Commonwealth v. Vrooman

Dissenting Opinion by

Mjr. Justice Dean :

The act of February 4,1870, declares it to be a misdemeanor for any person to issue a policy of insurance against loss by fire or lightning, without authority being expressly conferred so to do, by a charter of incorporation issued according to law.

The defendant, on March 12, 1894, issued a policy to James G. Kimball in the sum of $1,000, indemnifying him against loss by fire on his household furniture contained in his dwelling house in Philadelphia, without authority expressly conferred by an act of incorporation. For so doing, he was indicted and tried March 20, 1894. 'There was no dispute as to the facts, and the jury, in a special verdict, found them as stated. The court, being of opinion the act was unconstitutional, entered judgment on the verdict for defendant, and thereupon the commonwealth appealed.

Unquestionably, the legislature has the authority to enact any law not in conflict with the constitution of the state or of the United States. The right to limit the transaction of the business of fire insurance to incorporated associations, is not, in express terms, forbidden. But the right of natural persons to make contracts of indemnity against loss by fire or shipwreck was, for centuries before the adoption of the constitution, a common law right. All the authorities, without a single exception, hold that, under the constitutional light to acquire, possess and protect property, there is necessarily included the light to make reasonable contracts concerning it, which contracts are protected by the constitution. In this, all agree. And all agree, further, that the legislature may, in the exercise of its police power, absolutely .forbid contracts which are inimical to public interests; and, second, may adopt suitable regulations of contracts for the protection of the public.

*323The business of fire insurance being one which, from its nature, involves contracts with large numbers of persons in all parts of the commonwealth, who have not the opportunities of gaining the information necessary to intelligent bargaining, for their better security, the legislature may make such regulations as will protect them against fraud or imposition. It may -require that all who desire to transact business with the public, shall take out a license, shall make frequent reports of their financial condition; have fixed places of business where service of process can be had on them; that they shall deposit with the treasurer, or other officer of the commonwealth, bonds or other securities in sufficient amount to guarantee those with whom they contract against loss. And generally may make all reasonable rules for the regulation of such business. But can the legislature absolutely forbid the making.of such a contract by individuals, and confer on corporations a monopoly of such business ?

Is the business of fire insurance deleterious to the publie ? If so, the legislature may absolutely prohibit it. But no one contends that it is. On the contrary, it is admitted it is to the advantage of the publie. The legislature admits this by expressly authorizing artificial persons to conduct it. If such contracts be not injurious to the public, and may not be altogether prohibited, then where is the authority to prohibit one class, natural persons, from entering into them, and specially empowering another and numerically- a very much smaller class, artificial persons, to make them ? In so doing the state grants a monopoly in a particular business -to a particular class.

As is said in substance in the Slaughter House Cases, 16 Wall. 102; 19th Pickering, 54; 13th Allen, 372, and many other cases, “ All such grants relating to any known trade or manufacture, have been held, by all the judges of England, to be void at common law, as destroying the freedom of trade, discouraging labor and industry, restraining persons from getting an honest livelihood, and putting it in the power of the grantees to enhance the price of commodities.”

A contract of indemnity against loss by fire, being a common law right, it cannot, by legislative grant, be monopolized by a small class, unless it hás become of such publie concern as requires its exercise by the state or by a corporation to whom the state’s power is immediately delegated. It may be admitted *324that the business of constructing and operating public highways for the carriage of goods and travelers is exclusively in the state, and is of such immediate public interest that it can be transacted only by the state and such corporations as the state may specially authorize. But to carry on this business at all involves a right of eminent domain, which the state alone can exercise or grant, and therefore it ought not to be exercised by private individuals. There is not, and never was, a right in the individual to take private property for the construction and operation of a public highway, on which to conduct for profit the business of transportation ; but there never was a time that the individual had not the right to make a contract to indemnify his fellow against loss by fire. This act is not obnoxious to the constitution because it authorizes corporations to' insure against fire, but because it prohibits individuals doing a like business. It grants a monopoly of a particular business to a particular class; prohibits all others from engaging in it. This the legislature may, in the exercise of its police power, in some cases do. It may declare that females shall not be employed in some avocations ; that children under a certain age shall not be employed in mines or factories; that none but men of good repute shall sell liquor by retail; and the wisdom of such legislation is not a question which the courts can consider; for it is adopted to promote the health, morals and good order of the public.

That in some of the states, the legislature has restricted the business of banking to corporations, has no analogy to the ease in hand. The banking intended to be restricted by the New York act, was issuing of notes, receiving of deposits and discounting. In People v. Utica Ins. Co., 15 Johns. 358, and Bristol v. Barker, 14 Johns. 205, it was held that the act was only a restraining and regulating act, applying to associations of individuals; that as to them, to do a banking business they must have corporate authority. That an individual was not prohibited from doing a banking business, except as to issuing bank notes. It has always been held to be within the police power of the legislature to restrict the issuing of notes, intended to pass as money, to corporations. It is a matter which concerns the entire public, who have no opportunity, in the hurry of every-day business transactions of life, to ascertain the value of the promise which is tendered as money. Butin a contract *325of indemnity, why should not the citizen make his contract when and where the price and security suits him best ? Why should the legislature take from the whole people their common law right of contract for insurance, and grant it to a particular class ? Where is there the semblance of the constitutional exercise of the police power in this ? Under the corporation act of 1874, and supplements, corporations for almost every business are authorized, such as supplying ice, printing and publishing, conducting hotels, drove-yards, livery-stables, lumbering, quarrying, mining, brewing, distilling, improvement and sale of real estate. In fact, almost evéry kind of business can be transacted by incorporated companies. All concern the public. If this act be constitutional, the legislature can prohibit the transaction of any business, if not conducted by corporations under the act of 1874, and under the pain of imprisonment forbid the individual engaging in any business whatever.

It is paternalism, to assume that citizens are incapable of prudently contracting with reference to their property without an express grant of the state in the shape of corporate franchise, to one of the contracting parties. It is an assumption that the citizen is a child, needing the tutelage and protection of the legislature in the ordinary affairs of business life. Or else it is a species of tyranny in government like that of Turkey, where the rights to produce, manufacture and trade, are all the subject of grant from the sultan.

If the exercise of the right of contract to indemnify be injurious to the public, then it ought to be prohibited; if beneficial, it ought not to be monopolized by a few.

The rule to be educed from Budd v. New York, 143 U. S. 528, the Elevator Cases; the Sinking Fund Cases, 99 U. S. 700, and all the cases where the police power of the state is discussed, is that, while a business affected by a public interest may be regulated, yet when not inimical to the health, morals or safety of the people, it cannot be prohibited. I do not think an exclusive grant to a class is regulation ; that is prohibition of all others, and is therefore unconstitutional.

The judgment in my opinion should be affirmed, and the appeal dismissed.

Mb. Chief Justice Stebbett and Mb. Justice Gbeen concurred in this dissent.