Opinion · Supreme Court of the United States

Hancock Mutual Life Insurance v. Warren

Hancock Mut. Life Ins. v. Warren, 181 U.S. 73 (1901)

Type
Opinion
Court
Supreme Court of the United States
Jurisdiction
Federal
Date
1901-04-08
Topic
general

Me. Chief Justice Fullee, after stating the case, delivered the opinion of the court. In State v. Ackerman, 51 Ohio St. 163, it -was ruled that as foreign, insurance companies and associations, whether incorporated or not, before commencing business in the State, were *75 required to obtain a certificate of authority to do .so, which conferred on the company or association receiving it the right and privilege of carrying on its business in the State, the privilege so conferred was a franchise. In the course of the opinion the court quoted with approval, from Spelling on Extraordinary Relief, as follows: “ Where, by statute, the legal exercise of a right, which at common law was private, is made to depend upon compliance with conditions interposed for the security and protection of the public, the necessary inference is that it is no longer private, but has become a matter of public concern, that is, a franchise, the assumption and exercise of which without complying with the conditions prescribed would be a' usurpation of a public or sovereign function. ...

Citator

UpLaw has not yet analyzed Hancock Mutual Life Insurance v. Warren. The absence of a flag is not a finding that it is good law.

Cited by
41 opinions

Headnotes

  1. Constitutional Law — State Power over Corporations — Franchise Conditions A state may prescribe the terms and conditions on which it grants a franchise to an insurance company to do business within its borders, and a company that accepts the franchise is bound by those terms and conditions and must accept the accompanying burdens along with the benefits. 181 U.S. 73 (Fuller, C.J.)
  2. Constitutional Law — Equal Protection A state statute regulating life insurance companies that applies to all life insurance companies doing business within the state, foreign and domestic alike, works no arbitrary classification or unlawful discrimination, because a state may do with foreign corporations whatever it may do with corporations of its own creation. 181 U.S. 73 (Fuller, C.J.)
  3. Constitutional Law — Liberty of Contract — Corporations A corporation is a creature of law whose powers are not original but are precisely those conferred by the incorporating act; a state prescribes the purposes of a corporation and the means of executing them, and its control in this respect is even broader as to foreign corporations than as to domestic ones, so a corporation has no liberty-of-contract right to assert against such conditions. 181 U.S. 73 (Fuller, C.J.) (quoting Waters-Pierce Oil Co. v. Texas, 177 U.S. 28)
  4. Insurance Law — State Regulation — Answers to Interrogatories It is for the state legislature to define the public policy of the state respecting life insurance and to impose such conditions on the transaction of business by life insurance companies within the state as it deems best, including a statute limiting when an applicant's answers to interrogatories may bar recovery on the policy or be used in evidence against it. 181 U.S. 73 (Fuller, C.J.)
HANCOCK MUTUAL LIFE INS. CO.v. WARREN,181 U.S. 73(1901)
21 S.Ct. 535
HANCOCK MUTUAL LIFE INSURANCE COMPANYv. WARREN.
ERROR TO THE SUPREME COURT OF THE STATE OF OHIO.
No. 196.
Argued and submitted March 19, 1901.
Decided April 8, 1901.
Orient Insurance Companyv.Daggs,172 U.S. 557;Waters-Pierce Companyv.Texas,177 U.S. 28;New YorkLife Insurance Companyv.Cravens,178 U.S. 389, approved and affirmed. Section 3625 of the Revised Statutes of Ohio dealing with the subject of answers to interrogatories in applications for policies of life insurance, applicable to all life insurance companies doing business in the State of Ohio, and in force at the time the policy of insurance sued on in this case was issued, was within the power of the State over corporations, and not in violation of the Constitution of the United States.
THIS action was brought in the Common Pleas Court of Delaware
County, Ohio, on a policy of insurance issued September 27, 1895,
by the John Hancock Mutual Life Insurance Company on the life of
George E. Warren and for the benefit of William M. Warren. The
insurance company resisted payment on the ground that the policy
had been fraudulently obtained by the decedent, in that the
answers made by him in his application made a part of the policy,
and which were expressly warranted to be complete and true, the
policy providing that if any of the statements were untrue it
should be void, were false, and that he made them for the purpose
of defrauding the insurance company, which would not have issued
the policy had it known of the falsity of the answers.
Section 3625 of the Revised Statutes of Ohio provided that:
"No answer to any interrogatory made by an applicant, in his or
her application for a policy, shall bar the right to recover upon
any policy issued upon such application, or be used in evidence
upon any trial to recover upon such policy, unless it be clearly
proved that such answer is wilfully false and was fraudulently
made, that it is material, and induced the company to issue the
policy, and that but for such answer the policy would
Page 74
not have been issued; and, moreover, that the agent of the
company had no knowledge of the falsity or fraud of such answer."
Rev. Stat. Ohio, 1898, p. 1900.
The trial judge charged the jury as follows: "This law being
in force at the time this policy of insurance was taken out, is
applicable to the policy of insurance involved in this case. And
is applicable to the questions and answers in the application
that by the terms of the policy are made express warranties as
well as those that are not." The defendant duly excepted to that
portion of the charge, and to other portions of the same purport.
The defendant also requested the court to give the jury the
following instruction: "The policy or contract upon which this
action is based and the application made by George E. Warren for
the same, constitute a warranty that all answers by said Warren
contained therein are true, and if any one or more of said
answers is untrue, though made without actual fraud, and under an
innocent misapprehension of the purport of the questions and
answers, no contract of insurance is thereby made, and the
contract is voidab initio, and your verdict will be for the
defendant." The court declined to give this instruction, and
defendant duly excepted.
The jury returned a verdict for the plaintiff, and judgment
was entered thereon, which was affirmed by the Circuit Court, and
finally by the Supreme Court of Ohio.The John Hancock Mutual
Life Insurance Companyv.Warren,59 Ohio St. 45.
Mr. George K. Nash, Mr. W.Z. DavisandMr. Louis G.Addisonfor plaintiffs in error submitted on their brief.Mr. John S. Jonesfor defendant in error.Mr. W.B. Jones, andMr. F.M. Marriottwere on his brief.
MR. CHIEF JUSTICE FULLER, after stating the case, delivered the opinion of the court.
InStatev.Ackerman,51 Ohio St. 163, it was ruled that as foreign insurance companies and associations, whether incorporated or not, before commencing business in the State, werePage 75required to obtain a certificate of authority to do so, which conferred on the company or association receiving it the right and privilege of carrying on its business in the State, the privilege so conferred was a franchise. In the course of the opinion the court quoted with approval, from Spelling on Extraordinary Relief, as follows: "Where, by statute, the legal exercise of a right, which at common law was private, is made to depend upon compliance with conditions interposed for the security and protection of the public, the necessary inference is that it is no longer private, but has become a matter of public concern, that is, a franchise, the assumption and exercise of which without complying with the conditions prescribed would be a usurpation of a public or sovereign function. . . . There is no class of business, the transaction of which, as a matter of private right, was better recognized at common law than that of making contracts of insurance upon the lives of individuals. But now, by statute, in almost, if not quite all the States, stringent requirements as to security of the persons dealing with insurers and the making and filing reports of public officers for public information, are provided, and must be strictly observed and complied with before any person, association or corporation may make any contract of life insurance. The effect of such statute is to make that a franchise which previously had been a matter purely of private right."

In the present case the Supreme Court of Ohio sustained the constitutionality of section 3625 of the Revised Statutes, which was in force at the time this policy was issued, upon the ground that the State had a right "to prescribe the terms and conditions upon which it grants such franchise, and the insurance company, having accepted the franchise with its terms and conditions, is bound thereby, and must accept the burdens with the benefits." The legal effect was held to be the same "as if the section was copied into and made a part of the policy." And it was said that the statute had also been held constitutional inNational LifeInsurance Co. v.Brobst,56 Ohio St. 728, where no opinion seems to have been delivered.

The section in question applies to all life insurance companies doing business in the State of Ohio, and the State can certainlyPage 76do with foreign corporations what it may do with corporations of its own creation.

InOrient Insurance Companyv.Daggs,172 U.S. 557, we held that provisions in the Revised Statutes of Missouri, that "in all suits upon policies of insurance against loss or damage by fire, hereafter issued or renewed, the defendant shall not be permitted to deny that the property insured thereby was worth at the time of the issuing of the policy the full amount inserted therein on said property," etc.; and "that no condition of any policy of insurance contrary to the provisions of this article shall be legal or valid," were not in conflict with the Constitution of the United States. And this was affirmed inNewYork Life Insurance Companyv.Cravens,178 U.S. 389.

InWaters-Pierce Oil Companyv.Texas,177 U.S. 28, where a statute of Texas was assailed on the ground that it took away the liberty of contract, Mr. Justice McKenna, delivering the opinion of the court, said: "The plaintiff in error is a foreign corporation, and what right of contracting has it in the State of Texas? This is the only inquiry, and it cannot find an answer in the rights of natural persons. It can only find an answer in the rights of corporations and the power of the State over them. What those rights are and what that power is, has often been declared by this court. 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 meaning to foreign corporations." And as the state court had held that the statute was a condition imposed on the oil company on doing business within the State, it was said of it that "whatever its limitations were upon the power of contracting, whatever its discriminations were, they became conditions of the permit and were accepted with it." And seeTullisv.Railroad Company,175 U.S. 348;Equitable c.Assurance Societyv.Clements,140 U.S. 226.

It was for the legislature of Ohio to define the public policyPage 77of 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.Judgment affirmed.