Full opinion text
PER CURIAM. This action in equity is brought for the purpose of testing the constitutionality of Chapter 95 of the Laws passed by the Twenty-fifth Legislative Assembly, in regular session, of the State of Montana, as interpreted by the Attorney General of that state, and as so interpreted threatened to be enforced against the complainant herein by the defendant as State Auditor and Ex Officio Insurance Commissioner of'the State of Montana. In its Bill of Complaint complainant prays: 1: That the aforesaid Chapter 95 of the Laws of Montana, 1937, insofar as it requires that an agent of this complainant locally licensed and resident within the State of Montana shall receive the full commission on all policies of insurance made, written or placed, or caused to be made, written or placed, upon insurable risks resident, situated or located within the State of Montana, and insofar as it prohibits this complainant from paying a portion of such commission on such insurance to agents and brokers in various other states of the United States, shall be declared to be void, invalid and unconstitutional and in conflict with the Fifth and Fourteenth Amendments to the Constitution of the United States; 2: That the said Chapter 95 of the Laws of Montana, 1937, aforesaid, insofar as it undertakes to empower and authorize the defendant to suspend this complainant’s certificate of authority to do business in the State of Montana because of its refusal to pay the full commission to such resident agents and because of payment of a part of the commission to non-resident agents and brokers, be declared to be void, invalid and unconstitutional and in violation of the Fifth and Fourteenth Amendments to the Constitution of the United States; and, 3: That the defendant John J. Holmes as State Auditor and Ex Officio Commissioner of Insurance of the State of Montana, and all of his representatives, servants, employees, and their respective successors in office, and all persons acting under their authority, may be perpetually and forever restrained and enjoined from suspending or attempting to suspend this complainant’s right to do business in the State of Montana or from cancelling or setting aside this complainant’s certificate of authority so to do or from taking any further steps to that end, and that the said defendant be perpetually enjoined and restrained from refusing to renew this complainant’s certificate of authority from time to time as provided by law, or from in any manner suspending, attempting to suspend, or otherwise interfering with the business of this complainant so long as this complainant shall comply with the requirement of the Laws of the State of Montana excepting the provisions of Chapter 95 of the Laws of Montana, 1937, hereinbefore referred to. The parts of the act referred to material to the decision of the case in hand are as follows: “Be it enacted by the Legislative Assembly of the State of Montana: “Section 1. It shall be unlawful for any insurance company * * * doing business within the State of Montana * * * to make, write, place, or cause to be made, written or placed in this State, any policy, bond, duplicate policy, contract of insurance or contract of indemnity of any kind or character, or any general floating group policy upon persons or property, or upon any insurable risk, resident, situated or located in this State, unless written through and countersigned by an agent of this State, duly licensed to transact insurance, bonding or indemnity business therein. [Emphasis supplied.] “A resident agent shall countersign all policies, bonds or contracts of indemnity so issued, and shall receive the full commission on all such policies, bonds or contracts of insurance on indemnity, when the premium is paid [emphasis supplied], to the end that the State may receive the tax required by law to be paid on the premiums collected for insurance on all persons, property or other insurable risks resident, situated or located within this State; provided that nothing in this act shall be construed to prevent any insurance company or association from issuing policies, bonds or contracts [of insurance] at its principal or department offices, covering property or persons or other insurable or indemnity risks resident, situated or located in this State; provided, however, such policies are issued upon application procured and submitted to such company or association by a resident agent, who shall keep a record of all such policies, bonds or contracts of indemnity so isstied, and countersign the same, and that said resident agent or agents shall receive the full commission on all policies when premium is paid. It shall be unlawful for any such resident agent to rebate or divide such commission, with intent to evade' the provisions of this act; and any violation of. this provision shall be punished as provided in Sections 6123 and 6124 Revised Codes of Montana 1935. [Emphasis supplied.] * * * “Section 2. Exceptions. * * * “Section 3. Penalties. Any * * * fire insurance company * * * wilfully failing to observe or comply with the provisions of this act shall be guilty of a misdemeanor and shall be subject to and liable to pay a penalty of five hundred dollars ($500.00) for each violation thereof, and for each failure to observe and comply with the provisions of said section, after notice and hearing by the state commissioner of insurance, in the same manner as provided by law for the investigation and punishment by the state commissioner of insurance for other infractions and violations of the insurance laws of this State. * * * "After such notice and hearing the commissioner of Insurance may, in his discretion, revoke the certificate of authority issued to any corporation, society or agent on his being satisfied, after notice and hearing as provided by law, that such corporation, society or agent has violated any of the provisions of this Act. This penalty is in addition to the other penalties herein described. [Emphasis supplied] * * * “Section 4. Any insurance * * * corporation * * * whose authority to transact business in this State shall have been so revoked shall not again be authorized or permitted to transact business within the State of Montana until it shall have paid the amount of any fine or fines assessed * * * and shall have filed in the office of the state auditor a certificate signed by its president or other chief executive officer to the effect that the terms and obligations of the provisions of this act are accepted by it as part of the conditions of its right and authority to transact business in this State.” (Emphasis supplied.) This cause came regularly on for hearing on plaintiff’s motion for a temporary injunction, before a Three Judge Court, the Honorable Bert Emery Haney, one of the Judges of the United States Circuit Court of Appeals, Ninth Circuit, the Honorable Charles N. Pray and the Honorable James H. Baldwin, United States District Judges, District of Montana, judges presiding, as provided by the Act of June 18, 1910, c. 309, Sec. 17, 36 Stat. 557, as amended, Sec. 380 of Title 28, U.S.C.A. Thereupon a stipulation of facts was filed and presented to the Court, and counsel for plaintiff introduced in evidence, without objection, a copy of an Order to Show Cause made by said John J. Holmes as State Auditor and Commissioner of Insurance Ex Officio of the State of Montana on September 7, 1938, in re Revocation State Insurance Department License No. 2211, addressed to the complainant Springfield Fire and Marine Insurance Company, a corporation, and requiring it “by and through its officers, or counsel, or otherwise, to appear before the said State Auditor and Ex Officio Commissioner of Insurance in and for the State of Montana * * * there to show cause why Montana Insurance Department License No. 2211 heretofore issued to the said Springfield Fire & Marine Insurance Company, a corporation, should not be cancelled, vacated, set aside and held for naught”, certified by said John J. Holmes as State Auditor and Commissioner of Insurance Ex Officio of the State of Montana to be “a true, full, complete and exact copy of Order to Show Cause entered against the Springfield Fire & Marine Insurance Company as the same appears in my office of which I am the legal keeper”. The case was argued by counsel for the parties litigant and submitted to and taken under advisement by the Court on the merits, on the pleadings, the stipulation of facts so filed and said copy of Order to Show Cause so certified. The Pleadings: It is alleged in the Bill of Complaint, and expressly admitted by the Answer, that: 1: The complainant, Springfield Fire & Marine Insurance Company, is a corporation duly organized and existing under and by virtue of the laws of the State of Massachusetts, and a citizen of the State of Massachusetts, and a resident of the State and District of Massachusetts; 2: That complainant, as such corporation, is .duly entered and qualified to do and carry on the business of writing, underwriting, placing, soliciting and otherwise engaging in the fire insurance business and in making, placing and executing fire insurance contracts in the various states of the United States, and particularly within the State of Montana; 3: Complainant is and for many years has been duly qualified to do business in the State of Montana and engaged in soliciting, making, writing and placing policies and contracts of fire insurance upon property and insurable risks resident, situated and located in the State of Montana; 4: The defendant, John J. Holmes, is the duly elected, qualified and acting State Auditor of the State of Montana and as such is designated by law as Commissioner of Insurance of the State of Montana under the provisions of Section 162 of the Revised Codes of Montana, 1935, and as such Commissioner of Insurance is a citizen and resident of the State of Montana; 5: Section 6112 of the Revised Codes of Montana, 1935, provides in part as follows: “All insurance corporations, associations, and societies, as hereinbefore specified in the preceding section, before commencing to do business in the state of Montana, shall be required to secure a license, authorizing them to transact business of insurance corporations, associations, or societies, and shall pay to the state auditor, for such license, the following fees: * * * “For a license to collect in any one year premiums over the sum of five thousand dollars, the sum of twenty dollars for each and every one thousand dollars to be so collected; * * * 6: Section 6113 of the Revised Codes of Montana, 1935 provides: “The state auditor, upon the payment of the fees enumerated in the preceding section, or, after the deductions have been made, as above provided for, shall issue, in duplicate, a license, as therein provided, a copy of which shall be forthwith filed in his office.” 7: Section 6114 of the Revised Codes of Montana, 1935 provides as follows: “All licenses issued under this act shall expire on the 31st day of March of each year.” S: Section 6115 of the Revised Codes of Montana,' 1935 provides as follows: “Nothing in this act shall be construed into permitting any insurance corporation, association, or society to do business in the state of Montana, even when in possession of the license provided for herein, unless such corporation, association, or society shall have complied with.the laws of the state of Montana now in force, or which may hereafter be enacted.” 9: Section 166 of the Revised Codes of Montana, 1935, provides in part: “The commissioner of insurance shall examine and inquire into violations of insurance laws of this state. * * * For the purposes of the examinations, inquiries, or investigations as aforesaid, the commissioner of insurance or his deputy, or the person authorized to make them, shall have free access to all books and papers of an insurance company that relate to its business, and the books and papers kept by any officer, agent, or employee relating to, or upon which any record of its business is kept, and may summon witnesses and administer oaths or affirmations, in the examination of the directors, trustees, officers, agents, or employees of any such company, and any other person in relation to its affairs, transactions, and conditions. He may require and compel the production of records, books, papers, contracts, or other documents by attachments, if necessary.” 10: Section 167 of the Revised Codes of Montana, 1935 provides in part as follows : “If the commissioner finds upon examination, hearing, or other evidence, that any insurance company * * * organized in this state, or in any other state, territory, or foreign country, * * * has-failed to comply with the law or with the provisions of its charter * * * or if its officers or agents refuse to submit to examination, or to perform any legal obligation relative thereto * * * he shall suspend or revoke all certificates of authority granted to said insurance company, and to its officers or agents.” 11: Section 6118 of the Revised Codes of Montana, 1935, provides among other things, that before transacting any fire insurance business every agent of such corporation shall procure annually a certificate of authority or license as agent and further providing that the Commissioner of Insurance is prohibited from issuing a certificate of authority or license to any person or agent unless such person or agent is a legal resident of the State of Montana at the time such certificate of authority is issued. That said Section 6118 further provides that such certificates of authority or licenses shall expire on the 31st day of March of each year; 12: The Twenty-fifth Legislative Session of the State of Montana passed Chapter 95 of the Laws of 1937 which provides as follows: “Section 1. It shall be unlawful for any insurance company or association, including life, fire, casualty, surety or indemnity corporations or associations doing business within the State of Montana (except so-called assessment life insurance companies, as hereinafter provided, and fraternal benefit societies and rural mutual insurance companies) to make, write, place, or cause to be made, written or placed in this State, any policy, bond, duplicate policy, contract of insurance or contract of indemnity of any kind or character, or any general floating group policy upon persons or property, or upon any insurable risk, resident, situated or located in this State, unless written through and countersigned by an agent of this State, duly licensed to transact insurance, bonding or indemnity business therein. “A resident agent shall countersign all policies, bonds or contracts of indemnity so issued, and shall receive the full commission on all such policies, bonds or contracts of insurance on indemnity, when the premium is paid, to the end that the State may receive the tax required by law to be paid on the premiums collected for insurance on all persons, property or other insurable risks resident, situated or located within this State; provided that nothing in this act shall be construed to prevent any insurance company or association from issuing policies, bonds or contracts at its principal or department offices, covering property or persons or other insurable or indemnity risks resident, situated or located in this State; provided, however, such policies are issued upon application procured and submitted to such company or association by a resident agent, who shall keep a record of all such policies, bonds or contracts of indemnity so issued, and countersign the same, and that said resident agent or agents shall receive the full commission on all policies when premium is paid. It shall be unlawful for any such resident agent to rebate or divide such commission, with intent to evade the provisions of this act; and any violation of this provision shall be punished as provided in Section 6123 and 6124 Revised Codes of Montana 1935. Provided, however, that the signature of a resident agent on an application for a life insurance policy shall be deemed a countersigning of the policy if a copy of such application is attached to the policy.” “Section' 3. Penalties. Any life insurance companies, fire insurance companies, surety or indemnity companies or associations wilfully failing to observe or comply with the provisions of this act shall be guilty of a misdemeanor and shall be subject to and liable to pay a penalty of five hundred dollars ($500.00) for each violation thereof, and for each failure to observe and comply with the provisions of said section, after notice and hearing' by the state commissioner of insurance, in the same manner as provided by law for the investigation and punishment by the state commissioner of insurance for other infractions and violations of the insurance laws of this State. Such fines and penalties shall be handled and disposed of by the state commissioner of insurance 'in the same manner as license fees are now handled and disposed of by said commissioner. “After such notice and hearing the commissioner of insurance may, in his discretion, revoke the certificate of authority issued to any corporation, society or agent on his being satisfied, after notice and hearing as provided by law, that such corporation, society or agent has violated any of the provisions of this act. This penalty is in addition to the other penalties herein described. . “Any corporation, society or agent whose certificate of authority has been revoked may, within fifteen (15) days thereafter, appeal from said order to any district court of this State having jurisdiction over the persons, corporations or agents concerned. “Section 4. Any insurance company, indemnity corporation or surety corporation or association whose authority to transact business in this State shall have been so revoked shall not again be authorized or permitted to transact business within the State of Montana until it shall have paid the amount of any fine or fines assessed by the state commissioner of insurance, and shall have filed in the office of the state auditor a certificate signed by its president or other chief executive officer to the effect that the terms and obligations of the provisions of this act are accepted by it as part of the conditions of its right and authority to transact business in this State.” 13: Section 6123 of the Revised Codes of Montana, 1935, provides as follows: “Every officer or agént of any such corporation, who shall violate any of the provisions of this act, shall be deemed guilty of a misdemeanor.” •14: Section 6124 of the Revised Codes of Montana, 1935, provides as follows: “Whenever it shall appear to the satisfaction of the commissioner of insurance after a hearing before him upon notice, that any company, officer, agent, solicitor or helper has violated any provision of this act, he shall suspend the license of any such company, officer, agent, solicitor or helper to transact business in this state for a period of sixty (60) days for the first offense, and for a period of from not less than one year to not more than three years in the discretion of the commissioner of insurance, for the second or any additional offenses, and no other license shall be issued to any such company, officer, agent, solicitor, or helper during the period of suspension, as the case may be.” 15: That at all times during the years 1936 and 1937 and in the years prior thereto, and at the present time for the year 1938, this complainant was, is and has been the owner of a certificate of authority to transact business within the State of Montaña as provided in the statutes above set forth, and complainant has during said years and for many years past and now is engaged in the State of Montana and in .other states of the United States in making, writing and placing insurance, and particularly fire insurance, upon insurable risks resident, situated and located in the State of Montana; 16: J. H. Heilbronner Company is one of the duly licensed resident agents in the State of Montana, residing at Butte, Montana, of this complainant, holding a license as such resident agent issued by the State of Montana; 17: E. L. Dee is one of the duly licensed resident agents in the State of Montana, residing at Butte, Montana, of this complainant, holding a license as such resident agent issued by the State of Montana; 18: On the 29th day of July, 1938, the defendant herein, John J. Holmes, State Auditor and Ex Officio Commissioner of Insurance of the State of Montana, directed a letter to this complainant, a copy • of which is hereto attached marked Exhibit C and by reference thereto made a part hereof; - Said letter so directed and marked as aforesaid is in words and figures as follows: “State of Montana Office of John J. Holmes State Auditor Commissioner of Insurance Investment Commissioner State Fire Marshal Helena, Montana July 29, 1938 “Springfield Fire & Marine Ins. Co. “114 Sansome Street “San Francisco, California “Attention — H. K. Norris, Agency Supervisor “Dear Sir: “The Montana Insurance Department has been contacted by the J. H. Heilbronner Company relative to your Company’s contract No. 193342, Anaconda Copper Mining Company. The Department has reviewed your letter of July 14th wherein you state that the contract has been returned for cancellation as of date of issue. “The Department is interested, in learning if your Company reissued a new contract in the amount of the canceled contract and covering the same risks, and, if so, what agency plant in the State of Montana countersigned the issued policy. “Kindly advise the Department fully as to the above mentioned inquiry. “The Department trusts that you will give this matter your prompt attention. “Very truly yours, “John J. Holmes “State Auditor and Ex Officio Insurance Commissioner. “By “(Signed) J. D. Kelley “Deputy Insurance Commissioner. “JDK :CB” 19: On the 1st day of September, 1938, this complainant directed to said defendant its answer to.said letter, which answer is fully set out in the Order to Show Cause, copy of which is hereto attached marked Exhibit D and by reference thereto made a part hereof; Said letter so directed and marked as aforesaid is in words and* figures as follows: “Missoula, Montana “September 1, 1938 “Hon. John J. Holmes, “State Auditor and Ex Officio “Commissioner of Insurance, “Helena, Montana “Dear Sir: “Under date of July 29 you addressed a letter to Springfield Fire and Marine Insurance Company, 114 Sansome Street, San Francisco, California, wherein you referred to Springfield Fire and Marine Insurance Company policy No. 193342 covering certain of the properties of the Anaconda Copper Mining Company. “I am authorized by Springfield Fire and Marine Insurance Company to advise you that its policy No. 193342 covering $852,800.00 in properties of Anaconda Copper Mining Company dated December 31, 1937, was cancelled flat as of date of issue by Springfield Fire and Marine Insurance Company and that a new policy dated back to the date of issue of the first policy was written by another agent of Springfield Fire . and Marine Insurance Company covering the same risk for the same amount. “Your letter of July 29 states that you were contacted by agent J. H. Heilbronner Company and since J. H. Heilbronner Company participated in the first policy which was cancelled but did not participate in the second policy issued, it is anticipated that your inquiry was made for the purpose of determining whether or not in writing the second policy Springfield Fire and Marine Insurance Company complied with the provisions of Chapter 95 of the Laws of Montana, 1937, in payment of the full commission as interpreted by the Attorney General of Montana in his opinion of April 25, 1938. “It is the policy of Springfield Fire and Marine Insurance Company to comply with all of the valid laws of the State of Montana and to give your office all information covering any of the business done in Montana by the company. However, Springfield Fire and Marine Insurance Company takes the position that Chapter 95 of the Laws of 1937 is unconstitutional under the Fourteenth Amendment of the Constitution of the United States and that the company was entirely within its rights in cancelling its policy No. 193342 and issuing another policy in lieu thereof. “So that you may be fully advised as to the reason for cancellation of the first policy you are informed that policy No. 193342 was solicited by an insurance broker, and that the Anaconda Copper Mining. Company directed that broker to obtain insurance coverage upon certain of its properties located within and without the State of Montana, the amount of the properties then to be covered by that policy being valued at $852,800.00 for insurance purposes. Of those properties 83.9 per cent were located within the State of Mon-, tana and 16.1 per cent outside of the-State of Montana. “The broker in question was not a resident of the State, of Montana and while 83.9 per cent of the property was situated within the State of Montana the broker nevertheless solicited the business at offices-, of the Anaconda Copper Mining Company outside of the State, of Montana and that broker rendered to Springfield Fire and Marine Insurance Company engineering, inspection and agency services equal in value to 10 per cent of the gross premium.' The broker collected the premium from the Anaconda Copper Mining Company and after deducting therefrom 10 per cent for the. services so rendered remitted to J. H. Heilbronner Company that portion of ’ the premium represented by $352,800 of the coverage provided in the policy. Simultaneously the broker furnished J. H. Heilbronner Company with a receipted bill for 10 per cent of that portion of the premium for the services rendered and it then became the duty of J. H. Heilbronner Company to first deduct five per cent from its share of the gross premium and remit the balance to Springfield Fire arid Marine Insurance Company. Mr. Heilbronner refused to do this but offered to remit the balance of his share of the premium after-deducting 15 per cent therefrom. ■ “Upon refusal of J. H. Heilbronner Company to. remit his portion of the premium less five per cent the policy was can-celled by Springfield. Fire and,Marine In-, surance Company.-and the'broker had same re-written through another resident agency, in Montana, dating the policy back to the original date, who was-, willing to permit', the service charge of TO, per cent to-be paid to the non-resident broker ..and. to accept five, per-' cent as. the.resident agentis; comtnission. . .A;;.! ...j “This situation squarely raises the question as to whether or not a resident agent in Montana of a qualified insurance company may accept five per cent of the premium as his commission in cases where a non-resident broker, having serviced, solicited, engineered, inspected and forwarded the business takes 10 per cent of the premium as a charge for the services so rendered by him. “We are aware that the Attorney General of Montana has held in his opinion of April 25, 1938, that such a transaction is invalid under the provisions of Chapter 95 of the Laws of Montana, 1937, but Springfield Fire and Marine Insurance. Company differs with the Attorney Gen-, eral and takes the position that that law is. unconstitutional and you are therefore advised that "'the'second policy written is now in full force and effect and that it is the intention of Springfield Fire and Marine Insurance Company to maintain it in full force and effect until its expiration date and also to write-other insurance in Montana through non-resident brokers on the. same basis. “Yours very truly, “Toole & Boone “By /s/ Howárd Toole “Attorneys for Spririgfield Fire & Marine Insurance - Co. “T :p” 19: On the 7th day of September, 1938, the defendant herein served upon this complainant an Order to Show Cause, which is hereto attached as Exhibit D, above referred to; 20: As appears in said Order to Show Cause the defendant herein has charged this complainant with knowingly and intentionally aiding and abetting violations of the provisions of Chapter 95 of the Laws of Montana, 1937, and knowingly and intentionally conducting ■ its fire insurance business, within the State of Montana* with an intent to evade and defeat the express provisions of said Chapter 95 of the Laws of 1?37, and this complainant has been by said defendant in said Order to Show Cause directed and ordered to appear before the defendant as Commissioner' of Insurance .in his office in Helena; Montana, on Sépteijiber 28, -1938, there to show cause why -this complainant’s-Montana .Insurance. Department license and certificate of authority, to., do. business .within. ,the'; State..of Montana; should hot be. cancelled, vacated, set aside .and,:ljel.d^.for naught because of the alleged violations of the provisions of Chapter 95 of the Laws of Montana, 1937; 21: The said defendant John J. Holmes as State Auditor and Ex Officio Commissioner of Insurance asserts that Chapter 95 of the Laws of Montana 1937 is valid legislation and binding upon this complainant and that under the provisions of said law it is and has become his duty to cancel, vacate and set aside the certificate of authority of this complainant and to deprive this complainant of the right to do business within the State of Montana; 22: The reason of said defendant in the issuance of said Order to Show Cause is that the said defendant maintains and asserts that this complainant has been, is, and will be violating the provisions of Chapter 95 of the Laws of Montana 1937 because of its failure and refusal to pay unto its agents resident within the State of Montana the full commission upon insurance covering insurable risks resident, situated and located in the State of Montana upon policies of insurance forwarded to such resident agents by non-resident agents and brokers who have solicited, obtained and made and placed such insurance under agreements made outside of the State of Montana whereby such non-resident agents or brokers receive a portion of the commission for services rendered by them; 23: This complainant has advised the defendant that Chapter 95 of the Laws of Montana 1937 is void, invalid and unconstitutional because it violates the provisions of the Fifth and Fourteenth Amendments of the Constitution of the United States in that: The State of Montana has no right or power whatsoever to control, regulate or prohibit this complainant’s contracts, agreements or arrangements made outside of the State of Montana concerning compensation of its agents or brokers who do not reside within the State of Montana for services rendered wholly outside of the State of Montana; ¡ The State of Montana has no right whatsoever to require that the resident agents within the State of Montana shall receive the full commission on all policies of -insurance when the premium is paid;, and, The State of Montana has no right whatsoever to control, regulate or prohibit this complainant’s contracts, agreements or arrangements made inside of the State of Montana concerning compensation of its resident agents; 24: Complainant further alleges that this is a suit of a civil nature in equity arising under the Constitution of the United States and that the matter in controversy exceeds, exclusive of interests and costs, the sum of three thousand dollars ($3,000); 25: Complainant further alleges that unless restrained by this Honorable Court the defendant as State Auditor and Ex Officio Commissioner of Insurance of the State of Montana will on September 28, 1938, cancel, vacate and set aside this complainant’s certificate of authority or license to carry on its insurance business within the State of Montana and will refuse to renew this complainant’s present certificate of authority and will suspend this complainant and deprive it indefinitely of the right to carry on its business within the State of Montana; 26: Unless the said defendant is restrained by this Honorable Court this complainant’s valuable right to do business in the State of Montana and this complainant’s valuable business within the State of Montana will be wholly lost and destroyed since this complainant could not after such cancellation continue to do business within the State of Montana in view of the provisions of Chapter 95 of the Laws of Montana 1937 and the penalties therein contained; 27: In view of the fact that the said defendant intends to cancel, vacate and set aside this complainant’s certificate of authority on September 28, 1938, immediate and irreparable loss and damage to this complainant will result from this cancellation and will continue to result therefrom and such irreparable loss and damage will result from the cancellation of this complainant’s certificate of authority before this matter can be heard on an application for an interlocutory injunction after notice as required by the provisions of Section 380 of Title 28 of the. United States Codes Annotated; 28: This complainant has an agency plant within the State of Montana wherein' it has agency contracts with numerous local fire insurance agents within the State of Montana, and that each and every one of said' agents is daily soliciting, writing and placing insurance with this complainant upon insurable risks within the State of Montana; 29: The said business and agency plant is of great value, to-wit, in excess of ten thousand dollars ($10,000), and has been created by this complainant at great expense, and that the continued ability of this complainant to carry on its insurance business within the State of Montana is dependent upon the uninterrupted solicitation of such business by its said agents; 30: If the defendant shall cancel or ■revoke the certificate of authority of this complaint such revocation or cancellation will automatically result in the revocation and cancellation of all of the local licenses issued to such resident agents and will immediately interrupt and destroy the right of this complainant and its said agents to continue to do business within the State; 31: The insurance business of this complainant within the State of Montana is increasing and that complainant’s net premium retentions are and will be in excess of the sum of ten thousand dollars ($10,000) during the year 1938 and by reason thereof a great and irreparable damage, injury and loss will be suffered by this complainant unless there shall issue out of this Honorable Court a temporary restraining order to remain in force until the hearing and determination of complainant’s application for an interlocutory injunction; 32: By reason of the fact that this complainant has and will have numerous policies of insurance outstanding and in effect in the State of Montana wherein a part of the commission has been paid or will be paid to agents or brokers outside of the State of Montana and wherein the resident agent within the State of Montana has not and will not receive the full commission, there will be a multiplicity of suits involving this complainant wherein the certificate of authority of this complainant will be challenged and threatened with cancellation; and, 33: This complainant has no plain, speedy or adequate remedy in the ordinary course of law. Order to Show Cause and Findings of Fact: It is stated in the Order to Show Cause, and the Court finds that the facts upon which the same was'based and issued are as follows, to-wit: 1: That on the 1st day of April, 1938, the Springfield Fire and Marine Insurance Company, a corporation, did make requisition for, and did have issued to it, that certain Montana Insurance Department License numbered 2211, wherein and whereby the said Springfield Fire and Marine Insurance Company, a corporation, was duly .licensed to conduct the business of fire insurance within the State of Montana for the year beginning April 1, 1938, and ending March 31, 1939, which said license was, at all times herein mentioned, and now is, in full force and effect; 2: That at all times herein mentioned Chapter 95, Laws of Montana 1937, was, and now is, in full force and effect,, which said Chapter, inter alia, provides that: “It shall be unlawful for any insurance company * * * doing business within the State of Montana * * * to make, write, place, or cause to be made, written or placed in this State, any policy, * * * contract of insurance * * * upon any insurable risk, resident, situated or located in this State, unless written through and countersigned by an agent of this State, duly licensed to transact insurance, * * * business therein. “A resident agent shall countersign all policies, * * * and shall receive the full commission on all such policies * * * when the premium is paid, * * * provided that nothing in this act shall be construed to prevent any insurance company * * * from issuing policies * * * at its principal or department offices, covering property * * * situated or located in this State; provided, however, such policies are issued upon application procured and submitted to such company or associatidn by a resident'agent, who shall keep a record of all such policies * * * and countersign the same, and that said resident agent * * * shall receive the full commission on all policies when premium is paid. It shall be unlawful for any such resident agent to rebate or divide such commission, with intent to evade the provisions of this act; * * ” Section 1. 3: That on, to-wit, the 29th day of July, 1938, J. H. Heilbronner, a duly licensed Montana agent for the Springfield Fire and Marine Insurance Company, a corporation, did complain to the Montana Insurance Department that the said Springfield Fire and Marine Insurance Company, a corporation, had wholly failed and refused to comply with the provisions of Chapter 95, Laws of 1937, in that the said Springfield Fire and Marine Insurance Company did issue its certain contract of insurance, No. 193342, and did cause the same to be countersigned by its licensed agent, the said J. H. Heilbronner, as required by the provisions of Chapter 95, Laws of Montana 1937, but that the said Springfield Fire and Marine Insurance Company, a corporation, did wholly fail and refuse to pay to its said licensed agent, the said J. H. Heilbronner, the full commission accruing on its policy No. 193342, as provided for by Chapter 95, Laws of 1937, and that the said Springfield Fire and Marine Insurance Company, a corporation, did cause its said contract of insurance No. 193342 to be canceled flat as of date of issue, at and when its said licensed agent, the said J. H. Heilbronner, demanded that the full commission be paid, at and when the premium on said contract of insurance was paid, and that the said Springfield Fire and Marine Insurance Company, after so canceling the aforesaid policy, did then issue a new contract of insurance covering the same risk and did cause the said reissued contract of insurance be countersigned by a licensed agent, other than the said J. H. Heilbronner, which said agent did so countersign the said contract of insurance on a commission ■ basis other than that provided for by Chapter 95, Laws of 1937, as interpreted by the Attorney General of the State of Montana, and threatened to be acted upon by the defendant herein. 4: That on, to-wit, the 22nd day of September, 1937, the Attorney General of the State of Montana rendered his official opinion to the effect that the words “full commission”, as used in Chapter 95, Laws of 1937, convey the intent: “That the resident Montana agent should receive the same commission for countersigning an insurance contract as he would receive from the ■same business if he secured it himself.” 5: That under date of November 30, 1937, the Attorney General rendered his official opinion to the effect that Chapter 95, Laws of 1937, prohibits a resident Montana agent from rebating or sharing the commission paid on any issued contract of insurance with an out of state agent forwarding the contract of insurance into the State of Montana for countersignature; 6: That on, to-wit, the 7th day of September, 1938, the Springfield Fire and Marine Insurance Company, a corporation, did, through its counsel, file with the State Auditor and Ex Officio Commissioner of Insurance in and for the State of Montana its certain communication in words and figures as follows, to-wit: (This communication is hereinbefore set out in full and it will not be recopied here). 7: That the said Springfield Fire and Marine Insurance Company, a corporation, did, on or about December 31, 1937, at Butte, Montana, cause its duly licensed agent, J. H. Heilbronner, to countersign its certain policy of insurance No. 193342 issued and dated as of December 31, 1937, and thereafter the said Springfield Fire and Marine Insurance Company, a corporation, did fail and refuse to pay its said countersigning agent, J. H. Heilbronner, the full commission accruing on its said policy of insurance No. 193342, as required by Chapter 95, Laws of Montana 1937, as so interpreted and threatened to be acted upon, and did on, to-wit, the 14th day of July, 1938, at and when its said' countersigning agent, J. H. Heilbronner, refused to accept a five per cent countersigning commission in lieu of the full commission as provided for by Chapter 95, Laws of Montana 1937, as so interpreted and threatened to be acted upon, cancel its said contract of insurance No. 193342 flat as of date of issue, and did, after so canceling its said contract of insurance No. 193342 as aforesaid, issue in lieu thereof its certain contract of insurance covering the same risk, and did cause the reissued contract of insurance to be countersigned by a duly licensed Montana agent of the said Springfield Fire and Marine Insurance' Company other than the said J. H. Heilbronner, and did pay, or cause to be paid, to the said agent so countersigning the reissued contract, a commission of five per cent in lieu of the full commission accruing on the said reissued contract of insurance, as provided for by Chapter 95, Laws of Montana 1937, as so interpreted and threatened to be acted upon; 8: That the said Springfield Fire and Marine Insurance Company, a corporation, did knowingly and intentionally aid and abet a violation of the provisions of Chapter 95, Laws of Montana 1937, in that the said Springfield Fire and Marine Insurance Company did at Butte, Montana, on, to-wit, the 14th day of July, 1938, cancel its certain contract of insurance No. 193342 dated December 31, 1937, flat as of da.te of issue at and when its countersigning agent, J. H. Heilbronner, refused to divide the full commission accruing on the said contract of insurance with an out-of-state agent or broker, and did demand that he be paid the full commission accruing on said contract of insurance, as provided by Chapter 95, Laws of Montana 1937, as so interpreted and threatened to be acted upon. And the said Springfield Fire and Marine Insurance Company, a corporation, did, after so canceling its said contract of insurance No. 193342, issue in lieu thereof its certain contract of insurance covering the same risk, and did cause the said reissued contract of insurance to be countersigned by its duly licensed Montana agent other than the said J. H. Heilbronner, and did pay or cause to be paid to said countersigning agent, for so countersigning said contract of insurance, a commission less than the full commission accruing on the said reissued contract of insurance, and did, then and there, knowingly and intentionally require and permit the said countersigning agent to divide the full commission accruing on said reissued contract of insurance with an out-of-state agent or broker, contrary to the express provisions of Chapter 95, Laws of Montana 1937, as so interpreted and threatened to be acted upon; and, 9: That in committing the acts herein complained of, the said Springfield Fire and Marine Insurance Company, a corporation, did well know the meaning and intent of Chapter 95, Laws of Montana 1937, and did knowingly and intentionally conduct its fire insurance business within the State of Montana with an intent to evade and defeat the express provisions of the said Chapter 95, Laws of Montana 1937, as so interpreted and threatened to be acted upon. It is obvious from a reading and consideration of the admitted and proven facts that the defendant John J. Holmes as State Auditor and Ex Officio Commissioner of Insurance of the State of Montana threatens to, and unless restrained by the order of this Court will, revoke the license of the complainant here to do business within the State of Montana upon the theory that Chapter 95 of the Laws of Montana 1937 requires an insurance company to pay to its' agent resident in and licensed by the State of Montana the “full commission” upon the insurance written, which, as interpreted by the Attorney General of that State and accepted by and acted upon by the defendant here, means that the agent of the insurance company resident and licensed to do business in the State of Montana who countersigns a contract of insurance upon any insurable risk resident, situated or located in the State of Montana shall receive the same commission for countersigning the contract of insurance as he would receive for the same business if he had secured it himself (paragraph 4 of the Order to Show Cause); and that Chapter 95 of the Laws of Montana 1937 “prohibits a resident Montana agent from sharing the commission paid on any issued contract of insurance with an out-of-state agent forwarding the contract of insurance into the State of Montana for countersignature”, (paragraph 5 of the Order to Show Cause). Stated in another way, the statute involved here, as so interpreted and threatened to be enforced, means that the State has undertaken to fix exactly the amount of the commission to be paid to insurance agents resident in and licensed by the State of Montana for insurance written upon an insurable risk resident, situated or located in the State of Montana, and prohibits the insurance company writing the insurance and such resident and licensed insurance agent from dividing or paying any part of that commission with or to the non-resident insurance agent or broker who originated the business and performed necessary services of value in connection therewith as compensation for such services so rendered. This being true, complainant contends: 1: The State of Montana cannot consistently with due process of law absolutely fix commissions of insurance agents within the State of Montana ; 2: The State of Montana cannot consistently with due process of law regulate the payment of commissions to resident agents within the State of Montana in such a manner as to regulate or prohibit the payment of commissions to agents or brokers outside of the State of Montana who have rendered services of value in connection with insurance upon risks within the State of Montana; 3: The State of Montana cannot consistently with due process of law require the payment of the “full commission”, within the meaning of those words as interpreted by the Attorney General of the State of Montana, and threatened to be enforced by the defendant here, to agents resident within the State of Montana; 4: Even if the State of Montana possessed the powers of regulation above referred to, which it does not possess, it could not consistently with due'process of law exercise those powers in such a way as to prohibit or regulate the payment of commissions to agents or brokers outside of the State of Montana for services of value rendered in other states by requiring the payment of the “full commission”, as so interpreted and threatened to be enforced, to agents within the State of Montana; and, 5: The State of Montana cannot consistently with due process of law require the payment of the “full commission”, as interpreted and threatened to be enforced, or any commission, to agents within the State of Montana for services not rendered by such agents. The pleadings and stipulated facts in the case at bar disclose that the complainant here has in every instance, and particularly with respect to the policies in question in the instant case, complied with the provisions of Chapter 95 of the Laws of Montana 1937, which makes it unlawful “for any insurance company * * * doing business within the State of Montana * * * to make, write, place, or cause to be made, written or placed in this State, any policy, bond, duplicate policy, contract of insurance or contract of indemnity of any kind or character, or any general floating group policy * * *, upon any insurable risk, resident, situated or located in this State, unless written through and countersigned by an agent of this State, duly licensed to transact insurance, bonding or indemnity business”, Section 1, with the result that the question as to whether the State of Montana has or has not the right to so regulate is not up for consideration or decision and it is not considered or decided. Complainant concedes, as it must, that “since the decision in German Alliance Insurance Company v. Ike Lewis, Superintendent of Insurance of Kansas, 233 U.S. 389, 411 [34 S.Ct. 612, 58 L.Ed. 1011, L.R. A.1915C, 1189], the business of insurance is so weighted with the public interest that the State has the right to pass regulatory legislation within certain limits, not, however, to the extent of unconstitutional legislation or legislation which goes beyond the reasonable and legitimate interest of the state and its citizens.” See also: Carroll v. Greenwich Ins. Co., 199 U.S. 401, 411, 26 S.Ct. 66, 50 L.Ed. 246; German Alliance Ins. Co. v. Lewis, 233 U.S. 389, 408-416, 34 S.Ct. 612, 58 L.Ed. 1011, L.R.A. 1915C, 1189; La Tourette v. McMaster, 248 U.S. 465, 468, 39 S.Ct. 160, 63 L.Ed. 362; National Union Fire Ins. Company v. Wanberg, 260 U.S. 71, 43 S.Ct. 32, 67 L. Ed. 136; Wolff Company v. Industrial Court, 262 U.S. 522, 535, 43 S.Ct. 630, 67 L.Ed. 1103, 27 A.L.R. 1280; Herbring v. Lee, 280 U.S. 111, 50 S.Ct. 49, 74 L.Ed. 217, 64 A.L.R. 1430; and, O’Gorman v. Hartford Fire Ins. Company, 282 U.S. 251, 51 S.Ct. 130, 75 L.Ed. 324, 72 A.L.R. 1163. In Wolff Company v. Industrial Court, 262 U.S. 522, 535, 43 S.Ct. 630, 632, 67 L.Ed. 1103, 27 A.L.R. 1280, it is said: “Businesses said to be clothed with a public interest justifying some public regulation may be divided into three classes: “(1) Those which are carried on under the authority of a public grant of privileges which either expressly or impliedly imposes the affirmative duty of rendering a public service demanded by any member of the public. Such are the railroads, other common carriers and public utilities. “(2) Certain occupations, regarded as exceptional, the public interest attaching to which, recognized from earliest times, has survived the period of arbitrary laws by Parliament or colonial Legislatures for regulating all trades and callings. Such are those of the keepers of inns, cabs, and gristmills. [Citations], “(3) Businesses which, though not public at their inception, may be fairly said to have risen to be such and have become subject in consequence to some government regulation. They have come to hold such a peculiar relation to the public that this' is superimposed upon them. In the language of the cases, the owner by devoting his business to the public useJ in effect grants the public an interest in that use and subjects himself to public regulation to the extent of that interest although the property continues to belong to its private owner and to be entitled to protection accordingly.” (Emphasis supplied). That the business of insurance falls within the limits of class 3 is evident. In German Alliance Insurance Company v. Lewis, 233 U.S. 389, 34 S.Ct. 612, 58 L. Ed. 1011, L.R.A.1915C, 1189, it is said: “The effect of insurance — indeed, it has been said to be its fundamental object— is to distribute the loss over as wide an area as possible. In other words, the loss is spread over the country, the disaster to an individual is shared by many, the disaster to a community shared by other communities ; great catastrophies are thereby lessened, and, it may be, repaired. In assimilation of insurance to a tax, the companies have been said to be the mere machinery by which the inevitable losses by fire are distributed so as to fall as lightly as possible on the public at large, the body of the insured, not the companies, paying the tax. Their efficiency, therefore, and solvency, are of great concern. The other objects, direct and indirect, of insurance, we need -not mention. Indeed, it may be enough to say, without stating other effects of insurance, that a large part of the country’s wealth, subject to uncertainty of loss through fire, is protected by insurance'. This demonstrates the interest of the public in it, and we need not dispute with the economists that this is the result of the ‘substitution of certain for uncertain loss,’ or the diffusion of positive loss over a large ‘group of persons, as we have already said to be certainly one of its effects. We can see, therefore, how it has come to be considered a matter of public concern to regulate it, and, governmental insurance has its advocates and even examples. Contracts of insurance, therefore, have greater public consequence than contracts between individuals to do or not to do a particular thing whose effect stops with the individuals. We may say in passing that when the effect goes beyond that, there are many examples of regulation.” 233 U.S. at pages 412, 413, 34 S.Ct. at page 619, 58 L.Ed. 1011, L.R.A.1915C, 1189. The underlying thought here appears to be that public necessity and not private advantage or gain justifies regulation within the Constitution. Acting on this theory it has been held that the State may: 1: Require that insurance rates shall be reasonable. German Alliance Insurance Co. v. Lewis, 233 U.S. 389, 34 S.Ct. 612, 58 L.Ed. 1011, L.R.A.1915C, 1189. In speaking of the statute involved in that case the Court said: “The statute seeks to secure rates which shall be reasonable both to the insurer and the insured, and as a means to this end it prescribes equality of charges, forbids initial discrimination or subsequently by the refund of a portion of the rates, or the extension to the insured of any privilege; to this end it requires publicity in the basic schedules and of all of the conditions which affect the rates or the value of the insurance to the insured, and also adherence to the rates as published. Whether the requirements are necessary to the purpose, or — to confine ourselves to that which is under review— whether rate regulation is necessary to the purpose, is a matter for legislative judgment, not judicial. Our function is only to determine the existence of power.” 233 U. S. at page 417, 34 S.Ct. at page 621, 58 L.Ed. 1011, L.R.A.1915C, 1189. The vital provision of the statute referred to (Laws Kan.1909, c. 152) relating to rates of insurance is as follows: “Sec. 3. When the superintendent shall determine any rate is excessive or unreasonably high, or not adequate to the safety or soundness of the company, he is authorized to direct the company to publish and file a higher or lower rate, which shall be commensurate with the character of the risk; but in every case the rate shall be reasonable.” 233 U.S. at page 391, 34 S.Ct. at page 613, 58 L.Ed: 1011, L.R.A.1915C, 1189. (Emphasis supplied). The principle upon which fixing of rates charged for insurance is based is aptly stated by the Court as follows: “We may venture to observe that the price of insurance is not fixed over the counters of the companies by what Adam Smith calls the higgling of the market, but formed in the councils, of the underwriters, promulgated in schedules of practically controlling constancy which the applicant for insurance is powerless to oppose, and which, therefore, has led to the assertion that the business of insurance is of monopolistic character and that ‘it is illusory to speak of a liberty of contract.’ It is in the alternative presented of accepting the rates of the companies or refraining from insurance, business necessity impelling if not compelling it, that we may discover the inducement of the Kansas statute; and the problem presented is whether the legislature could regard it of as much moment to the public that they who seek insurance should no more be constrained by arbitrary terms than they who seek transportation by railroads, steam or street, or by coaches whose itinerary may be only a few city blocks, or who seek the use of grain elevators, or be secured in a night’s accommodation at a wayside inn, or in the weight of a 5 cent loaf of bread. We do not say this to belittle such rights or to exaggerate the effect of insurance, but .to exhibit the principle which exists in all and brings all under the same governmental power.” 233 U.S. at pages 416, 417, 34 S.Ct. at page 621, 58 L.Ed. 1011, L.R.A.1915C, 1189. Again public need is the underlying thought. O’Gorman & Young v. Hartford Insurance Co., 282 U.S. 251, 257, 51 S.Ct. 130, 75 L.Ed. 324, 72 A.L.R. 1163. The statute involved in this case (P.L. N.J.1928, p. 257, § 1), provided: “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 * * * 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.” 282 U.S. at page 255, 51 S.Ct. at page 131, 75 L.Ed. 324, 72 A.L.R. 1163. (Emphasis supplied). In affirming a decision of the Supreme Court of the State of New Jersey upholding the validity of this statute Mr. Justice Brandéis observed: “The agent’s compensation, being a percentage of the premium, bears a direct relation to the rate charged the insured. The percentage commonly allowed is so large that it is a vital element in the rate structure and may seriously affect the adequacy of the rate. Excessive commissions may result in an unreasonably high rate level or in impairment of the financial stability of the insurer.” 282 U.S. at page 257, 51 S.Ct. at page 131, 75 L.Ed. 324, 72 A.L.R. 1163. (Emphasis supplied). Here again the public interest, — a fair price to the insured and reasonable probability of being reimbursed in case of loss, is the principle controlling the decision. 2: Prescribe the qualifications of insurance brokers. La Tourette v. McMaster, 248 U.S. 465, 39 S.Ct. 160, 63 L.Ed. 362. In this case the Court stated: “An act * * * entitled ‘An act to provide for the licensing of insurance brokers,’ defines in its first section an insurance broker ‘to be such person as shall be licensed by the insurance commissioner to represent citizens’ of the state [for the placing of insurance in insurers] in the ‘state or in any other state or country.’ And it is provided in section 2 of the act, among other conditions, that only such persons may be licensed as are residents of the state and have been licensed insurance agents of the state for at least two years.” 248 U.S. at page 466, 39 S.Ct. at page 161, 63 L.Ed. 362. The complainant, a resident and citizen of the State of New York, there contended: 1: ’ That he was thereby deprived of his liberty and property by the act of the State of “South Carolina” in violation of the due process clause of the Fourteenth Amendment ; and, 2: That the act discriminates against citizens of other states and in favor of citizens of the State of South Carolina in violation of Section 2,