Hartford Fire Insurance v. State

Wood, J.,

(dissenting.) Nowhere in this act has the Legislature made the mere innocent act of doing business in this State, without reference to prices fixed by a trust, a crime. They have not made it unlawful for foreign corporations, who are in a trust here or elsewhere, to do business in this State, provided such business has no connection with a trust or trust prices. They have nowhere prohibited such innocent acts of doing business. Until this is done, it is palpably wrong for the court to invoke the aid of the “history of the times” or the mandates of political platforms or executive messages, or any other extraneous matters, to ascertain the intent of the Legislature. No rules of construction are better settled than that crimes will not be created by intendment or implication, and that penal statutes must be strictly construed- As early as the Sixth Arkansas this court said: “It. is a rule never to be departed from that criminal statutes must be strictly construed. The rule is founded alike upon policy as well as humanity, designed for the protection of the citizen; unless he is clearly charged and proved guilty of a positive enactment of law,” he cannot be punished. Hughes v. State, 6 Ark. 134.

In Stout v. State, 43 Ark. 415, this language was used: “Penal statutes in declaring what acts shall constitute an offense, and in prescribing punishment to be inflicted, are to be construed rigorously. The general words shall be restrained for the benefit of him against whom the penalty is inflicted. The case of an offender must fall within the words and the mischief to be remedied.” In Casey v. State, 53 Ark. 336, Chief Justice Cockriee said: “No case should be brought within a penal statute unless completely within its words, and every reasonable doubt about the meaning of the language should be resolved in favor of the accused.”

In State v. Lancashire Ins. Co., 66 Ark. 466, Judge Riddick said: “To determine the meaning of a statute, the courts must look mainly to the language of the act itself, for that is. the final expression of the legislative will, and therein must such will and intention be sought. Whatever the Legislature may have intended, such intention can have no effect unless expressed in the statute; for this; being a penal statute, cannot be extended by implication. It would be in the highest degree unjust to punish conduct not clearly forbidden by the law itself, and, to quote the words of a recent opinion of the Supreme Court of the United States: “We are left to determine the meaning of this act as we determine the meaning of other acts from the language used therein.” United States v. Trans-Mississippi Freight Assn., 166 U. S. 318. Again this court, through the same learned judge, in Little Rock & F. S. Ry. Co. v. Oppenheimer, 64 Ark. 271, 289, speaking of a penal statute, said: “It shows that the language of the statute does not plainly express what appellees say it means. But this is a penal statute, and cannot be extended by implication. * * * The statute should not, of course, be defeated by a forced or overstrict construction; but the intention of the Legislature must be gathered from the words, and they must be such as to leave no reasonable doxxbt upon the subject.” Berry v. Ry. Co. 41 Ark. 517; Watkins v. Griffith, 59 Ark. 344-356; Basham v. Toors, 51 Ark. 309-315; Little Rock, H. S. & T. Ry Co. v. Spencer, 65 Ark. 183. These excerpts, out of many to be found in our reports from the first to the last, of same ‘purport, show how tenaciously this court has adhered to these fundamental rules of construction. Indeed, so important are they in conserving personal liberty and the rights of property they have always been considered as inviolable as the Constitution itself.

To the everlasting credit of this high tribunal, not a single case can be found, so far as I am aware, where these rules have ever been departed from. Why should we ignore them now ? In the opinion of the majority, after reciting that the dominant political party in this State in its platform had demanded the passage of the King bill, and after quoting what the convention construed to be the purpose of the bill, Chief Justice Hire continues as follows: “The General Assembly elected in 1904, composed almost entirely of members of the political party whose platform is quoted, with remarkable unanimity and rapidity, passed the King bill, which had been rejected by the two preceding General Assemblies, and in less than a fortnight of its organization.it was approved, and it is the statute now at bar. Reaching back to the construction sought by the State in the Lancashire case, an act is now before the court supposed to embody that theory, demanded by the dominant party as containing it, and speedily passed by the General Assembly elected on the platform demanding it; these facts render the conclusion irresistible that the General Assembly intended to render unlawful the doing of business in this State by any corporation when such corporation belonged to any trust to fix prices anywhere, when it passed this act.”

In view of what I have already said, I submit that no consideration whatever should be given to the demands of a partisan organization in arriving at the proper meaning of this act, especially when the Democratic convention approved the King bill exactly in the words as written t'o carry out its expressed purpose. To follow such a recommendation as that would be for this court to yield the authority vested in it by the Constitution and the laws to the behests of a political convention.

But, if matters extraneous to the language of the act itself must be looked to, then I protest that it would be more in keeping with the dignity, authority and independence of this court, and less derogatory to the Legislature, to say that, having the decision of this court before them construing the former law, they were guided and controlled by the principles and rules therein announced, rather than by the demands of any party platform, or any executive message. For, if not, we must impeach them either of imbecility of mind or worse. If, as the majority intimates, this legislation, in the unconstitutional and therefore vicious form upheld by this court, is in response to the demands of the dominant political party in this State, as evidenced by the “remarkable unanimity and rapidity” with which it was passed by the Legislature “elected on the platform demanding it,” then I feel constrained to say that this is all the greater reason why this court should observe those time-honored rules of construction which have been formulated by the ministers of justice through all ages, and are found to be wise and useful canons at all times -for the preservation of the sacred rights of personal liberty and property, and especially useful in times of great political excitement and craze in saving the people themselves from the evil result of their own ignorance or folly, and ofttimes from the wicked designs of selfish and unscrupulous politicians.

Attributing then to the Legislature only a desire to observe these well-known rules of construction, which were announced by this court in passing’upon the Rector law in the decision which they had before them, and only a desire to conform their last enactment to the Constitution, as they were sworn to do, I shall proceed from that viewpoint to discuss the construction that should be given the present anti-trust law upon the case presented by this record.

First. As to the meaning of the words “and transacting or conducting any kind of business in this State.” The issue as to the meaning of these words is precisely the same as it was in the case of State v. Lancashire Ins. Co., supra. The words themselves are the same, used in the same connection, and the added words, in other connections, in no manner change the sense in which these are used.

That this is true is shown by the pleadings in the two cases, and the contention of counsel for the State in each case. In the case of the State v. Lancashire Ins. Co:, counsel for the State, in presenting the issue as to the proper meaning of these words, “and transacting or conducting any kind of business in this State,” said: “The conjoint act of being a member of a pool or trust and the doing of business in Arkansas constitutes the gist of the offense- One cannot be separated from the other. But it is when the conjoint act is consummated by the appellees that the sting of the law attaches, and they are prohibited from coming into our borders for the purpose of carrying on their nefarious business.” And again: “The matter upon which the sting of the law is placed consists in the two concurring elements: (1) Participating in an agreement to regulate or’fix prices or rates; and (2) at the same time, or in reference thereto, doing business in the State.” (Brief of Attorney General in former cases.)

In the present case counsel for the State say: “What reason can there be for holding that the act makes either membership in a pool alone, or doing business in itself, the gravamen or gist of the offense? Is it not a sensible and reasonable construction of the act that it takes both to constitute the offense?” We thus quote from the briefs of counsel to show that counsel in both cases understood and contended that the doing of business as set forth by the words “and transacting or conducting any kind of business in this State,” as used in the statute, prescribed an essential element in the offense.

In answer to the contention of counsel on this issue in the Lancashire case, I said: “The proposition, when analyzed, is exceedingly simple. The Legislature has no extra-territorial power to punish crime. The crime specified in this act is the “entering into, becoming a member of, or a party to, any pool, etc., to fix or limit the prices or premiums to be paid for insuring property against loss or damage by fire,” etc. If a foreign corporation, doing business in this State, enter into, or become a member of, this pool or trust beyond the limits of the State, then the crime is clearly committed beyond the limits of the State, unless the pool or trust is to fix the premiums for insuring property in Arkansas, in which event the crime put in motion in the foreign State takes effect and becomes complete in Arkansas. Just as in the cases cited by the Attorney-General, where a man in one State throws a stone, or shoots a gun across the line, and kills a man in another State, or forms a conspiracy in one State to burn or ■destroy property in another State, the crime in such cases becomes complete where the person is killed or where the property is •dstroyed. But where the foreign corporation enters into, and becomes a member of, a pool or trust in a foreign State which ■does not purport to, and does not in any manner, affect the property of the people of the State, of course no crime is committed in this State.

“The Legislature certainly did not intend to make a crime, and punish the mere act of doing business in this State by a foreign insurance company, although a member of a pool or trust, whether in or out of the State; for the very gravamen of the crime is entering a pool or trust to ñx the price or premium to be paid for insuring property, etc. Now, suppose the member of the pool or trust in the foreign State proposed to do business, and did business in Arkansas on a strictly competitive basis, which tended to cheapen and lower the rates of insurance to the people of this State, could any dispassionate lawyer say that the Legislature intended by this act to punish such a beneficial and commendable deed as that? Certainly not. The Legislature manifestly was intending to correct an evil existing which affects, or might affect, injuriously the people of the State. Now, the prohibiting of foreign corporations from doing business in this State on any terms and conditions that the Legislature may prescribe is one thing, and the punishing of them for any crime they may commit is another and entirely different thing. As to the former — the privilege to do business — the Legislature has the power to say: 'Foreign corporations, you cannot do business in this State, if you are a member of a pool or trust to fix or limit prices anywhere in the wide world.’ As to the latter — the entering of a pool or trust, the crime — they could say: 'You will be punished with the severe penalties denounced by this act, if you are a member of a pool or trust to fix the price or premium upon property in Arkansas.’

“As the Legislature had no power to punish foreign corporations for becoming members" of a pool' or trust outside of the State, which did not propose to affect prices in the State, and as it did have full power to punish them for entering pools or trusts to affect prices or premiums in Arkansas, and also to forfeit their right to do business in this State, is it not conclusive that they intended by the words ‘any pool or trust’ to mean any pool or trust to fix the price or premium on property in this State? We must not convict the Legislature of doing or attempting to do a vain and idle thing. Had the Legislature intended to exclude' foreign corporations that were members of a pool or trust anywhere in the world to fix prices anywhere outside of this State, how easy it would have been to have made it unlawful for such corporations to do business in this. State, and to have provided sufficient penalties for the violation of such law to secure its enforcement. But no such thing as that was provided in the act under consideration. The purpose of the Legislature is doubtless correctly reflected in .the title: ‘An act providing for the punishment of pools, trusts and conspiracies to control prices, etc.’ The fact that the Legislature embraced the other persons named in the act along with foreign corporations. shows that it intended that these corporations might be considered as violating the law in the same way as any ‘partnership or individual or any other association or persons whatsoever’ might do. It is an egregious mistake to suppose that a foreign corporation is-guilty of an offense for merely doing business in this State, or to-consider the act of doing business as an element of the offense under this law. It would be no more an offense for them to do-business than for domestic corporations or individuals to do-business. Foreign corporations are expressly authorized to do-business. The doing of business by them is not an ingredient of the offense at all. The words, ‘and transacting or conducting any kind of business in this State,’ applied to them, are used in the sense merely of descriptio personarum. They merely indicate that these corporations are within the legislative jurisdiction because of the fact of their doing business in this State. There are no separate acts conjoined, as the Attorney-General supposes and argues, but the one act. The proof which would establish the crime would also establish the forfeiture of the right to do business in the State. The Legislature could both forfeit the right of the insurance company to do business and punish for the crime of entering a pool or trust to fix the price or premium, if the act -was done, or became complete or effectual, in Arkansas, but it could not punish for the crime unless it did. Therefore the fact that the Legislature has included individuals and domestic corporations, and has prescribed, as a result of the violation of this act, both a penalty for the crime committed and a forfeiture of the right to do business, shows conclusively that, as to foreign corporations, it could only have intended to reach such of these corporatins as were in a pool or trust in this State, or in a foreign State, to regulate prices in this State.”

The Legislature, having adopted these words, must-be held to have adopted them with the construction that was placed upon them by the judges of this court, and as to the proper construction to be given these words there was no difference of opinion among the judges of the court as then ^constituted. It will not do now to say this question was then not presented, and that what I then said was obiter dicta. For that is not true, as shown by the pleadings and the contention of respective counsel in the case. As the Legislature has not indicated by anything they have said in the present act that they intended that the meaning of these words should be different from what we held them to mean in the Rector law, I do not feel called upon to change my views. I concur fully with Judge BaTTeE as to the meaning of these words. Suppose we had a law saying: “Any Attorney-General, Governor or Secretary of State, living in Little Rock, and transacting and conducting any kind of business in the west wing of the Capitol, who shall enter or become a member of any trust in this State or elsewhere to fix prices, etc., in this State or elsewhere, etc., shall be deemed and adjudged guilty of a conspiracy to defraud.” Could any one say that the words “living in Little Rock, and transacting or conducting any kind of business in the west wing of the Capitol” were elements of the offense? Certainly not. Yet there would be just as much reason and sense in saying that these words were elements of the offense in the case supposed, as to say that the words “and transacting or conducting any kind of business in this State” are elements of the offense in the present law.

Second. As to the proper meaning of the first section, it will be observed that the words “in this State or elsewhere,” are added after the word “made,” referring to the trust agreement, and that the words “either in this State or elsewhere” are also added after the words “to regulate or fix,” etc., and the words “to fix or limit,” etc. Taking the words in the connection used, and giving to each word its grammatical construction and natural meaning, the construction would be that the words “in this State or elsewhere,” where they first occur, after the verb made, constitute an adverbial phrase, and modify that verb; making the language refer to a “pool, trust,” etc., made anywhere, and that the words, “in this State or elsewhere,” after the verbs to “regulate or fix” and “to fix and limit,” likewise constitute an adverbial phrase qualifying these verbs. So that the meaning of this section is, that if any domestic corporation which is a going concern in this State, or any foreign corporation that is transacting or conducting any kind of business here, or any of the other classes of persons named in the act, shall enter into any trust anywhere in the world to ñx prices, and shall proceed to fix -the prices or premiums anywhere in the world, or to limit or regulate anywhere in the world the quantity or amount of any article of property in this State, or to be used and which is used in this State, all such classes named in the act are then guilty of a conspiracy to defraud, as declared therein, and thereby subject to the penalties denounced against such in the second and third sections for a violation of the provisions of the act.

It will be noticed that the qualifying phrase, “in this State or elsewhere,” is not used after the words “property” or “article or things.” If this phrase had been used after these words, then it would have been an adjective phrase, qualifying the nouns “property” or “article” or “thing” anywhere in the world. But, as the Legislature has not said that the “property” or “article” or “thing” upon which the premium is paid or of which the quantity is limited or fixed may be elsewhere, we must presume that this was for the reason that they did not intend for the act to have an extra-territorial effect, which would have been beyond their jurisdiction. In State v. Lancashire Ins. Co., supra, Judge Riddick said: “Our conclusion is that this statute does not apply to pools or combinations formed outside of this State, and not intended to affect prices in this State. In other words, we are of the opinion, that the Legislature by this act did not intend to prohibit or punish acts done or agreements made in foreign countries by corporations doing business here when such acts or agreements have reference only to persons or property or prices in such foreign countries.” So it cannot be said that the court expressly decided that the Rector law was applicable to trusts formed outside of the State which were intended to affect persons, property or prices of insurance in this State.

Judge Martin, the learned circuit judge who decided the Lancashire case, and many eminent counsel held to the view, under the Rector law, that, according to the strict construction to be given criminal statutes, the trust agreement itself would have to be made in this State before the law was violated. Now, the Legislature, having taken up the whole subject of anti-trust legislation anew in the act of 1905, determined to make it plain that no matter where the trust was formed or the prices fixed, if such trust affected in any manner persons or. property in this State, the crime was complete. Hence they added the words “in this State or elsewhere.” The Rector law is expressly repealed. The first section of that law was substantially re-enacted with the slight additions to make clear the purpose which I have here indicated. The second, third, fourth, fifth and sixth sections of that law were re-enacted exactly as in the Rector law, but the fourth, fifth, sixth, eighth and ninth sections of the present law are not embraced in the Rector law at all, showing that the Legislature was intending to make an entirely new law upon the subject.

Third. The court treats the act as a criminal statute, and not as an act simply prescribing conditions upon which foreign corporations may do business in this State. When so treated, the construction given by the court, in my opinion, would render the whole of the first section unconstitutional. For a foreign corporation, having complied with our laws, and already doing business in this State, must be treated, under our Constitution and statutes, so far as the punishment for criminal offenses is concerned, exactly, as domestic corporations or other persons are treated. Constitution, art. 12, § 11; Kirby’s Digest, §§ 824, 828. And who would be so bold as to declare that it is within the power of the Legislature to punish individuals, or any member of any partnership, association or company, or even domestic corporations for the mere innocent act of doing business in this State, because such persons might be interested in trusts elsewhere, to affect prices elsewhere, but which acts were perfectly lawful in the States where they were done ? Could one of our domestic corporations, or one of our own citizens, or a citizen of another State who owned stock in a corporation or company in another State, which was in the insurance business, for instance, which corporation or company in another State was in a trust not forbidden by the law of th: State — could such individual or domestic corporation be punished in this State under this law for selling shoes, groceries or dry goods, when such sales were without any reference whatever to the trust of which he was a member in other States ? Clearly not, for_such a monstrous doctrine would be contrary to art. 2, § 2, of the declaration of rights in our Constitution, securing to “all men” the “inalienable right” of “defending liberty” and “of acquiring, possessing and protecting property;” also section 17 of the same article, forbidding the passing of any law impairing the obligation of contracts. Upon this question Judge Riddick has well said; “Now, while the Legislature can dictate the terms under which corporations of other States may do business here, it does not have control of the citizen. If a merchant of Missouri, doing business also in this State, should enter into a pool or combination in Missouri to regulate prices there, but not intended to have effect in this State, our Legislature could not on that account prevent him from doing business here, or subject him to a penalty. So, if we adopt the construction contended for by the Attorney-General, we must assume, as to a portion of the statute, that the Legislature was attempting to do something it plainly had no right to do, and such portion must be treated as unconstitutional and void.”

The Legislature certainly did not intend for the act to have the effect that it must have on other classes named in the statute, if the construction of the majority is correct as to foreign corporations. The Supreme Court of the United States sáys: “Our duty, therefore, is to adopt that construction which, without doing violence to the fair meaning of the words used, brings the statute into harmony with the provisions of the Constitution. * * * Such construction shall be given to it as will render it free from constitutional objection. It ought never to be assumed that the law-making power of the government intended to usurp or assume power prohibited to it.” Grenada County v. Bragden, 112 U. S. 269.

This act does not seem to be framed as an exclusion statute, or as prescribing the conditions upon which foreign corporations might be permitted to do business in this State. If the first section had been presented in that light, without any reference to penalties for some crime committed, then, taken in connection with the third section forfeiting the right to do business, I would have had more doubt as to its invalidity. Presented as a criminal. ■statute to punish a foreign corporation for some act done beyond the borders of the State, and which in no manner affects persons or property in the State, I have no doubt whatever of its unconstitutionality. No statute should be given an extra-territorial ■effect if it can be avoided. Black, Int. Laws, pp. 91 et seq.; Endlich, Con. and Int. Stat. §§ 169, 170, 335; Bishop, Stat. Crimes, §141, and many authorities cited.

Treated as a criminal statute, the Supreme Courts of Texas and Missouri have already declared § 7 unconstitutional.

But I have already extended this opinion farther than I intended. As I construe the law, it might have subserved a useful purpose in giving the people some relief from those unlawful ■combinations in restraint of trade called trusts, which, when intended to suppress competition in prices and thus oppress the people, are wicked and harmful in the extreme. The law should severely denounce and punish these to the extent of driving them from our State, if possible.

But'the law, as construed by the majority, will not have that effect. On the contrary, it will rather tend to build up and ■foster the most gigantic and oppressive of the trusts, by preventing free competition, the very thing which wise anti-trust laws are enacted to encourage. As construed by the court, it will undoubtedly drive nearly all the old line insurance companies from the State, but that will have the effect of raising, instead of lowering, the price of insurance; and, if enforced in other respects, will open up a veritable Pandora’s box of ills to the commercial and business interests of the State, which will hurt thousands and "help none.

For these reasons, I do not believe the Legislature intended the act to have the effect which the majority of the court construe it to have; and if they did so intend, they have wholly failed to express such intent in the language of the act. That the Legislature knew how to make an act unlawful when they intended it to be so is shown in sections four, five and six, where they expressly make the doing of certain things named therein unlawful. But they use no such language with reference to the ”transacting or conducting of business” in the first section, or anywhere else, which this court now supplies to make a crime out of what has al.ways been considered not only as innocent but helpful to all, to-wit, the doing of business, not under a trust, but in free competition with all. I submit, with due respect to my associates, that they are wrong, and this wrong, having received the final sanction of this tribunal, the last refuge of the litigant for right and justice, can never be corrected.