Queen Ins. Co. v. State

• Decision Date: 14 December 1893
• Citation: 24 S.W. 397
• Parties: QUEEN INS. CO. et al. v. STATE ex rel. ATTORNEY GENERAL.
• Court: Texas Supreme Court

24 S.W. 397

QUEEN INS. CO. et al. v.STATE ex rel. ATTORNEY GENERAL.

Supreme Court of Texas.

December 14, 1893.

Error from court of civil appeals of third supreme judicial district.

Action on relation of C. A. Culberson, attorney general, against the Queen Insurance Company and others, to restrain a combination between them to fix rates and agents' commissions, and to restrain said companies from doing business in the state.From a judgment of the court of civil appeals (22 S. W. 1048) affirming the district court's judgment for plaintiff, defendants bring error.Reversed.

Leake, Henry, Miller & Reeves, for plaintiffs in error.Chas. A. Culberson, Atty. Gen., and Frank Andrews, Asst. Atty. Gen., for defendant in error.

GAINES, J.

This action was brought in the name of the state of Texas, by its attorney general, against the Texas Insurance Club, an association of insurance agents, and against 57 foreign insurance corporations doing business in this state under permits granted in pursuance of the statutes of the state.It is alleged in the petition that the Texas Insurance Club was created with the consent and by the procurement of the other defendants, with the object of organizing a combination for the purpose of fixing a uniform rate of insurance throughout the state upon a graduated scale, and of thereby preventing competition among each other, and at the same time of establishing a fixed rate of commission to be paid to the agents of such companies.It is claimed in the petition that the acts charged against the defendants show an illegal combination, as defined and denounced in the act of March 30, 1889, entitled "An act to define trusts and to provide for penalties and punishment of corporations, persons, firms and associations of persons connected with them, and to promote free competition in the state of Texas."Laws 1889, p. 141.It is also claimed in the petition that the combination, purposes, and acts of the defendants are in restraint of trade and contrary to public policy, and therefore illegal at common law.The prayer was that the Texas Insurance Club be dissolved, and that the permits of the other defendants be canceled, or that the defendants be enjoined from carrying out the objects of the combination as alleged in the petition.The trial court held that the act of March 30, 1889, did not apply to a combination to fix rates of insurance or the commissions of the agents of insurance companies, and also that the act was unconstitutional and void, by reason of the thirteenth section, which excepted from its operation "agricultural products and live stock while in the hands of the producer or raiser;" and sustained a demurrer to so much of the petition as charged a violation of that statute.However, the demurrer to that part of the petition which charged a combination alleged to be illegal at common law was overruled; and after hearing the evidence the court held that the effective allegations of the bill were sustained by the proof, and entered a decree enjoining the defendants from making or carrying out any agreements between them establishing fixed rates of insurance, or fixing the percentage of commissions to be paid to their agents.The defendants appealed, and the attorney general filed cross assignments of error.The court of civil appeals affirmed the judgment of the district court in every particular, but held that the statute of March 21, 1889, was invalid, because it nowhere in terms declared that "trusts" such as are defined in the first section are illegal.Assuming that the whole case is before us upon the pleadings and facts as determined by the court of civil appeals, we will proceed to dispose of the questions involved in it, so far as may be necessary for its disposition.

The act of March 30, 1889, reads as follows: "Act to define trusts and to provide for punishments and penalties of corporations, persons, firms and associations of persons connected with them, and to promote free competition in the state of Texas.Section 1.Be it enacted by the legislature of the state of Texas: That a trust is a combination of capital, skill or acts by two or more persons, firms, corporations, or associations of persons, or of either two or more of them for either, any, or all of the following purposes: First — To create or carry out restrictions in trade.Second — To limit or reduce the production or increase or reduce the price of merchandise or commodities.Third — To prevent competition in manufacture, making, transportation, sale or purchase of merchandise, produce or commodities.Fourth — to fix at any standard or figure, whereby its price to the public shall be in any manner controlled or established, any article or commodity of merchandise, produce or commerce intended for sale, use or consumption in this state.Fifth — To make or enter into, or execute or carry out any contract, obligation or agreement of any kind or description by which they shall bind or have bound themselves not to sell, dispose of, or transport any article or commodity or article of trade, use, merchandise, commerce or consumption below a common standard, or by which they shall agree in any manner to keep the price of such articles, commodity, or transportation at a fixed or graduated figure, or by which they shall in any manner establish or settle the price of any article or commodity or transportation between them or themselves and others to preclude a free and unrestricted competition among themselves or others in the sale or transportation of any such article or commodity, or by which they shall agree to pool, combine or unite any interest they may have in connection with the sale or transportation of any such article or commodity, that its price might in any manner be affected.* * * Sec. 4.Every foreign corporation violating any of the provisions of this act is hereby denied the right and prohibited from doing any business in this state, and it shall be the duty of the attorney general to enforce this provision by injunction or other proceedings in the district court of Travis county, in the name of the state of Texas.* * * Sec. 6.Any violation of either or all the provisions of this act shall be and is hereby declared a conspiracy against trade, and any person who may be and may become engaged in any such conspiracy, or take part therein, or aid or advise in its commission, or who shall as principal, manager, director, agent, servant or employe, or in any other capacity knowingly carry out any of the stipulations, purposes, prices, rates or orders thereunder, or in pursuance thereof, shall be punished by fine not less than fifty nor more than five thousand dollars and by imprisonment in the penitentiary, not less than one nor more than ten years, or by either such fine or imprisonment.Every day during a violation of this provision shall constitute a separate offense.Sec. 7.In any indictment for an offense named in this act it is sufficient to state the purposes or effects of the trust or combination, and that the accused was a member of, acted with, or in pursuance of it, without giving the name or description, or how, when or where it was created.Sec. 8.In prosecutions under this act it shall be sufficient to prove, that a trust or combination as defined herein exists, and that the defendant belonged to it, or acted for or in connection with it, without proving all belonging to it or proving or producing any article of agreement or written instrument on which it may have been based, or that it was evidenced by any written instrument at all.The character of the trust alleged may be proved by its general reputation.* * * Sec. 10.Each and every person, firm, corporation or association of persons who shall in any manner violate any of the provisions of this act, shall for each and every day that such violation shall be committed or continued, forfeit and pay the sum of fifty dollars, which may be recovered in the name of the state of Texas, in any county where the offense is committed, or where either of the offenders reside, or in Travis county, and it shall be the duty of the attorney general, or the district or county attorney to prosecute for and recover the same.Sec. 11.That any contract or agreement in violation of the provisions of this act, shall be absolutely void and not enforceable either in law or equity.Sec. 12.That the provisions hereof shall be held cumulative of each other and of all other laws in any way affecting them now in force in this state.Sec. 13.The provisions of this act shall not apply to agricultural products or live stock, while in the hands of the producer or raiser. * * *" The omitted sections throw no light upon the questions under consideration.

Admitting, for the present, that the language of the statute sufficiently manifests the intention of the legislature to make such combinations as are defined therein unlawful, and to make punishable acts committed in violation of its provisions, and that it is not in conflict with the constitution by reason of the fact that it exempts "agricultural products and live stock while in the hands of the producer or raiser" from its operation, we still have the question whether the combination charged in the petition is embraced within the provisions of the law.We are of opinion that that question must be answered in the negative.To determine that it is so embraced, we must hold either that it is a restriction in trade, within the meaning of the first subdivision of section 1, and that these words sufficiently define an offense so as to make it punishable under our laws, or that the contract of insurance is a commodity such as is named in the other subdivisions.A combination between two or more insurance companies to increase their rates or to diminish the rates to be paid to their agents is, in a general sense, a combination in restraint of trade.But we think that the words "restrictions in trade" were...