Moresh v. O'Regan

• Decision Date: 22 October 1936
• Parties: MORESH v. O'REGAN, County Prosecutor, et al.
• Court: New Jersey Court of Chancery

187 A. 619

MORESH

v. O'REGAN, County Prosecutor, et al.

Court of Chancery of New Jersey.

Oct. 22, 1936.

Syllabus by the Court.

1. A contract which for a consideration, undertakes to do anything other than to pay a sum of money upon the destruction or injury to something in which the other party has an interest is not a contract of insurance.

2. The petitioner was indicted for violating the provisions of section 88 of the Insurance Act, as amended by P.L.1928, p. 396 (Comp.St.Supp.1930, § 99—88). He was engaged in the glazing business. He, for a sum of money, agreed with and obligated himself to his customers located in the city of Bayonne, N. J., for a certain period, "to service the glass store front in the premises of said customers, which service consisted of (1) repairing store front glass by tightening bars or clamps to keep the glass in firm condition, and (2) to replace all store front glass broken in the said premises." Held, the said agreement is not a contract of insurance, and that it is not a violation of the Insurance Act; and that the petitioner is entitled to an order restraining the prosecution of criminal proceedings.

3. Equity under certain circumstances, may enjoin a public official from proceeding with a criminal action.

4. The right of an individual to conduct an insurance business sustained.

Suit by Irving Moresh against Daniel T. O'Regan, Prosecutor of the County of Hudson, and others. On order to show cause.

Order and judgment for complainant.

William Boorstein, of Jersey City (Julius Lichtenstein, of Hoboken, of counsel), for complainant.

Daniel O'Regan, Prosecutor of the Pleas, of Jersey City, and Frank G. Schlosser, Asst. Prosecutor of the Pleas, of Hoboken, for defendant O'Regan, County Prosecutor.

Louis J. Cohen, Asst. Atty. Gen., for Carl K. Withers, Commissioner of Banking and Insurance.

EGAN, Vice Chancellor.

The petitioner was engaged in the glazing business in the city of Bayonne, county of Hudson, and state of New Jersey, from about the vear 1911 up to the filing of the petition herein. In the year 1933, he entered into contracts with his customers in the said city whereby, for a sum of money, he agreed with and obligated himself to them, for a certain period, "to service the glass store front in the premises of said customers, which service consisted of (1) repairing store front glass by tightening bars or clamps to keep the glass in firm condition, and (2) to replace all store front glass broken in the said premises." The petition says that the business of "service: contracts is limited solely to properties located in the City of Bayonne and only to such persons as are specially chosen by the petitioner."

The defendant, the prosecutor of the county of Hudson, says that the complainant's "service" business is one of insurance and is being conducted in violation of the provisions of the insurance laws of the state of New Jersey. He, in consequence, submitted the facts to the grand jury of Hudson county for its consideration, and the petitioner was indicted by that body at the December term, 1934, for an alleged violation of the provisions of the Insurance Act. The indictment is based upon the statute entitled "An Act to provide for the regulation and incorporation of insurance companies and to regulate the transaction of insurance business in this state." P.L.1902, p. 407, c. 134 [2 Comp.St.1910, p. 2838 et seq. § 1 et seq.] as amended and supplemented. (Comp.St.Supps. § 99—1 et seq.) Section 88 of said act was amended by P.L.1928, p. 396, c. 221 (Comp.St.Supp.1930, § 99— 88) and it now provides that: "No person or firm nor any company organized under the laws of this State or of any other State or foreign country, himself, itself or themselves, or by his, its or their brokers, agents, solicitors, surveyors, canvassers or other representatives of whatever designation, nor any such broker, agent, solicitor, surveyor, canvasser or other representative, shall solicit, negotiate or effect any contract of insurance of any kind, including all kinds of insurance described in this act, or sign, deliver or transmit, by mail or otherwise, any policy, certificate of membership or certificate of renewal thereof, or receive any premium, commission, fee or other payment thereon, on any property or thing, or on the life, health or' safety of any person, or maintain or operate any office in this State for the transaction of the business of insurance, or in any manner, directly or indirectly, transact the business of insurance of any kind whatsoever, withing this State, unless such company, person or firm, shall be authorized to do the same under the provisions of the laws of this State. Any person, firm or company violating any of the provisions of this section shall be guilty of a misdemeanor."

Section 89 of said act provides (P.L. 1902, p. 446 (2 Comp.St.1910, p. 2867 § 89): "The penalty for each violation of this act, except any failure of any company to file an annual statement, shall be five hundred dollars and all costs of suit; all penalties provided by this act shall be sued for and collected by the commissioner of banking and insurance in an action upon contract in the nature of an action for debt in the name of the state; the first process against any person may be a capias ad respondendum, and any person against whom any judgment shall be obtained shall be committed to the county jail until such penalty and costs are paid; one-half of such penalty, when recovered, shall be paid by the commissioner of banking and insurance to the local firemen's relief association in the city, town or township wherein the violation was committed, if there be such an association therein, and if not, then to be paid in equal shares to the several firemen's relief associations in the county wherein the violation occurred, and if none exist in the county then to be paid to the said commissioner, to be distributed by him pro rata to each of the firemen's relief associations in the state, as other funds are by law distributed by him to such associations, and the other half to the said commissioner for the use of the state; and the necessary expenses for enforcing the provisions of this act, when not otherwise provided for, shall be paid by said commissioner out of the fines so collected and the fees and taxes paid by insurance companies of other states and foreign countries."

The commissioner of banking and insurance, the petition alleges, has threatened to institute proceedings against the petitioner under this lastmentioned section (89) for the recovery of penalties there in mentioned because of his execution of all such service contracts.

The petitioner contends he is within his rights to enter into the related contract and argues that the quoted sections 88 and 89 of the Insurance Act, as far as they purport to prohibit or forbid an individual from transacting the business of insurance and to provide penalties for the transacting thereof, are unconstitutional and void; and, he alleges that the proposed trial of the indictment by the prosecutor of the pleas of Hudson county will result in irreparable injury to him and to his business. Upon the filing of the petition herein, an order to show cause was issued to (1) enjoin the prosecution of criminal proceedings under section 88 of the Insurance Act, and of the civil proceedings by the commissioner of banking and insurance for recovery of the penalties provided in section 89 of said act for violation of the provisions of section 88 thereof; and (2) for a declaratory judgment to determine (a) the constitutionality of the Insurance Act so far as the same attempts to prohibit individuals from carrying on the insurance business, and (b) for a construction of the Insurance Act to determine whether the business of the petitioner is actually within the meaning of the act.

At the time of the argument on the order to show cause, it was stipulated by counsel that the instant case was to be considered and decided by the court upon the verified petition filed herein and the briefs then filed, and to be filed, by the petitioner and both defendants.

It is contended that the right to earn a living is a property right. That point has been affirmatively decided by our courts. It has been most recently settled in an opinion of the Court of Errors and Appeals in the case of Cameron v. International Alliance T. S. E., 118 N.J.Eq. 11; 176 A. 692, 97 A.L.R. 594. The petitioner is unquestionably vested with this property right. That it applies to the issue, there is no doubt in my mind. The petitioner charges that the statute under which he was indicted is invalid, and because of such invalidity, he is not barred from engaging in the insurance business; and that when the state interferes with his right to so engage, it interferes with his vested property right to earn a living. There is force to his argument. If the statute cannot be sustained then the state's action in prosecuting tinder it cannot be sustained. The defendants question the jurisdiction of this court and say the petitioner, under the facts, is not in the proper forum. I disagree with them. The complainant comes to the right tribunal. Vice Chancellor Church in Brex v. Smith, 104 N.J.Eq. 386, 146 A. 34, 35, in discussing the right of a court of equity to enjoin a public official from proceeding with a criminal action, said:

"The prosecutor contends that a court of equity has no jurisdiction, because it cannot enjoin a public official, stating that this court cannot stay or interfere with a criminal proceeding. In the first place, this statement is too broad, for the courts have held that under certain circumstances this may be done in criminal cases. In Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. [714] 715, 13 L.R.A.(N.S.) 932, 14 Ann.Cas. 764 (to cite but one), the United States Supreme Court said, after citing numerous cases: 'These cases show that a court of equity is not...