The State Ex Inf. Crow, Attorney-General v. Firemen's Fund Insurance Co.

• Decision Date: 15 July 1899
• Citation: 52 S.W. 595,152 Mo. 1
• Parties: The State ex inf. Crow, Attorney-General, v. Firemen's Fund Insurance Company et al
• Court: Missouri Supreme Court

52 S.W. 595

152 Mo. 1

The State ex inf. Crow, Attorney-General, v. Firemen's Fund Insurance Company et al

Supreme Court of Missouri

July 15, 1899

Writ of ouster awarded.

Edward C. Crow, Attorney-General, and Sam B. Jeffries, Assistant Attorney-General, for informant.

(1) The anti-trust statute of Missouri does not infringe upon the liberty of the citizen to contract concerning his property and prohibit him the enjoyment of his property and impose restraints and burdens upon it without due process of law. Road Co. v. Sanford, 164 U.S. 592; Waters-Pierce Oil Co. v. State, 44 H. R. W. R. 938; U. S. v. Joint Traffic Ass'n, 171 U.S. 505. These statutes are founded upon a proper exercise of the general police authority of the State. Beach on Trusts and Monopolies, sec 13; Munn v. Illinois, 94 U.S. 124; Railroad v Beckwith, 129 U.S. 29; State v. Moore, 104 N.C 710; Thorp v. Railroad, 27 Vt. 140; Bertholf v O'Rielly, 74 N.Y. 521. The State, in the exercise of this power in the selection of remedies looking to the suppression of evil and harm to its people, may apply them to the most sacred contracts and to the uses of property of every description, not in the way of an arbitrary spoliation or confiscation in the capricious exercise of the police power, but a useful regulation in the interest of the public welfare. Cooley's Const. Lim. (6 Ed.), pp. 707-720. In enumerating subjects which are acted upon by the State in the exercise of its police power, a late writer on limitations of police powers names combinations in restraint of trade. In U. S. v. Trans-Missouri Freight Ass'n, 166 U.S. 322, the court said: "While the statute prohibits all combinations in the form of trusts or otherwise, the limitation is not confined to that form alone. All combinations which are in restraint of trade or commerce are prohibited, whether in the form of trusts or in any other form whatever." Tiedeman on Lims. of Police Powers, sec. 96a; Railroad v. Mathews, 165 U.S. 16; Crowley v. Christenson, 137 U.S. 89. The Federal Supreme Court has decided that it was not the design of the Fourteenth Amendment to the Constitution of the United States to interfere with the just and proper exercise of the police power by the States. Barbier v. Connolly, 113 U.S. 31; Davis v. Mass, 167 U.S. 47; Oil Co. v. State, 44 S.W. 938. (2) If legislative authority does exist to restrain the conduct of owners of property in a particular way in the use of their property so as to work injury to the public welfare, and the legislature has acted in the manner required by the Constitution in passing laws, then due process of law exists in so far as it is necessary to find legal authority for passing a statute similar to our anti-trust act, prohibiting all combinations in restraint of trade. Legal restraint imposed upon the use of property does not deprive the owner of it of due process of law. Railroad v. Mathews, 165 U.S. 23; Railroad v. Hume, 115 U.S. 519; Barbier v. Connelly, 113 U.S. 31; Walston v. Nevin, 128 U.S. 582; Railroad v. Gibbes, 142 U.S. 387; Bertholf v. O'Reilly, 74 N.Y. 519; Mulger v. Kansas, 123 U.S. 653; Davidson v. New Orleans, 96 U.S. 104. (3) The anti-trust statute is not obnoxious to the Fourteenth Amendment to the federal constitution, as being class legislation. U. S. v. Pipe Co., 85 F. 285; Association v. Houck, 27 S.W. 696; Brewing Co. v. Templeman, 38 S.W. 27; Puqua v. Chicago Milk Shippers' Ass'n, 155 Ill. 166; U. S. v. Trans-Missouri Freight Ass'n, 166 U.S. 299; People v. Railroad, 121 N.Y. 616; Hathaway v. State, 38 Tex. Crim. App. 261; People ex rel. v. American Tobacco Company (1897), 2 Chicago, L. J. Weekly, p. 249; Casualty Co. v. Alibone, 90 Tex. 660; Ins. Co. v. Levy, 33 S.W. 992; Campbell v. Cook, 86 Tex. 684; Railroad v. Mackay, 127 U.S. 209; Railroad v. Beckwith, 129 U.S. 29; Railroad v. New York, 165 U.S. 623; Soone Hing v. Crowley, 113 U.S. 708; Bank v. Penn, 167 U.S. 462; Railroad v. Mathews, 165 U.S. 17; State v. Moore, 104 N.C. 714. (4) No covenant in restraint of trade can be enforced unless the covenant embodying it is merely ancillary to the main purpose of a lawful contract and necessary to protect the covenantee in the enjoyment of the legitimate fruits of the contract or to protect him from the dangers of an unjust use of those fruits by the other party. U. S. v. Pipe Co., F. 282; Frisbie v. U.S. 157 U.S. 160; Holden v. Hardy, 169 U.S. 391; Martin v. Hunter's Lessee, 1 Wheat. 304; Blair v. Ridgely, 41 Mo. 63. (5) Insurance combines to fix, maintain and control rates of insurance tend to and do suppress competition and such combines violate the anti-trust statute of Missouri. Hartford Fire Ins. Co. v. Raymond, Ins. Com., 70 Mich. 485; Beechley v. Mulvihill, 70 N.W. 107; American Fire Ins. Co. v. State, 26 Ins. L. J. 861; State v. Phipps, 50 Kan. 609; People v. North River Sugar Refining Co., 121 N.Y. 582; People v. Milk Exchange, 154 N.Y. 267; People v. Chicago Gas Trust Co., 130 Ill. 268; People v. Distilling and Cattle Feeding Co., 156 Ill. 448; U. S. v. Addyston Pipe and Steel Co., 85 F. 271; Moore v. Bennett, 140 Ill. 69; Cooke's Trade and Labor Combinations, p. 120; Greenhood on Public Policy, pp. 854-55-56-57; 3 Ins. Law Magazine, p. 42. (6) Agreements between insurance companies to fix and maintain rates tend to the suppression of competition and constitute a strict monopoly. Lawrence v. Kidder, 10 Barb. 64; Dunlop v. Gregory, 10 N.Y. 244; Beach on Industrial Trusts, secs. 10 and 11; People v. Sugar Refining Co., 54 Hun. 354; Sandiego Water Co. v. Flume Co., 108 Cal. 549; California Steam Navigation Co. v. Wright, 6 Cal.259; U. S. Trans-Missouri Freight Ass'n, 166 U.S. 290. And monopolies are against common right. Craven v. Rodgers, 101 Mo. 243. (7) Where a corporation uses its franchises for the purpose of establishing a trust, or enters into a trust to create a monopoly and stifle competition, the State can forfeit the corporate franchise. People v. North River Sugar Refining Co., 121 N.Y. 582; People v. Milk Exchange, 145 N.Y. 267; State v. Standard Oil Co., 49 Oh. St. 137; People v. Chicago Gas Trust Co., 130 Ill. 268; People v. Distilling and Cattle Feeding Co., 156 Ill. 448. The scheme inaugurated in the city of St. Joseph was intended to and did constitute a monopoly in the fixing of insurance rates in the hands of the respondent companies because it created a common rate and abolished competition. The "Social Club" fixed the rate of insurance and dominated the business. This created a trust. Hartford Fire Ins. Co. v. Raymond, Ins. Com., 70 Mich. 485; State v. Krebs, 64 N.C. 604; People v. Sugar Refining Co., 121 N.Y. 624; Beach on Industrial Trusts, secs. 219-220; People v. W. T. B. Co., 47 N.Y. 586; London v. Van Acker, 1 Ld. Ryan 499; E. S., etc., Co. v. People, 121 Pa. St. 154; People v. F. Co., 27 Barb. 445; Com. v. Bank, 21 Pick. 542; Railroad v. Cave Co., 113 U.S. 384; State v. Railroad, 45 Wis. 590; People v. Railroad, 27 Barb. 452; F. Co. v. Hyde Park, 97 U.S. 666; People v. North River Sugar Refining Co., 121 N.Y. 582. (8) The acts of the agents of the foreign insurance corporations, in entering into a combination to fix rates of insurance in violation of the antitrust law, bind the corporations where reports are made to the companies and they accept the benefits of said organization. Waters-Pierce Oil Co. v. State, 44 S.W. 936; Ins. Co. v. Raymond, 70 Mich. 485; State ex rel. v. Aetna Ins. Co., 150 Mo. 113. (9) It is no answer to a combination of this kind to say that it should be permitted to exist for the reason that it has reduced the prices of insurance, even though such were true. That policy may be necessary to crush competition. Such combinations have been frequently condemned by courts as unlawful and against public policy. Hoeker v. Vandewater, 4 Denio 349; Stanton v. Allen, 5 Denio 434; Coal Co. v. Coal Co., 68 Pa. St. 186; Craft v. McConoughy, 79 Ill. 346; Hannah v. Fife, 27 Mich. 172; Alger v. Thatcher, 19 Pick. 51. In numerous cases restrictions have been condemned, notwithstanding they produced for a while the lowering of prices. Anderson v. Jett, 89 Ky. 375; Hoffman v. Brooks, 23 Am. L. Reg. 648; People v. Milk Exchange, 145 N.Y. 267.

Given Campbell and Waddill, Ellerbe & Hereford for respondents.

(1) This suit is in the nature of a public accusation, and if the State makes out its case, the judgment is penal, and in such case the burden of proof is upon the State to prove the charges as alleged. 5 Thompson's Com. on Corps., sec 6804; State ex. inf. v. Bland, 144 Mo. 534; High ex. Remedies, sec. 710; State ex rel. v. Talbots, 123 Mo. 69; 2 Spell ex. Relief, secs. 1850, 1851, 1860. (2) The overwhelming weight of evidence establishes the fact that the Underwriters' Social Club of St. Joseph, Mo., was not created, formed or organized, conducted or carried on for the purpose of fixing or maintaining rates of insurance in that city, or for the purpose of controlling rates of insurance in any respect, and that it did not either fix, control or maintain rates of insurance according to Fetter's estimates. Anderson v. U.S. 171 U.S. 604. (3) None of the respondents authorized directed or acquiesced in the acts of their local agents, in becoming members of the Underwriters' Social Club of St. Joseph, Mo., during the period covered by this suit, and none of the defendants, were aware or informed at any time prior to the production of this suit, that said club was engaged in the business of fixing or maintaining rates of fire insurance, or in any way, charged with doing same, in the city of St. Joseph, Mo. (4) The information filed by relator, does not state facts sufficient to constitute a cause of action. State ex inf. v. Bland, 144 Mo. 534. (5) The Act approved April 2, 1891, as amended by the Acts of April 11,...