People ex rel. Barton v. American Auto. Ins. Co.

• Decision Date: 18 April 1955
• Citation: 282 P.2d 559,132 Cal.App.2d 317
• Court: California Court of Appeals Court of Appeals
• Parties: The PEOPLE of the State of California, on the relation of Ardy V. BARTON, Plaintiff and Appellant, v. AMERICAN AUTOMOBILE INSURANCE COMPANY a foreign corporation, and Associated Indemnity Corporation, a domestic corporation, Defendants and Respondents. Civ. 20659.

Page 559

282 P.2d 559

132 Cal.App.2d 317

The PEOPLE of the State of California, on the relation of Ardy V. BARTON, Plaintiff and Appellant, v. AMERICAN AUTOMOBILE INSURANCE COMPANY a foreign corporation, and Associated Indemnity Corporation, a domestic corporation, Defendants and Respondents.

Civ. 20659.

District Court of Appeal, Second District, Division 1, California.

April 18, 1955.

Hearing Denied June 16, 1955.

Edmund G. Brown, Atty. Gen., Charles A. Barrett, Deputy Atty. Gen., for appellant.

Henry G. Bodkin, Los Angeles, Jerry Giesler, Beverly Hills, Ardy V. Barton, Los Angeles, for relator.

Parker, Stanbury, Reese & McGee, Raymond G. Stanbury, Los Angeles, Pilsbury, Madison & Sutro, A. B. Tanner, Charles F. Prael, San Francisco, for respondents.

WHITE, Presiding Justice.

This is an appeal by plaintiff from a judgment for defendants, entered upon plaintiff's failure to amend after a general demurrer was sustained to plaintiff's first amended Petition in Quo Warranto.

Defendants were insurance companies authorized to do and doing business in the State of California. Included in the business of defendants was the writing of policies of insurance covering negligence of automobile drivers.

In the first amended petition in quo warranto, plaintiff alleged that defendants did cause to be published in various nationally distributed magazines, including 'Life' and 'The Saturday Evening Post', advertisements relating to the subject of excessive jury verdicts.

Attached to the amended petition were photostatic copies of the advertisements upon which plaintiff's petition was based.

On the first advertisement so set forth (marked Exhibit 'A'), appears the picture of a woman holding a letter in her hand and beneath the picture appears the following:

'Me? I'm Paying for Excessive Jury Awards?

'Yes, Mrs. Jones, you pay for liability and damage suit verdicts whether you are insured or not.

'For example, higher insurance rates paid by the folks who helped fill your market basket--farmer, processors, truckers, wholesalers and retailers--are reflected in your grocery bill.

'You see, claims against insurance companies are paid out of policyholders' premiums. When jury awards are excessive, all business firms' premiums must be increased.

'And since insurance premiums are part of the overall cost of doing business, higher premiums must be passed on to you and every other member of the buying public through higher prices.

'Next time you serve on a jury, remember this: When you are overly generous with an insurance company's money, you help increase not only your own premiums, but also the cost of every article and service you buy.

'Most claims for damages are legitimate and reasonable, and are amicably settled out of court. However, as jurors tend more and more to give excessive awards in cases that do go to court, such valuations are regarded as establishing the 'going' rate for the day-to-day out-of-court claims all of which means increased insurance premium cost to the public.

'American-Associated Insurance Companies.

'American Automobile Insurance Company--Associated Indemnity Corporation--Saint Louis 2, Missouri'.

On the next advertisement (marked Exhibit 'B') appears the picture of a jury being sworn to try a case, below which appears the following:

'* * * A True Verdict Render According To The Law and The Evidence.

'Jury service is often a difficult responsibility because, when making decisions, we always are tempted to listen to our hearts as well as our heads.

'But the Juror's Oath demands that jurors decide 'according to * * * the evidence.' Jurors sometimes forget this. Ruled by emotion rather than facts, they arrive at unfounded or excessive awards * * * verdicts occasionally even higher than requested!

'These men and women may be scrupulously honest. But as jurors, they feel in their hearts that the injured person--although he may have caused the accident--is entitled to an award.

'Because insurance rates depend on claim costs, these honest jurors cost millions of policyholders, including themselves, countless extra dollars in premiums every year.

'When you, as a juror, sit in judgment on a suit involving personal injuries, be fair with the public's--and your--money. Reach a decision according to the evidence.' Then follows the same language as appears in the last two paragraphs of Exhibit 'A'.

The third advertisement (marked Exhibit 'C') presents the picture of an officer sitting outside a closed jury room, and below which appears the following:

'Your Insurance Premium is Being Determined Now.

'This could be any courtroom in the country--Behind the locked door, twelve men and women are reaching a verdict involving a defendant protected by a casualty insurance company. What they decide affects your pocketbook.

'All claims against insurance companies have to be paid out of funds created by premiums from policyholders. When these funds are insufficient, insurance rates must be increased.

'Casualty insurance companies have been losing an average of $11 on every $100 of earned automobile liability premiums. More accidents are partly responsible. So are excessive jury awards, rendered by jurors who feel they can afford to be generous with the 'rich' insurance company's money. Actually, jurors who are responsible for awards in excess of what is just and reasonable are soaking you by raising insurance rates.' This is followed by a repetition of the statements contained in the last two paragraphs of the above Exhibit 'A'.

In the fourth advertisement (marked Exhibit 'D') is found a photograph of a father and son engaged in conversation, and below which appears the following:

'Bill Set Me Straight on Jury Awards.

'Bill's my son--a senior in law school. Last night I told him about my recent experience as a juror.

'As a businessman, I knew the woman involved in the trial was legally at fault. She walked into a moving car. But she was a widow with a child to support. And I felt certain that the driver of the car was insured.

'The doctor said that the widow wouldn't be able to hold down a steady job for at least a year, so we awarded her a healthy sum. After all, her child must eat.

"But the law,' said Bill, 'clearly states that the verdict must be based on legal liability, fault for the accident, as determined by the evidence.'

"The insurance company can afford to pay,' I protested.

"But claims,' argued Bill, 'must be paid out of premiums belonging to thousands of policyholders--including widows, too. And don't forget, when premium collections do not cover claims, everybody's insurance rates--including yours--have to go up.'

'You know, sometimes it pays to listen * * * even to your son.' Following this is the same wording as contained in the last two paragraphs of the aforesaid Exhibit 'A'.

Exhibit 'E', also attached to plaintiff's petition, is a page taken from 'Shop Talk', a publication apparently sponsored by 'American-Associated Insurance Companies', of St. Louis, Missouri. The page contains an article upon the campaign being conducted 'To combat the important problem of unjust jury awards', and in the lower lefthand corner reference is made to the above-mentioned advertisements in 'Life' and 'Saturday Evening Post', with the comment:

'More Than One Out of Every Three potential jurors will see at least one of these advertisements appearing in Life and The Saturday Evening Post. Based on total readership-per-issue figures for each magazine more than 70,000,000 persons will see these messages'.

It was further charged in the petition that the foregoing publications amounted to a contempt of the judicial process and a conspiracy formed with the intent to corrupt jurors.

The petition prayed for a restraint against further publication of said or similar matter or forfeiture of defendants' corporate rights in the State of California, or that defendants be required to pay a suitable fine as punishment.

Defendants filed a general demurrer on the grounds that the petition sought to violate and suppress respondents' right of freedom of speech and of the press guaranteed by the Constitution of the United States and by the Constitution of the State of California, and that the facts alleged were insufficient to show a violation of Penal Code section 95, a contempt of the judicial process or a conspiracy or intent to corrupt jurors, or grounds for a proceeding in quo warranto. The demurrer was sustained with leave to amend. Plaintiff declined to amend and a judgment of dismissal was entered.

The theory of appellant in this proceeding is thus stated in its brief: 'This appellant is the State of California, and if the conduct of a corporation, the creature of this State, is in violation of its penal statutes, this appellant, the State of California, may bring an action against the offending corporation for dissolution, fine restraining order, etc., or any combination of these remedies.' Corporations Code, section 4690; Code Civ.Proc., section 803.

Because we regard it as the main if not determinative issue presented by this controversy, we shall first give consideration to respondents' claim that their demurrer was properly sustained because this proceeding constitutes a form of prior restraint upon publication barred by the free speech and free press provisions of the Federal and State Constitutions, Constitution of the United States, Amendments I and XIV, Section 1; Constitution of the State of California, Article I, Section 9.

From time immemorial the most conspicuous feature of history has been the struggle between liberty and authority. Undoubtedly, the framers of our Constitution and Bill of Rights, as well as those who brought into being our own California Constitution, recognized that at the time of the adoption of these immortal documents, as in ages past, we are not without tragic proof that the exacted power of some governments to ignore the inalienable right of the...