Aetna Ins. Co. v. Commonwealth

• Decision Date: 15 June 1899
• Citation: 106 Ky. 864,51 S.W. 624
• Parties: ÆTNA INS. CO. et. al. v. COMMONWEALTH. [1]
• Court: Kentucky Court of Appeals

51 S.W. 624

106 Ky. 864

ÆTNA INS. CO. et. al. v. COMMONWEALTH. ^[1]

Court of Appeals of Kentucky.

June 15, 1899

Appeal from circuit court, Franklin county.

"To be officially reported."

The Ætna Insurance Company and others were convicted of the offense of criminal conspiracy, and they appeal. Reversed.

W. S Pryor, Pirtle & Trabue, W. W. Thum, S.E. Sloss, and Paddock Wright & Billing, for appellants.

Robt. B. Franklin, W. S. Taylor, and M. H. Thatcher, for the Commonwealth.

DU RELLE, J.

This appeal is from a judgment of conviction under an indictment charging appellants with "the offense of unlawfully conspiring, by persuasion, intimidation, and force, to counteract, avoid, stifle, and kill the effect of free competition among fire insurance companies and agents engaged in and offering to do a fire insurance business in the city of Frankfort, county of Franklin, and state of Kentucky committed as follows, viz.: The said Ætna Insurance Company a corporation organized under the laws of the state of Connecticut [and eighty-six others], in the said city of Frankfort, county of Franklin, and state aforesaid, on the 22d day of September, 1898, and within one year before the finding of this indictment, did then and there, each with the other, and with other persons, associations, firms, and corporations to this grand jury unknown, unlawfully conspire, confederate, combine, enter into, maintain, consummate, and continue an unlawful pool, trust, conspiracy, confederation, combination, compact, and agreement, intending and contriving thereby to persuade, intimidate, compel, and force all agents and companies then and there engaged in and offering to do a fire insurance business to enter into, maintain, consummate, and continue said unlawful pool, trust, conspiracy, combination, confederation, compact, and agreement, the objects, aims, and ends of which were then and there to counteract, avoid, stifle, and kill the effect of free competition among all insurance companies and agents then and there engaged in and offering to do a fire insurance business, to fix and maintain the cost of fire insurance to the insuring public at a greater premium rate than would otherwise have to be paid, and thus unlawfully to exact, extort, and procure great sums of money from citizens of this commonwealth owning and insuring property in the city of Frankfort, county of Franklin, and state aforesaid, which said great sums of money said citizen would not have to pay but for the existence of said unlawful pool, trust, conspiracy, combination, confederation, compact, and agreement, and which said unlawful pool, trust, conspiracy, combination, confederation, compact, and agreement so as aforesaid entered into, consummated, maintained, and continued by the parties aforesaid is of grievous prejudice and hurt to the common and public good and welfare, of evil example, and against the peace and dignity of the commonwealth of Kentucky." To sustain this charge of conspiracy, the commonwealth introduced the constitution and by-laws of the Kentucky and Tennessee board of fire underwriters and the Franklin board of underwriters, to show the objects of the associations named, together with the evidence that appellants were engaged in fire insurance business at Frankfort through agents who were members of the Frankfort or local board. Not all of the appellants were members of the Kentucky and Tennessee board, but all appear to have done business in Frankfort through members of the local board. The Kentucky and Tennessee board was an association of fire insurance companies doing business in the two states named; the object stated in its constitution being "to organize and maintain local boards, to establish and enforce uniform commissions, adequate rates, correct forms of policies, and to inculcate sound principles of underwriting." Each company desiring membership was required to subscribe to the constitution and by-laws through its representatives, "thereby pledging itself to the objects and regulations of the association, and every member of this association shall require its agents to unite with local boards, and co-operate actively therewith; but all rules and rates of the association must be enforced by members, whether adopted by the local boards or not." The by-laws require the secretary, "under the direction of the executive committee, to promulgate rates and rules of the association." The Frankfort board, entitled "The Local Board of Fire Insurance Agents of Frankfort, Kentucky," had for one of its objects, as declared by its constitution, the establishment "and maintenance of adequate and equitable rates." Membership was confined to agents of companies and officers of local companies, and no person was eligible to be a member who was in any way interested in insurance business with a person or company not a member, "unless they also are governed by all the rules and rates adopted by the board." Every member was required "strictly and rigidly to adhere to the rules and rates adopted by the board, without deviation in letter or spirit." By the by-laws, provision was made for an executive and rating committee to survey and report risks. The surveys and rate books issued to members were the property of the board, and returnable upon its order. Misrepresentation or improper means of interference by agents subjected the party offending to charges. No agent was allowed to employ a solicitor or broker. Members were forbidden to attempt to create or foster prejudice against the state association, the local board, or its members. There were provisions against dividing commissions, and writing risks outside the jurisdiction of the board at less than the established rate at the locality of the risk. Obedience to these regulations was to be enforced according to a schedule of penalties fixed in the by-laws, and a member was to be punished for violation of rules or rates by suspension from membership, after hearing, upon a two-thirds vote, followed by a request to the companies of such agent that his commission be canceled. Testimony was introduced tending to show that a considerable increase had taken place in the rate of insurance in Frankfort and vicinity after the establishment of these boards. It is not necessary here to go further into the testimony.

A number of questions are presented upon this appeal, and have been most elaborately argued by counsel. Among other grounds for reversal presented, it is urged that under the ruling in Com. v. Ward, 92 Ky. 158, 17 S.W. 283, the indictment did not sufficiently set forth the facts stating the offense attempted to be charged; that the evidence was insufficient to sustain the charge; that this was especially true as to the so-called nonboard companies, which were not members of either board, and against whom the only testimony connecting them with the alleged conspiracy is the fact that they employed agents in Frankfort who were members of the local board, thereby adopting the rates promulgated by that board; that the service and summons upon the insurance commissioner were not sufficient to bring the defendants before the court to answer an indictment; and that the instructions did not present the law to the jury. But the underlying question, which, if answered in the negative, renders the consideration of these questions unnecessary for the disposition of this case, is whether, either by the common law or under the statute, there is in this commonwealth such an offense as that attempted to be described in the indictment. This question we shall consider first.

It was conceded by counsel representing the commonwealth, both in oral argument and brief, that this proceeding was not instituted under the statute, but under the common law; and a careful examination of the statute has convinced us that it does not apply to a case like the one at bar. It provides (Ky. St. § 3915) "that if any corporation under the laws of Kentucky, or under the laws of any other state or country for transacting or conducting any kind of business in this state, or any partnership, company, firm or individual, or other association of persons, shall create, establish, organize, or enter into, or become a member of, or a party to, or in any way interested in any pool, trust, combine, agreement, confederation or understanding with any other corporation, partnership, individual or person, or association of persons, for the purpose of regulating or controlling or fixing the price of any merchandise, manufactured articles or property of any kind, or shall enter into, become a member of, or party to, or in any way interested in a pool, agreement, contract, understanding, combination or confederation, having for its object the fixing, or in any way limiting the amount or quantity of any article of property, commodity or merchandise to be produced or manufactured, mined, bought or sold, shall be deemed guilty of the crime of conspiracy, and punished therefor as provided in the subsequent sections of this act." The language used would indicate that the statute was intended to prevent pools and trusts forming for the purpose of fixing the price of merchandise and manufactured articles. Without giving undue weight to the argument that the punctuation shows the word "property" to be qualified by the adjective "manufactured," it seems certain that the ejusdem generis rule of construction does apply, and that property referred to in the section was property of the same general class or nature as that described previously by the words "merchandise and manufactured articles." And while it may be admitted that a contract, either for labor, or for indemnity against contingent loss, like an insurance contract, when executed, becomes property, because it is...