McGOHEY, District Judge.
This is a motion to quash service of process on the defendant Rhode Island Insurance Company (hereafter called "Rhode Island"). The suit was removed here from the New York Supreme Court. There is diversity of citizenship and the amount in controversy is sufficient for jurisdiction. A motion to remand was withdrawn after the defendant American Eagle Fire Insurance Company settled the claim against it.
It is conceded that service was not made on any officer or managing agent of Rhode Island in New York. Process was served on the Superintendent of Insurance of the State of New York and on the defendant by registered mail addressed to and received by it in Philadelphia, Pennsylvania, pursuant to Section 59-a of the New York Insurance Law.
This statute provides that any of certain enumerated acts,
The action is for damages for alleged breaches of two contracts of insurance issued by Rhode Island to the plaintiff on or about November 17, 1949. On that date Rhode Island was concededly a foreign insurance company not authorized to do business in New York. Prior to July 1, 1948, it had been so authorized.
On November 17, 1949, when the policies were issued, and thereafter, Rhode Island was listed in the New York telephone directory with an address at 44 Wall Street, where it had maintained its office while authorized to do business in New York. There was also listed, together with the New York address, Rhode Island's address in Philadelphia, Pa., where its main office is located. By calling this New York telephone number one could be connected through to the Philadelphia office, at the rate of a local New York call. Rhode Island was also listed under another New York number at the New York address (also 44 Wall Street) of one John Davies, the marine settling agent of Rhode Island. Davies indeed was the person to whom Rhode Island directed the plaintiff to submit its proof of loss, which was done, and it was Davies who, on behalf of Rhode Island, denied liability.
The two contracts of insurance were delivered to the plaintiff in New York after negotiations conducted by telephone between plaintiff's broker in New York and
The foregoing facts, in my opinion, establish that Rhode Island performed in New York at least some of the acts enumerated in Sec. 59-a. Certainly the contracts were delivered to the plaintiff in New York. The claims were investigated in New York by Rhode Island's settling agent Davies. Rhode Island notified the plaintiff in New York that Davies was its agent for this purpose, and it was Davies who rejected the plaintiff's claims in New York. Moreover, Rhode Island listed a New York address and telephone number, and used them in its business. All these taken together constitute the "transaction of business" in New York by Rhode Island within the meaning of the statute.
Rhode Island contends that thus construed New York's statute deprives it of due process and of equal protection of the laws, and that it is an "invalid and unwarranted infringement upon interstate and foreign commerce." The notice of motion also asserted that the section contravenes the New York Constitution. But this point was neither argued nor briefed, and so I deem it to have been waived.
Although insurance business conducted across state lines constitutes interstate commerce,
The question remains whether the statute denies due process or equal protection. I think it does not. Subdivision 1 of the Act states the purpose of the New York Legislature as follows: "The purpose of this section is to subject certain insurers to the jurisdiction of the courts of this state in suits by or on behalf of insureds or beneficiaries under certain insurance contracts. The legislature declares that it is a subject of concern that many residents of this state hold policies of insurance issued or delivered in this state by insurers while not authorized to do business in this state, thus presenting to such residents the often insuperable obstacle of resorting to distant forums for the purpose of asserting legal rights under such policies. In furtherance of such state interest, the legislature herein provides a method of substituted service of process upon such insurers and declares that in so doing it exercises its power to protect its residents and to define, for the purpose of this section, what constitutes doing business in this state, and also exercises powers and privileges available to the state by virtue of public law number fifteen, seventy-ninth congress of the United States, chapter twenty, first session, senate number three hundred forty, as amended, which declares that the business of insurance
It is too late to question the power of New York to impose appropriate regulations on foreign insurers who seek authorization to do business in the state. Among the regulations are those requiring the designation of the Superintendent of Insurance as attorney to accept service of process in actions against the authorized foreign insurer, and the maintenance within the state of reserves in such amounts as the Superintendent requires for payment of claims. This case raises the question whether New York may, in the interest of domestic policyholders, impose similar regulations on foreign insurers who, without authorization, by the use of the mails, telephone and agents located here do in fact transact business in New York. It is urged that the term "doing business" is one of fixed content in the decisions. And that as thus defined it does not embrace what Rhode Island did here. It is said, for instance, that although Davies was indeed "an agent" of Rhode Island, he was not such that service on him would bind the Company, because he was not its "managing agent" and that Rhode Island's activities in New York did not constitute "doing business" under the decision in Minnesota Commercial Men's Ass'n v. Benn.
In requiring Rhode Island to post a sufficient bond as a condition of filing an answer and making defense, New York is requiring no more of Rhode Island than it constitutionally requires of any authorized foreign insurer. Rhode Island has no constitutional right to preferential treatment. No denial of equal protection has been shown, but rather the contrary.
The motion is denied.