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LUMBERMEN'S INS. CO. V. MEYER, 197 U. S. 407 (1905)

U.S. Supreme Court

Lumbermen's Ins. Co. v. Meyer, 197 U.S. 407 (1905)

Pennsylvania Lumbermen's Mutual

Fire Insurance Company v. Meyer

No. 182

Argued March 14-15, 1905

Decided April 3, 1905

197 U.S. 407


In order that a federal court may obtain jurisdiction over a foreign corporation, the corporation must, among other things, be doing business within the state.

To obtain such jurisdiction in New York, personal service of the summons upon, and a delivery to, the defendant must be made in the manner designated by § 432 of the Code of Civil Procedure of that state, and if the corporation has no property in the state and service cannot be made on the president, treasurer or secretary, and no person has been designated, such service can only be made on a director or person specified in subdivision 3 of that section, in case the cause of action arose within the state.

A fire insurance company which issues its policies upon property in another state is engaged in its business in that state when its agents are there, under its authority, adjusting the losses covered by its policies.

Where an insurance company, after loss has occurred on property insured by it in another state, fails to make the payment, or to build or repair, as required by the policy involved in this action, it fails to comply with the terms of the contract, and out of that failure the cause of action arises in the state where the loss occurs.

In this case, as the company was doing business in New York and the cause of action arose in New York, service under subdivision 3 of § 432 of the Code of Civil Procedure on a director of the company residing in New York was sufficient to give the circuit court of the United States in New York jurisdiction of a Pennsylvania corporation.

Meyer, the plaintiff below, recovered judgment in the United States Circuit Court for the Western District of New York against the corporation defendant for five thousand and some odd dollars upon policies of fire insurance issued by it upon certain buildings (and the machinery therein) in the City of Rochester, in the State of New York. The corporation sought to obtain a review of the judgment, and to that end sued out a writ of error, and the case was brought before

Page 197 U. S. 408

the Court of Appeals for the Second Circuit, which has certified certain facts upon which it desires the opinion of this Court. These facts are as follows:

The action was commenced in the Supreme Court of the State of New York by service of the summons on Samuel H. Beach at the City of Rome, New York, a director of the company, who resided in that city, and, on application of the company, appearing specially, the case was removed into the United States Circuit Court for the Western District of New York because of diverse citizenship of the parties. By motion, on special appearance, to set aside the service by plea, exception, and assignment of error, the question as to whether jurisdiction of the company had been obtained by such service has been properly raised.

The defendant in error is, and at the time of the commencement of this action was, a citizen and resident of the State of New York. The plaintiff in error is a fire insurance corporation organized under the laws of the State of Pennsylvania, and its office is in Philadelphia. Written applications were duly made to it for the issuance of the policies in suit, and were mailed from Rochester, New York, to the company at Philadelphia, Pennsylvania. The policies were made out and executed by it at Philadelphia, and were sent to the insured at Rochester, New York, where he received the same. All transactions between the company and said insured subsequent to the issuance of said policies and until after the destruction of said property by fire were by correspondence in writing from Philadelphia to him at Rochester, and he, writing from Rochester, to it in Philadelphia.

Three of the said company's thirteen directors reside in the State of New York, but the only act done by them for it is to attend, from time to time, the meetings of the board of directors, which are held in the City of Philadelphia, and there to give such advice and take such action in connection with its business as may seem to them proper. They perform no duties and do no acts for the company in the State of New York, and never

Page 197 U. S. 409

have. The company has no agents or officers within that state, and has not had at any time. It has no office within that state, has never been authorized or licensed by the insurance department thereof to do business therein, and has not taken the steps required by law for that purpose. At the date of the service of the summons as aforesaid, the said company had and now has about nine hundred thousand dollars ($900,000) outstanding insurance on property within the State of New York, which is something less than one-third of its total risks. The applications therefore were made by mail, addressed to it at Philadelphia, and the policies were executed and issued at that city and sent by mail from there to the insured within the State of New York.

Ever since the plaintiff in error was incorporated, it has been engaged in the business of insuring property located in the State of New York and other states against loss by fire, and has sent by mail circulars from Philadelphia into said state soliciting business. In the prosecution of its business and for the purpose of increasing it, the company sends its general manager to the different conventions of lumbermen held in the State of New York, for the purpose of urging upon those attending upon such conventions the advantages of insuring with it. It sends its adjusters into the State of New York when a loss by fire occurs there to property insured by it for the purpose of adjusting the amount of such loss. It originally placed insurance upon the property covered by the policies in question after its manager had pointed out the advantage of insuring in the company, the conversation being had at the City of Rochester in that state.

Page 197 U. S. 412

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