statutory provision that was inconsistent with rights secured to it
by that instrument.
The Court says that the ground for placing life and health
insurance companies in a different class from fire, marine, and
inland insurance companies is obvious. The only reason assigned for
that statement is
"the necessity of the prompt payment of the insurance money in
very many cases, in order to provide the means of living of which
the beneficiaries had been deprived by the death of the
insured."
But the same reasons exist for prompt payment by a fire
insurance company when the house which shelters the insured and his
family is destroyed by fire. And yet, under the statute, a fire,
marine, or inland insurance company, if it resists a claim for
loss, is not liable, when its defense is unsuccessful, to pay any
special damages or special attorneys' fee. It can defend any suit
brought against it under the same conditions accorded to individual
citizens or to corporate bodies generally. But a different and most
arbitrary rule is prescribed for life and health insurance
companies. Their good faith in refusing to pay a claim for loss, or
in defending an action brought to enforce payment of such a claim,
is not taken into account. If, in any case, they do not, within a
specified time, pay the amount demanded of them, no matter what may
be the reason for its refusal to pay, and if they do not succeed in
their defense, they must pay not only the principal sum, with
ordinary interest, but, in addition, twelve percent damages on the
amount of the principal, and all reasonable attorneys' fees for the
prosecution and collection of the loss. Thus the state in effect
forbids a life or health insurance company to appear in a court of
justice and defend a suit brought
Page 185 U. S. 336
against it except subject to the harsh condition that, if the
jury does not sustain the defense, the company must pay special
damages and special attorneys' fees that are not exacted from any
other defendant, corporate or individual, who may be sued for
money.
This is such an arbitrary classification of corporations ,and
such a discrimination against life and health insurance companies
as brings the statute within the decision in the
Ellis
case, which has been often referred to by this Court with approval.
Magoun v. Illinois Trust and Savings Bank, 170
U. S. 294;
St. Louis, Iron Mountain &c. R. Co.
v. Paul, 173 U. S. 409;
Nicol v. Ames, 173 U. S. 521;
W. W. Cargill Co. v. Minnesota, 180 U.
S. 452.
In my opinion, the statute in question comes within the
constitutional prohibition of the denial by a state of the equal
protection of the laws, and should be held void.