State ex Inf. Taylor v. American Ins. Co., 36724.

• Citation: 200 S.W.2d 1
• Decision Date: 30 December 1946
• Docket Number: No. 36724.,36724.
• Parties: STATE OF MISSOURI, on the Information of J.E. TAYLOR, Attorney General, (Successor in Office to ROY McKITTRICK), Relator, v. AMERICAN INSURANCE COMPANY, a Corporation, ET AL.
• Court: United States State Supreme Court of Missouri

200 S.W.2d 1 STATE OF MISSOURI, on the Information of J.E. TAYLOR, Attorney General, (Successor in Office to ROY McKITTRICK), Relator,
v.
AMERICAN INSURANCE COMPANY, a Corporation, ET AL. No. 36724. Supreme Court of Missouri. Court en Banc, December 30, 1946. Rehearing Denied, March 10, 1947.

[200 S.W.2d 4]

Quo Warranto.

JUDGMENT AGAINST RESPONDENTS AND FINES LEVIED.

J.E. Taylor, Attorney General, Robert L. Hyder and George W. Crowley, Assistant Attorneys General, for respondent.

(1) Quo warranto is the proper remedy in this case. State ex inf. McKittrick v. American Colony Ins. Co., 336 Mo. 406, 80 S.W. (2d) 876; State ex inf. McKittrick v. American Ins. Co., 346 Mo. 269, 140 S.W. (2d) 36; State ex inf. Hadley v. Standard Oil Co., 218 Mo. 1, 116 S.W. 902. (2) Prima facie proof of guilt established under Section 8317, R.S. 1939. Secs. 5972, 8317, R.S. 1939; Laws 1911, pp. 267-271, secs. 1-12; Laws 1915, pp. 313-320; State ex rel. Barker v. Assurance Co., 251 Mo. 278, 158 S.W. 640; American Constitution Fire Assurance Co. v. O'Malley, 342 Mo. 139, 113 S.W. (2d) 795. (3) A preponderance of the evidence shows respondents' guilt. Secs. 5986, 8302, R.S. 1939; State ex inf. McKittrick v. American Colony Ins. Co., 336 Mo. 406, 80 S.W. (2d) 876; State ex inf. McKittrick v. American Ins. Co., 346 Mo. 269, 140 S.W. (2d) 36; 33 Words and Phrases, p. 17; American Constitution Fire Assurance Co. v. O'Malley, 342 Mo. 139, 113 S.W. (2d) 795; State ex inf. Crow v. Firemen's Fund Ins. Co., 152 Mo. 1, 52 S.W. 595; Potomac Fire Ins. Co. v. State, 18 S.W. (2d) 929. (4) The rating act does not compel respondents to charge the same rates, and it is clearly shown that respondents charged the same rates by agreement. Sec. 5979, R.S. 1939; American Constitution Fire Assurance Co. v. O'Malley, 342 Mo. 139, 113 S.W. (2d) 795. (5) The connection of the Missouri Inspection Bureau with the Western Actuarial Bureau constitutes strong evidence of a combination to violate both the rating statutes and the anti-trust statutes of Missouri. State ex inf. McKittrick v. American Colony Ins. Co., 336 Mo. 406, 80 S.W. (2d) 876; State ex rel. North British & Mercantile Ins. Co. v. Thompson, 330 Mo. 1146, 52 S.W. (2d) 472; State ex inf. Hadley v. Standard Oil Co., 218 Mo. 1, 116 S.W. 902; State ex rel. Hadley v. Standard Oil Co., 194 Mo. 124, 91 S.W. 1062. (6) The Missouri Audit Bureau was created solely to assist respondents in maintaining an unlawful combination. Sec. 5972, R.S. 1939; State ex inf. Crow v. Firemen's Fund Ins. Co., 152 Mo. 1, 52 S.W. 595. (7) In fixing rates of commission to agents, respondents directly violated the rating statutes and anti-trust statutes. Secs. 5972, 5986, 8304, R.S. 1939; State ex inf. Hadley v. Standard Oil Co., 218 Mo. 1, 116 S.W. 902; Potomac Fire Ins. Co. v. State, 18 S.W. (2d) 929. (8) The Oil Insurance Association, Underwriters Grain Association, and other similar organizations are pools and directly violate the anti-trust statutes. Secs. 5927, 8302, 8303, 8304, R.S. 1939; 33 Words and Phrases, p. 17. (9) Proof is evident that respondents bribed O'Malley to establish and maintain agreed insurance rates. (10) Respondents acted jointly in the 16 2/3 per cent increase, and acts in pursuance to that conspiracy continue in the present time. State ex inf. McKittrick v. American Colony Ins. Co., 336 Mo. 406, 80 S.W. (2d) 876; State ex inf. Crow v. Firemen's Fund Ins. Co., 152 Mo. 1, 52 S.W. 595; State v. Hill, 352 Mo. 895, 179 S.W. (2d) 712. (11) The rating act and anti-trust statutes are not inconsistent. State ex inf. Crow v. Firemen's Fund Ins. Co., 152 Mo. 1, 52 S.W. 595; American Constitution Fire Assurance Co. v. O'Malley, 342 Mo. 139, 113 S.W. (2d) 795; Aetna Ins. Co. v. Hyde, 315 Mo. 113, 285 S.W. 65. (12) The findings of the Commissioner should be given great weight. State ex inf. Major v. Arkansas Lumber Co., 260 Mo. 212, 169 S.W. 145.

Fred L. Williams, David A. Murphy and Homer H. Berger for respondents; Williams & O'Bryen, Harding, Murphy & Tucker and Morrison, Nugent, Berger, Hecker & Buck of counsel.

(1) In quo warranto suits, such as this, the burden of proof is upon the State to establish that the respondents are guilty of the violation charged. And this must be shown by "Clear and Convincing Proof." Even though the proof should raise a "Strong Suspicion" or even "Strong Possibilities" it is not sufficient. State ex inf. v. Armour Packing Co., 265 Mo. 121, 176 S.W. 382; State ex inf. v. Continental Tobacco Co., 177 Mo. 1, 75 S.W. 737; State ex inf. v. Carondelet Planing Mill Co., 309 Mo. 353, 274 S.W. 780. (2) The three year statute of limitations is applicable here and before any of the respondents can be ousted or fined the state must prove by clear and convincing evidence that the respondents are guilty of the violation charged and that said violations occurred within the period of three years next before the filing of the cause of action. Secs. 652, 1015, 1040, 1786, R.S. 1939; State ex inf. v. Arkansas Lumber Co., 260 Mo. 212, 169 S.W. 145; State ex inf. v. St. Louis Union Tr. Co., 335 Mo. 845, 74 S.W. (2d) 348; State ex inf. v. Armour Packing Co., 265 Mo. 121, 176 S.W. 382; State ex rel. v. Dudley & Co., 340 Mo. 852, 102 S.W. (2d) 895; Emery v. Holt County, 345 Mo. 223, 132 S.W. (2d) 970. (3) The Missouri Rating Act, enacted in 1915 revolutionized fire, lightning and storm insurance rate making in Missouri. The State by said Act actively entered into the supervision of rate making and took over the right, through its agent, the Superintendent of Insurance, to exercise the power of life or death over rates. Thereafter, under the language of this Act, no increase in rates could be made without his consent and all rates whether reductions or increases were subject to his reduction orders. Secs. 5975, 5984, 5974, R.S. 1939. (4) The State in thus safeguarding the public interest by taking over the supervision and ultimate decision as to rates, did at the same time deem it advisable and in harmony with the trend of sound economic thought to grant to the stock fire insurance companies greater latitude in their co-operative activities in formulating estimates of rates in the first instance, so long as the companies adhered to the requirements of the Act. Secs. 5972, 5973, R.S. 1939. (5) Each stock fire insurance company doing business in Missouri is expressly permitted by the Rating Act to use the public rating record maintained by the Missouri Inspection Bureau or any other actuarial bureau and to charge the same rates as any other company using said public rating record charges; the user is, however, prohibited from agreeing with any other company or bureau to continue to use said rating record or to refrain from maintaining its own rating record or to maintain the rates fixed by such bureau. Sec. 5972, R.S. 1939. (6) Sec. 8317, R.S. 1939, has no application to the condition where two or more companies in complying with the Rating Act use the same bureau public rating record. (7) Sec. 5972, R.S. 1939, being the later enactment will control over Section 8317 on all matters in which the two sections are found to be in irreconcilable conflict. Young v. Greene County, 342 Mo. 1105, 119 S.W. (2d) 369; State ex rel. v. Smith, 345 Mo. 1158, 139 S.W. (2d) 929; State ex rel. v. Walker, 326 Mo. 1233, 34 S.W. (2d) 124; City of St. Louis v. Kellman, 235 Mo. 687, 139 S.W. 443. (8) While the respondents are using the public rating record of the Missouri Inspection Bureau (as they each have the express right to do under Section 5972 of the Rating Act), they and each one of them are compelled by law to charge the rates indicated by said public rating record. Sec. 5979, R.S. 1939. (9) There is no proof in this record that any of the respondents have violated the inhibitions of Section 5972 of the Rating Act by entering into any agreements with other respondents or with any actuarial bureau (a) that they will continue to use the rating record of any actuarial bureau or (b) that they will refrain from maintaining their own rating record, or (c) to maintain the rate fixed by any such actuarial bureau. (10) Since the Missouri Rating Act (Section 5972) permits each of the respondents to use the rating record of the Missouri Inspection Bureau or any other actuarial bureau, the action of two or more companies using the rating record of the same actuarial bureau is no proof of the existence of an agreement to continue to use said rating record or to refrain from maintaining their own rating record. (11) Furthermore, the tremendous cost and expense of maintaining a public rating record in compliance with the Rating Act is a conclusive explanation of why the companies use the rating record of some actuarial bureau rather than to maintain their own individual rating records. (12) The word "maintain" as used in the third inhibition in the above statute means: "to keep effective and from falling, declining or ceasing," "to keep or hold in any particular state or condition," "to keep, hold, retain." Title "Maintain": Funk & Wagnalls New Standard Dictionary of English Language, page 1494; Webster's International Dictionary, 2nd Ed.; Anderson's Law Dictionary; Ballentine's Law Dictionary; 38 C.J. 336. (13) The action of the Missouri Inspection Bureau in employing the expert service of the Western Actuarial Bureau in working out scientific schedules for its consideration has a sound economic basis and is not illegal in any sense. (14) The activities of the Missouri Audit Bureau and the uses made of it by the respondents do not violate the Missouri Anti-trust Law or the Rating Act. (15) The activities of certain of the respondents in such associations as the Underwriters Grain Association, the Oil Insurance Association, the Western Factory Insurance Association and the Western Sprinklered Risk Association providing for reinsurance and joint insurance are necessary and essential activities in order to furnish adequate coverage...