Submitted April 17, 1914. Decided June 8, 1914.
A Federal question may not be imported into a record for the first time by way of assignment of error made for the purpose of review by this court. As a general rule, for the purpose of review by this court, rights under the full faith and credit clause of the Federal Constitution are required to be expressly set up and claimed in the court below. Denial of full faith and credit to the statutes of another State cannot be made the basis of review by this court where it appears that the court below reached the same result that plaintiff contended for on grounds wholly independent of the Federal question and sufficient to sustain its action. This court has already decided that state statutes, such as that of Texas imposing a 12% penalty and an attorney's fee, for damages for delay in payment of proper claims, are not unconstitutional under the Fourteenth Amendment as depriving life insurance companies of their property without due process of law or as denying them the equal protection of the law. A payment made by a life insurance company to one of two claimants on receiving a bond of indemnity, held, under the circumstances of this case, not to have been the payment of a stakeholder seeking to discharge his duty but of a person espousing the cause of one claimant against the other and thereby subjecting himself to the legal consequences arising from his action. This court cannot review on its merits a case which it must dismiss for want of jurisdiction.
Mr. William J. Moroney for plaintiffs in error:
The Texas statute, as construed and applied in this case by the state court, is repugnant to the Fourteenth Amendment.
The judgment of the state court denied full faith and credit to the statutes of Georgia that were pleaded and proved in defense of this suit, in violation of the full faith and credit provision of the Constitution of the United States.
In support of these contentions, see Rev. Stat. Texas, Art. 3071; Civil Code Georgia, §§ 2114, 2116, 3077; Atchison T. S.F. Ry. Co. v. Sowers, 213 U.S. 55; Atlantic Coast Line Ry. Co. v. Wharton, 207 U.S. 328; Attorney General v. Lowrey, 199 U.S. 639; Bacon v. Texas, 163 U.S. 216; Beer v. Landman, 88 Tex. 450[ 88 Tex. 450]; Bolin v. St. Louis Ry. Co., 61 S.W. 444; Bridge Proprietors v. Hoboken Co., 1 Wall. 116; Cawthorne v. Perry, 76 Tex. 338[ 76 Tex. 338]; Cheeves v. Andres, 87 Tex. 287[ 87 Tex. 287]; Clark v. San Francisco, 124 U.S. 639; Collins v. Texas, 223 U.S. 288; Dartmouth College Case, 4 Wheat. 518; El Paso Ry. Co. v. Gutierrez, 215 U.S. 87; Estay v. Luther, 142 S.W. 649; Farmers' Ins. Co. v. Dobney, 188 U.S. 301; Fidelity Life Ins. Co. v. Mettler, 185 U.S. 308; Fidelity Life Ins. Co. v. Zapp, 160 S.W. 139; Furman v. Nichol, 8 Wall. 44; Ex parte Garland, 4 Wall. 333; Grigsby v. Russell, 222 U.S. 149; Gulf, C. S. Fe Ry. Co. v. Dennis, 224 U.S. 503; Gulf, C. S. Fe Ry. Co. v. Ellis, 165 U.S. 150; Illies v. Fitzgerald, 11 Tex. 429[ 11 Tex. 429]; Iowa Life Ins. Co. v. Lewis, 187 U.S. 264; Ludy v. Larson, 37 L.R.A. (N.S.) 907; Martin v. West, 224 U.S. 191; Murdock v. Memphis, 20 Wall. 590; Northwestern Life Ins. Co. v. McCue, 223 U.S. 234; Pacific Life Ins. Co. v. Williams, 79 Tex. 633 [ 79 Tex. 633]; St. Louis Ry. Co. v. Wynne, 224 U.S. 354; Schofield v. Turner, 75 Tex. 324[ 75 Tex. 324]; Southwestern Ins. Co. v. Woods Nat'l Bank, 107 S.W. 114; Stanley v. Schwalby, 162 U.S. 255; Tilt v. Kelsey, 207 U.S. 42; Vandalia Ry. Co. v. Indiana, 207 U.S. 359; Washington Life Ins. Co. v. Gooding, 49 S.W. 123; Wilson v. Black Bird Creek Co., 2 Pet. 245; Yazoo c. Co. v. Jackson Vinegar Co., 226 U.S. 217. Mr. Wilmer S. Hunl, Mr. Sterling Myer and Mr. C.A. Teagle for defendant in error:
The Supreme Court will not consider questions not raised and passed on in the court below, nor consider other Federal questions than the one raised.
The assignment of the insurance policies was a Texas contract.
If the contract was a Georgia contract, yet if invalid under the laws of Texas, the law of comity between States does not require its enforcement by the Texas courts.
The contract of assignment was even void under the laws of Georgia.
Article 3071, Texas Rev. Stat., is constitutional.
There was no right of the insurance company to recover the $460.00 paid to Cohen by Hilsman.
A general assignment raising a Federal question will not be considered.
On error from a state court, the Supreme Court will only consider the Federal question which gives it jurisdiction.
In support of these contentions, see Acts Texas Legislature 1907, p. 172; 24 Am. Eng. Ency. of Law, 1052; Armstrong v. Toler, 11 Wheat. 258; Arnott v. Coal Co., 23 Am. Rep. (N.Y.) 190; Association v. Mettler, 189 U.S. 150; Atlantic Coast Line v. Wharton, 207 U.S. 328; Beardsley v. Beardsley, 138 U.S. 262; Beer v. Landaman, 88 Tex. 450[ 88 Tex. 450]; Bigelow v. Benedict, 70 N.Y. 206; Cameron v. Barcus, 71 S.W. 423; Capitol City Dairy Co. v. Ohio, 183 U.S. 238; Cheeves v. Anders, 87 Tex. 291[ 87 Tex. 291]; Clark v. McDade, 165 U.S. 170; Cothran v. Telegraph Co., 83 Ga. 25; Dewey v. Des Moines, 175 U.S. 193; Dugger v. Ins. Co., 81 S.W. 335; Embree v. McLean Co., 11 Tex. Civ. App. 493; Falkner v. Hyman, 142 Mass. 53; Farmers Ins. Co. v. Dabney, 189 U.S. 301; Fletcher v. Williams, 66 S.W. 861; Fowler v. Bell, 90 Tex. 150; Furman v. Nichols, 8 Wall. 75; Georgia Code, Arts. 3537, 3668, 3671; German Society v. Dormitzer, 192 U.S. 124; Green v. Van Buskirk, 7 Wall. 139; Hamblen v. Western Land Co., 147 U.S. 531; Hill v. Spear, 50 N.H. 253; Horner v. United States, 143 U.S. 570; Insurance Co. v. Bank, 107 S.W. 114; Insurance Co. v. Williams, 79 Tex. 633[ 79 Tex. 633]; Insurance Co. v. Hazelwood, 75 Tex. 351[ 75 Tex. 351]; Irvin v. Williams, 110 U.S. 508; Jones v. Aiken, 80 S.W. 285; Keokuk H.B. Co. v. Illinois, 175 U.S. 193; Maxwell v. Newbold, 18 How. 511; McLaughlin v. Fowler, 154 U.S. 663; 1 Meechum on Sales, §§ 8430, 484; Messenger v. Mason, 10 Wall. 507; Murdock v. Memphis, 20 Wall. 590; Myrick v. Thompson, 99 U.S. 297; Norris v. Logan, 97 S.W. 20; Osborne v. Florida, 164 U.S. 650; Oscanyon v. Arms Co., 103 U.S. 261; Pope v. Hanke, 40 N.E. 842; Railway v. Dennis, 224 U.S. 503; Railway v. Wynne, 224 U.S. 354; Rev. Stat. Texas, Art. 3071; Schonfield v. Turner, 75 Tex. 329[ 75 Tex. 329]; Seligson v. Lewis, 63 Tex. 220[ 63 Tex. 220]; Storey v. Solomon, 71 N.Y. 422; Sweeney v. Ousley, 53 Ky. 413; Telegraph Co. v. Blanchard, 68 Ga. 299; Tilt v. Kelsey, 207 U.S. 43; Tracey v. Talmage, 67 Am. Dec. (N.Y.) 132; Wheeless v. Myer, 12 S.W. 712; Wilson v. Namie, 102 U.S. 572; Wilton v. Ins. Co., 78 S.W. 403; Zipcey v. Thompson, 1 Gray (Mass.), 242.
Upon the pleadings which we have just stated and the facts stipulated, the trial court gave judgment for the plaintiff, Cohen, against the defendant company for the amount of the policies less the sums which had been loaned thereon by the Company with interest and with the statutory penalties and attorney's fees claimed.
To recapitulate, it suffices to say that the assignments of error made by the Company in the court below for the purpose of the appeal by it taken but expressed the defenses resulting from its answer and the stipulated facts which we have stated. That is to say, reliance was placed (1) upon the proposition that in any event the recourse of the plaintiff was against Hilsman and not against the Company; (2) that the transfer of the policies to Hilsman was a Georgia contract and valid under the law of that State because the existence of insurable interest at the time of the transfer, although necessary under the Texas law, was not necessary under the Georgia law; (3) that as in any event the transaction out of which the assignment of the policies from Cohen to Hilsman grew was admittedly a gambling one, the court would not allow the executor of Cohen to derive any rights from assailing that transaction, but would leave the parties where their illegal contract had placed them, that is, let the assignment to Hilsman stand, and hence leave no right in Cohen, executor, to recover; (4) that the court erred in giving judgment for the statutory penalties and damages because under the circumstances stated the liability to pay them was not embraced by the statute under which they were imposed and that if the statute, as construed, imposed the damages and attorney's fee which were allowed, it was in violation of § 1, of the Fourteenth Amendment.
In an elaborate opinion the court disposed of all these contentions. It held that the suit need not be brought against Hilsman but that it could be brought directly against the Company. It decided that the contract of assignment was a Texas contract and for want of insurable interest in Hilsman was invalid under the laws of that State, although it was in substance admitted that it would have been valid, so far as the question of insurable interest was concerned, if it had been a Georgia contract. Coming to consider the fact that both parties had conceded that the transaction out of which the assignment of the policies grew was purely of a gambling nature and that that fact had been stipulated, the court refused to sustain the following proposition which was insisted upon by the defendant company: "When an insurance policy is assigned as part of a gaming transaction, the law will give no relief to either party, or to their heirs, executors or assigns, regardless of all other questions, but will leave the parties where they have voluntarily placed themselves." On the contrary the court, relying upon the Texas law upon that subject, the Georgia law on the same subject and the principles of general law applicable thereto, held that instead of leaving the assignment growing out of the gambling transaction enforceable in the hands of Hilsman it would in consequence of the illegality, strike down the whole transaction and therefore leave the policy in the hands of Cohen the insured, to whom it belonged before the assignment had been made. And for this reason also the court decided that the sum paid by Hilsman for the transfer need not be repaid by Cohen in order to recover. On the subject of the penalties the court referring to the cases of Fidelity Mutual Life Association v. Mettler, 185 U.S. 308, and Farmers' Merchants' Insurance Company v. Dobney, 189 U.S. 301, held that the statute under which they were imposed was not repugnant to the Fourteenth Amendment and said: "The action of the Insurance Company in paying the money due on the policies was not, as in Insurance Co. v. Woods Nat. Bank, 107 S.W. 119, an offer of the Insurance Company to pay to the one of the two real claimants when it should be determined whom he was, but a voluntary payment to the rival claimant who had no right whatever to the amount due on the policy. The company has indemnified itself against its act in paying the money due on the policy to one who was not entitled to receive it; now let it resort to its indemnity."
At the threshhold we must dispose of a motion to dismiss. It is apparent from the statement of the case that the only express assertion of Federal right had reference to the statutory penalty and the attorney's fee. The assignments of error however, assert violations of rights under the Constitution in many particulars, but more especially with reference to the action of the court in treating the sales of the policies as Texas contracts and refusing to apply the Georgia law which admittedly differed fundamentally from that of Texas. It is elementary that a Federal question may not be imported into a record for the first time by way of assignments of error made for the purposes of review by this court. Moreover as a general rule it is true that for the purposes of review by this court rights under the full faith and credit clause, § 1, Article IV of the Constitution, come within that class which are required to be expressly set up and claimed in the court below. Johnson v. New York Life Ins. Co., 187 U.S. 491; El Paso and Southwestern R.R. v. Eichel, 226 U.S. 590, 597; Chicago, Ind. and L. Ry. Co. v. Hackett, 228 U.S. 559, 565. Let it be conceded, as we think it must be, where the record leaves no doubt that rights under the full faith and credit clause were essentially involved and were necessarily passed upon, there would be jurisdiction to review even although such rights had not been expressly asserted below (see Tilt v. Kelsey, 207 U.S. 43, 51); the right to review under such condition being in effect but a result of the elementary rule that it is irrelevant to inquire how and when a Federal question was raised in a court below when it appears that such question was actually considered and decided. But these concessions are irrelevant, even although it be further conceded that the ruling of the court below as to the necessity for an insurable interest and its governing the case by the law of Texas instead of by the law of Georgia brings this case within the doctrines just stated. We say this because of the existence of another and fundamental question which causes the concessions stated to be immaterial. Both parties, as we have seen, wholly independent of the existence of an insurable interest, affirmed the illegality of the transaction out of which the assignments of the policies grew because of the alleged gambling nature of the transaction and the admitted facts without dispute established that situation. There being thus an admission by both parties and no dispute concerning the illegality of the transaction and a difference only as to the consequences to arise from such illegality, it follows that the case reduces itself to a consideration of that subject. But on coming to its consideration it is plain that no question concerning the full faith and credit clause was involved in any contention made below by the plaintiff in error in that regard, since the rights deduced from the admitted illegality of the transaction were placed solely on considerations of the local law of the State of Texas and of the State of Georgia deemed to be applicable to such condition of things or upon what was deemed to be the controlling principles of general law on the subject. Indeed, so absolutely is this case, that, as we have seen, the Company itself insisted on the illegality and based rights upon it. And it was only on behalf of the defendant in error that considerations involving the full faith and credit clause were suggested as controlling the results in consequence of the admitted illegality of the transaction as a gambling one. A condition which is illustrated by the fact that the reply petition of the plaintiff while accepting and reiterating the averment of illegality made in the answer of the defendant Company, in addition specially alleged that the illegality resulting from the gambling transaction caused the assignment of the policies to be void under the law of New York where the Company was organized and under the law of Texas, as well as under the law of Georgia. And it was for this reason that the proof which was offered as to the statute law of Georgia on the subject of gambling transactions and the decision or decisions of that State which it was deemed made the statute applicable were tendered on behalf of the plaintiff and not by the defendant company. It would be indeed anomalous when the parties had both relied upon the illegality of the transaction upon grounds wholly independent of any Federal right and the case had been decided upon that ground, which in and of itself is sufficient to sustain the action of the court below, to permit one of the parties because of his dissatisfaction with the application of such principles to assert the existence of jurisdiction because the case rested on a Federal issue. It becomes hence obvious that the assignments of error outside of the one referring to the repugnancy to the Fourteenth Amendment of the statute imposing damages and penalties, affords not the slightest pretext for the exercise of jurisdiction and they therefore may be put out of view.
Coming to consider the latter subject it may not be doubted that the non-repugnancy of the assailed statute to the Constitution of the United States has been directly determined by this court in the cases upon which the lower court based its ruling. ( Fidelity Mut. Life Ass'n v. Mettler, 185 U.S. 308; Farmers' Merchants' Ins. Co. v. Dobney, 189 U.S. 301.) But it is said that as previously upheld the statute as construed by the state court contemplated a liability for the penalties or damages and attorneys' fees only in case there was a wilful refusal to pay and therefore those decisions have no application here since the statute as applied in this case enforces a liability against the Company in spite of its action in the utmost good faith, taken solely for the purpose of determining to whom it must pay the sum due, liability as to which was frankly conceded. But the deduction simply disregards the basis upon which the court below rested its conclusion and invites us upon a conception of injustice to commit a wrong by reviewing a matter of purely local concern which is not within our cognizance. We say this because clearly the court below rested its conclusion as to liability for the penalty and damages not upon the construction of the statute suggested, but upon the premise that the payment to Hilsman by the Insurance Company of the sum of the policies under the circumstances stated was a payment which took it out of the category of a mere stakeholder seeking to discharge his duty in good faith and placing it in the position of a person espousing the cause of one as against the other and thereby subjecting himself to the legal consequences arising from such action. And the considerations which we have stated also dispose of the contention concerning the wrong which it was insisted was done in declaring the assignment of the policies void because of the gambling nature of the contract and yet permitting the assignor to hold on to the price paid for such assignment. That question was involved in and controlled by the court's ruling concerning the illegal nature of the transaction and the principles applicable thereto, and therefore it is beyond our competency to review.
As the repugnancy of the statute concerning the damages and attorney's fee was the only semblance of ground for invoking our jurisdiction and as that ground was conclusively established to be without merit when the writ of error was sued out, it follows that there is nothing upon which to base jurisdiction and the writ of error must be dismissed.
Dismissed for want of jurisdiction.