Louis Brandeis

“ Under the construction placed upon the statute no agent can make an enforcible agreement with an insurance company definitely fixing his compensation. Always the company can defeat his claim for the agreed amount, reasonable in fact, by paying less to another agent. ”

“ The statute prescribes no definite rate of compensation; under it no two companies are required to pay at the same rate for like services in the same locality; and competition for business is necessarily abridged. And in order to operate at all at some points the insurer may find it necessary to pay agents much more than prudent management would require, and beyond the real value of their services at such places.
Although agents are usually paid a specified percentage of premiums collected, the statute is not limited to that situation. ”

“ One agent's efforts often produce much more valuable results than those of another. Such interference with the freedom of the parties hinders the proper conduct of the business and may ultimately cause increased rates. ”

“ And it permits an agent who has been paid according to his agreement to recover more if he can show that some other agent has received greater compensation.
The objections to the statute, no extraordinary conditions having been disclosed by the defendant, should be obvious. It goes far beyond the mere regulation of the business of insurance and interferes directly with the right of insurers to control the conduct of their internal affairs; it restricts the right of both company and agent to make reasonable private agreements in respect of compensation for ordinary services ”

“ In case any insurer is convicted of a violation of this act, every local agent of the insurer in this State shall be entitled to the same commission or compensation, or other thing of value, for business done for the insurer during the calendar year in which the discrimination took place, on risks in this State, and any local agent may recover from the insurer in any court of competent jurisdiction, the amount of such excess commission or compensation, or other thing of value, if any, to which he may become entitled under the provisions of this act. ”

“ Every such insurer or agent shall, within ten days after written demand therefor, furnish to any person, upon whose property or risk a rate has been made by said insurer, or to his authorized representative, full information as to such rate, and if such property or risk be rated by schedule applying particularly to each risk, a copy of such schedule, and shall provide such means as may be approved by the Commissioner of Banking and Insurance were by any person or persons affected by such rate may be heard on an application for a change in such rate. ”

“ Moreover, lack of a uniform scale of commissions allowed local agents for the same service may encourage unfair discrimination among policyholders by facilitating the forbidden practice of rebating. In the field of life insurance, such evils led long ago to legislative limitation of agents' commissions. [2]
The statute here questioned deals with a subject clearly within the scope of the police power. We are asked to declare it void on the ground that the specific method of regulation prescribed is unreasonable and hence deprives the plaintiff of due process of law. ”

“ A foreign insurance company, licensed to operate in New Jersey, employed an agent and agreed to pay reasonable compensation. The agent demanded 25 per cent. of the premiums collected. The company paid 20 per cent. of these and successfully resisted the claim for more upon the sole ground that 'since twenty per cent. is the amount of commissions paid to some of its local agents, the effect of this legislation (Act March 29, 1928) is to determine that a comis sion in excess of that is unreasonable.' Abstractly stated, the principal paid 'A' commissions at the rate of 20 per cent. ”

“ O'Gorman & Young, a New Jersey corporation, under proper license transacts business as an insurance broker. For many years it has been the agent of appellee, a Connecticut corporation authorized to issue fire policies in New Jersey. Prior to March 29, 1928, the agreement of employment provided that for negotiating and selling such policies the agent should receive 25 per cent. of prescribed premiums. ”

“ This motion was denied and final judgment went for the defendant upon the pleadings and admission.
'The other question is whether of not the act deprives the plaintiff of its property without due process of law, and therefore is a violation of the 14th Amendment to the Federal Constitution.
'Federal and State laws are in favor of the regulation of the business affairs of persons and corporations which affect the public interest and there are federal and state decisions in almost every state in this country upholding the constitutionality of such laws, provided they are reasonable. ”

“ Any one or more of such insurers singly or jointly may employ for the making of such general basis schedules and rates and the filing of the same the services of such experts as it, or they, may deem advisable for such purpose. ”