State v. Firemen's Fund Ins. Co.

• Decision Date: 30 June 1899
• Citation: 152 Mo. 1,52 S.W. 595
• Parties: STATE ex rel. CROW, Atty. Gen., v. FIREMEN'S FUND INS. CO. et al.
• Court: Missouri Supreme Court

52 S.W. 595

152 Mo. 1

STATE ex rel. CROW, Atty. Gen., v. FIREMEN'S FUND INS. CO. et al.

Supreme Court of Missouri.

June 30, 1899.

INSURANCE — COMBINATIONS TO REGULATE RATES — STATUTES — SUBJECTS AND TITLES — DUE PROCESS OF LAW — PARTIAL INVALIDITY — EVIDENCE — PLEADING.

1. In quo warranto proceedings to forfeit the licenses of insurance companies for violating the law relating to unlawful combinations for fixing rates, an answer by defendants, pleading the unconstitutionality of the law, is an admission that it has been violated, although such answer closes with a general denial of all the allegations not admitted to be true.

2. The existence of an unlawful combination among insurance companies to maintain uniform premium rates may be established by circumstantial evidence.

3. After Acts 1895, p. 237, prohibiting pools or trusts among insurance companies to fix rates for insurance, went into effect, companies doing business in St. Joseph subscribed for the rate books issued by one who had fixed rates for the underwriters' association. The agents of the companies joined a "social club," and hired an employé of the one who issued the rate books to act as secretary. Each policy written by the agent was put in an unsealed envelope, addressed to his company, and was then turned over to the secretary of the club, who compared it with the rate book, and, if the premium charged did not correspond therewith, he called upon the agent for an explanation. The members of the club had an oral agreement to abide by the rates fixed on penalty of a fine, and violators of the agreement were tried by the club. Held, that the club was a pool or trust, within Acts 1895, p. 237, § 1, providing that any corporation or individual who shall enter into "any pool, trust, agreement, combination, confederation, or understanding with any other corporation, partnership, or individual" to fix the price or premium to be paid for insuring property against loss by fire, or to maintain the price when so fixed, shall be deemed guilty of a conspiracy, and shall forfeit their rights to do business in the state.

4. Act April 2, 1891 (Acts 1891, p. 186), entitled "An act providing for the punishment of pools, trusts and conspiracies to control prices, and as to evidence and prosecution in such cases," and providing, as amended by Acts 1895, p. 237, that any corporation or individuals who shall enter into a pool or trust to regulate the price of any article of manufacture, or commodity, "or the price or premium to be paid for insuring property against loss by fire, lightning, or storm" shall be guilty of conspiracy, does not violate Const. art. 4, § 28, providing that no bill shall contain more than one subject, which shall be clearly expressed in its title.

5. Acts 1895, p. 237, providing that any corporation or individual who shall enter into any pool or trust with any other corporation or individual to fix the price or premium to be paid for insuring property, or to maintain the price when so fixed, shall be deemed guilty of conspiracy, and shall forfeit their rights to do business in the state, does not deprive such person of liberty or property without due process of law.

6. Such act does not deprive insurance companies which have complied with the laws of the state as they existed before its enactment of any vested right.

7. Where, in proceedings against insurance companies under Acts 1895, p. 237, providing for the forfeiture of the franchises of insurance companies who combine together to regulate and maintain insurance rates, the question whether the act of the agent is the act of the company is treated as one of fact, and no presumption is invoked, the fact that section 6 of such act, making the act of the agent prima facie proof of the act of the company as to foreign companies only, is invalid, cannot avail defendants.

8. Where, in proceedings against insurance companies under Acts 1895, p. 237, providing for the forfeiture of the franchises of insurance companies who combine together to regulate and maintain insurance rates, no attorney's fees are allowed, the fact that sections 9 and 10 of such act, allowing attorney's fees, is invalid, cannot avail defendants.

Gantt, C. J., and Robinson and Valliant, JJ., dissenting in part.

In banc. Original proceeding by the state by quo warranto on the information of Edward C. Crow, attorney general, against the Firemen's Fund Insurance Company and others. Judgment against respondents.

This is an original proceeding by quo warranto to oust 73 fire insurance companies of their corporate rights, privileges, and franchises under the laws of Missouri on account of a violation by them of the laws of this state relating to "pools, trusts, and conspiracies, unlawful combinations." The defendant companies are organized under the laws of other states or foreign countries, and are doing an insurance business in Missouri by reason of and compliance with the comity laws of this state. The petition, after stating the necessary facts as to the character and organization of the defendants and their compliance with the laws of Missouri in respect to foreign insurance companies doing business in this state, is as follows: "That afterwards, on the ____ day of November, 1896, each and all of said defendant corporations unlawfully, illegally, and willfully misused and abused their said franchises, rights, and privileges as fire insurance companies authorized to do business under the laws of the state of Missouri, in this, to wit: That each and all of said defendant corporations having an authorized agent and representative in the city of St. Joseph, a city of less than one hundred thousand inhabitants, did then and there, through and by means of a certain organization known as the `Underwriters' Social Club' of said city (which said Underwriters' Social Club of said city was organized, and has been maintained, and is now maintained, with the knowledge and consent, and according to the desire and wish, of said defendant corporations, and for the sole purpose of the advancement of the business interests of said defendant corporations in said city of St. Joseph), create, enter into, become a member of and a party to a certain pool, trust, agreement, combination, confederation, and understanding with each other and other fire insurance corporations and associations of persons to regulate, fix, and control the price or premium to be paid for insuring property in St. Joseph, Buchanan county, Missouri, against loss or damage by fire, lightning, and storm; and to maintain and control said price, when so regulated and fixed, and to prevent competition in said business in said city. That each and every one of said corporations, being so represented in said city of St. Joseph by a local resident fire insurance agent, legally and fully authorized by each of said several defendant corporations to act for their respective corporations in all matters relating to the insurance of property against loss or damage by fire, lightning, and storm in said city, that said agents, and each of them, did then and there, with the knowledge and consent and according to the wish and desire of the said respective defendant corporations which the said agents represented, and for the sole and only purpose of advancing the business interests of said defendant corporations, then and there willfully, unlawfully, and knowingly did agree, confederate, and combine with each other to form and organize on the ____ day of November. A. D. 1896, a certain organization whose membership was composed exclusively of local resident fire insurance agents, representatives alone of defendant corporations; and that said organization was then and there perfected by the said local resident agents of defendant corporations by the election of a president, secretary, treasurer, and other officials, whose names, except those of the secretary and president, are to the relator unknown, but who were at said time, and are now, local resident fire insurance agents representing different ones of the defendant corporations. That the said organization so formed was the Underwriters' Social Club of St. Joseph, Missouri, and it was formed by said local resident agents of said defendant corporations solely for the purpose of advancing the interests of said respective defendant corporations, and for the purpose of maintaining what is known in insurance circles as `correct practices'; or, in other words, for the purpose of keeping up the agreed rate on all the different classes of risks of insurance. That the said rates so agreed upon to be maintained in said city of St. Joseph were fixed by one W. J. Fetter, of Kansas City, Missouri, as relator is informed and believes. That ____ Wise is president of said Underwriters' Social Club, and that Mr. E. F. Scott is secretary of said organization, and was brought from the office of Mr. Fetter in Kansas City, Missouri, as relator is informed, for the purpose of assuming the duties of secretary of said Underwriters' Social Club of St. Joseph, Missouri. That, among other things, the duties of Mr. E. F. Scott were to check the daily reports of the different agents belonging to said Underwriters' Social Club, and to see that the policies written by said agents were all written at the agreed rate as fixed by said W. J. Fetter, and promulgated in the rate book sent to the resident local agents of defendant corporations. That the said secretary, E. F. Scott, was and is paid a salary, and that the method of paying the same is as follows: That the local resident agents of defendant corporations each proportionately contribute according to the amounts assessed against them, respectively, sums sufficient in the aggregate to pay the monthly salary of said E. F. Scott as secretary of said Underwriters' Social Club of St. Joseph, Missouri. That each of said resident local agents of defendant corporations deduct the amount so contributed by...