John C. Perkins, being duly sworn, deposes and says that he is the Commissioner of Insurance within and for the State of South Dakota, defendant in the above entitled action. That he has read the foregoing demurrer to the bill of complaint of the Hartford Fire Insurance Company, a corporation, et al, complainants in this suit, and that the same is not interposed for the purpose of delaying said suit or any proceeding therein. JOHN C. PERKINS. Subscribed and sworn to before me this 3rd day of October, 1903. Notary Public. IN THE CIRCUIT COURT OF THE UNITED STATES WITHIN AND FOR THE DISTRICT OF SOUTH DAKOTA, SOUTHERN DIVISION. The Hartford Fire Insurance Company of Connecticut, a Corporation, et al., Complainants, vs. John C. Perkins, Commisssioner of Insurance, Defendant. DEFENDANT'S BRIEF. IN EQUITY In this action, the purpose of which is to enjoin the defendant, Commissioner of Insurance for the State of South Dakota, from enforcing the provisions of chapter 158, Laws of 1903, South Dakota, commonly known as the "Anti-compact Law," the complainants, all foreign fire insurance companies, as a basis for the relief which they seek, allege that the said act is repugnant to certain provisions of the federal and state constitutions, and therefore void, and ask this court to so declare said act unconstitutional at their instance. To this bill of complaint the defendant interposed a general demurrer. I will hereafter allude to the particular objections raised to this act by complainants' counsel and the allegations in their bill of complaint, and in the first instance I will call the court's attention to the general proposition of the right or the standing of the complainants in their attack upon this act. The act in question is as follows, being chapter 158, Laws of South Dakota, 1903: Sec 1. COMBINATIONS PROHIBITED - PENALTY FOR VIOLATION.] Any combination, agreement, confederation, compact or understanding made and entered into either directly or indirectly by or between two or more fire insurance companies insuring property against loss or damage by fire and loss or damage from the elements, transacting business within this state, or between officers, agents or employes of any such companies relating to the rates to be charged for insurance, regulating and fixing the minimum price or premium to be paid for insuring property located within this state, the amount of commission to be allowed agents for procuring insurance or the manner of transacting the business of fire or other casualty insurance within this state, is hereby declared to be unlawful, and any such company, officer or agent violating this provision shall be deemed guilty of a misdemeanor and on conviction thereof in any court having jurisdiction shall pay a penalty of not less than one hundred dollars ($100) nor more than five hundred dollars ($500) for each offense to be recovered for the use of the general fund of the state; and any such company, corporation or association so offending shall not be permitted to transact business within this state. Sec. 2. AFFIDAVIT MUST BE MADE WHEN CALLED FOR.] Any fire insurance company, corporation or association desiring to transact business within this state shall, in addition to the requirements now provided for by law, furnish the insurance commissioner of this state on or before the first day of July in each year, and at any other time during the year when called upon by the insurance commissioner of this state, as one of the conditions for being permitted to transact business within this state, an affidavit subscribed and sworn to by the president or secretary or managing officer of such corporation or association, before competent authority, stating that said company of which he is an officer has not violated any of the provisions of the foregoing act, naming them; and such affidavit shall be in the following form: I, ................, being first duly sworn, depose and say that I am one of the managing officers of the ...... company or association, and that said association has not entered and will not enter into any combination or agreement with any other fire insurance company or companies whatsoever by which there is any understanding of whatsoever kind or character, either directly or indirectly, tending to fix or establish a uniform price or premium for fire insurance in the State of South Dakota, or any agreement whatever either directly or indirectly relating to the rates to be charged for insurance within said state. Sec. 3. ANY OFFICER OR EMPLOYE OF INSURANCE COMPANIES MAY BE SUMMONED TO APPEAR BEFORE COMMISSIONER.] The commissioner of insurance of this state is hereby authorized to summon and bring before him for examination under oath any officer or employe of any fire insurance company transacting business within this state suspected of violating any of the provisions of this act; and on complaint in writing made to him by two or more residents of this state, charging such company under oath upon their knowledge or information and belief with violating the provisions of this act, said insurance commissioner shall summon and cause to be brought before him for examination under oath any officer or employe of said company; and if upon such examination and the examination of any other witnesses that may be produced and examined, the insurance commissioner shall determine that said company is guilty of a violation of any of the provisions of this act, or if any officer shall fail to appear or submit to an examination after being duly sum moned, said commissioner shall forwith issue an order revoking the authority of such company to transact business within this state, and such company shall not thereafter be permitted to transact the business of fire insurance in this state at any time within one year from the time of such revocation. Sec. 4. TESTIMONY NOT TO BE USED AGAINST PERSON MAKING SAME.] The statements or declarations made or testified to by any such officer or agent in the investigation before the commissioner, as provided for in this act shall not be used against any person making the same in any criminal prosecution against him, and no person shall be excused from testifying for the reason that his testimony so given will tend to criminate him. Sec. 5. REPEAL.] All acts and parts of acts in conflict with the foregoing provisions are hereby repealed. Approved March 9, 1903. The court will observe by reading complainants' brief that they concede the plenary power of the state to regulate or entirely exclude foreign insurance companies from transacting business within its boundaries, and with the exception of their claim that it is "class legislation," their contention as to the unconstitutionality of such act rests upon their claim that it applies to both foreign and domestic insurance companies, and that as to domestic companies it transcends the constitutional powers of the legislature, and that if void or voidable at the instance of such domestic companies it is ipso facto unconstitutional as to these complainants. The statement of complainants' counsels' position is contained at the top of page three of their brief, and is as follows: "There is nothing in this act that separates foreign insurance companies from other insurance companies, so the purpose of the act is directed to all insurance companies alike. If this act, for the reasons alleged in the bill of complaint. conflicts with the constitution, both state and federal, as against domestic companies, then it is unconstitutional and void as to all other insurance companies. If the act deprives any insurance company of the equal protection of the law in the right to make and enforce its contracts, then by its very purpose it deprives all companies of such protection and right.” Complainants' counsel seek by one brush of the hand to admit that a state has the constitutional right to regulate or entirely exclude foreign insurance companies from transacting business therein without abiding the consequence of such admission, and ignoring the full effect and meaning thereof as laid down by the courts. Counsel evidently concede that if this act applied only to foreign insurance companies it would be valid, and their entire argument is based upon the idea that they can challenge the act in directly through the rights of domestic companies, though they concede that they cannot attack it directly, resting upon their own rights or want thereof. COMPLAINANTS HAVE NO CONSTITUTIONAL RIGHTS WHICH ARE VIOLATED BY THE ACT IN QUESTION AND CAN- "Only those whose rights would be prejudiced by the enforcement of an unconstitutional act will be heard to question its validity." 6 Encyc. Law, 2nd Ed. 1090, and numerous cases cited in note one: People vs. Brooklyn, 89 N. Y. 791-93. Sinclair vs. Jackson, 8 Cowen, 543-79. Keokuk Packet Co. vs. City of Keokuk, 95 U. S. 80, (book 24 L. Ed. 377). Sullivan vs. Berry, 83 Ky. 198 (4 Am. St. Rep. 147). State vs. Mosher (Iowa), 43 N. W. 202. County Commissioners of Franklin County vs. State (Fla.), 12 Jones vs. Black, 48 Ala, 540. Hingham and Q. Bridge and T. Co. vs. Norfolk, 6 Allen (Mass.) "The statute is assumed to be valid until someone complains whose rights it invades; prima facie, and upon the face of the act itself, nothing will generally appear to show that the act is not valid, but it is only when some person attempts to resist its operation and calls in the aid of the judicial power to pronounce it void as to him, his property or his rights that the objection of unconstitutionality can be presented and sustained. Respect for the legislature, therefore, concurs with well established principles of law in the conclusion that such an act is not void, but voidable only, and it follows as a necessary legal inference from this position that this ground of aviodance can be taken advantage of by those only who have a right to question the validity of the act and not by strangers. To this extent only is it necessary to go in order to secure and protect the rights of all persons against the unwarranted exercise of legislative power. To this extent only, therefore, are courts of justice called on to interpose." Cooley's Constitutional Limitations, 5th Ed. 197. One reason why the courts will not declare a statute unconstitutional at the suit of a person whose rights are not thereby invaded is that the person whose property rights are invaded may waive the constitutional objection to the statute. "Where a constitutional provision is designed for the basis of protection solely of the property rights of the citizen it is competent for him to waive the protection and to consent to such action as would be invalid if taken against his will." Cooley's Const. Lim. 5th Ed. 216. Lee vs. Tillotson, 24 Wend. 337 (14 L. Ed. 629). In the case of the People vs. Brooklyn, etc., R'y., 89 N. Y. 75, the court says, at page 93: "A statute is assumed to be valid until someone complains whose right it invades. The land owners are not here complaining and we do not know that they ever will. They have the power to waive a constitutional provision made for their benefit. Possibly they have already done so or may in the future; we cannot know, and until they come and present their contract and invoke the constitutional protection, no tribunal is called upon to grant it. The city and the land owners must be left to settle their own controversy this one is between the city and the railroad companies. It is only when some person attempts to resist the operation of the act and calls in the aid of the judicial power to pronounce it void as to him, his property or his rights that the objection of unconstitutionality can be presented and sustained. A legislative act may be entirely valid as to some classes of cases and clearly void as to others, so that we are to leave the land owners to vacate their contract with the city, if they have one, when they please and in their own way.” The court in the above cited case cited Wellington Petitioner, 16 Pick. 96, and Embury vs. Connor, 3 N. Y. 511. “A legislative act may be entirely valid as to some classes of cases and clearly void as to others." Cooley's Const. Lim. 5th Ed. 215. In the case of Sinclair vs. Jackson, supra, the court, at page 577, said: "As to the objection to the constitutionality of the laws, as respects the rights of the children of Clark, the devisees in remainder, it involving the validity of the mortgages as against them, they alone are competent to urge it. If they question the legality of the acts of their father, the court before which the objection shall be raised will give it all the attention which the importance of the principle it involves and the results it has produced so obviously require. It would be premature now to examine it. This court, in my judgment, owes it as well to the purchasers who may have acquired titles under those acts of the legislature as to the devisees in remainder, whose interests are affected by them, to reserve their expression of an opinion, and, indeed to forbear forming one upon the constitutionality of the laws or the efficacy of the proceedings under them, until the parties interested in the decision shall be heard, and the best lights in their power shall be shed upon the subject. Whatever |