Arkansas Life Insurance Company v. American National Insurance Company

• Decision Date: 10 November 1913
• Citation: 161 S.W. 136,110 Ark. 130
• Parties: ARKANSAS LIFE INSURANCE COMPANY v. THE AMERICAN NATIONAL INSURANCE COMPANY
• Court: Arkansas Supreme Court

161 S.W. 136

110 Ark. 130

ARKANSAS LIFE INSURANCE COMPANY v. THE AMERICAN NATIONAL INSURANCE COMPANY

Supreme Court of Arkansas

November 10, 1913

Appeal from Pulaski Circuit Court, Second Division; Guy Fulk, Judge affirmed.

STATEMENT BY THE COURT.

The appellant brought suit against the appellees to recover damages alleged to have accrued to appellant from the conduct of the appellees in planning and executing a conspiracy to destroy appellant's business and the business of the Industrial Mutual Indemnity Company, a corporation to whose assets and business appellant became successor.

The first paragraph of the complaint set up the organization of appellant and appellee, American National Insurance Company stated the business they were engaged in, and that Smith was in the employ of appellee, American National Insurance Company as general agent for Arkansas.

The second paragraph alleged the organization of the Industrial Mutual Indemnity Company, and set forth that it was engaged in the industrial insurance business until the 28th of February, 1911, when the appellant, by contract with it reinsured its policy holders and took over all of its assets.

The third and fourth paragraphs set forth at length the manner in which the mutual company carried on its business of insurance, and alleged that the defendant, Smith, while he was the general superintendent of the mutual company, in September, 1910, clandestinely entered into a contract with his co-defendant to enter at some future time the employment of the American National Insurance Company, and in the meantime to "organize and execute a conspiracy to destroy the appellant and the mutual company."

The fifth and sixth paragraphs alleged that defendants had conspired together to destroy appellant as a competitor against the statutes of the State prohibiting the formation of pools, trusts, etc.

The seventh paragraph sets out specifically that the purpose of the alleged conspiracy was to procure all of the employees of the appellant and their contracts of insurance, and all of their business, property and good will in order to force appellant out of business; that this was to be done by false and fraudulent representations made concerning the appellant that they endeavored, by this means, through Smith, to persuade the employees of the mutual company to breach their contracts of employment and to leave the employment of the appellant and enter the employment of the National Insurance Company; that the conspiracy should be continued as long as necessary to accomplish the purpose intended, and that resort should be had "to intimidation, threats, false and slanderous statements, bribery, false and malicious prosecutions, vexatious litigation, confiscation of property, or any other unlawful means necessary to accomplish the destruction of their competitors."

The eighth paragraph alleged that by the "unlawful means aforesaid" the appellant succeeded in procuring the employees of the mutual company, on the morning of January 9, 1911, to enter the employ of appellee.

The ninth paragraph sets forth that the agents of the appellee company, in pursuance of the false and fraudulent representations, induced the policy holders of the mutual company to abandon their policies with that company and to insure in the national company, which was done by false and fraudulent statements, setting them out; that this was done "falsely, designedly and maliciously, for the purpose of executing the unlawful conspiracy."

The tenth and eleventh paragraphs detailed the further efforts of the defendants to destroy the business of the mutual company by interference with its agents and policy holders, causing the policies to lapse in the mutual company and the appellant company.

The twelfth paragraph specifies the amount of damages alleged to have resulted to appellant by reason of the acts of the alleged conspiracy.

The fourteenth and fifteenth paragraphs allege that suits were brought against the mutual company for the dissolution of the same in pursuance of the conspiracy, and that the purpose of the suits was to destroy the mutual company's business by causing the policy holders therein to drop their policies by false and fraudulent statements concerning the solvency of the mutual company, which are set forth; that the false and fraudulent statements made throughout the various districts in which the mutual company was doing business caused a loss to plaintiff of an income from policy holders in the mutual company to the amount of $ 20,000.

The sixteenth paragraph sets forth the following: "That the defendants during the years 1911 and 1912 have continued, through malice and by means of false and fraudulent promises of compensation and promotion, interfered with the employees of plaintiff, whereby the business of plaintiff was kept deranged; that they have succeeded in securing said employees to leave plaintiff, in breach of contract, and enter the employment of defendants; that they carried to defendants the skill and knowledge of plaintiff's business that they had acquired at plaintiff's expense; that defendants required them to spend their time in harassing, annoying and worrying plaintiff's policy holders, from whom they had formerly collected, and in trying to cause said policy holders to lapse their insurance, all of which was in furtherance of said conspiracy; that because thereof plaintiff has been compelled to employ agents to overcome said wrongs and maintain said insurance, and in defense of its said business has been compelled to spend to its damage the sum of $ 5,000; that in numerous instances plaintiff has been unable to satisfy its said policy holders from the aforesaid attacks of defendants whereby the premiums of plaintiff have been greatly reduced, to its damage in the sum of $ 5,000; that because of said wrong it has been deprived of new business to its damage in the sum of $ 15,000."

The seventeenth paragraph sets forth that one Nelson, plaintiff's former superintendent, joined the conspiracy, through appellee's wrong, and brought suit against the appellant in the sum of $ 50,000; that said suit was brought for the purpose of "annoying and vexing plaintiff's policy holders and employees, and as a basis for further false and fraudulent representations against plaintiff, to its damage in the sum of $ 5,000."

The eighteenth paragraph sets forth certain false and fraudulent representations of Nelson in pursuance of the conspiracy by which appellant alleges that it was brought into disrepute with its policy holders, and as a result caused them to lapse their insurance, to plaintiff's damage in the sum of $ 7,000.

The nineteenth paragraph sets forth that the good name and reputation of plaintiff had been damaged in the sum of $ 80,000.

The twentieth paragraph alleges exemplary damages in the sum of $ 50,000; and the prayer was for judgment for $ 200,000.

The appellees, defendants below, demurred to the complaint, alleging that the same "does not state a cause of action." The court sustained the demurrer. Appellant refused to plead further, whereupon the court dismissed the complaint, and the cause is here on appeal.

Judgment affirmed.

Miles & Wade, for appellant.

The wrongs complained of are actionable, and the complaint states a cause of action, because:

1. The purposes of the alleged conspiracy are unlawful. (a) To suppress competition and establish a monopoly is against public policy and contrary to law. Kirby's Dig., §§ 1976 to 1982; 1 Bishop's Crim. Law, §§ 518-529; 2 Id., § 230. (b) It is contrary to law to wilfully interfere with, entice away, employ and induce laborers and employees to breach their contracts of employment. Kirby's Dig., § 5030. (c) It is a civil wrong to harass and annoy plaintiff's agents and policy holders, and to injure and destroy its business. 77 N.Y.S. 373.

2. The complaint alleges interference with the contractual relations of appellant with its agents and policy holders. 2 E. & B. 216; Bigelow on Torts, 23, 24; Id., 133-6; 86 Ark. 130; 6 Q. B. Div. 333; 70 N.J.Eq. 541; 76 N.C. 355; 122 Ga. 509; 50 W.Va. 611; 188 Mass. 353; 23 Fla. 206; 90 Me. 166; 77 Md. 396; 101 Ill.App. 355; 177 Mass. 485; 59 W.Va. 253; 43 Ga. 601; 66 N.Y. 82; 2 Wend. 385; 19 Id. 305; 5 O. Cir. 40; 12 Mass. 115.

3. It states a cause of action because of the wrong of appellees in employing the superintendents, agents and other employees of appellant, with their knowledge, skill and influence over its policy holders. 90 Ark. 301; 31 Cyc. 1130; 8 O. Dec., Reprint, 32; 2 Hare, 393; 3 Ch. 462-1892; 38 N.Y.S. 487; 2 Q. B. 35-1895; 14 Ch. Div. 596-1880; 15 So. 956; 50 Neb. 248; 19 N.Y. 9; 130 N.Y. 134; 6 N.Y.S. 507; 86 Mo. 546; 52 N.W. 131.

4. Because of the unlawful means employed to injure appellant in its business, in (1) interfering with existing business, 61 Wash. 107, and (2) procuring refusal to make subsequent contracts of employment and insurance. Bigelow, Torts, 115.

5. Because of malice of appellees toward appellant as shown in their efforts to destroy it. The thing done, and all the methods employed to do it, may be lawful, still it may be actionable because of the malicious motive that actuates the doer.

Nothing can justify the malicious interference, annoyance, harassing and worrying of plaintiff's agents and policy holders, alleged in the complaint. 107 Mass. 555; 57 N.E. 1011; 107 Minn. 145; 161. Fed. 219; 9 L. R. A. (N. S.) 904, and note; 118 Ky. 662; 86 F. 1017; 26 So. 791; 150 F. 419; 29 L. R. A. (N. S.) 869, and note.

6. Because of the number of persons associated together in the conspiracy. The fact that the defendant company conspired with others, and with them formed a conspiracy to do something that it could not do alone, created a...