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decided: January 13, 1902.



Author: Gray

[ 183 U.S. Page 556]

 MR. JUSTICE GRAY, after stating the case as above, delivered the opinion of the court.

A State has the undoubted power to prohibit foreign insurance companies from making contracts of insurance, marine or other, within its limits, except upon such conditions as the State may prescribe, not interfering with interstate commerce. A contract of marine insurance is not an instrumentality of commerce, but a mere incident of commercial intercourse. The State, having the power to impose conditions on the transaction of business by foreign insurance companies within its limits, has the equal right to prohibit the transaction of such business by agents of such companies, or by insurance brokers, who are to some extent the representatives of both parties. Hooper v. California, 155 U.S. 648; Allgeyer v. Louisiana, 165 U.S. 578.

The statute of Massachusetts of 1894, c. 522, on which this indictment is founded, besides requiring foreign insurance companies, as conditions precedent to doing business in the State, to appoint agents within the State, and to deposit a certain sum in trust for their policy-holders and creditors, provides, in section 3, that "it shall be unlawful" "for any person as insurance agent or insurance broker to make, negotiate, solicit or in any manner aid in the transaction of" insurance on or concerning any property, interest or lives in Massachusetts, except as authorized by the act; and, in section 98, that any person "who shall act in any manner in the negotiation or transaction of unlawful insurance" (evidently intending insurance declared unlawful by section 3) "with a foreign insurance company not admitted to do business in this Commonwealth," shall be punished by fine.

The acts of negotiation or transaction by the defendant in Massachusetts, admitted in the facts agreed by the parties, are

[ 183 U.S. Page 557]

     that he solicited from McKie the business of procuring insurance upon his vessel in Boston, and, as agent of Johnson & Higgins of New York, having an office in Boston, secured the authority of McKie to the placing of a contract of insurance for a certain sum in pounds sterling upon the vessel, and transmitted an order for that insurance to Johnson & Higgins in New York; whereupon they, acting according to the usual course of business of the defendant, of themselves and of their agents in Liverpool, obtained from the London Lloyds, who had not been admitted to do business in Massachusetts, a policy of insurance for that amount on the vessel; and the defendant afterwards, in Massachusetts, received from Johnso & Higgins that policy, and sent it by mail to McKie, which tends to show that the policy obtained from the foreign insurance company was the insurance which he had originally solicited. These facts clearly convict the defendant of negotiating and transacting in Massachusetts unlawful insurance with a foreign insurance company in violation of the statute, if that statute is constitutional.

In Hooper v. California, 155 U.S. 648, Hooper, the agent in California of the same Johnson & Higgins of New York, obtained from them a policy of marine insurance of a Massachusetts insurance company on a vessel in California, owned by a citizen of California, to whom he delivered the policy in California. It was held that a statute of California, by which Hooper was guilty of procuring insurance for a resident of California from a foreign insurance company which had not given bond as required by the laws of California, was constitutional.

In Allgeyer v. Louisiana, 165 U.S. 578, the insurance was not obtained through an agent or broker, but by the assured himself; and the point decided was that a statute of a State punishing the owner of property for obtaining insurance thereon in another State was unconstitutional. In that case the decision in Hooper's case was expressly recognized and distinguished; and Mr. Justice Peckham, speaking for the court, and repeating the words of Mr. Justice White in Hooper's case, observed: "It is said that the right of a citizen to contract for

[ 183 U.S. Page 558]

     insurance for himself is guaranteed by the Fourteenth Amendment, and that, therefore, he cannot be deprived by the State of the capacity to so contract through an agent. The Fourteenth Amendment, however, does not guarantee the citizen the right to make within his State, either directly or indirectly, a contract, the making whereof is constitutionally forbidden by the State. The proposition that, because a citizen might make such a contract for himself beyond the confines of his State, therefore he might authorize an agent to violate in his behalf the laws of his State within her own limits, involves a clear non sequitur, and ignores the vital distinction between acts done within and acts done beyond a State's jurisdiction." 155 U.S. 658, 659; 165 U.S. 587, 588.

As was well said by the Supreme Judicial Court of Massachusetts, "While the legislature cannot impair the freedom of McKie to elect with whom he will contract, it can prevent the foreign insurers from sheltering themselves under his freedom in order to solicit contracts which otherwise he would not have thought of making. It may prohibit not only agents of the insurers, but also brokers, from soliciting or intermeddling in such insurance, and for the same reasons." 175 Mass. 156.

We are of opinion that the case at bar comes within Hooper v. California, and not within Allgeyer v. Louisiana; and that section 98 of the statute of Massachusetts, under which the plaintiff in error has been convicted, is not contrary to the Constitution of the United States.

The effect of the other provision of the Massachusetts statute, declaring that "all contracts of insurance on property, lives or interests in this Commonwealth shall be deemed to be made therein," need not be considered; because the defendant has been convicted, not of the making of the contract, but of negotiating and transacting that contract in Massachusetts.

Judgment affirmed.

MR. JUSTICE HARLAN, dissenting.

In my opinion this case does not differ in principle from Allgeyer v. Louisiana, 165 U.S. 578; and so thinking I cannot concur in the opinion and judgment in this case.


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