Hartford Fire Ins. Co. v. Raymond

• Decision Date: 08 June 1888
• Citation: 38 N.W. 474,70 Mich. 485
• Court: Michigan Supreme Court
• Parties: HARTFORD FIRE INS. CO. v. RAYMOND, COMMISSIONER OF INSURANCE.

38 N.W. 474

70 Mich. 485

HARTFORD FIRE INS. CO. v. RAYMOND, COMMISSIONER OF INSURANCE.

Supreme Court of Michigan

June 8, 1888

Petition for mandamus.

Moses Taggart, Atty. Gen., (N. C. Burch, of counsel,) for respondent.

LONG J.

Petition is filed in this cause for mandamus to compel the respondent, the commissioner of insurance of the state of Michigan, to vacate an order made by him on the 2d day of April, 1888, revoking the license of relator to do business within this state. The relator is an insurance corporation organized and existing under the laws of the state of Connecticut, and for many years has transacted an insurance business in the state of Michigan. In February, 1887, it filed the necessary proofs and papers with the commissioner of insurance to obtain, and did obtain, a renewal of its authority to do business in the state of Michigan, and paid to the state treasurer the specific taxes due from it for the preceding year, and continued to do business in this state for the year 1887. At its session in 1887 the legislature of this state passed an act which was approved June 28, 1887, entitled "An act to regulate the manner in which insurance companies, not organized under the laws of this state, but doing business within it, shall transact their business." Section 1 of this act, by its terms requires all fire, marine, or inland insurance companies or associations, in addition to the requirements of the law in force, to file with the commissioner of insurance an undertaking that it will not directly or indirectly enter into any contract, agreement, arrangement, or undertaking of any nature or kind whatever with any other company, companies, association, or associations, or the agents of their respective companies or associations, in the business transacted in this state. Section 2 absolutely forbids the making by any such insurance company of any contract of the character mentioned in section 1. Section 3 prohibits the agents of any such company or association from making any such contract with the agent or agents of any other company. Section 4 declares it unlawful for any agent solicitor, broker, surveyor, or any one in any other capacity to transact or aid in transacting business for any company violating said act. Section 6 makes it the duty of the commissioner to provide a blank for contract required under the first section of the act, and to mail the same to each company not incorporated under the laws of this state, but doing business therein under authority from the commissioner of insurance. This section makes it the express duty of the commissioner of insurance to "revoke the certificate of each and every of said companies or associations which shall not file such undertaking" properly filled, executed and authenticated within 30 days after the mailing of said blanks to said companies. Section 7 makes it the duty of the commissioner of insurance, on notice of "any violation of the provisions of this act," to investigate, and, if satisfied that any company is violating its undertaking, or section 2 of the act, or that its agents are so violating the same, "to forthwith revoke the certificate granted in behalf of such company or association."

In January, 1888, relator applied to the commissioner of insurance for a renewal of its authority, and on February 28, 1888, filed with the commissioner the agreement provided for by the act of 1887. This agreement is as follows: "Know all men by these presents, that the Hartford Fire Insurance Company, of the city of Hartford, in the state of Connecticut, a body corporate by or under the laws of Connecticut, and fully authorized to conduct the business of fire or fire and marine and inland insurance, having been admitted or having applied for admission to transact the business of fire insurance in the state of Michigan, in conformity with the laws thereof, and in compliance with act No. 285 of the Public Acts of 1887, does hereby undertake, stipulate, promise, and agree that it will not directly or indirectly enter into any contract, agreement, arrangement, or undertaking of any nature or kind whatever with any other company, companies, association, or associations, the object or effect of which is to prevent open and free competition between it and said company, companies, association, or associations, or the agents of their respective companies or associations, in the business transacted in the state of Michigan, or in any part thereof." This agreement was signed by the president and secretary of the company, and to it was affixed its corporate seal. At the time of filing this agreement with the commissioner, the relator served upon the commissioner the following protest: "To the Honorable, the Commissioner of Insurance of the State of Michigan: Act No. 285 of the state of Michigan requires insurance companies, not organized under the laws of your state, as conditions precedent to transacting business therein, to execute and file with you an undertaking that they will not, directly or indirectly, enter into any contract, agreement, arrangement, or undertaking of any nature or kind whatever with any other company, companies, association, or associations, the object or effect of which is to prevent open and free competition in the business transacted in the state, or any part thereof. This act also, in terms, makes it unlawful for agents of companies to enter into like contracts for similar purposes, and attempts to confer upon you and your deputy power to investigate alleged violations of the act, and, if satisfied therefrom that any company or its agent has violated the provisions thereof, then to revoke the certificate granted in behalf of such company, and cause public notice of such revocation to be given. It is the desire of this company, while transacting business in the state of Michigan, to comply with and observe the laws thereof. The form of the undertaking prepared by you under this act we have executed and enclose herewith. In executing and transmitting this instrument to you, this company does hereby make and transmit therewith its most earnest protest against the constitutionality of the act in question. In executing the annexed agreement this company must not be understood as consenting to the jurisdiction attempted to be conferred upon you by the seventh section of said act, or that the authority of this company to do business in the state of Michigan may be revoked in case you or your deputy should become satisfied that this company is represented by any agent who is violating the provisions of section 3 of said act; and this company, in executing and transmitting the annexed undertaking, does not intend to consent, and shall not be understood as consenting, to all the provisions of said act, or waiving its rights to question the validity thereof, should it become necessary hereafter." This protest was signed by the president and secretary of the company. The renewal certificate was duly issued to the relator by the commissioner of insurance, and the relator continues to do business within this state.

On March 20, 1888, the commissioner of insurance served upon the relator the following written notice:

" Messrs. Geo L. Chase, President, and P. C. Royce, Secretary, Hartford Fire Insurance Company-GENTLEMEN: It having come to my knowledge that the Hartford Fire Insurance Company has violated the provisions of section 2 of act No. 285, Public Acts of Michigan of 1887, by entering into a contract, agreement, or arrangement with the Michigan Rating and Inspection Bureau, and object of which is to prevent open and free competition between the companies doing business in this state. You are hereby notified to appear before me, at my office in Lansing, on Wednesday, the 28th day of March, 1888, at 10 o'clock A. M., to show cause why the certificate of authority to transact business in this state, heretofore granted to said company, shall not be revoked as provided for in section 7 of said act.

"Respectfully yours,

"HENRY S. RAYMOND, Comm'r of Insurance."

On March 28, 1888, the relator appeared specially before said commissioner, by Hon. Isaac Marston, its attorney, for the sole and only purpose of objecting to such proceedings for the following reasons: The said act is unconstitutional and void: (1) In its attempts to confer upon the commissioner of insurance, an officer appointed by the governor, judicial power. (2) That said act does not provide or point out any way or method of notifying a company interested that an investigation is about to be had under the provisions of section 7. (3) That said act does not provide for or require any complaint, charge, or specification, informing such company of the way or manner in which it is claimed such company has violated the provisions of said act, or give said company an opportunity to appear and be heard upon such investigation. (4) That said act deprives said company of its right to a trial by jury, and attempts to deprive it of valuable rights and privileges without due process of law. (5) That the notice issued in this case does not set forth or contain any charge showing a violation of the act, nor point out with reasonable certainty how or in what manner the said act has been violated by said company.

On the hearing before the commissioner, on the 28th day of March, 1888, the said commissioner of insurance produced in evidence a printed circular issued by David Beveridge, the material parts of which are as follows:

"PROSPECTUS.

"The enactment by the Michigan Legislature of a law forbidding such agreements between fire insurance companies, as tend to prevent open and free competition, would appear to render necessary some different plan for the conduct of the business. Assuming that

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