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Statement of the Case.
the laws in violation of the constitution of the State of Louisiana and also of the Constitution of the United States. They also set up that the business concerning which defendants. were sought to be made liable, and the contracts made in reference to such business, were beyond the jurisdiction of the State of Louisiana, and that the defendants were not amenable to any penalties imposed by its laws; that the contracts of insurance made by defendants were made with an insurance company in the State of New York, where the premiums were paid, and where the losses thereunder, if any, were also to be paid; that the contracts were New York contracts, and that under the Constitution of the United States the defendants had the right to do and perform any act or acts within the State of Louisiana which might be necessary and proper for the execution of those contracts, and that in so far as the act No. 66 of the general assembly of the State of Louisiana of the year 1894 might be construed to prevent or interfere with the execution of such contracts, the same was unconstitutional and in violation of the constitution of both the State of Louisiana and the United States.
The case was tried upon an agreed statement of facts, as follows: The Atlantic Mutual Insurance Company is a corporation, created by the laws of the State of New York and domiciled and carrying on business in that State, and the defendants made a contract with that company for an open policy of marine insurance for $200,000, on account of themselves, and to cover cotton in bales purchased and shipped by them on which drafts might be drawn for the purchaser, upon "Whom It Might Concern." By the terms of the policy, among other things it was stated: "Shipments applicable to this policy, to be reported to this company by mail or telegraph the day purchased, warranted not to cover cotton in charge of carriers on shore or during inland transportation. No risk is to be insured by this policy until a letter signed by , and addressed to the president of this company, detailing the name of the vessel, particulars of the shipment, with description of the property and amount to be insured, is deposited in the post office atwhich must be done
Statement of the Case.
while the property is in good safety, and in all cases prior to the departure of the risk from ; a duplicate of such. letter to be sent by the following mail. A new and separate policy to be issued for each risk, the premium on which is to be paid in cash upon the delivery of such policy in New York to E. Allgeyer & Company."
The Atlantic Mutual Insurance Company is engaged in the business of marine insurance, and has appointed no agent in the State of Louisiana, and has not complied with the conditions required by the laws of that State for the doing of business within the same by insurance companies incorporated and domiciled out of the State.
On the 23d of October, 1894, the defendants mailed to that company a communication, stating insurance was wanted by defendants for account of same (the open policy); loss, if any, payable at Paris, in French currency, etc., for $3400 on 100 bales of cotton, which, at the time of the communication, were within the State of Louisiana. The premiums to be paid under the contract of insurance and the loss or losses under the same were payable in the city of New York, the premiums being remitted by the defendants from New Orleans by exchange.
Defendants are exporters of cotton from the port of New Orleans to ports in Great Britain and on the continent of Europe; they sell cotton in New Orleans to purchasers at said ports. For the price of every sale of cotton made by them they, in accordance with the general custom of business, draw a bill of exchange against the purchaser, attaching to the same the bill of lading for the cotton and an order on the Atlantic Mutual Insurance Company for a new and separate policy of insurance, spoken of in the open policy, and the form of the said order is as follows:
(6 Attached to draft No. from E. Allgeyer & Co., New Orleans, 189, to Atlantic Mutual Ins. Co., New York.
"Marks and numbers,
"Please deliver to
or order special policy for
This bill of exchange, with the bill of lading attached, is sometimes negotiated with banks in the city of New York; sometimes it is not negotiated at all, but forwarded direct for collection from the purchaser of the cotton. The bill of exchange, with bill of lading and order for insurance attached, in either case is sent from New Orleans/first to New York, where, after its negotiation or before being forwarded from thence for collection, the order for insurance is presented to the Atlantic Mutual Insurance Company. Upon this showing the insurance company in New York issues and delivers to the holder of the exchange and bill of lading when the former has been negotiated, or to the agent of defendant when the exchange has not been negotiated, a new and a separate policy of insurance for the cotton, in accordance with the contract made with the defendants and evidenced by the policy above mentioned and described. This new and separate policy, when received, is attached to the bill of exchange. The exchange cannot be negotiated in New York unless it is accompanied by both the bill of lading and order for insurance, and unless the new and separate policy issued by the company is attached to it the purchaser of the cotton is under no obligation to pay the bill drawn on him for the price of the cotton. The new and separate policy delivered to the holder of the exchange and bill of lading in New York, or to defendants' agent there, as the case may be, is for the benefit of the holder of the latter, or of defendants, according as the exchange has been negotiated or not. The holder of the exchange becomes the owner of the cotton covered by the bill of lading attached and is the owner of the policy of insurance covering the same, in the event of a loss within the terms of the policy.
The business thus described is conducted as above by the general custom and agreement of all parties concerned.
Opinion of the Court.
The court of first instance before which the trial was had ordered that plaintiff's demand be rejected and that judgment in favor of the defendants be given. An appeal was taken from that judgment to the Supreme Court of the State, which, after argument before it and due consideration, reversed the judgment of the court below and gave judgment in favor of the plaintiff for $1000, as for one violation of the statute, being the only one which was proved. State v. Allgeyer, 48 La. Ann. 104. The plaintiffs in error ask a review in this court of the judgment entered against them by directions of the Supreme Court of Louisiana.
Mr. Branch K. Miller for plaintiffs in error.
Mr. M. J. Cunningham, Attorney General of the State of Louisiana, and Mr. E. Howard McCaleb, for defendant in
MR. JUSTICE PECKHAM, after stating the case, delivered the opinion of the court.
There is no doubt of the power of the State to prohibit foreign insurance companies from doing business within its limits. The State can impose such conditions as it pleases upon the doing of any business by those companies within its borders, and unless the conditions be complied with the prohibition may be absolute. The cases upon this subject are cited in the opinion of the court in Hooper v. California, 155 U. S. 648.
A conditional prohibition in regard to foreign insurance companies doing business within the State of Louisiana is to be found in article 236 of the constitution of that State, which reads as follows: "No foreign corporation shall do any business in this State without having one or more known places of business, and an authorized agent or agents in the State, upon whom process may be served."
It is not claimed in this suit that the Atlantic Mutual Insurance Company has violated this provision of the constitution by doing business within the State.
Opinion of the Court.
In the State of Louisiana v. Williams, 46 La. Ann. 922, the Supreme Court of that State held that an open policy of marine insurance, similar in all respects to the one herein described, and made by a foreign insurance company, not doing business within the State and having no agent therein, must be considered as made at the domicil of the company issuing the open policy, and that where in such case the insurance company had no agent in Louisiana it could not be considered as doing an insurance business within the State.
The learned counsel for the State also admits in his brief the fact that the contract (i.e. the open policy) was entered into at New York City.
In the course of the opinion delivered in this case by the Supreme Court of Louisiana that court said:
"The open policy in this case is conceded to be a New York contract; hence the special insurance effected on the cotton complained of here was a New York contract.
"The question presented is the simple proposition whether under the act a party while in the State can insure property in Louisiana in a foreign insurance company, which has not complied with the laws of the State, under an open policythe special contract of insurance - and the open policy being contracts made and entered into beyond the limits of the State.
"We are not dealing with the contract. If it be legal in New York, it is valid elsewhere. We are concerned only with the fact of its having been entered into by a citizen of Louisiana while within her limits affecting property within her territorial limits. It is the act of the party, and not the contract, which we are to consider. The defendants who made the contract did so while they were in the State, and it had reference to property located within the State. Such a contract is in violation of the laws of the State, and the defendants who made it were within the jurisdiction of the State, and must be necessarily subject to its penalties, unless there is some inhibition in the Federal or state constitution, or that it violates one of those inalienable rights relat