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The following is quoted from the testimony of La Due, secretary for defendant company:

"Q. At the date of such revocation (revocation of Alex. Coke's power of attorney), March 17, 1914, did not the company actually know that suit had been filed against it on this Hagler policy? A. At the date of this revocation, March 17, 1914, the company had received the communications from John W. McCracken, dated January 22, 1914 (which inclosed the citation in this case), and from Chas. V. Johnson, dated January 22, 1914 (which inclosed the citation and petition in this suit), but denies that on the date of such revocation, viz., March 17, 1914, any valid suit had been begun against it or valid service obtained upon the defendant company. Q. Did you have personal knowledge of this revocation of Coke's authority being sent? A. I did. Q. Please answer the following question frankly: Was not the revocation of Coke's authority made for the purpose of preventing service upon the defendant company in Texas in the suit brought by Hagler's administrators? Mr. Gregory (attorney for defendant): Question objected to as speculative. Mr. Page (representing plaintiff): Will the commissioner direct an answer to be made? Commissioner: I direct an answer, if he knows. A. I don't know. Q. Do you swear that this was not at least one of the purposes? Mr. Gregory: Same objection. A. I don't know. Q. Has any power of attorney, or authority to receive service, been given to any other person in the state of Texas since the date of the revocation of Coke's authority? A. Not to my knowledge."

In the case of Michael v. Mutual Insurance Co., 10 La. Ann. 737, the court said:

a foreign insurance company, doing business through an agent in New Orleans, and taking risks in Louisiana, cannot be permitted to frustrate a claim in a Louisiana court, upon a contract made with it, by revoking the power of its agent, on the eve of the institution of a suit for loss, of which it had been notified. Such a proceeding savors of bad faith."

Again, in Pervangher v. Union Casualty & Surety Co., 81 Miss. 32, 32 South. 909, which involved a like question, the court held:

“The contention of the appellee is not to be supported. Having come into the state under conditions prescribed by law, and issued the policy sued on by its agent Moore, it cannot withdraw the agency of Moore, and leave itself without any agent in this regard. To do so would be a fraud upon appellant, and fraud is never tolerated.

The appellee could not withdraw his agency so far as to receive service for the company, and its effort in that direction is a nullity.”


Again in Fisher v. Traders' Mutual Life Insurance Co., 136 N. C. 217, 48 S. E. 667, it was held:

"The fact that the defendant had ceased to do business in this state, if such is a fact, cannot affect our conclusion. If it had taken out a license to do business in the state, it could neither revoke it, nor could it withdraw from the state, to the plaintiff's prejudice. The statute will not cease to operate as to it until its debts due to citizens of this state are paid."

And again, in Groel v. United Electric Co., 69 N. J. Eq. 397, 60 Atl. 822, the court says:

"It is not necessary to enlarge upon the fatuity of legislation which would permit a foreign corporation to come within the state and transact business upon condition that it name an agency upon whom process should be served, and leave it within the power of the corporation to prevent service by discharging the agent and revoking his authority whenever it pleased, leaving suitors within the state powerless to bring the corporation into court."

[4] If neither McCracken nor Coke, at the time of service upon him, was the legal agent of the company, upon whom citation could be served, then the defendant had no agent in the state for the purpose of citation, and might have been cited by publication under the provisions of article 3070, which was in force at the time of the issuance of the policy, and to the provisions of which it agreed by obtaining a permit and doing business in the state. Article 3096ee, Sayles' Civil Statutes Supp. 1904. A stipulation to this effect in the policy would have been binding, and the case must be considered as though the article was so written into the policy.

In Pennoyer v. Neff, 95 U. S. 714, 24 L. Ed. 565, the leading case as authority that a personal judgment cannot be rendered against a foreign company, brought into court by publication of citation, the exception was recognized where the corporation had itself, in advance, consented thereto. We quote from the opinion:

"If that the litigation) involves merely a determination of the personal liability of the defendant, he must be brought within its jurisdiction by service of process within the state or his voluntary appearance. Except in cases affecting the personal status of the plaintiff, and cases in which that mode of service may be considered to have been assented to in advance, as hereinafter mentioned, the substituted service of process by publication, allowed by the law of Oregon and by similar laws in other states, where actions are brought against nonresidents, is effectual only where

property in the state is brought under the control of the court.”

See, also, Wilson v. Seligman, 144 U, S. 41, 12 Sup. Ct. 541, 36 L. Ed. 338; Connecticut Mutual Life v. Spratley, 172 U. S. 602, 19 Sup. Ct. 308, 43 L. Ed. 569; Mutual Reserve v. Phelps, 190 U. S. 147, 23 Sup. Ct. 707, 47 L. Ed. 987.

[5] It is urged, however, and with much force, that the law prevailing at the time the policy was issued, articles 3064 and 3070 of the Revised Statutes of 1895, had been repealed prior to the filing of this suit. This is true. By chapter 108 of the Acts of 1909, making many provisions for domestic and foreign insurance companies, these acts are expressly repealed; but at the time this act of 1909 was pending there was another bill pending expressly providing that all foreign insurance companies should appoint the commissioner of insurance their agent for the service of legal process. This latter act, while approved a few days after the first, went into immediate effect, being over two months before the first act was effective. The two acts must, therefore, be construed together. The Legislature evidently did not intend to leave any gap or interim during which it would not be necessary for any such life insurance company to have an agent in the state for the service of process.

The present law provides that each life insurance company engaged in doing, or desiring to do, business in the state, shall file with the commissioner of insurance an irrevocable power of attorney appointing an agent for the service of process. The defendant company was at that time annually collecting premiums on over $1,000,000 worth of insurance previously issued to citizens of the state. It was its duty under the act to immediately so appoint the insurance commissioner its agent, but it failed to do so. The repealing clause of the first act

of 1909, referred to, must be considered just as it would be were it inserted in the latter act instead of the former, and it certainly cannot be contended that the defendant is not subject to the obligations of either the present law or the repealed articles of the Revised Statutes.

[6] It was evidently not the intention of the Legislature to release nonresident insurance companies doing business in the state from their obligations under the then existing law until they had complied with the provisions of the new law. It was certainly not the intention of the Legislature to itself, by repeal of an old law, cancel outstanding powers of attorney before the insurance companies, then doing business in the state, had, in lieu thereof, given new powers of attorney to the insurance commissioner, under the provisions of the new act.

[7] But, if such were the intention of the Legislature, then such act would be one divesting vested rights and impairing the obligation of contracts, and therefore unconstitutional.

It is urged by counsel for defendant that the repeal of the original articles of the Revised Statutes of 1895 does not in any wise impair the obligation of the contract of insurance, but merely affects the remedy. It is true that the Legislature had the authority to make any change it might have seen fit pertaining to the remedy, or as to the manner of obtaining legal process on defendant, or as to procedure in the trial; but it could not deprive plaintiffs altogether of any remedy by divesting the courts of the state of the jurisdiction which they had at the time the policies were written, and forcing the plaintiffs to go to another state to assert their rights under the contract. Of what avail would be a contract with no court in which to enforce it? It is not a sufficient answer to say that he might sue in a far distant state.

In Connecticut Mutual Life Ins. Co. v. Spratley, 172 U. S. 602, 19 Sup. Ct. 308, 43 L. Ed. 569, the court said:

“It was well said in Baltimore & 0. Railroad Co. v. Harris, 12 Wall. 65, at 83, 20 L. Ed. 354, at 359, by Mr. Justice Swayne, in speaking for the court in regard to service on an agent that: “When this suit was commenced, if the theory maintained by counsel for the plaintiff in error be correct, however large or small the cause of action, and whether it were a proper one for legal or equitable cognizance, there could be no legal redress short of the seat of the company in another state. In many instances the cost of the remedy would have largely exceeded the value of its fruits. In suits local in their character, both at law and in equity, there could be no relief. The result would be, to a large extent, immunity from all legal responsibility.' The court, in view of these facts, was of opinion that Congress intended no such result."

There is no practical difference, in its effect, in taking away a man's right and in taking away the only remedy by which that right can be effectively asserted. When the Duke pronounced judgment against Shylock, graciously sparing his life, but declaring his fortune forfeited, the latter replied:

"Nay, take my life and all; pardon not that;
You take my house, when you do take the prop
That doth sustain my house; you take my life,

When you do take the means whereby I live.”
The exceptions to the citations filed in both cases are overruled.


(District Court, E. D. Michigan, S. D. July 24, 1917.)

No. 3118.


STATE COURT. 11 In determining whether securing a judgment on two of a series of potes given for motors purchased under conditional sale made in Michigan passed title to the buyer the decisions of the Michigan Supreme Court will


-Motors had been purchased by bankrupt under a conditional sale. Part of the price had been paid in cash, and notes given for the balance. The first note had been paid in full and a small payment made on the second. The assignee of the seller recovered a judgment against the bankrupit for the balan due on the second note and the amount of the third note. Held, that the taking of a judgment was not an election to make the sale absolute transferring title to the buyer. :)

In Bankruptcy. In the matter of Del T. Sutton, bankrupt. Petition for the review of an order of the referee in bankruptcy granting the petition of Fred W. Haines for the reclamation of five motors claimed by the trustee to belong to the bankrupt estate. Order of referee affirmed.

Harold H. Emmons, of Detroit, Mich., for petitioner.
Lloyd T. Chockley, of Detroit, Mich., for trustee.

TUTTLE, District Judge. This matter comes before the court on a petition for the review of a certain order of the referee in bankruptcy for the Southern division granting the petition of Fred W. Haines, assignee of the Standard Electric Company, for the reclamation of five motors, claimed by the trustee to belong to the bankrupt estate. The facts, which are undisputed, are thus stated in the certificate of the referee, whose correctness in this respect is not challenged by either party:

"On February 8, A. D. 1915, the Standard Electric Company, a corporation, entered into a contract with Del T. Sutton for the sale of certain motors. Light dollars fifty-seven cents ($8.57) of the purchase price was paid in cash. and for the balance Mr. Sutton gave 24 notes of tifteen dollars ($15.00), payable one each month. The form of the note was an ordinary proinissory note by which the bankrupt agreed to pay to the order of the Standard Electric Company fifteen dollars ($15). The first note of fifteen dollars ($15.00) was paid; five dollars ($5.00) was paid on the second note; but no further pay. ments were made. On October 19, 1915, a judgment was rendered in favor of Fred W. Haines against the bankrupt for twenty-five dollars ($25.00), the balance due on the second note and the amount of the third note, together with the costs of suit.

“All of the other notes are still in the possession and are the property of Fred W. Haines, assignee.

"The contract entered into between the parties provides for the sale by the Standard Electric Company to the bankrupt of five electric motors. It provides the terms of payment, as above specified, eight dollars fifty-seven cents ($8.57) cash and 24 notes of fifteen dollars ($15.00) each, due each month, the wFor other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & lodessa

first note falling due March 15, A. D. 1915. So far as material, the other parts of the contract are as follows: 'It is expressly agreed and understood that this order shall not be countermanded and that the goods sball remain and be held by the purchaser as exclusive property of the Standard Electric Company, until the purchase money shall have been fully paid, as agreed herein, notes and drafts not to be considered as payment until they have been redeemed, and if default be made in payment, the goods to be surrendered to the Standard Electric Company, or order, on demand, and all payments forfeited.'

“It was not contemplated by either of the parties at the time of the sale of the motors that said motors were to be resold, but they were purchased for the purpose of being operated in the bankrupt's place of business.

"It was the claim of the trustee that by the bringing of suit and the entry of judgment for two of the notes that thereby the title of the motors passed to the bankrupt.

"The only question to be determined is whether or not the taking of judg. ment upon 2 of a series of 24 notes, made for the purpose of evidencing the debt due upon contract for conditional sale, the judgment and none of the other notes having been paid, transfers the title to the buyer of property which is purchased for his own use, and not for resale."

[1] If this question has been passed upon by the Michigan Supreme Court, this court will follow and adopt the decisions of that court upon such question. Bryant v. Swofford Bros. Dry Goods Co., 214 U. S. 279, 29 Sup. Ct. 614, 53 L. Ed. 997; York Mfg. Co. v. Cassell, 201 U. S. 344, 26 Sup. Ct. 481, 50 L. Ed. 782; Mishawaka Woolen Mfg. Co. v. Westveer, 191 Fed. 465, 112 C. C. A. 109. As was said in the case first cited :

In bankruptcy the construction and validity of such a contract must be determined by the local laws of the state."

[2] It is urged by the trustee that by reducing two of these notes to judgment the vendors elected to make the sale absolute, and therefore cannot now reclaim the property which was the subject-matter of this contract. In support of this contention the trustee cites two Texas cases, Merchants' & Planters' Bank v. Thomas, 69 Tex. 237, 6 S. W. 565, and Parlin & Co. v. Harrell, 8 Tex. Civ. App. 368, 27 S. W. 1084. Both of these cases involved a transfer of notes received by the vendors in a conditional sale from the vendee, as security for the payment of the purchase price, and it was held in both cases that by such transfer the vendors elected to convey to the vendee title to the property sold under such conditonal sale. This, of course, is a different situation from that presented there. As was pointed out in the case first cited:

The vendors, “having placed the notes beyond their own reach, could not reclaim the property, for, in order to do so, they were obliged to cancel the notes or return them to the vendees. But the effect of the transfer was to assign to the indorsees the right to enforce against the vendee the collection of the notes. This was the only right they did possess, and the vendors intended to confer it upon them by means of the indorsement, and at the same time to divest themselves of all right to the property. Having elected to have the notes enforced and abandoned their right to claim the property, the title vested in Boussel & Seisfield,” the vendees.

This decision was followed in the later case cited which involved substantially the same facts.

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