The herald., 1898-03-11
.orrrcE OF THE HERALD.
Los Angeles. March 10, 1893.

''It Il a great misfortune not to have
Enough wit to speak we'll or not enough
Judgment to keep silent.
The flQht between the insurance compa-
bies and State Commissioner Clunie. which
has been Waged ever since the latters ap-
pointment to flll the chair vacated by the
peaceful Higgins, has now reached its cul-
minating point. The companies first sought
the protection Of the courts In the shape of
IN order restraining the commissioner
from the exercise Of the authority claimed
by him for refusing certificates to the
various companies which had not COM
blied with his Interpretation of the stat
utes, also restraining him from the col
lection OF $27S000 claimed to be due from
the companies under the law Of 1885. This
honey. 1t was claimed by the commission
br, should have been paid into the fire.
mems relief funds of the various munic.-
balities of California, under the provisions
bf the statute mentioned.
In the circuit court OF San Francisco the
natter came up ON Monday on an order
Tor the defendant commissioner to show
eause before Judge Morrow, why the re-
Dtraining orders issued against him should
hot be made permanent. Upon the hearing
Commissioner Clunle introduced an am
davit for the purpose Of going at once TO
the question Of the legality or the
plegality of the insurance compact,
lhus subordinating all side issues and Civ
Ing the counsel of the insurance companies
IN unpleasant surprise.
The Clunie affidavit Is q voluminous doc
sment OF ffty-eight typewriter pages Oh
egal cap. AS a preliminary to the conslu-
eration Of the compact itself the document
points out certain Irregularities in connec-
lion with some Of the companies, ASSERTS
rood faith on the part of the insurance
commissioner and declares that he never
blaimed to have the power by the laws OF
this state to enforce the payment or the
lakes provided In the act OF 1885, but. draw
ing fine distinction, says that said act
Df the legislature Is valid and subsisting
condition precedent to the transaction OF
business in said state by the corporations
which It Affects" In other words, the IN
vurance commissioner claims he can refuse
authority to do business In California to
companies which do not pay the obliga-
lions that he cannot enforce as taxes. The
bond question is then touched upon, after
which the main cause of the controversy
Is fatty presented In the following lam
guage:
Afi1ant further says that the said
compainants should not be heard or
permitted to prosecute or maintain !.
said suit for the reason that they are
now and have been for many years
transacting insurance business In the
certain Illegal combination and COM
pact known and designated by the name
OF Board of Fire Underwriters of the
Pacifc;" that the main purpose of said
organization, under said designation, Is
20 prevent and suppress competition In
the insurance business In said state, to
control the fixing of and to fix the rates
of premiums to be charged on insur-
ance, to regulate and prevent rebates.
10 fix the compensation for insurance
business. to regulate premium collec-
tions and to appoint agents; that seven
eighths of the insurance companies au-
thorized to transact business In said
vtate are members of said combination,
as constituted by said complaint.
The constitution and rules of the board
of fire underwriters of the Pacific and the
regulations for solicitors and brokers with
the agreements which they have to sign
In order to do business follow at length.
Apart from the general interest Of such a
compact certain parts have special in
terest for the insuring public. Such. for
instance, is section of the constitution,
relating to the prevention OF rebates, the
penalty provided being:
For each violation of this section the
penalty shall be the cancellation of the
policy or policies and the prohibition
to write or place within one year the
risk or risks covered.
to the delinquency of the insured. which
reads:
When the amount involved or the cir
cumstances surrounding the case war;
rant 1t, any member may report to the
secretary of the executive committee
the name of the insured under any poll
ley which has been returned as can
celed for non-payment of premium. In
such event the secretary of the execu-
tive committee shall Immediately notify
every member and every agent In the
locality where the property insured is
located of such delinquency thereaf-
ter no insurance shall be written by any
member or agent upon any property for
such delinquent until the earned prem
ium upon such policy shall have been
paid. Notice of such payment shall be
promptly given.
Commissioner Clunie submits to the
court that 1t necessarily results from the
constitution, rules and forms of the board
of fire underwriters that the complainants
ore engaged in carrying on business in an
unlawful manner, and the actions
brought against him are in furtherance of
such unlawful enterprise. He also AYERS
that the compact is the real party in inter-
est, the actions being brought and main
tained by it, as evidenced by circular
sent out on February 2th by Alfred Still
man, secretary Of the executive committee
of the board of fire underwriters to its
members and their agents.
The clause Of the compact agreement
which is regarded by the commissioner as
specially obnoxious on the ground that II
evidences the existence Of a trust or COM
b!nation contrary to law, is as follows:
Each Of the undersigned companies
hereby agrees to observe all Of the pro-
visions Of the constitution and rules and
regulations of the board of fire UNDER
writer's OF the Pacific as they are now
or may be hereafter constitutionally
amended, holding faithfully to the spir-
1t as we'll as the letter of this agree
ment. Each signer hereof further
agrees that 1t shall not be absolved from
any obligation assumed, by reason of a
violation OF such obligation by another
member, except upon written resigna-
tion sent not less than five days nor
more than twenty-one days after serv-
Ice Of written notice Of intention to re-
sign, and until after all assessments
shall have been paid, except that upon
demand agreed to by majority vote Of
the entire membership such vote being
confirmed at a subsequent meeting not
less than fve days later, Its name may
pc stricken from the roll without fur
ther notice.
The thirtieth annual preliminary report
OF the insurance commissioner has been
submitted to the governor ana has beer,
printed by Commissioner Clunie for dis
tribution. 1t is statistical In character ana
contains no comments on the compact
war II appears that sixteen companies Of
all classes were admitted to transact busi-
ness 10 California during 1897 These were