Hooper v. California/Dissent Harlan

Mr. Justice HARLAN (dissenting).

Hooper, the plaintiff in error, was the agent at San Francisco of the firm of Johnson & Higgins, average adjusters and insurance brokers, doing business in the city of New York. In the latter capacity that firm procured for its customers, from insurance companies wherever incorporated, insurance on ships, vessels, cargoes, and freights.

C. W. Mott, a resident of California, inquired of Hooper if he could procure a certain amount of insurance on a vessel named the Alliance at a given rate of premium, no particular company being specified by Mott. Hooper communicated with his principals, and the latter telegraphed in reply, 'Alliance, four thousand dollars, done in American form,' but did not name the company in which the insurance had been placed. Mott was informed of this telegram. Johnson & Higgins procured and forwarded to Hooper a policy of the China Mutual Insurance Company of Boston insuring the Alliance in the above sum. Hooper delivered it to Mott, the latter paying to the former, as agent of Johnson & Higgins, the amount of the premium. That amount was deposited in bank at San Francisco to the credit of Johnson & Higgins, the latter being notified of the deposit.

On account of what he did, as above stated, Mott was prosecuted under a statute of California, which provided that 'every person who in this state procures or agrees to procure any insurance for a resident of this state from any insurance company not incorporated under the laws of this state, unless such company or its agent has filed the bond required by the laws of this state relative to insurance, is guilty of a misdemeanor.' Pen. Code, § 439.

The bond referred to is that prescribed by section 623 of the Political Code of California, which makes it the duty of the insurance commissioner to require every company, association, or individual, not incorporated under the laws of California, 'and proposing to transact insurance business by agent or agents in this state,' before commencing such business, to file a bond, with sureties, in the penal sum of $2,000, conditioned that the person or firm, agent or officer, named therein, would pay to the treasurer of the county or city and county in which the principal office of the agency is located such sum per quarter, payable in advance, for a license to transact an insurance business, or such other license as may be imposed by law, so long as the agency remains in the hands of the person or firm, officer or agent, named as principal in the bond; and that such person or firm, officer or agent, would pay to the state all stamp or other duties on the gross amounts so insured, inclusive of renewals on existing policies, and conform to all the provisions of the revenue and other laws made to govern them.

It is true, as stated in the opinion just delivered, that this court has held that a state may prescribe the conditions upon which the corporations of other states, not engaged in interstate commerce, may do business within its jurisdiction; indeed, may exclude such corporations altogether from its limits. In Paul v. Virginia, 8 Wall. 178, it was adjudged that a corporation was not a citizen within the meaning of the clause of the constitution declaring that the citizens of each state shall be entitled to all the privileges and immunities of citizens in the several states, although, for purposes of suit in the courts of the United States, it must be deemed a citizen of the state under whose laws it was created. But no question like the one involved in that case is now presented for decision. There is no question here as to the rights of individual citizens of California and of New York.

Section 623 of the Political Code of California applies only to insurance companies not incorporated under the laws of that state, and 'proposing to transact business' within its limits. The statement of the case on appeal shows that defendant had charge of the business of Johnson & Higgins, at San Francisco, as their employ e and agent, and not otherwise. There is no suggestion in that statement that the China Mutual Insurance Company of Boston proposed to do business in California by agent; nor is it stated that Johnson & Higgins are or ever claimed to be agents of the company, nor that that company ever recognized them as its agents, or ever issued to a resident of California any policy of insurance except the one delivered to Johnson & Higgins, and which that firm obtained and forwarded to Hooper, and by the latter was delivered to Mott. This single act of the company cannot be held to prove that it proposed to transact business in that state, or that it contemplated the issuing of any other policy to a resident of California. In Manufacturing Co. v. Ferguson, 113 U.S. 727, 734, 5 Sup. Ct. 739, this court, referring to a statute of Colorado forbidding foreign corporations from doing business there, except upon complying with certain regulations, said that it did not embrace a single or isolated transaction by a foreign corporation. Indeed, the prosecution in the present case manifestly had in mind the difference between a single act of insuring property and 'proposing to transact insurance business by agent or agents'; for, as will be seen, the complaint under which Hooper was prosecuted does not allege, and, as I infer, purposely failed to allege, that the company which issued the policy in question proposed to transact business in California. So that we have before us a statute making it a crime to procure, or agree to procure, in California, for a resident of that state, a policy of insurance from a foreign corporation which does not propose to do business there by agents, and, so far as appears, has never issued to a resident of California any policy but the one issued to Mott.

In my opinion, the statute, in its application to the case now presented, is an illegal interference with the liberty both of Mott and of Hooper, as well as an abridgement of the privileges, not of a foreign corporation, but of individual citizens of other states through whom the policy in question was obtained. Johnson & Higgins are pursuing one of the ordinary callings of life in the city of New York. It is a lawful calling, as much so as that of a merchant, grocer, manufacturer, tailor, or shoemaker. It cannot properly be characterized as in itself or by the necessary results of the business hurtful to the community. They have as much right to pursue their calling in California, by agent, as they have to pursue it in New York. Of course, this calling-indeed every calling of life-is subject to the power of the state within whose limits it is pursued, to regulate it in any mode that does not violate the essential rights of liberty and property guarantied by the federal constitution against hostile state action. If it were conceded that California could require every one acting within its limits as an agent for others, whether insurance brokers, merchants, grocers, manufacturers, tailors, or shoemakers, to take out a license and pay a tax as such agent, such regulations being made applicable, in similar circumstances, to all agents doing business in California,-it would not follow that it could absolutely prohibit individual citizens of other states or its own people from conducting there, by agents, an ordinary calling not in itself immoral or dangerous to the public. The enjoyment upon terms of equality with all others in similar circumstances of the privilege of pursuing an ordinary calling or trade is an essential part of liberty, as guarantied by the fourteenth amendment. Powell v. Pennsylvania, 127 U.S. 678, 684, 8 Sup. Ct. 992, 1257. Among the inalienable rights possessed by American citizens is, as Mr. Justice Field has said, 'the right of men to pursue their happiness, by which is meant the right to pursue any lawful business or vocation in any manner not inconsistent with the equal rights of others, which may increase their prosperity or develop their faculties, so as to give to them their highest enjoyment.' Butchers' Union Slaughterhouse Co. v. Crescent City Live-Stock Landing Co., 111 U.S. 757, 4 Sup. Ct. 652. And in the same case Mr. Justice Bradley said: 'I hold that the liberty of pursuit-the right to follow any of the ordinary callings of life-is one of the privileges of a citizen of the United States.' So in Jacob's Case, 98 N. Y. 99, 106: 'One may be deprived of his liberty and his constitutional rights without the actual imprisonment or restraint of his person. Liberty, in its broad sense, as understood in this country, means the right, not only of freedom from actual servitude, imprisonment, or restraint, but the right of one to use his faculties in all lawful ways, to live and work where he will, to earn his livelihood in any lawful calling, and to pursue any lawful trade or avocation.'

In many states there are individuals or firms whose business it is to negotiate Ioans for others. Often, if not generally, the money is in the hands of corporations for investment. These corporations may not have agents outside of the state in which they are located. What would be thought of a statute making it a crime for any one in the state which enacted it to procure for one of its residents, and through a firm of brokers in New York, a loan of money from a corporation of another state, that did not propose to do business by agent, or elsewhere than at the place of its creation? The state, it may be, could forbid any foreign corporation, whose business it is to invest money for itself and others, from doing business in California by agent, or could require, as a condition of its doing business there by agent, that the corporation or agent should give such bond with surety, as may be prescribed. But it could not be made a crime for one in that state to procure a loan of money for a resident of that state, through individual citizens of another state, although the money should be obtained from a foreign investment company not proposing to transact business by agent in the state where the borrower resides, and from which the application to borrow comes. And yet the principle which the court approves in its opinion would seem to justify the contrary view.

Mott, for whom Hooper acted, could not be compelled to restrict his application for insurance to foreign companies doing or proposing to do business in California, and which had filed the bond required by the statute of that state. If he preferred insurance in a company that had no agent in California, he had a right to that preference; and any interference with its free exercise would infringe his liberty. Suppose he had himself applied, by mail, directly to Johnson & Higgins for insurance on his vessel, and that firm had delivered the policy in question to an express company, with directions to deliver it to Mott. Or suppose that Mott had made his application, by mail, directly to the company. I cannot believe that a statute making his conduct in either of the cases supposed a criminal offence, would be sustained as consistent with the constitutional guaranties of liberty. But it seems from the opinion of the court that a state is at liberty to treat one as a criminal for doing for another that which the latter might himself do of right, and without becoming a criminal. In my judgment, a state cannot make it a crime for one of its people to obtain, himself or through the agency of individual citizens of another state, insurance upon his property by a foreign corporation that choosed not to enter the former state by its own agents.

The chief vice in the argument of counsel in support of the California statute is found in the assumption that Hooper, as well as his principals, Johnson & Higgins, acted as agents of the insurance company. That assumption is unwarranted by the facts. Hooper was the agent of Johnson & Higgins, and in that capacity alone acted for Mott. What he said and did in California was said and done for his principals. Neither Johnson & Higgins nor Hooper acted as agents for the insurance company. The transaction, in legal effect, is the same as it would have been if Mott had himself applied by mail to Johnson & Higgins for insurance, and had received the policy from them by mail or through some one in California to whom it was intrusted by that firm for delivery to him. If California could forbid Mott himself self to obtain, by mail, a policy from a foreign corporation having no agent or representative of its own in California, and make it a crime for him to do so, then the statute in question is not repugnant to the constitution of the United States. But, in my judgment, the power of excluding foreign corporations from doing business within its limits, by agents, cannot be exerted by the state so as to impair or destroy the constitutional rights of its own people or of citizens of other states. I think the judgment of the court below should be reversed.

Mr. Justice BREWER concurs in this opinion. Mr. Justice JACKSON, now absent, participated in the consideration of this case. This opinion has been submitted to him, and he concurs in the views here expressed.