O'Gorman & Young, Inc. v. Hartford Fire Ins. Co.

Opinion

 [*254]   [**130]   [***326]  MR. JUSTICE BRANDEIS delivered the opinion of the Court.

These cases, which are here on appeals from the highest court of New Jersey, were argued together. They present the question  [**131]  whether the following statutory provision,  [*255]  effective March 29, 1928, is consistent with the due process clause of the Fourteenth Amendment:

"In order that rates of insurance against the hazards of fire shall be reasonable it shall be unlawful for any such insurer licensed in this State to . . . allow . . . any commission . . . in excess of a reasonable amount, to any person for acting as its agent in respect to any class of such insurance, nor . . . to allow . . . any commission [****7]  . . . in excess of a reasonable amount, to any person for acting as its local agent in respect to any class of such insurance, nor . . . to allow . . . any commission . . . to any person for acting as its local agent in respect to any class of such insurance, in excess of that . . . allowed to any one of its local agents on such risks in this State." (New Jersey Laws 1928, c. 128, p. 258.)

In each case, O'Gorman and Young, Inc., a domestic corporation licensed as an insurance broker, sues a licensed foreign fire insurance company  [***327]  to recover a balance alleged to be due for services performed as local agent at Newark after the effective date of the statute. In the Phoenix Assurance Company case, the complaint is on a contract terminable at will, made prior to the enactment of the statute, by which the company agreed to pay to the agent twenty-five per cent. of the premiums. In the Hartford Fire Insurance Company case, the complaint is on a contract, made after the enactment of the statute, by which the defendant agreed to pay as compensation "what such services were reasonably worth"; and the complaint alleges that the services were reasonably worth twenty-five [****8]  per cent. of the premiums. Each complaint alleges that the defendant has paid the plaintiff only twenty per cent. of the premiums. Each answer admits the facts alleged in the complaint. As a defense, it sets up the statute and the fact that the defendant had at the date of its enactment, and ever since has had, several persons acting as its local agents within the State to whom the compensation allowed in respect to the same class of business has been only twenty per cent. of the premiums.

 [*256]  Each case was heard upon a motion to strike out the answer and for judgment on the ground that the statute is void under the due process clause of the Fourteenth Amendment. In each case the trial court denied the motion and entered judgment against the plaintiff, the facts alleged in the answer being admitted. In an opinion discussing the question presented, that court said:

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