providing, however, by its terms, for its renewal for successive years, upon compliance by the assured with the conditions named. Renewals were effected during the years 1885, 1886, and 1887, but the assured failed to make those payments on July 23, 1888, which were required in order to extend his policy over another year, and he died in November following. His administrators have rested, and must rest, their right to a recovery, upon the proposition that the defendant did not give to the assured the form of notice prescribed by a statute of this State as a prerequisite to the right to declare a policy of life insurance forfeited.

The defendant, in support of its appeal from the judgment, which the plaintiffs have succeeded in recovering, presents two grounds. It denies that the statute in question applies to such a policy, and it insists that if it does, the notice, which was, in fact, given to the assured, was sufficient. That statute (being chapter 321 of the laws of 1877, amending chapter 341 of the laws of 1876) provides that "No life insurance company doing business in this State shall have power to declare forfeited or lapsed any policy hereafter issued or renewed, by reason of non-payment of any annual premium or interest, or any portion thereof, except as hereinafter provided. Whenever any premium or interest due upon any such policy shall remain unpaid when due, a written or printed notice stating the amount of such premium or interest due on said policy, the place where said premium or interest should be paid, and the person to whom the same is payable, shall be duly addressed and mailed to the person whose life is assured." Omitting the description of the part of the notice for the payment of an unpaid premium, and declaring a forfeiture if the notice is not complied with, the final proviso reads "provided, however, that, if a notice stating when the premium will fall due, and that, if not paid, the policy and all payments thereon will become forfeited and void, served in the manner hereinbefore provided, at least thirty and not more than sixty days prior to the day when the premium is payable, shall have the same effect as the service of the notice herein before provided for."

Upon the construction of this statute, the appellants' counsel made an elaborate argument to the effect that it cannot be applicable to this kind of a contract. With much ability he has analyzed its provisions, and insists that they must refer to, by force of the language used, to the ordinary policy of insurance, which is to be kept in force until the happening of the event assured against, by regular payments, annually, or at shorter stated periods. In the continuance of such a policy the assured has a vested interest; by reason of the fact that his annual payments are calculated and fixed at amounts to cover more than a risk from year to year, and go to form a reserve or accumulated fund, to be offset against insurance in after years, and which will enable the insurer to make eventual payments. The learned counsel argues that the mischief to be remedied by this statute is the forfeiture of such a vested interest; whereas, in this policy the insurance agreement is for a term of one year; the payment was for such a risk, and it constituted no consideration for any insurance beyond the expiration of the term.

The question is an interesting one and its solution might not be free from difficulty, but, inasmuch as the appellant must succeed upon the second ground advanced, we do not think it necessary to pass upon the question. We should hesitate to call in question the applicability of the statute to any class of life insurance policies. It was intended to, and undoubtedly does, subserve a useful purpose, in throwing about the contract between the insurer and the assured reasonable safeguards against a forfeiture or the lapsing of the interest of the assured. But we fail to perceive that any substantial requisite was wanting in the notice which the company gave to the assured. The notice was seasonably mailed, and stated that "the premium, as stated below, on your policy No. 13,302 in this society, will become due and payable at this office on the 23d day of July, 1888. In order to continue and extend the insurance, it will be necessary that the payments required for that purpose shall be paid on or before the date above mentioned, as stipulated in the policy contract." Then follow statements of the place where, and the persons to whom payments may be made, and of the amounts making up a net amount to be paid.

This notice would seem to be very definite in its statements, but the respondents say, and the court below has thought that it is not in conformity with the provisions of the statutes, for not literally following the statutory language. In support of this they cite Phelan vs. The Northwestern Mutual Life Insurance Company (113 N. Y., 147), where this court held a notice insufficient. The notice there was, that "the conditions of your policy are, that payment

must be made on or before the day the premium is due, and members neglecting so to pay are carrying their own risks," and what was condemned was the use of language not intelligible to all. To say that persons are "carrying their own risk" is not plainly embodying the notice which the statute requires, and might be incomprehensible to those unlearned in insurance phraseology. But in this case, as the appellants' counsel has clearly shown, the notice to be given could not closely conform to the statute; inasmuch as the yearly method of insurance was of a special character. The notice was to remind the assured of the privilege he possessed of electing to have the contract continued and extended over the ensuing year, and of the conditions of its exercise. It could not state, that if the "premium" was not paid, the policy and all payments thereon will become forfeited and void, for that would not be accurate. Something more than a premium was to be paid to extend the contract of insurance, and therefore, the company notified him that certain "payments" were necessary for that purpose. The obligation of the statute must not be unreasonably insisted upon. It provides for the giving of a notice which shall be unambiguous and intelligible to all. When applied to an insurance contract out of the ordinary form, it secures to the assured such a notice as will contain statements reminding him of when and where he is to make any payments pursuant to the terms of the contract, their amount and the effect of non-payment.

The statute was not meant to operate harshly upon the insurer, but to afford a protection to the assured, by the reasonable requirement of a notice, couched in plain terms, from the insurer before the interest of the assured could be forfeited. To hold, that where every essential fact required to be known is intelligibly stated in the notice, it may be disregarded, if not literally following the words of the statutory provision, would be a most harsh and unwarrantable construction. Its words are readily capable of being used in the ordinary cases of insurance contracts, but in cases not precisely had in view, and where some regard must be had to the nature of the contract itself, it is sufficient if the essential information, intended to be afforded by the statute, is found in the notice actually given. If the provisions of the act are to be extended in their application to the case of a contract made for the insurance of a life for the term of twelve months, the flexibility of its language must certainly admit the sufficiency of a notice from the insurer in conformity with that contract.

For these reasons, we conclude that it was error for the court below to order judgment for the plaintiffs on the verdict. The order of the general term and the judgment entered thereon should be reversed and a new trial ordered with costs to abide the event.

All concur except Andrews, J., absent.

Jane A. McDougall et al, aamrs., vs. Provident Savings Life Assurance Society-New York Court of Appeals.

POLICY NOT IN ACCORDANCE WITH APPLICATION.

This action was brought to recover of the defendant company a certain sum of money which he had paid to its agent as the first annual premium upon a policy of insurance upon his life for the sum of $5000, to be thereafter issued by the defendant. The ground upon which he sought to recover this premium back was that the defendant had failed to approve his application and issue him a policy, as required by the terms of his application. Defendant's denial alleged affirmatively that it had delivered to the plaintiff a policy of insurance for the sum of $10,000, with the understanding that at the end of the first year it should be reduced at the request of the plaintiff to the sum of $5000. Plaintiff recovered judgment for the amount of the premium paid by him, and the defendant appealed.

HELD-Where the answer alleges that defendant issued a policy to plaintiff, such allegation is such an admission of defendant's corporate capacity as will waive plaintiff's failure to allege the same in the complaint; one who is the agent of the insurance company for the purpose of receiving applications for the insurance has authority to agree for the company that a life policy shall in its second year be reduced one-half in amount; where the answer alleges that defendant delivered to plaintiff a policy for double the amount desired, but with the understanding that after the first year it should be reduced, plaintiff can introduce a written demand for the second year's premium on the unreduced policy. Judgment affirmed.

Sengfelder vs. Mutual Life Insurance Company of New York-Washington Supreme Court.

NATIONAL SUPERVISION OF INSURANCE.

A bill having been introduced in Congress by Representative John M. Pattison, president of the Union Central Life Insurance Company, providing for the establishment of a National Bureau of Insurance, the question of governmental supervision of insurance has been brought prominently to the front. The chief obstacle in the way of the creation of such a national bureau has been held to lie in the decision of the Supreme Court of the United States in the case of Paul vs. the State of Virginia, rendered November 1, 1869. For the purpose of placing this decision on record where it is easy of access, we print the full text of it here. Mr. Justice Field delivered the opinion of the Court as follows:

An Act of the Legislature of Virginia, passed on the 3d of February, 1866, provides that no insurance company not incorporated under the laws of the State shall carry on its business within the State without previously obtaining a license for that purpose; and that it shall not receive such license until it has deposited with the treasurer of the State bonds of a specified character to an amount varying from thirty to fifty thousand dollars, according to the extent of the capital employed.

A subsequent act passed during the same month declares that no person shall, “without a license authorized by law act as agent for any foreign insurance company," under a penalty of not less than $50 nor exceeding $500 for each offense; and that every person offering to issue, or making any contract or policy of insurance for any company created or incorporated elsewhere than in the State, shall be regarded as an agent of a foreign insurance company.

In May, 1866, the defendant, a resident of the State of Virginia, was appointed the agent of several insurance companies incorporated in the State of New York to carry on the general business of insurance against fire; and in pursuance of the law of Virginia he filed with the Auditor of public accounts of the State his authority from the companies to act as their agent. He then applied to the proper officer of the district for a license to act as such agent within the State, offering at the time to comply with all the requirements of the statute respecting foreign insurance companies, including a tender of the license tax, excepting the provisions requiring a deposit of bonds with the treasurer of the State, and the production to the officer of the treasurer's receipt. With these provisions neither he nor the companies represented by him complied, and on that ground alone the license was refused. Notwithstanding this refusal the defendant undertook to act in the State as agent for the New York companies without any license, and offered to issue policies of insurance in their behalf, and in one instance did issue a policy in their name to a citizen of Virginia. For this violation of the statute he was indicted, and convicted in the Circuit Court of the city of Petersburg, and was sentenced to pay a fine of fifty dollars. On error to the Supreme Court of Appeals of the State, this judgment was affirmed, and the case is brought to this court under the twenty-fifth section of the judiciary act.

The corporators of the several insurance companies were at the time, and still are, citizens of New York, or of some one of the States of the Union other than Virginia. And the business of insurance was then, and still is a lawful business in Virginia, and might then, and still may, be carried on by all resident citizens of the State, and by insurance companies incorporated by the State, without a deposit of bonds, or a deposit of any kind with any officer of the commonwealth.

On the trial in the court below the validity of the discriminating provisions of the statute of Virginia between her own corporations and corporations of other States was assailed. It was contended that the statute in this particular was in conflict with that clause of the Constitution which declares that "the citizens of each State shall be entitled to all the privileges and immunities of citizens in the several States," and the clause which declares that Congress shall have power "to regulate commerce with foreign nations and among the several States." The same grounds are urged in this court for the reversal of the judgment.

The answer which readily occurs to the objection founded upon the first clause consists in the fact that corporations are not citizens within its meaning. The term citizens as there used applies only to natural persons, members of the body politic, owing allegiance to the State, not

to artificial persons created by the legislature, and possessing only the attributes which the legislature has prescribed. It is true that it has been held that where contracts or rights of property are to be enforced by or against corporations, the courts of the United States will, for the purpose of maintaining jurisdiction, consider the corporation as representing citizens of the State under the laws of which it is created, and to this extent will treat a corporation as a citizen within the clause of the Constitution extending the judicial power of the United States to controversies between citizens of different States. In the early cases when this question of the right of corporations to litigate in the courts of the United States was considered, it was held that the right depended upon the citizenship of the members of the corporation, and its proper averment in the pleadings. Thus in the case of the Hope Insurance Company vs. Bourdman (5 Cranch, 67), where the company was described in the declaration as a company legally incorporated by the legislature of the State of Rhode Island and Providence Plantations, and established at Providence," the judgment was reversed because there was no averment that the members of the corporation were citizens of Rhode Island, the court holding that an aggregate corporation as such was not a citizen within the meaning of the Constitution.

In later cases this ruling was modified, and it was held that the members of a corporation would be presumed to be citizens of the State in which the corporation was created, and where alone it had any legal existence, without any special averment of such citizenship, the averment of the place of creation and business of the corporation being sufficent; and that such presumption could not be controverted for the purpose of defeating the jurisdiction of the court.-(Louisville Railroad Co. vs. Letson, 2 How. 497; Marshall vs. Baltimore and Ohio Railroad Co., 16 How. 314; Covington Drawbridge Co. vs. Shepherd, How. 233; and Ohio and Mississippi Railroad Co. vs. Wheeler, 1 Black, 297.)

But in no case which has come under our observation, either in the State or federal courts, has a corporation been considered a citizen within the meaning of that provision of the Constitution which declares that the citizens of each State shall be entitled to all the privileges and immunities of citizens of the several States. In Bank of Augusta vs. Earle (13 Peters, 586) the question arose whether a bank incorporated by the laws of Georgia with a power, among other things, to purchase bills of exchange, could lawfully exercise that power in the State of Alabama; and it was contended, as in the case at bar, that a corporation composed of citizens of other States was entitled to the benefit of that provision, and that the court should look beyond the act of incorporation and see who were its members for the purpose of affording them its protection, if found to be citizens of other States, reference being made to an early decision upon the right of corporations to litigate in the federal courts in support of the position. But the court, after expressing approval of the decision referred to (Bank of the United States vs. Deveau, 5 Cranch, 61), observed that the decision was confined in express terms to a question of jurisdiction; that the principle had never been carried further, and that it had never been supposed to extend to contracts made by a corporation, especially in another sovereignty from that of its creation; that if the principle were held to embrace contracts, and the members of a corporation were to be regarded as individuals carrying on business in the corporate name, and therefore entitled to the privileges of citizens, they must at the same time take upon themselves the liabilities of citizens, and be bound by their contracts in like manner; that the result would be to make the corporation a mere partnership in business with the individual liability of each stockholder for all the debts of the corporation; and that the clause of the Constitution could never have intended to give citizens of each State the privileges of citizens in the several States, and at the same time to exempt them from the liabilities attendant upon the exercise of such privileges in those States; that this would be to give the citizens of other States higher and greater privileges than are enjoyed by citizens of the State itself, and would have deprived each State of all control over the extent of corporate franchises proper to be granted therein "It is impossible," continued the court, "upon any sound principle, to give such a construction to the article in question. Whenever a corporation makes a contract it is the contract of the legal entity, the artificial being created by the charter, and not the contract of the individual members. The only rights it can claim are the rights which are given to it in that character, and not the rights which belong to its members as citizens of a State."

It was undoubtedly the object of the clause in question to place the citizens of each State upon the same footing with citizens of other States, so far as the advantages resulting

from citizenship in those States are concerned. It relieves them from the disabilities of alienage of other States; it inhibits discriminating legislation against them by other States; it gives them the right of free ingress into other States and egress from them; it ensures to them in other States the same freedom possessed by the citizens of those States in the acquisition and enjoyment of property and in the pursuit of happiness; and it secures to them in other States the equal protection of their laws. It has been justly said that no provision in the Constitution has tended so strongly to constitute the citizens of the United States one people as this. (Lemmon vs. The People, 20 N. Y., 607.) Indeed, without some provision of the kind removing from the citizens of each State the disabilities of alienage in the other States, and giving them equality of privilege with citizens of those States, the Republic would have constituted little more than a league of States; it would not have constituted the Union which now exists.

But the privileges and immunities secured to citizens of each State in the several States by the provision in question are those privileges and immunities which are common to the citizens in the latter States under their constitution and laws by virtue of their being citizens. Special privileges enjoyed by citizens in their own States are not secured in other States by this provision. It was not intended by the provision to give to the laws of one State any operation in other States. They can have no such operation, except by the permission, express or implied, of those States. The special privileges which they confer must, therefore, be enjoyed at home, unless the assent of other States to their enjoyment therein be given.

Now, a grant of corporate existence is a grant of special privileges to the corporators, enabling them to act for certain designated purposes as a single individual, and exempting them (unless otherwise specially provided) from individual liability. The corporation being the mere creation of local law can have no legal existence beyond the limits of the sovereignty when created. As said by this Court in Bank of Augusta vs. Earle, "It must dwell in the place of its creation, and cannot migrate to another sovereignty." The recognition of its existence even by other States, and the enforcement of its contracts made therein, depend purely upon the comity of those States-a comity which is never extended where the existence of the corporation or the exercise of its powers are prejudicial to their interests or repugnant to their policy. Having no absolute right of recognition in other States, but depending for such recognition and the enforcement of its contracts upon their assent, it follows, as a matter of course, that such assent may be granted upon such terms and conditions as those States may think proper to impose. They may exclude the foreign corporation entirely; they may restrict its business to particular localities, or they may exact such security for the performance of its contracts with their citizens as in their judgment will best promote the public interest. The whole matter rests in their discretion.

If, on the other hand, the provision of the Constitution could be construed to secure to citizens of each State in other States the peculiar privileges conferred by their laws, an extraterritorial operation would be given to local legislation utterly destructive of the independence and the harmony of the States. At the present day corporations are multiplied to an almost indefinite extent. There is scarcely a business pursued requiring the expenditure of large capital, or the union of large numbers, that is not carried on by corporations. It is not too much to say that the wealth and business of the country are to a great extent controlled by them. And if, when composed of citizens of one State, their corporate powers and franchises could be exercised in other States without restriction, it is easy to see that, with the advantages thus possessed, the most important business of those States would soon pass into their hands. The principal business of every State would, in fact, be controlled by corporations created by other States.

If the right asserted of the foreign corporation, when composed of citizens of one State, to transact business in other States were even restricted to such business as corporations of those States were authorized to transact, it would still follow that those States would be unable to limit the number of corporations doing business therein. They could not charter a company for any purpose, however restricted, without at once opening the door to a flood of corporations from other States to engage in the same pursuits. They could not repel an intruding corporation, except on the condition of refusing incorporation for a similar purpose to their own citizens; and yet it might be of the highest public interest that the number of corporations in the State should be limited; that they should be required to give publicity to their transactions; to submit their affairs to proper examination; to be subject to forfeiture of their