United States v. South-Eastern Underwriters Ass'n, Criminal Action No. 16920.

• Court: United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Northern District of Georgia
• Writing for the Court: UNDERWOOD
• Citation: 51 F. Supp. 712
• Parties: UNITED STATES v. SOUTH-EASTERN UNDERWRITERS ASS'N et al.
• Decision Date: 05 August 1943
• Docket Number: Criminal Action No. 16920.

51 F. Supp. 712

UNITED STATES
v.
SOUTH-EASTERN UNDERWRITERS ASS'N et al.

Criminal Action No. 16920.

District Court, N. D. Georgia, Atlanta Division.

August 5, 1943.

51 F. Supp. 713

Frank H. Elmore, Jr., Sp. Asst. to Atty. Gen., Manuel M. Gorman and H. Donald Leatherwood, Sp. Attys., both of Washington, D. C., Tom C. Clark, Asst. Atty. Gen., and M. Neil Andrews, U. S. Atty., and Ellis Mundy, Asst. U. S. Atty., both of Atlanta, Ga., for plaintiff.

Wright, Gordon, Zachry, Parlin & Cahill, of New York City, and MacDougald, Troutman & Arkwright, of Atlanta, Ga. (John T. Cahill, of New York City, Dan MacDougald, of Atlanta, Ga., and Thurlow M. Gordon and E. L. Williams, both of New York City, of counsel), for all defendants except Universal Ins. Co., and Kansas City Fire & Marine Ins. Co.

UNDERWOOD, District Judge.

On November 20, 1942, an indictment was returned by a Grand Jury of this Court against one hundred and ninety-eight corporations and twenty-seven individuals, charging such corporations and individuals with a conspiracy to fix and maintain arbitrary and non-competitive rates on fire insurance sold by them in the States of Alabama, Florida, Georgia, North Carolina, South Carolina, and Virginia, in violation of Section 1 of the Sherman Anti-Trust Act, 26 Stat. 209, 15 U.S.C.A. §§ 1-7, 15 note, and with a conspiracy to monopolize trade and commerce in fire insurance in said States in violation of Section 2 of the Act.

On January 13, 1943, defendants filed a demurrer challenging the sufficiency of the indictment upon the grounds that, it charges no offense against the United States; that the business of fire insurance is not commerce; that the interpretation of the Act insisted upon would be a violation of the Tenth, Fifth and Sixth Amendments to the Constitution; and that the Court is without jurisdiction of the subject matter of the indictment.

The case came on regularly to be heard on the demurrer and was argued orally and subsequently by briefs.

To constitute a violation of the Sherman Act, the restraint and monopoly denounced must be that of interstate trade or commerce, and, unless the restraint and monopoly charged in the indictment be restraint or monopoly of interstate trade or commerce, the indictment must fall.

It is not a question here of whether the defendants participated in some incidental way in interstate commerce or used in some instances the facilities of interstate commerce, but is rather whether the activities complained of as constituting the business of insurance would themselves constitute interstate trade or commerce, and whether defendants' method of conducting same amounted to restraint or monopoly of same. It is not a question as to whether or not Congress had power to regulate the insurance companies or some phases of their activities, but rather whether Congress did do so by the Sherman Act.

Persons may be engaged in interstate commerce, yet, if the restraint or monopoly complained of is not itself a restraint or monopoly of interstate trade or commerce, they may not be convicted of violation of the Sherman Act. The fact that they may use the mails and instrumentalities of interstate commerce and communication, and be subject to Federal regulations relating thereto, would not make applicable the Sherman Act to intrastate commerce or to activities which were not commerce at all.

The whole case, therefore, depends upon the question as to whether or not the business of insurance is interstate trade or commerce, and if so, whether the transactions alleged in the indictment constitute interstate commerce.

The Supreme Court has repeatedly held, during a period of seventy-five years, that the business of insurance is not commerce, either intrastate or interstate. They have done so unequivocally and unambiguously. Paul v. Virginia, 8 Wall. 168, 19 L.Ed. 357; Hooper v. California, 155 U.S. 648, 15 S.Ct. 207, 39 L.Ed....