The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1906-07-24

IN the control Of your department under
the same regulations and subject to the
same prohibitions as life insurance COM
panfes-
BY paragraph 1870. G. s. of 1901. you
are empowered, and it IS your duty,
when you have reason to suspect that
any insurance company is transacting
business in violation of the provisions
OF any of the insurance laws of this
state, TO make an examination OF its
affairs and business, and to appoint
suitable persons to make such exam
ination. and if as result to that ex-
animation you are satisfied that the
provision of any of the insurance laws
Of the state are being violated, you may
revoke the certificate of said company
to transact business in this state.
The question then is. do any or all
of the things mentioned above constitute
a breach Of the laws of the state. The
law of the state prohibiting trusts and
providing for the punishment of the
same paragraph 1854 G. S. 1901) defines
a trust as;
s. : A trust is combination of capital,
skill or acts, by two or more persons.
firms, corporations, or associations Of
persons, or either two or more of them,
for either. any or all of the following
purposes:
'' 'First-To create or carry out re-
strictions in trade or commerce, or
to carry out restrictions in the full
and free pursuit of any business au-
thorized or permitted by laws of this
state.
'second-To increase or reduce the
price or to control the cost or rates
of insurance.
THE contract between the three
persons or corporations mentioned
above is one which must Of necessity
increase the cost of insurance to the
employe who is required, as 1 under
stand the matter from your statement,
m he 7frrv~4 \
insurance affected by this arrange
ment. You do not state that the en-
ploye pays any premium for a bond,
but contract enclosed by you seems
to indicate 1t. If this be true, he is
compelled to obtain the bond from
the surety company before he can ac-
cept employment either from the Pa
ciic Express company or the Mis-
souri, Pacific railway company. In
view of the fact that these corpora
men in the state, the contract amounts
to one which allows the American
Surety company to fix its own price
for bonding these men or insuring
their fidelity to these companies and
compelling the enploye to pay for the
Insurance.
But this seems to be but half the
wrongful effect of the contract, because
you state that not only is the Missouri
Pacific Railway company and the Pa
cific Express company, acting together
under this contract with the American
Surety company, but all. OF many of the
other railroad and express companies
Of the state are acting under it also.
It puts in the hands of this surety COM
pany the power to raise the rates of
which in many cases will prove to be
prohibitive.
IN the case of the state VS.. Phipps. so
Kan, s09 and in re Pinkneys A Kan,
SO, the supreme court of the state held
that insurance rates are included with
in the term trade as used in the first
clause OF the trust law above quoted
and that an agreement to Increase such
rates was a violation of that section.
There is another view to the effect of
these contracts and understandings be-
tween these companies. Paragraph
24z1, G. S. 1901, provides as follows:
= Any employer of labor in this state
after having discharged any person
from his service, shall not prevent or
attempt to prevent by word, sign or
writing of any kind whatsoever any
such discharged employe from obtain
ing employment from any other person,
company or corporation, except by fur
nishing in writing, on request, the cause
of such discharge
THE principal effect of permitting
this insurance company to furnish all
the insurance of this character for
many, If not all of the express and rail-
road companies of the state is to put
within its power the right to DENY en-
ployment to any employe who happens
to have trouble with his employer, while
his faithfulness or fidelity to duty is
being insured by this company. rhe
employer reports the breach of service
to the Surety company. The Surety
company at once strikes the name of
the employe from its list of permissi-
BILE risks. In other words. the employe
is blacklisted from that time because
a1af 70
pany. and employers refuse to employ
his in this class of employment with
out It.
1T may be suggested that the il
legality of this arrangement is all with
the express or railroad companies and
that the insurance company ought to
have the right to obtain and hold all
Of the insurance It can obtain The
fact remains. however, that the insur
ance company is a party to this agree
m ent. It no doubt profits from the ex-
clusiveness of the contract, and IS able
to obtain higher rates of insurance by
reason of it
II think for this reason that the con-
tracts and agreements mentioned by
you and stated above, are contrary to
public policy and in violation of the
Jaws both in letter and spirit mem
toned above I think also that under
the authority of the insurance laws
mentioned. you would be warranted in
taking action to compel this company
to comply with the law. or to declare
its certificate and right to do business
in this state forfeited.
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