Where the defendant make no appearance in the state court or in
the Circuit Court except for the purpose of raising the question of
jurisdiction and removing the case to the federal court, such
proceeding do not amount to a general appearance.
A state may require a foreign insurance corporation not having
any regular office in the state to make its agents who have
authority to settle losses in the state competent to receive notice
of actions concerning such losses.
In order for a state court to obtain jurisdiction over a foreign
corporation having neither property nor agent within a state, it is
essential for the corporation to be doing business in the
state.
An insurance company with outstanding policies in a state on
which it collects premiums and adjusts losses
held, in
this case, to be doing business within that state so as to render
it liable to an action, and that service, according to the law of
the state, on a doctor sent to investigate the loss and having
power to adjust the same is sufficient to give the state court
jurisdiction.
Page 213 U. S. 246
While service of process on one induced by artifice or fraud to
come within the jurisdiction of the court will be set aside, this
Court will not reverse the finding of the trial court that there
was no such fraud where, as in this case, there is testimony
supporting it.
Under § 5 of the Act of March 3, 1891, c. 517, 23 Stat. 826,
this Court has jurisdiction to review cases certified in which the
question of jurisdiction is alone involved, and, under the power
conferred by that statute, can reverse the court below when clearly
wrong, even upon questions of fact.
The facts are stated in the opinion.
Page 213 U. S. 249
MR. JUSTICE DAY delivered the opinion of the Court.
This case presents a question of the jurisdiction of the circuit
court of the United States to entertain a suit brought by Mary B.
Davis, defendant in error, plaintiff below, against the
Page 213 U. S. 250
Commercial Mutual Accident Company, plaintiff in error,
defendant below. The case comes here upon a certificate involving
the question whether the defendant company was duly served with
process. The circuit court found that the service of summons was
valid and sufficient to give it jurisdiction, and overruled a
motion to set aside the service and dismiss the action for want of
jurisdiction.
The suit was commenced by Mary B. Davis in the Circuit Court of
Howard County, Missouri, and was removed to the Circuit Court of
the United States for the Central Division of Western Missouri by
the defendant, a Pennsylvania corporation. The company made no
appearance in the court below or in the state court, except for the
purpose of raising the question of jurisdiction, and removing the
case to the federal court. Such proceedings did not amount to a
general appearance in the suit.
Goldey v. Morning News,
156 U. S. 518;
Wabash Western Ry. Co. v. Brow, 164 U.
S. 271.
The record contains a bill of exceptions setting forth the
testimony upon the question of jurisdiction. It appears that A. F.
Davis, husband of the plaintiff, held a policy in the defendant
company, issued August 6, 1896, in the sum of $5,000, insuring
against accidental death. On December 31, 1906, he received a
gunshot wound, from which he died on the fourth of January, 1907.
On January seventh, 1907, the insurance company was notified of the
death. On January 14 and 15, one Dr. Mason, of Chicago, went to the
City of Fayette, Missouri, the home of the plaintiff, and there
made an investigation of the cause of death in defendant's behalf,
and demanded an inspection of the body of the deceased, which
demand was refused. Some correspondence ensued between the
plaintiff and the defendant company, and, on February 20, a letter
was written, signed by the plaintiff, which letter contained, among
other things, the following:
"However, if you think it is right, you may send someone here to
examine the body for you. Can't you also send someone authorized
who could settle the claim here if your doctor found everything as
reported, as most all of the claims have
Page 213 U. S. 251
been paid, and I am very anxious to have the balance settled as
soon as possible."
"Then, too, if I should want to compromise the claim in lieu of
an examination, your agent would have power to settle it without
any delay. Please let me know just when you will send someone, as I
am thinking of going to St. Louis for a few days, and would like to
be here when he comes, so let me know several days in advance."
To this letter the company replied by a letter written by its
secretary at the Philadelphia office, that it would have its
medical representative in Fayette with authority to make an
adjustment. Afterwards, on February 27, Dr. Mason went to Fayette,
having received a written letter of authority from the company,
authorizing him to act on behalf of the company in the examination
of the body of the deceased, which letter also authorized him to
adjust the claim.
The testimony is not altogether in harmony as to what occurred
at the meeting of February 27. It does appear that the
representative of the plaintiff and Dr. Mason met and conferred
upon the matter of compromising the claim, and that, afterwards an
offer was made by the plaintiff's representatives to proceed with
an examination of the body of the deceased. Dr. Mason declined this
offer until he could have another physician present, and, after
some negotiation, a deputy sheriff appeared and served process upon
Dr. Mason as agent of the company, upon a petition which had been
prepared before his arrival, and which was filed in the case
subsequently removed to the federal court. There is also testimony
tending to show that a physician was present who was ready to
assist in the examination of the body as a representative of the
plaintiff.
The grounds of objection to the service in the case may be
summarized to be: first, that Mason was not a person authorized to
receive service of process on defendant's behalf; second, that at
the time the service was attempted, the defendant company was not
engaged in the transaction of business in the State of Missouri;
third, that Dr. Mason was enticed into the State of
Page 213 U. S. 252
Missouri by the trick and device of the plaintiff; fourth, that
the return of service did not disclose a valid service under the
laws of the United States nor of the State of Missouri.
As to the service of summons, the statutes of Missouri provide
(Revised Statutes of Missouri, 1899, vol. 1, § 570) as follows:
"A summons shall be executed, except as otherwise provided by
law, either . . . fourth, where defendant is a corporation or joint
stock company, organized under the laws of any other state or
country, and having an office or doing business in this state, by
delivering a copy of the writ and petition to any officer or agent
of such corporation or company in charge of any office or place of
business, or, if it have no office or place of business, then to
any officer, agent, or employee in any county where such service
may be obtained, and, when had in conformity with this subdivision,
shall be deemed personal service against such corporation, and
authorize the rendition of a general judgment against it."
Section 7992, vol. 2, Revised Statutes of Missouri, 1899:
"Service of summons in any action against an insurance company
not incorporated under and by virtue of the laws of this state, and
not authorized to do business in this state by the superintendent
of insurance, shall, in addition to the mode prescribed in § 7991,
be valid and legal and of the same force and effect as personal
service on a private individual, if made by delivering a copy of
the summons and complaint to any person within this state who shall
solicit insurance on behalf of any such insurance corporation, or
make any contract of insurance, or collects or receives any premium
for insurance, or who adjusts or settles a loss, or pays the same
for such insurance corporation, or in any manner aids or assists in
doing either."
The sheriff returned the summons as follows:
"Executed the within writ in the County of Howard and State of
Missouri, on the 27th day of February, A.D.1907, by delivering a
copy of the petition in this case hereto attached and a copy of
this writ to Frank G. Mason, agent of the within
Page 213 U. S. 253
named defendant, the Commercial Mutual Accident Company, a
corporation organized under the laws of the State of Pennsylvania
and doing business in the state, but having no office or place of
business herein and not incorporated under the laws of this state
nor authorized to do business in this state, and while he, the said
agent, was transacting business for the said defendant in our said
county, and while he was adjusting or settling a loss on a policy
of insurance for said defendant, or was aiding and assisting in so
doing."
"George D. Gibson,"
"
Sheriff, Howard County, Missouri"
"By H.L. Hughes, Deputy"
In view of the fact that much of the business of the country is
done by corporations having foreign charters and principal offices
remote from states wherein they transact business, it has been
found necessary to make provision for the service of summons upon
local agents, in order to give jurisdiction to try controversies
which have originated in such states. With this purpose in view,
many states have provided that foreign corporations, in order to do
business within the state, must make provision for service upon
some local agent, or by authority conferred upon some state officer
to accept service of summons. And but for such statutes and the
authority given by the states to obtain service upon local agents,
there could be no recovery upon the contracts of such companies,
unless redress be sought in a distant state, where the company may
happen to have its home office.
Mutual Life Ins. Co. v.
Spratley, 172 U. S. 602,
172 U. S. 619;
Railroad Company v.
Harris, 12 Wall. 65,
79 U. S. 83.
In pursuance of this policy, the State of Missouri has enacted
the sections of its statutes providing for service upon the agents
of insurance companies. In § 7992, it is provided, among other
things, that service may be made by delivering a copy of the
summons and complaint to any person within the state who shall
solicit insurance on behalf of any insurance company, or make any
contract of insurance, or who collects or receives any
Page 213 U. S. 254
premium for insurance, or who adjusts or settles a loss or pays
the same for such insurance corporation, or in any manner aids or
assists in doing either. Under this section, in part at least, the
sheriff undertook to make service upon Dr. Mason. The record
clearly discloses that Mason had authority to adjust and settle the
loss which was the subject of the plaintiff's claim. It is true
that the statute says that service may be upon "any person within
the state . . . who adjusts or settles the loss," etc. This
language clearly has reference to the authority of the person whom
the statute declares to be competent to receive service of summons,
and the statute, in effect, provides that the person clothed with
such power shall be capable of receiving service upon the
corporation. The statute designing to reach one having the
authority of the company for the purpose named, it is immaterial
that the loss was not actually settled. This section (7992) is
limited to the cases of companies not incorporated under the laws
of the state, and not authorized to do such business within the
state by the superintendent of insurance.
This law was in force when Dr. Mason came into the state,
clothed with full authority to settle the loss. The company must be
presumed to have acted with knowledge of this statute. The company
could only be served with process through some agent. It was
competent for the state, keeping within lawful bounds, to designate
the agent upon whom process might be served. It chose to enact a
statute providing that an agent competent by authority of the
company to settle and adjust losses should be competent to
represent the company for the service of process. When the company
sent such an agent into Missouri, by force of the statute, he is
presumed to represent the company for the purpose of service, and
to be vested with authority in respect to such service so far as to
make it known to the foreign corporation thus coming within the
state and subjecting itself to its laws.
Lafayette
Insurance Company v. French, 18 How. 404,
59 U. S.
408.
It is not necessary that express authority to receive
service
Page 213 U. S. 255
of process be shown. The law of the state may designate an agent
upon whom service may be made, if he be one sustaining such
relation to the company that the state may designate him for that
purpose, exercising legislative power within the lawful bounds of
due process of law. This was held in effect in
Connecticut
Mutual Life Insurance Company v. Spratley, 172 U.
S. 602.
We think the state did not exceed its power, and did no
injustice to the corporation by requiring that, when it clothed an
agent with authority to adjust or settle the loss, such agent
should be competent to receive notice, for the company, of an
action concerning the same.
It is further contended that the defendant company was not doing
business within the State of Missouri. That it is essential, in
order to obtain jurisdiction over a foreign corporation having, as
in the case at bar, neither property nor agent in the state, that
it be doing business in the state, is settled by numerous decisions
of this Court.
St. Clair v. Cox, 106 U.
S. 350;
Goldey v. Morning News, 156 U.
S. 518;
Barrow Steamship Company v. Kane,
170 U. S. 100;
Connecticut Mut. Life Insurance Co. v. Spratley,
172 U. S. 602;
Conley v. Mathieson Alkali Works, 190 U.
S. 406;
Lumbermen's Insurance Company v. Meyer,
197 U. S. 407;
Peterson v. Chicago, Rock Island & Pacific Railway
Company, 205 U. S. 364.
Was the defendant doing business in the State of Missouri? The
record discloses, and the court had found, that it had other
insurance policies outstanding in the State of Missouri. Upon these
policies undoubtedly premiums were paid, and it was the right of
the company to investigate losses thereunder, to have an
examination of the body of the deceased in proper cases, and to do
whatever might be necessary to an adjustment or payment of any
loss. The record shows that the company sent Dr. Mason to Fayette
to investigate the loss sued for in this case, and later, and at
the time of the service of the process, Mason was in Missouri with
full authority to settle the loss in controversy.
Page 213 U. S. 256
Previous cases in this Court have not defined the extent of the
business necessary to the presence of a foreign corporation in the
state for the purpose of a valid service; it is sufficient if it is
doing business therein. We are of opinion that the finding of the
court in this case is supported by testimony, and that the
corporation was doing business in Missouri.
It is urged that it clearly appears from the testimony in this
case that Dr. Mason was sent into the State of Missouri because of
the fraud and artifice of the plaintiff, and that in such case the
law will not permit a service of summons to stand. It is
undoubtedly true that, if a person is induced by artifice or fraud
to come within the jurisdiction of the court for the purpose of
procuring service of process, such fraudulent abuse of the writ
will be set aside upon proper showing.
Fitzgerald Const. Co. v.
Fitzgerald, 137 U. S. 98. "The
fraud of the plaintiff," says the counsel for the plaintiff in
error, "consisted in inducing the company, by artifice, to confer
upon Dr. Mason authority to compromise the suit."
Upon the testimony before the court, the circuit court reached
the conclusion that the company was not induced by fraud or
artifice to send Dr. Mason to the State of Missouri. This Court has
jurisdiction to review, under § 5 of the Act of March 3, 1891,
cases in which the question of jurisdiction alone is involved, and
which are duly certified here for decision. And where the decision
of the court below is clearly wrong, even upon a question of fact,
it may be set aside under the power conferred by the statute upon
this Court. We think this is the effect of the reasoning in
Goldey v. Morning News, 156 U.S.,
supra, and
Mexican Central R. Co. v. Pinkney, 149 U.
S. 194.
It is contended by counsel for the plaintiff in error that the
evidence is undisputed, and clearly demonstrates the fraudulent
conduct of the plaintiff in obtaining service in this case. But we
are not prepared, on this question of fact, to say that the court
below committed plain error. The court might have found upon the
testimony that there was a
bona fide attempt
Page 213 U. S. 257
to settle the controversy between the parties, and that it was
only when they failed to settle that service of summons was made
upon Mason, as the agent of the company. There is testimony tending
to show that both parties expected an adjustment of the claim to be
made at this meeting, which was held for that purpose. There is
testimony from which it might be inferred that there was a
bona
fide offer to permit an examination at that time of the
remains of the deceased. We do not feel authorized to find, as
against the testimony set forth in the bill of exceptions, and the
finding of the court below, that the purpose in writing the letter
of February 20, and procuring authority to be conferred upon Dr.
Mason to settle the case, and to come into the State of Missouri
for that purpose, was a mere fraudulent scheme to obtain service
upon the insurance company.
As the sole question before us pertains to the sufficiency of
the service under the facts disclosed, we reach the conclusion that
the judgment of the Circuit Court must be affirmed.
Affirmed.