Professional & Business Men's LI Co. v. Bankers Life Co.

• Decision Date: 08 April 1958
• Docket Number: No. 707.,707.
• Citation: 163 F. Supp. 274
• Parties: PROFESSIONAL AND BUSINESS MEN'S LIFE INSURANCE COMPANY, a Corporation, Plaintiff, v. BANKERS LIFE COMPANY et al., Defendants.
• Court: U.S. District Court — District of Montana

163 F. Supp. 274

PROFESSIONAL AND BUSINESS MEN'S LIFE INSURANCE COMPANY, a Corporation, Plaintiff, v. BANKERS LIFE COMPANY et al., Defendants.

No. 707.

United States District Court D. Montana, Helena Division.

March 24, 1958.

On Petition for Leave to File Motion to Rehear April 8, 1958.

Order Filed June 30, 1958.

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McCaffery, Roe & Kiely, Butte, Mont., and Skedd, Harris & Massman, Helena, Mont., for plaintiff.

Corette, Smith & Dean, Butte, Mont., for Bankers Life Co., Northern Life Ins. Co., and Prudential Life Ins. Co. of America.

Coleman, Lamey & Crowley, Billings, Mont., for Equitable Life Assur. Society of U. S., Franklin Life Ins. Co., Mut. Life Ins. Co. of N. Y., New York Life Ins. Co., and Paul Revere Life Ins. Co.

Jardine, Stephenson, Blewett & Weaver, Great Falls, Mont., for Kansas City Life Ins. Co., Northwestern Nat. Life Ins. Co., and Occidental Life Ins. Co. of Cal.

Ralph J. Anderson, Helena, Mont., for Nat. Reserve Life Ins. Co.

Small & Herron, Helena, Mont., for Farmers New World Life Ins. Co.

Toomey & Hughes, Helena, Mont., for State Farm Life Ins. Co.

Gunn, Rasch & Gunn, Helena, Mont., for Mut. Benefit Life Ins. Co. and Ohio Nat. Life Ins. Co.

Rasch & Patterson, Helena, Mont., for Western Life Ins. Co.

Weir, Gough & Matson, Helena, Mont., for Metropolitan Life Ins. Co.

Dan R. Lovelace, Bozeman, Mont., for James H. Dickson.

Luxan & Scribner, Helena, Mont., for all other defendants.

John T. Vance, Helena, Mont., for Bankers Life & Cas. Co. of Ill.

William Mussman (of Pillsbury, Madison & Sutro), San Francisco, Cal., for Bankers Life Co. and others.

MURRAY, Chief Judge.

The complaint in this case contains six counts. The first count is based upon alleged violation of the federal anti-trust laws; Counts two, three and four are based on defamation; and Counts five and six allege damages as the result of violations by defendants of certain Montana statutes. Each of the defendants filed separate motions to dismiss directed to each of the counts. However, arguments, both oral and written, were jointly submitted by all of the defendants.

Count One

The first ground of the motion to dismiss Count One is that the Court has no jurisdiction thereof. The interstate commerce alleged to have been restrained by the acts of the defendants in this case is the business of life insurance, and defendants insist that by reason of the McCarran Act jurisdiction has been taken away from federal courts of suits for violation of the Clayton and Sherman Acts in the business of insurance.

The McCarran Act provides generally that the Sherman Act and the Clayton Act shall apply to the business of insurance only to the extent that such business is not regulated by State law. The defendants say that the State of Montana has adequate laws regulating, by prohibiting, trusts, conspiracies and monopolies and that therefore by virtue of the McCarran Act the Sherman and Clayton Acts, 15 U.S.C.A. §§ 1-7, 15 note, 12 et seq., 1011 et seq., are inapplicable in Montana so far as the business of insurance is concerned.

The validity of the McCarran Act in its attempt to confer upon the states the power to regulate and tax the business of insurance, even when such business is conducted between the several States, has been established in the cases of Prudential Insurance Co. v. Benjamin, Insurance Commissioner, 328 U.S. 408, 66 S.Ct. 1142, 90 L.Ed. 1342, and Wilburn Boat Co. v. Fireman's Fund Insurance Co., 348 U.S. 310, 75 S.Ct. 368, 99 L.Ed. 337.

Plaintiff, in drafting its complaint, was apparently aware of the McCarran Act and sought to avoid its application to this case by alleging in Paragraph XIX of Count One of the complaint that the State of Montana has enacted no regulations or laws in connection with the regulation of monopolies or restraints of trade in the business of life insurance. By this allegation and by the assertion in plaintiff's brief that the allegation is an essential one, plaintiff tacitly concedes that if the State of Montana has by law provided for the regulation of monopolies and restraints of trade in the business of life insurance, this Court has no jurisdiction of the present action, unless, of course, the case falls within another exception in the McCarran Act which will be hereafter discussed.

Turning then to the law of Montana, we find the following provisions in Article XV, Section 20:

"No incorporation, stock company, person or association of persons in the state of Montana, shall directly, or indirectly, combine or form what is known as a trust, or make any contract with any person, or persons, corporation, or stock company, foreign or domestic, through their stockholders, trustees, or in any manner whatever, for the purpose of fixing the price, or regulating the production of any article of commerce, or of the product of the soil, for consumption by the people. The legislative assembly shall pass laws for the enforcement thereof by adequate penalties to the extent, if necessary for that purpose, of the forfeiture of their property and franchises, or in case of foreign corporations, prohibiting them from carrying on business in the state."

Article III, Section 29 of the Montana Constitution, provides:

"The provisions of this constitution are mandatory and prohibitory, unless by express words they are declared to be otherwise."

Section 94-1104, R.C.M.1947, provides:

"Unlawful trusts and monopolies —penalty. Every person, corporation, stock company, or association of persons in this state, who, directly or indirectly, combine or form what is known as a trust, or make any contract with any person or persons, corporation, or stock companies, foreign or domestic, through their stockholders, directors, officers, or in any manner whatever, for the purpose of fixing the price or regulating the production of any article of commerce —the phrase `articles of commerce,' as herein employed, shall and does include not only those articles which are generally, popularly, and legally known as articles of commerce, but also gas, water, water power, electric light, and electric power, for whatever purpose used or employed—or of the product of the soil for consumption by the people, or to create or carry out any restriction in trade, to limit productions, or increase or reduce the price of merchandise or commodities, or to prevent competition in merchandise or commodities, or to fix a standard or figure whereby the price of any article of merchandise, commerce, or product, intended for sale, use, or consumption, will be in any way controlled, or to create a monopoly in the manufacture, sale, or transportation of any such article, or to enter into an obligation by which they shall bind others or themselves not to manufacture, sell, or transport any such articles below a common standard or figure, or by which they agree to keep such article or transportation at a fixed or graduated figure, or by which they settle the price of such article, so as to preclude unrestricted competition, is punishable by imprisonment in the county jail for a period not less than twenty-four hours or more than one year, or by fine not exceeding twenty-five thousand dollars, or both."

In addition, Title 40, R.C.M.1947, contains extensive regulations of insurance and insurance companies.

Plaintiff contends that because the provisions of Section 94-1104, R.C.M. 1947, are not included in Title 40, the Chapter on Insurance in the Montana Code, the provisions of the former section prohibiting monopolies and conspiracies in restraint of trade do not apply to the business of life insurance. However, Section 94-1104 is a part of the general criminal code of the State of Montana which applies to all, and by its specific wording 94-1104 applies to every person, corporation, stock company or association of persons in the State. Under the provisions of that statute, a conspiracy to restrain trade in insurance in Montana is as illegal as it would be under the provisions of the Sherman Act (were it not for the McCarran Act).

Plaintiff likewise contends that the Legislature of Montana in 1957, when it passed Chapter 42 of the Session Laws of 1957, recognized that there was no regulation of monopolies and conspiracies in restraint of trade in the business of insurance in Montana. Chapter 42 of the Laws of Montana 1957, directed the State Auditor and Commissioner of Insurance to prepare and submit to the next legislative assembly a bill providing a modern and adequate code of insurance laws for the State of Montana regulating the insurance business, and appropriated the sum of $25,000 for the Commissioner of Insurance to make the comprehensive study necessary to prepare such a code. There is nothing in Chapter 42, however, that in any way suggests that the provisions of Section 94-1104, R.C.M.1947, do not apply to insurance companies or the business of insurance.

Thus it is apparent that Montana having by law regulated conspiracies in restraint of trade in the insurance business, by prohibiting them, this court, because of the provisions of the McCarran Act, would have no jurisdiction of a suit for violation of the Sherman and Clayton Acts involving the business of insurance, unless the suit falls within an exception to the McCarran Act.

Section 3(b) of the McCarran Act (Section 1013(b), Title 15 U.S.C.A.) contains the following provision:

"Nothing contained in this chapter shall render the said Sherman Act inapplicable to any agreement to boycott, coerce, or intimidate, or act of boycott, coercion, or intimidation."

Plaintiff contends that the complaint in this case contains allegations of an agreement to boycott, coerce or intimidate and acts of boycott, coercion and intimidation. Defendants' position is first, that the plaintiff, having proceeded upon the theory that the Sherman and Clayton Acts were applicable in this case because the State of...