Miller v. Minneapolis Underwriters Ass'n

• Decision Date: 11 June 1948
• Docket Number: No. 34606.,34606.
• Citation: 226 Minn. 367,33 N.W.2d 48
• Parties: MILLER v. MINNEAPOLIS UNDERWRITERS ASS'N, Inc., et al
• Court: Minnesota Supreme Court

33 N.W.2d 48

226 Minn. 367

MILLER v. MINNEAPOLIS UNDERWRITERS ASS'N, Inc., et al

No. 34606.

Supreme Court of Minnesota.

June 11, 1948.

Appeal from District Court, Hennepin County; William A. Anderson, Judge.

Action by J.T. Miller against the Minneapolis Underwriters Association, Inc., and others for a forfeiture of the corporate franchise of the association and to enjoin its officers from enforcing certain by-laws, on ground that the by-laws and practices thereunder were in violation of anti-trust statute. From a judgment for defendants, the plaintiff appeals.

Affirmed.

Willard C. Lindsay and Russell Smith, both of Minneapolis, for appellant.

Stanley V. Shanedling, of Minneapolis, Walter H. Bennett, of New York City, and Mark J. Woolley, of Minneapolis, for respondents.

MATSON, Justice.

Action to adjudge a forfeiture of the corporate franchise of the Minneapolis Underwriters Association, Inc. (hereinafter called the association) and to enjoin its officers from enforcing certain by-laws of the association on the ground that such by-laws and certain practices thereunder violate M.S.A. § 623.01 by so unreasonably restricting and restraining competition in the insurance business as to constitute a conspiracy and boycott in restraint of trade. The appeal by plaintiff, a nonmember of the association, from a judgment for defendants presents the question whether the trial court's findings, conclusions, and judgment are sustained by the evidence.

The association, organized in 1883 and incorporated in 1923, is a voluntary, non-stock, nonprofit membership corporation composed of fire insurance agents in the city of Minneapolis. Its membership is not open to insurance companies but is limited to their agents. Out of a total of 254 companies writing insurance in Minneapolis, 173 are stock companies and 81 are mutuals. The agents (inclusive of approximately 150 firm agencies) of 159 stock companies are members of the association and write from 70 to 80 percent of the premium volume of all fire insurance written in Minneapolis. The balance of the insurance is written by nonmember agents, who represent 81 mutual and 14 stock companies. The number of agent members is not indicative of the number of licensed agents represented in the association, because any agent member may have in his employ, or affiliated with him, other individual sales agents who are registered as solicitor members. Plaintiff, who is not a member of the association, is the general agent for several insurance companies and as such employs numerous subagents.

We are particularly concerned with three provisions of the by-laws of the association, namely, (1) the "Maintenance of Rates Rule," whereby all members are required to write insurance at the rates promulgated by a statutory bureau known as the Minneapolis Fire Underwriters Inspection Bureau; (2) the "In-or-Out Rule," whereby members are prohibited from representing any company whose agents are not all members of the association; and (3) the "Non-Intercourse Rule," whereby members agree not to place insurance on Minneapolis property with any agent or company except in compliance with the bylaws, and further agree not to accept brokerage risks except from fellow members. For a first violation of the by-laws a member is subject to a fine, and for a second violation to both fine and expulsion from membership.

The Minneapolis Fire Underwriters Inspection Bureau (hereinafter called the bureau), referred to in the "Maintenance of Rates Rule," is a rate-making bureau legally established pursuant to the Minnesota fire insurance rating bureau law (M.S.A. §§ 71.01 to 71.06), and any rates established by such bureau, in order to prevent discriminatory and unjust rates, are at all times subject to review and revision by the state insurance commissioner. In establishing rates, the bureau, under a credit and debit system, classifies the risks according to the presence or absence of fire protection and fire prevention facilities. The basic premium rate may be increased by charging against a particular risk certain debits for a deficiency of minimum fire protection safeguards. On the other hand, another risk may receive a reduction in the basic rate by virtue of credits allowed for the presence of fire protection facilities. Among the insurance agencies, inclusive of the members of the association, there is considerable competition in securing for their respective customers all credits to which they are justly entitled, as well as in avoiding unjustifiable debits.

The rating bureau statute expressly provides that any insurer may deviate from the bureau rate, but if the deviation is downward, then such insurer must maintain the lower rate for a minimum period of one year with respect to the class of property involved. An insurance agent is not compelled to join the association, but if he elects to do so he thereby subjects himself to the by-laws, which are designed to compel all members to charge the rates fixed by the bureau, and not to deviate therefrom without first obtaining permission from the association. In order to meet competition from a deviating nonmember, the association may, in so-called "relief cases," give a member express permission to broker a specified line of insurance at a variation rate with a nonmember agent who represents a deviating company. With the exception of such relief cases in which permission to deviate has been granted, it is the practice of the association to require the members not only to charge the bureau rate, but also not to place, or to renew, any insurance with a nonmember. Aside from the relief case exceptions, it appears that on certain occasions members have refused to become agents for companies represented by plaintiff, a nonmember, and that by reason of the by-laws members have refused to place or continue insurance with plaintiff's (as well as with other) companies. It has been the regular practice of the association to remind individual members of their obligations whenever a threatened violation of the by-laws has come to light.

1. Plaintiff is not entitled to injunctive relief. The entire case has been tried on the theory established by plaintiff's pleadings, which simply allege that defendants by certain acts of conspiracy and boycott have brought about a restraint of trade for the purpose of stifling competition in the insurance business and in order to maintain maximum insurance premium rates in violation of §§ 623.01 and 623.02. The basic antitrust section, namely, § 623.01, is a criminal statute, and has been so recognized. Campbell v. Motion Picture M. O. Union, 151 Minn. 220, 186 N.W. 781, 27 A.L.R. 631. Here, we have nothing more than a purported violation of a criminal statute. We have no allegation or showing that plaintiff's property or plaintiff's rights of a pecuniary nature have been actually injured or threatened. An inference might be drawn that certain practices of the association have been detrimental to plaintiff, but such an inference cannot supply the positive proof of the actual or threatened injury required for a granting of injunctive relief. It is not the province of a court of review to draw inferences as to the showing that could have been made, but which in fact was not made, upon the trial below. Equity will not enjoin purely criminal acts, but on the other hand the criminality of an act will not bar injunctive relief if there is otherwise ground for it. Higgins v. Lacroix, 119 Minn. 145, 137 N.W. 417, 41 L.R.A.,N.S., 737. Although equity will not enjoin a criminal act, it does have jurisdiction to enjoin an act which actually injures or threatens to injure property or rights of a pecuniary nature, and such jurisdiction is not destroyed by the fact that the act is accompanied by, or is itself, a violation of the criminal law. Glover v. Malloska, 238 Mich. 216, 213 N.W. 107, 52 A.L.R. 77. The criminality of the act neither gives nor ousts jurisdiction in chancery.¹ An injunction will be granted against a criminal act on the ground of actual or threatened injury to the property rights of an individual only if the complainant clearly shows facts and circumstances justifying the relief desired. 28 Am.Jur., Injunctions, § 150.

Obviously, § 613.70 is not involved on this appeal. The general rule, with certain exceptions not here applicable, is that litigants are bound in this court by the theory upon which the action was tried below. Skolnick v. Gruesner, 196 Minn. 318, 265 N.W. 44.

2. The remaining issue relates to plaintiff's attempt to vacate or annul the association's corporate charter pursuant to § 623.02, which provides that every domestic corporation violating, directly or indirectly, any provision of § 623.01 "shall forfeit all of its corporate franchises."

Section 623.02 further provides: "* * * The attorney general and the several county attorneys shall begin and conduct, in the district court, all actions and proceedings necessary to enforce the...