1. The Constitution of the United States secures to citizens of
another state than that in which suit is brought an absolute right
to remove their cases into the federal court upon compliance with
the terms of the twelfth section of the Judiciary Act.
2. The obstruction to this right imposed by a statute of a
state, which enacts
"That any fire insurance company, association, or partnership,
incorporated by or organized under the laws of any other state of
the United States desiring to transact any such business as
aforesaid by any agent or agents in this state shall first appoint
an attorney in this state on whom process of law can be served,
containing
an agreement that such company will not remove the
suit for trial into the United States circuit court or federal
courts, and file in the office of the secretary of state a written
instrument, duly signed and sealed, certifying such appointment,
which shall continue until another attorney be
substituted."
is repugnant to the Constitution of the United States and the
laws in pursuance thereof, and is illegal and void.
3. The agreement of the insurance company, filed in pursuance of
the act, derives no support from a statute thus unconstitutional,
and is as void as it would be had no such statute been passed.
A statute of Wisconsin passed in 1870 [
Footnote 1] enacts as follows:
"It shall not be lawful for any fire insurance company,
association, or partnership, incorporated by or organized under the
laws of any other state of the United States or any foreign
government for any of the purposes specified in this act directly
or indirectly to take risks or transact any business of
insurance
Page 87 U. S. 446
in this state unless possessed of the amount of actual capital
required of similar companies formed under the provisions of this
act, and any such company desiring to transact any such business as
aforesaid by any agent or agents in this state shall first appoint
an attorney in this state on whom process of law can be served
containing
an agreement that such company will not remove the
suit for trial into the United States circuit court or federal
courts, and file in the office of the secretary of state a written
instrument, duly signed and sealed, certifying such appointment,
which shall continue until another attorney be
substituted."
This statute being in force, the Home Insurance Company of New
York, a corporation organized under the laws of the State of New
York, and having its office and principal place of business in the
City of New York, being desirous of doing business in the State of
Wisconsin, established an agency there, and in compliance with the
provisions of the above-quoted statute, filed in the office of the
Secretary of State of Wisconsin an appointment of H. S. Durand as
their agent in it, on whom process might be served. The power of
attorney thus filed contained this clause:
"And said company agrees that suits commenced in the state
courts of Wisconsin shall not be removed by the acts of said
company into the United States circuit or federal courts."
Being thus established in the state, the company issued a policy
of insurance to one Morse, and a loss having occurred, as was
alleged, under it, Morse sued the company in the County Court of
Winnebago, one of the state courts of Wisconsin, to recover the
amount alleged to be due on the policy. The company entered its
appearance in the suit and filed its petition to remove the case,
under the twelfth section of the Judiciary Act of 1789, into the
circuit court for the district. The section under which the company
filed its petition for removal is in these words:
"If a suit be commenced in any state court . . . by a citizen of
the state in which the suit is brought against a citizen of another
state, . . . and the defendant shall at the time of entering
Page 87 U. S. 447
his appearance in such state court, file a petition for the
removal of the cause for trial into the next circuit court to be
held in the district where the suit is pending . . . and offer good
and sufficient surety for his entering in such court on the first
day of its session copies of said process against him, and also for
his there appearing, . . . it shall then be the duty of the state
court to accept the surety and proceed no further in the
cause."
The petition was in proper form and was accompanied by the
required bond and bail.
The state court of Wisconsin in which the suit was brought held
that the statute above quoted, of the state, and the agreement
under it justified a denial of the petition to remove the case into
the circuit court of the United States, and a trial having been
had, gave judgment for the plaintiff on a verdict found in his
favor. A similar view as to the effect of the statute of the state
and the agreement under it, was taken by the Supreme Court of
Wisconsin, and the judgment was there affirmed. [
Footnote 2] Thereupon the insurance company
brought the case here, and whether the statute and the agreement
were sufficient to justify the refusal to remove the case was the
point now presented for consideration.
The Constitution of the United States ordains as follows:
"This Constitution and
the laws of the United States
which shall be made in pursuance thereof . . . shall be the
supreme law of the land, and the judges in every state
shall be bound thereby,
anything in the constitution or
laws of any state to the contrary notwithstanding."
"The judicial power of the United States . . . shall extend to .
. . controversies between citizens of different states."
The case was twice argued.
Page 87 U. S. 450
MR. JUSTICE HUNT delivered the opinion of the Court.
The refusal of the state court of Wisconsin to allow the removal
of the case into the United States Circuit Court of Wisconsin, and
its justification under the agreement of the company and the
statute of Wisconsin form the subject of consideration in the
present suit.
The state courts of Wisconsin held that this statute and their
agreement under it justified a denial of the petition to remove the
case into the United States court. The insurance company deny this
proposition, and this is the point presented for consideration.
Is the agreement thus made by the insurance company one that,
without reference to the statute, would bind the party making
it?
Should a citizen of the State of New York enter into an
agreement with the State of Wisconsin, that in no event would he
resort to the courts of that state or to the federal tribunals
within it to protect his rights of property, it could not be
successfully contended that such an agreement would be valid.
Should a citizen of New York enter into an agreement with the
State of Wisconsin, upon whatever consideration, that he would in
no case, when called into the courts of that state or the federal
tribunals within it, demand a jury to determine any rights of
property that might be called in question, but that such rights
should in all such cases be submitted to arbitration or to the
decision of a single judge, the authorities are clear that he would
not thereby be debarred from resorting to the ordinary legal
tribunals of the state. There is no sound principle upon which such
agreements can be specifically enforced.
Page 87 U. S. 451
We see no difference in principle between the cases supposed and
the case before us. Every citizen is entitled to resort to all the
courts of the country, and to invoke the protection which all the
laws or all those courts may afford him. A man may not barter away
his life or his freedom, or his substantial rights. In a criminal
case, he cannot, as was held in
Cancemi's Case, [
Footnote 3] be tried in any other
manner than by a jury of twelve men, although he consent in open
court to be tried by a jury of eleven men. In a civil case, he may
submit his particular suit by his own consent to an arbitration, or
to the decision of a single judge. So he may omit to exercise his
right to remove his suit to a federal tribunal as often as he
thinks fit in each recurring case. In these aspects, any citizen
may no doubt waive the rights to which he may be entitled. He
cannot, however, bind himself in advance by an agreement, which may
be specifically enforced, thus to forfeit his rights at all times
and on all occasions, whenever the case may be presented.
That the agreement of the insurance company is invalid upon the
principles mentioned, numerous cases may be cited to prove.
[
Footnote 4] They show that
agreements in advance to oust the courts of the jurisdiction
conferred by law are illegal and void.
In
Scott v. Avery (one of the cases), the Lord
Chancellor says:
"There is no doubt of the general principle that parties cannot
by contract oust the ordinary courts of their jurisdiction. That
has been decided in many cases. Perhaps the first case I need refer
to was a case decided about a century ago. [
Footnote 5] That case was an action on a policy of
insurance in which there was a clause that in case of any loss or
dispute it should be referred to arbitration. It was decided there
that an action would lie, although there had
Page 87 U. S. 452
been no reference to arbitration. Then, after the lapse of half
a century, occurred a case before Lord Kenyon, and from the
language that fell from that learned judge many other cases had
probably been decided which are not reported. But in the time of
Lord Kenyon occurred the case which is considered the leading case
on the subject, of
Thompson v. Charnock. [
Footnote 6] That was an action upon a charter
party in which it was stipulated that if any difference should
arise, it should be referred to arbitration. That clause was
pleaded in bar to the action brought upon breach of the contract,
with an averment that the defendant was, and always had been, ready
to refer the same to arbitration. This was held to be a bad plea
upon the ground that a right of action had accrued, and that the
fact that the parties had agreed that the matter should be settled
by arbitration did not oust the jurisdiction of the courts."
Upon this doctrine all the judges who delivered opinions in the
House of Lords were agreed.
And the principle, Mr. Justice Story in his Commentaries on
Equity Jurisprudence, [
Footnote
7] says is applicable in courts of equity as well as in courts
of law.
"And where the stipulation, though not against the policy of the
law, yet is an effort to divest the ordinary jurisdiction of the
common tribunals of justice, such as an agreement in case of
dispute to refer the same to arbitration, a court of equity will
not any more than a court of law interfere to enforce the
agreement, but it will leave the parties to their own good pleasure
in regard to such agreements. The regular administration of justice
might be greatly impeded or interfered with by such stipulations if
they were specifically enforced."
In
Stephenson v. P. F. & M. C. Ins. Co., [
Footnote 8] the court said:
"While parties may impose as condition precedent to applications
to the courts that they shall first have settled the amount to be
recovered by an agreed mode, they cannot entirely close the access
to the courts of law. The law, and not the contract, prescribes the
remedy, and parties have no more right to enter into stipulations
against a resort to the
Page 87 U. S. 453
courts for their remedy in a given case than they have to
provide a remedy prohibited by law; such stipulations are repugnant
to the rest of the contract, and assume to divest courts of their
established jurisdictions; as conditions precedent to an appeal to
the courts, they are void."
Many cases are cited in support of the rule thus laid down. Upon
its own merits, this agreement cannot be sustained.
Does the agreement in question gain validity from the statute of
Wisconsin which has been quoted? Is the statute of the State of
Wisconsin, which enacts that a corporation organized in another
state shall not transact business within its limits unless it
stipulates in advance that it will not remove into the federal
courts any suit that any be commenced against it by a citizen of
Wisconsin, a valid statute in respect to such requisition under the
Constitution of the United States?
The Constitution of the United States declares that
"The judicial power of the United States shall extend to all
cases in law and equity arising under that Constitution, the laws
of the United States, and to the treaties made or which shall be
made under their authority, . . . to controversies between a state
and citizens of another state, and between citizens of different
states. [
Footnote 9]"
The jurisdiction of the federal courts under this clause of the
Constitution depends upon and is regulated by the laws of the
United States. state legislation cannot confer jurisdiction upon
the federal courts, nor can it limit or restrict the authority
given by Congress in pursuance of the Constitution. This has been
held many times. [
Footnote
10]
It has also been held many times that a corporation is a citizen
of the state by which it is created, and in which its principal
place of business is situated, so far as that it can sue and be
sued in the federal courts. This Court has repeatedly held that a
corporation was a citizen of the state
Page 87 U. S. 454
creating it, within the clause of the Constitution extending the
jurisdiction of the federal courts to citizens of different states.
[
Footnote 11]
The twelfth section of the Judiciary Act of 1789 provides that
if a suit be commenced in any state court by a citizen of the state
in which the suit is commenced against a citizen of another state,
where the matter in dispute exceeds $500, and the defendant at the
time of entering his appearance shall file a petition for the
removal of the cause for trial into the next circuit court of the
United States, and shall offer good bail for his proceedings
therein, "it shall be the duty of the state court to accept such
security and proceed no farther in the cause."
This applies to all the citizens of another state, whether
corporations, partnerships, or individuals. It confers an
unqualified and unrestrained right to have the case transferred to
the federal courts upon giving the security required. In the case
recently decided in this Court of
Insurance Company v.
Dunn, [
Footnote 12] it
was held that no power of action thereafter remained to the state
court, and that every question, necessarily including that of its
own jurisdiction, must be decided in the federal court.
The statute of Wisconsin, however, provides as to a certain
class of citizens of other states, to-wit, foreign corporations,
that they shall not exercise that right, and prohibits them from
transacting their business within that state unless they first
enter into an agreement in writing that they will not claim or
exercise that right.
The Home Insurance Company is a citizen of New York within this
provision of the Constitution. As such citizen of another state, it
sought to exercise this right to remove to a federal tribunal a
suit commenced against itself in the state court of Wisconsin where
the amount involved exceeded the sum of $500. This right was denied
to it by the
Page 87 U. S. 455
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 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.
We do not consider the question whether the State of Wisconsin
can entirely exclude such corporations from its limits, nor what
reasonable terms they may impose as a condition of their
transacting business within the state. These questions have been
before the Court in other cases, but they do not arise here. In
Paul v. Virginia, [
Footnote 13] MR. JUSTICE FIELD used language in speaking
of corporations which has been supposed to sustain the statute in
question.
"Having [he says] no absolute right of recognition in other
states, but depending for such recognition and the enforcement of
its contracts upon their assent, it follows, as a matter of course,
that such assent may be granted upon such terms and conditions as
those states may think proper to impose. They may exclude the
foreign corporation entirely, they may restrict its business to
particular localities, or they may exact such security for the
performance of its contracts with their citizens as in their
judgment will best promote the public interest. "
Page 87 U. S. 456
So in
Bank of Augusta v. Earle, [
Footnote 14] the language of Chief Justice Taney
has been invoked for the same purpose.
In each of these cases, the general language of the learned
justice is to be expounded with reference to the subject before
him. They lay down principles in general terms which are to be
understood only with reference to the facts in hand. Thus, the case
in which the opinion was delivered by MR. JUSTICE FIELD was one
involving the construction of that clause of the United States
Constitution which declares that "the citizens of each state shall
be entitled to all the privileges and immunities of citizens in the
several states," and of that clause regulating commerce among the
states, not of the one now before us. It involved the question
whether the state might require a foreign insurance company to take
a license for the transaction of its business, giving security for
the payment of its debts, and decided that taking insurance risks
was not a transaction of commerce within the meaning of the two
clauses of the Constitution cited. It had no reference to the
clause giving to citizens of other states the right of litigation
in the United States courts, and certainly had no bearing upon the
right of corporations to resort to those courts or the power of the
state to limit and restrict such resort.
It was not intended to impair the force of the language used by
Mr. Justice Curtis in
La Fayette Insurance Company v.
French, [
Footnote 15]
where he says:
"A corporation created by Indiana can transact business in Ohio
only with the consent, express or implied, of the latter state.
This consent may be accompanied by such conditions as Ohio may
think fit to impose, and these conditions must be deemed valid and
effectual by other states and by this Court,
provided they
are not repugnant to the Constitution and laws of the United States
or inconsistent with those rules of public law which secure the
jurisdiction and authority of each state from encroachment by all
others or that principle of natural justice which forbids
condemnation without opportunity for
Page 87 U. S. 457
defense."
Nearly the same language is used by Mr. Justice Nelson in
Ducat v. City of Chicago. [
Footnote 16]
None of the cases so much as intimate that conditions may be
imposed which are repugnant to the Constitution and laws of the
United States or inconsistent with those rules of public law which
secure the jurisdiction and authority of each state from
encroachment by others.
The case of
Bank of Columbia v. Okely, [
Footnote 17] is relied upon by the court
below to sustain the statute and the agreement in question. In that
case, it was provided in the fourteenth section of the charter of
the bank that whenever a borrower of the bank should make his note
by an agreement in writing negotiable at the bank and neglect its
payment when due, the president of the bank should cause a demand
in writing to be served upon the delinquent, and if the money was
not paid within ten days after such demand, it was made lawful for
the bank to present to the county clerk the note so unpaid, with
proof of the demand, and to require him to issue an execution or
attachment against the debtor. Before such execution could issue,
the bank was required to file an affidavit of the amount due on the
note.
"If the defendant shall dispute the whole or any part of the
debt [the statute adds] on the return of the execution, the court
shall order an issue to be joined and a trial to be had, and shall
make such other proceedings that justice may be done in the
speediest manner."
This statute was sustained in the case cited. Mr. Key, for the
plaintiff, argued in its support on the theory that the whole
effect of the provision was to authorize the commencement of a suit
by attachment instead of the usual common law process. Mr. Jones,
contra, contended that it was in violation of the
provision of the Constitution of Maryland and of the United States
securing to parties the right of trial by jury when the value in
controversy exceeded twenty dollars. In rendering the decision, the
Court said:
"This Court would ponder long before it would sustain this
action if we could be persuaded that the act in question produced a
total prostration of the trial by
Page 87 U. S. 458
jury, or even involved the defendant in circumstances which
rendered that right unavailing for his protection. . . . If the
defendant does not avail himself of the right given to him of
having an issue made up and the trial by jury, which is tendered to
him by the act, it is presumable that he cannot dispute the justice
of the claim."
We are not able to discover in this case any countenance for the
statute of Wisconsin which we are considering.
On this branch of the case, the conclusion is this:
1st. The Constitution of the United States secures to citizens
of another state than that in which suit is brought an absolute
right to remove their cases into the federal court upon compliance
with the terms of the Act of 1789.
2d. The statute of Wisconsin is an obstruction to this right, is
repugnant to the Constitution of the United States and the laws in
pursuance thereof, and is illegal and void.
3d. The agreement of the insurance company derives no support
from an unconstitutional statute and is void, as it would be had no
such statute been passed.
We are of opinion, for the reasons given, that the Winnebago
County Court erred in proceeding in the case after the filing the
petition and the giving the security required by the Act of 1789,
and that all subsequent proceedings in the state court are illegal
and should be vacated. The judgment in that court, and the judgment
in the Supreme Court of Wisconsin, should be reversed and the
prayer of the petition for removal should be granted.
Ordered accordingly.
[
Footnote 1]
1 Taylor's Statutes, page 958, section 22.
[
Footnote 2]
30 Wis. 496.
[
Footnote 3]
18 N.Y. 128.
[
Footnote 4]
Nute v. Hamilton Insurance Co., 6 Gray 174;
Cobb v.
New England Marine Insurance Co., ib., 192;
Hobbs v.
Manhattan Insurance Co., 56 Me. 421;
Stephenson v. P. F.
& M. Insurance Co., 54
id. 70;
Scott v.
Avery, 5 House of Lords Cases 811.
[
Footnote 5]
Kill v. Hollester, 1 Wilson 129.
[
Footnote 6]
8 Term, 139.
[
Footnote 7]
Section 670.
[
Footnote 8]
54 Me. 70.
[
Footnote 9]
Art. 3, ยง 2.
[
Footnote 10]
Railway Co. v.
Whitton, 13 Wall. 286;
Payne
v. Hook, 7 Wall. 427;
The Moses
Taylor, 4 Wall. 411, and cases cited.
[
Footnote 11]
Express Co. v.
Kountze, 8 Wall. 342;
Cowles v.
Mercer Co., 7 Wall. 118;
Railway v.
Whitton, 13 Wall. 275;
Ohio
& Mississippi Railroad Co. v. Wheeler, 1 Black
286.
[
Footnote 12]
86 U. S. 19 Wall.
214.
[
Footnote 13]
75 U. S. 8 Wall.
168.
[
Footnote 14]
38 U. S. 13 Pet.
519.
[
Footnote 15]
59 U. S. 18
How. 404.
[
Footnote 16]
77 U. S. 10 Wall.
410.
[
Footnote 17]
17 U. S. 4 Wheat.
235.
The CHIEF JUSTICE, with whom concurred MR. JUSTICE DAVIS,
dissenting.
I cannot concur in the judgment which has just been announced. A
state has the right to exclude foreign insurance companies from the
transaction of business within its jurisdiction. Such is the
settled law in this Court.
* The right to
impose conditions upon admission follows, as a necessary
Page 87 U. S. 459
consequence, from the right to exclude altogether. The State of
Wisconsin has made it a condition of admission that the company
shall submit to be sued in the courts she has provided for the
settlement of the rights of her own citizens. That is no more than
saying that the foreign company must, for the purposes of all
litigation growing out of the business transacted there, renounce
its foreign citizenship and become
pro tanto a citizen of
that state. There is no hardship in this, for it imposes no greater
burden than rests upon home companies and home insurers.
This insurance company accepted this condition, and was thus
enabled to make the contract sued upon. Having received the
benefits of its renunciation, the revocation comes too late.
The state court had jurisdiction to try the question of
citizenship upon the petition to transfer. Upon the facts, I think
it was authorized to find that the company was, for all the
purposes of that action, a citizen of Wisconsin and refuse the
order of removal.
*
Paul v.
Virginia, 8 Wall. 181;
Ducat v.
Chicago, 10 Wall. 410;
Bank
of Augusta v. Earle, 13 Pet. 586.