Court Opinion

ID: 8013307
Source: CourtListenerOpinion
Date Created: 2022-09-09 02:00:54.59964+00
Date Added: 2024-06-11T16:36:11.169101
License: Public Domain

VALLIANT, J.
(Dissenting). — I entirely agree with the majority of the court in the opinion that the acts charged in the information constitute an offense against the anti-trust statutes of this State, and I also agree that these statutes are constitutional and valid. I further agree that if the agents through whom the respondents have conducted their business in this State have been guilty of the offense charged in the information the respondents can not escape the condemnation of the law on the plea that they did not authorize or were ignorant of the unlawful conduct of their agents. But the evidence in my opinion is not sufficient to convict them of the offense charged.
It is shown by the evidence that the local agents of the respondent corporations were associated together in an organization called the Underwriters’ Social Club, which was in its general character more of a business than a social society, though it was not devoid of the latter characteristics. In weighing the evidence the name of the society adopted falls rather into the side of the scales against the respondents, because it seems to indicate to that extent an intention to mislead. But it appears that that club was the successor of one *52that had for its purpose, or at least for one of its purposes, the maintaining of certain rates of premiums which, whatever its legal status might have been before, became when the antitrust statutes were adopted, unlawful, and in organizing the new society it may be that the members in choosing this name only desired to distinguish it, as far as a mere name could do so, from’its predecessor, of which one Lancaster was the active officer.
A great deal of testimony is devoted to what is called the Fetter book and the use made of that book by the respondents. The author of the book is W. J. Fetter, an insurance expert of fifty years’ experience. It is published on his own account, and sold to all insurance companies who will buy. The general purpose of the book is to indicate to the insurer the rate of premiums to be charged for insurance on the various classes of property in the locality, and to classify the property. According to the evidence these rates are estimated from data derived from surveys and maps of the city drawn with special reference to furnishing information to the insurers as to the nature of the risk, and from personal inspection of the property, and are calculated by an experienced actuary. It is a book of technical information for all persons interested in that business and is estimated in value like all technical works in proportion to its reputation, or in proportion to the reputation of its author. When used and relied upon the effect is that the insurance agent writes a policy without making a personal inspection and survey of the property, and the book being not only in the hands of the local agent but also in the home office of the company, the latter may pass on the policy without a special suryey and certificate of inspection. The evidence shows that the book is in extensive use and that a large proportion of the business of the respondents in St. Joseph during the period covered by this inquiry was based on the rates given in the Fetter book.
There is nothing unlawful in the character of the book, *53and nothing unlawful in the insurance companies basing their business ventures on the information it contains, and even if the evidence showed that all their business was transacted on that basis, that would not of itself bring them under the condemnation of the law. The use that a fire insurance company, standing alone, may see fit to make of the book, is no more to be condemned than the use that á merchant may make of the daily price current reports or than that which a life insurance company may make of the tables of experience and of the prices at which such an insurance may be safely carried, compiled and computed by reputable authors and actuaries.
But there is a use to which the book might be put that would be unlawful, and that is the use to which it is charged in the information these respondents have put it, that is, that they have made it a standard of rates by agreement among themselves which shall not be lowered.
The evidence shows that before the anti-trust statutes were enacted there was a compact to maintain those or similar rates, and it shows that this so-called Social Olub was organized just after that law went into effect and the organizers had that law very much in mind. There was testimony in support of the information tending to show that whilst the ostensible object of the society was innocent, its real object was to violate the law. But on the other hand, whilst the testimony of the respondents was weak in support of the idea of its being a social club, yet it very satisfactorily showed that its main object was the regulation among themselves of the insurance business transacted by its members in particulars in which their mutual convenience was promoted, the public interest not prejudiced and the law not violated.
The testimony in support of the charge of the unlawful agreement to maintain rates is chiefly that of two witnesses who were, or had been, members of the club, and between whom and the other members there seems to have arisen some unpleasant feeling growing out of their business. "Whilst both *54of tliese witnesses testify that there was such an unlawful agreement, yet they state it rather as their conclusion; their understanding of a tacit agreement. They say that no writtten agreement to that effect was made and they do not state what if anything the members said among themselves that would constitute such an agreement. They undertook to give what they said the president said at the organization which was, in substance, that they could not put anything in writing that would lay themselves liable to prosecution under the anti-trust law, and that whatever was done on the subject of maintaining rates would have to be understood among the members. One of these witnesses said that if a member wrote a policy below the Eetter rate, the secretary would send it back to him and he would be required to take it up; when the witness was asked what would happen if the member failed to take up the policy, he said that usually there would be a big row and a whitewashing; when asked to state an instance in which a member had been thus disciplined, he was able to remember but one, and that he so vaguely stated that it did not clearly appear either that the member had violated the supposed rule or that any penalty followed. Another one of these witnesses testified that there was a penalty prescribed for cutting the rate which was a fine of $50 for the first two offenses and after that loss of his agency. On cross-examination he said that the agreement to submit to that $50 fine was in writing signed by all the members of the club. That is in contradiction of his own previous statement and that of the other witness just mentioned, to the effect that no agreement on that subject was reduced to writing for fear of the law.
The evidence showed that the club had a secretary whom it paid $75 a month. This secretary had been obtained by a committee sent by the club to Kansas City to consult Mr. Eetter on the subject, and was recommended by him as an efficient man for their business, he having been a clerk in Eetter’s office. All policies written by the members, and their daily *55reports were sent to the secretary who examined them, and if the policies were found correct he forwarded them to the company, if anything wrong was discovered, either in the policies or reports, he sent them back to the agent for correction. The State’s testimony tended to show that this was for the purpose of preventing any agent from cutting the rate. The testimony for respondents tended to show that the secretary was selected because of his skill in insurance business and to aid the members in their technical work; all policies were sent to him for his judgment as to their being properly written; if there was anything wrong in the form of the policy, or in the description of the property, it was his duty to note the correction and return it to the writer; when a number of policies were written by different agents on the same property it was desirable that they should all be what in technical language they call “concurrent,” that is substantially in the same from; it was the secretary’s duty to see that such policies were concurrent, and if one was found to be what they call “non-current” his duty was to note the difference and return it to the writer for correction; this could be done only by having a common agent of this kind or by the more inconvenient method of a meeting of all the agents interested; in a few instances when he first began his office, the secretary noted on policies that they were written below the rate indicated in the Eetter book, which was the usual standard, and returned them to the writers for such action as they might see fit to take, but it was done as a mere suggestion, the secretary took no further action on it, and he soon discontinued doing so; that he had nothing to do with fixing or maintaining the rates; that he made inspections of risks and when a change in the property or occupancy occurred he reported it to Mr. Eetter at Kansas Oity, who, if. in his opinion the change required it, prepared for distribution to all his subscribers slips indicating a change in the rate of premium that should be made.
*56The testimony of the president, secretary and several members of the club was taken and they all testify that there was ho agreement to maintain rates.
It is not every association of men engaged in the same business that .is condemned by. our anti-trust statutes, even though the object of the association be to facilitate the conduct of their business and promote their mutual interests. Such associations are not unusual nor necessarily injurious to the public well being. It was pointed out by witnesses in this case that there are features of the insurance business which render an association of the kind in question convenient and profitable to men engaged in the business, and that such an association may be conducted without in any particular violating the law.
The fact that before the anti-trust laws were enacted insurance companies were banded in an association to maintain rates doubtless conduces to place any society they may now form under suspicion, especially at a period when the public mind is excited on the subject of trusts. But when there is a legitimate purpose for which they may organize, and when we are told by reputable witnesses that such was the purpose of this organization and that there was no agreement to maintain rates, we have no right to disregard the testimony or overweigh it with suspicion.
I have given the evidence in this case a careful study and am satisfied that on the main question of fact the decided preponderance is in favor of the respondents, and the finding should be that they are not guilty of the acts charged and the judgment that they be discharged.