The Indianapolis journal., 1884-04-24
THE LOCAL UNDERWRITERS.
Judge Walker Holds the Insurance
Compact Is Null and Void
The Demurrer to the Complaint in the Case
of Metzger VS.. Cleaveland & Adams Sus-
tained-An Important Ruling.

A decision of much interest to fire insurance
agents and business men generally was givenby
Judge Walker, of the Superior Court yesterday
the purport of which was that the compact en-
tered into by the agents of this city, for the
purpose of sustaining rates, was lnvahd' as
being opposed to public policy Some months
ago. by direction of the general managers
of the fire insurance companies represented
in this city, their agents united in an association,
of which John T. Ashbrook was appointed man
ager, the purpose of which was to prevent the
cutting of rates by rival agencies and general
regulation of the local insurance business.
Binding rules were adopted, which made the or
ganizatior doubly effective Shortly afterward
Alex Metzger brought damage suit against the
Cleaveland & Adams agency, claiming that they
were writing policies at less rates than provided
by the compact and as fixed by Manager Ash
brook, and by reason of this fact the plaintlit
was deprived of several renewals which he other
wise would have had, and his business was other
wise injured. A demurrer was entered to this
complaint, setting forth that the insurance com
pact above referred to, was in restraint of trade,
and detrimental to public policy, and, therefore,
null andvoid After a careful consideration of
all the authorities on the subject, Judge Walker
yesterday sustained the demurrer, and his opin-
ion is spoken of by attorneys as being careful
and consistent exposition of the law. Unless
reversal is secured in higher court its effect
will probably be to destroy the local insurance
association The descision of the court is as fol-
lows:
JUDGE WALKERS RULING.
The plaintiff AYERS that on the 2Sth day of Novem-
koxr 4hn 1Coa1 fr nc cTtxr nfa
large number of foreign insurance companies, and
that the defendants were also agents of certain
other foreign insurance companies, and that said
parties together with large number of other local
agents Of insurance companies entered into written
Compact under the name of the indianapolis Fire
Insurance Association, under which it agreed by
the members of said association inter ala that
resident person should be selected as manager by the
companies at their expense pro rata basis of re-
ceipts.
Further, that they would not write risk until
rate had been fixed by the manager and would adhere
to all the rates fixed by him. that they would not issue
policy policies insurance to be written
by any company at less than said fixed rates and in
the event of finding any unrated risk they would sub
nit application for rating thereon to the manager
upon the same or next day succeeding that on which
the risk was found.
That they would not divide commissions with or re-
bate to the assured, his agent, employe broker,
any other person in any manner directly or indi-
rectly not party to this agreement. nor would they
cancel policies in any other form than that prescribed
by the condition of the policy.
That they would not attempt to create foster any
prejudice against a fellow-me,rber his companies;
that they would be responsible for the acts of their
employees and solicitors and, in case of second of
fense through such persons they should be discharged
at once, and no member of the compact or pledge
should employ them thereafter.
That they would not employ than five solicit
each and such solicitors shall be required to hold
the certificate of the manager designating the agency
he represents and such solicitors shall place their
business exclusively with the Office employing them.
Verks should not be considered solicitors, and must
be compensated by salary only. The term solicitor
shall be held to include only those who shall give their
entire time TO the business of fire insurance,
For certain violations of the agreement the offending
member would be required to cancel the policy or
policies under which the offense committed and
prohibited from writing the risk for year,
and, in addition the following fines to be i'm
posed: For the first violation so per cent. of the
preni u but IN no less than 500 for the second
the entire premium, but in less than $50; for
the third Violation the removal OF all companies
From the offending member and expulsion from the
BOARD.
In pursuance ofsuch agreement the manager estab-
lished uniform rates for writing insurance by the
parties to the compact but that thereafter the de-
PENDANTS insured various building in this city such
agents at rates less than the rate established by the
manager and that by thereof the plaintiff lost
certain renewals whereby he claims he has sustained
damages and sues to recover for such alleged injury.
The defendants by demurrer attack the complaint
the ground that the compact declared is in re-
srant of trade and its enforcement would be against
public policy, and that the is therefore void.
All contracts in restraint of trade, whore the
operation thereof is general, void for the
reason that their enforcement would be in
furious to the public interests. 1t is only
where the restraint is partial and for good considera
tion, well reasonable restraint, that such
tract although partial in its nature be upheld As
it has been said, the law barely permits and never
encourages such contracts" All presumptions are
against agreements of this nature and before such
contract be enforced it must appear from the
peadngs that such restraint is partial that the
sideration upon which the argument is based was a
good one and that good reasons appear for entering
into such contract and declaration that does not
contain these necessary averments to rebut the
OF law ag9nst gyms It's GS YSSy ~ i s pad on & de-
authorities generally support this view since the in
qury to Che validity of the contract sued must be
made in accordance with the above rule of law In the
agreement in this suit appears for the
cution of such compact or its enforcement The
pleading declares the purpose was to equaze fire in
surance rates nsurable property in the city of In
dianapolis, and thereby to protect the citizens
thereof and insured persons therein, from ex-
ance, and thereby enable said companies and
their agents to charge and receive uniform and Just
premiums and commission for uniform risks and
labor, and thereby enable said companies and their
agents to do legitimate just, and reasonably profit
able business in said city and State The general rule
is that the terms of written agreement cannot be
enlarged or changed by an avernent in the complaint
(85 Ind, 503.) Without regard, however to such
rule the court must look to the whole contract and
ascertain its scope, purpose and probable effect not
withstandng it may clearly declare purpose in its
provisions and if the tendency of the contract is
to affect the public injuriously it cannot be upheld
though it may declare its purpose to be for the public
good. The Supreme Court of Ohio in 18 Ohio St r.
204) quoting from 'Wilmot's Opinions" says 1T is
the duty of all courts of justice to keep their eye
steadily upon the interests of the public in the
administration of communicative justice, and when
they find an action is founded upon claim injurious
to the public, and which has bad tendency to give
countenance assistance in foro civilh ="
With these rules of law for guide the question
presented is can the defendants under contract be-
tween the parties hereto and with other To-
cal agents of insurance companies whereby uniform
and nfexible standard of rates is maintained be held
to respond to the plaintiff in damages for writing in
at less rate than that fixed by the manager
Is it the policy of the law and would it be for the
public interestto haye unvaryng price for all in
suranceY Of it is understood that the price
is the for all property but that the rate of all the
companies is the same given class of insurable
property. Under the provisions of their agreement
and the authorities touching contracts of this nature
there be but to that question. To hold
that such agreement should meet with any
favor sanction in law would be
to make exception of the business of insurance
rule that applies to every trade class of business
and industry in the world But in effect that is the
clair tha+ &c tl.a i:eeara,ca