State v. Phipps

• Decision Date: 01 January 1893
• Citation: 31 P. 1097,50 Kan. 609
• Parties: THE STATE OF KANSAS v. WM. C. PHIPPS et al
• Court: Kansas Supreme Court

31 P. 1097

50 Kan. 609

THE STATE OF KANSAS v. WM. C. PHIPPS et al

Supreme Court of Kansas

January 1, 1893

Appeal from Labette District Court.

PROSECUTION of W. C. Phipps, Theo. Gardner and four others for violating chapter 257 of the Laws of 1889, prohibiting unlawful trusts and combinations in restraint of trade. On May 14, 1891 defendants Phipps and Gardner were found guilty, and each was fined $ 100 and costs. Both appeal. The opinion states the facts.

Judgment affirmed.

E. F Ware, for appellants:

The state of Kansas has said that insurance is trade, and such is the recognized policy of the state. In re Pinkney, 47 Kan 89.

The state of Kansas by its insurance laws has recognized the interstate character of insurance. Laws of 1879, ch. 116, § 1; Gen. Stat. of 1889, p. 973.

Query: Perhaps the Kansas anti-trust law does not include foreign insurance companies, but leaves them, by concession, under the federal anti-trust law. Laws of 1889, ch. 257, § 6.

If the foreign insurance companies combine, the state has no adequate remedy, either by criminal or civil action. Laws of 1889, ch. 257, § 3; Crim. Code, § § 21, 28, 115; The State v. Gurnee, 14 Kan. 111; Bish. Crim. Proc., § 53; The State of Tennessee, 36 F. 258; The State, ex rel., v. Crawford, 28 Kan. 726; Jellico Case, 46 F. 432; 11 Wall. 164; 2 Wash. C. C. 429; Wisconsin v. Pelican, 127 U.S. 265; Dey v. Chicago, 45 F. 82.

The definition of the term in the United States constitution, "commerce among the several states," is "Intercourse." Cooley v. Philadelphia, 12 HOW 299; Telegraph Co. v. Telegraph Co., 5 Nev. 102; Telegraph Co. v. Telegraph Co., 2 Wood. 643; Telegraph Co. v. Telegraph Co., 96 U.S. 1; Telegraph Co. v. Texas, 105 id. 460; Telegraph Co. v. Pendleton, 122 id. 347; Ratterman v. Telegraph Co., 127 id. 411.

Insurance, by the very law of its being, is cosmopolitan and interstate.

An insurance company can only be confined to one state by legislative imprisonment.

The commerce clause of the United States constitution necessarily includes insurance, and gives congress a right to legislate thereon.

The statistics of insurance show that the question of insurance is of national importance.

If insurance is of national importance, congress has the power to legislate upon it. Council Bluffs v. Railroad Co., 45 Iowa 351; Bowman v. Chicago, 125 U.S. 465; Hall v. De Cuir, 95 id. 495; Crandall v. Nevada, 73 id. 42; Cooley v. Port, 53 id. 299; Pensacola v. Western, 96 id. 1; Munn v. Illinois, 94 id. 113.

The federal anti-trust law will, by its terms, cover the combines of insurance companies. 26 U.S. Stat. 209; Walling v. Michigan, 116 U.S. 456.

The doctrine of Paul v. Virginia has been overruled as regards insurance. 78 U.S. 183; 5 Otto, 683; Wrought v. Johnson, 84 Ga. 784; McCall v. California, 136 U.S. 104.

Outside of the commerce clause, power to legislate has been given to congress, by implication, from the grant to the judiciary. Const. of Kan., art. 3, § 2; Legal Tender Cases, 110 U.S. 440.

The constitution is to be interpreted in accordance with the will of the people now exercising power. Dartmouth College Cases, 4 Wheat. 644, 645; The Unwritten Const., Tiedeman, pp. 144, 145, 149, 150, 151.

The decision in In re Pinkney was a grant of power to the United States, and the federal courts will adopt and follow it to its legal conclusion. McKeen v. DeLancy, 5 Cranch, 22; Green v. Neal's Lessee, 6 Pet. 291; Louisville v. Mississippi, 133 U.S. 587, 589, 591.

John N. Ives, attorney general; and J. R. Hill, county attorney, by F. H. Atchinson, deputy, for The State:

From the multitude of cases supporting the proposition that state laws, although incidentally affecting interstate commerce, are valid, we cite: License Cases, 5 HOW 632; City of New York v. Miln, 11 Pet. 101; Cooley v. Board of Wardens, 12 HOW 299; The James Gray v. Fraser, 21 id. 184; Wilson v. Black, 2 Pet. 245; License Tax Cases, 5 Wall. 469; Munn v. Illinois, 4 Otto, 113; Nash v. Page, 80 Ky. 539; Butler v. Chambers, 36 Minn. 69 (1 Am. Rep. 638, and note); The State v. Campbell, 64 N.H. 402; People v. Budd, 117 N.Y. 1 (15 Am. Rep. 460.)

Insurance corporations have no right to do any business in the state, except upon the terms and conditions imposed by the state. Bank v. Earle, 13 Pet. 519; Paul v. Virginia, 8 Wall. 168; Doyle v. Continental, 4 Otto, 539; Ducat v. Chicago, 10 Wall. 410; Liverpool v. Insurance Co., id. 556; Telegraph Co. v. Treasurer, 28 Ohio St. 539; Insurance Co. v. Commonwealth, 87 Pa. 173; People v. Fire Association, 92 N.Y. 311; City of Leavenworth v. Booth, 15 Kan. 636.

That insurance is not interstate commerce, we rely upon Paul v. Virginia, 8 Wall. 168; City of Leavenworth v. Booth, 15 Kan. 636; Liverpool Ins. Co. v. Massachusetts, 10 Wall. 556; List v. Commonwealth, 118 Pa. 322 (10 Cent. Rep. 586, and 12 Am. Rep. 277); Crutcher v. Commonwealth, 11 S.Ct. 854.

Counsel for appellants insists that Paul v. Virginia should be overruled, and the doctrines therein announced extinguished. But it would seem that, if any principle of law had reached the dignity of stare decisis, the principle announced in that case should have reached it. It has been cited with approval in Ward v. Maryland, 12 Wall. 430; Railway Co. v. Whitton, 13 id. 283; Slaughter-House Cases, 16 id. 76; Insurance Co. v. Morse, 20 id. 445; Doyle v. Insurance Co., 4 Otto, 539; Telegraph Co. v. Telegraph Co., 6 id. 12; Boom Co. v. Patterson, 8 id. 407; United States v. Steffens, 10 id. 95; Railway Co. v. Koontz, 14 id. 11; Steamship Co. v. Tugman, 16 id. 121; St. Clair v. Cox, 16 id. 356; United States v. Harris, 16 id. 643; Civil Rights Cases, 109 U.S. 47; Railroad Co. v. Gebhard, 109 id. 537; Crutcher v. Commonwealth, 11 S.Ct. 854.

Besides our own state (15 Kan., supra), it has been adopted as the law in Pennsylvania: Thorne v. Insurance Co., 80 Pa. 28; Germania &c. v. Commonwealth, 85 id. 513; Insurance Co. v. Commonwealth, 87 id. 173.

It has been adopted as the law in the Virginia state court: Insurance Co. v. Warwick, 20 Gratt. 614. In Michigan: People v. The Judge, 21 Mich. 577. In Nevada: Ex parte Martin, 7 Nev. 140. In Illinois: Assurance Co. v. Rosenthal, 55 Ill. 85; Carrell v. City of East St. Louis, 67 id. 568. In Wisconsin: Morse v. Insurance Co., 30 Wis. 496; State v. Doyle, 40 id. 175. In Ohio: Telegraph Co. v. Treasurer, 28 Ohio St. 539. In Maine: Chaffee v. Bank, 71 Me. 514. In New York: People v. Fire Association, 92 N.Y. 311.

SIMPSON, C. VALENTINE and JOHNSTON, JJ., concurring.

OPINION

SIMPSON, C.:

W. C. Phipps and Theo. Gardner, with four others, were complained against by information in the district court of Labette county upon a charge of having violated chapter 257, Laws of 1889, being "An act to declare unlawful trusts and combinations in restraint of trade and products, and to provide penalties therefor." It seems from the record that only Phipps, Gardner, Neely and McClure were arrested. The other two defendants were not served with process. At the trial, the defendants Phipps and Gardner were found guilty, while the defendants James L. McClure and George A. Neely were found not guilty. Each of the appellants was fined $ 100 and costs. The specific charge was, that the accused were agents of various insurance companies organized under the laws of the states of New York, Colorado, Minnesota, and Connecticut; that they were doing business in this state, and that said insurance companies had combined to control the price and rate of insurance in the city of Oswego, Labette county, Kansas; that by agreement they had established certain rates larger than those existing before said combination; and that the accused, as agents and adjusters of said companies, were engaged in compelling local agents to observe such combination rates so established by said companies. The defendants Phipps and Gardner appeal to this court.

The counsel for the appellants contends (to state his proposition in general terms) that chapter 257, Laws of 1889, so far as it affects foreign insurance companies or their agents, is in conflict with the powers of congress to regulate commerce among the several states, and for that reason void; or, that the federal anti-trust law of July, 1890, (26 U.S. Stat. 209,) is exclusive of the state law, and that all prosecutions for such offenses as are charged in this information must be commenced in the federal courts, and hence these appellants must be discharged. The counsel has filed an elaborate brief, and made a long oral argument, discussing the anti-trust law of this state and of the United States, the commerce clause of the federal constitution, and the power of congress to legislate on that subject, as well as other branches of inquiry that may be involved in the proper discussion of this appeal.

The major premise of the argument in favor of the discharge of the appellants is, that this court has decided in a recent case that insurance is "trade," within the meaning of the provisions of the anti-trust law of this state, under which these appellants were prosecuted and convicted. The exact question in the case of In re Pinkney, 47 Kan. 89, was, whether the word "trade," in the title to the anti-trust law, (being chapter 257, Laws of 1889,) so far as it relates to the business of insurance contained in the first section of the act, was broad enough to fairly indicate that such a provision with respect to insurance was a part of the act; and the court held the act valid, so far as it related to the business of insurance, that being covered by the title of the act. This is what the court did say:

"The question presented is, Does the word 'trade,' used in the title, fairly indicate and include the provisions of the act with reference...