The opinion of the court was delivered by: Parsons, District Judge.
The Joe Louis Milk Company, an Illinois dairy corporation
operating in Chicago, brings this class action under the
Federal Civil Rights Act, 28 U.S.C. § 1343, 42 U.S.C. § 1983,
1985, on behalf of itself and all others similarly situated,
against the Director of Insurance of the State of Illinois "to
vindicate rights protected by the Fourteenth Amendment to the
Constitution of the United States."
The complaint alleges that defendant is managing the property,
business and affairs of the defunct Blackhawk Mutual Insurance
Company for the purpose of its liquidation, pursuant to the
Illinois Insurance Code and orders of the Circuit Court of Cook
County, Illinois, in Case No. 57 C 2791 (which court file
allegedly is missing). Beginning on or about January 1, 1964,
Hershey brought approximately 15,000 lawsuits in local Illinois
courts against plaintiff and other members of the class for
money allegedly owed by them to Blackhawk in order to overcome
a deficiency of about $696,000.00 in its assets. As a
consequence, plaintiff and others were required to expend money
to defend against such lawsuits. Other persons were defaulted
because they could not afford counsel, and they are being
sought in garnishment; other persons have settled or paid the
amounts demanded by Hershey in order to mitigate their expenses
Plaintiff alleges that defendant brought said suits upon the
following theory: (a) Blackhawk issued policies of insurance
providing for contingent liability against a member of the
company in an amount not less than one, nor more than ten,
times the premium specified in the policies; (b) because
plaintiff's name, and about 35,000 other names allegedly appear
in some file or record maintained by Blackhawk as an "insured
person or persons" during the twelve month period beginning
February 28, 1956, and ending February 27, 1957, they were,
thereby, policyholders and, ipso facto, "members" in said
company; (c) that defendant had authority to levy an assessment
(equal to the premium shown in the file or record) against the
"members" at any time during the pendency of the liquidation of
proceedings, and to bring suit to collect said assessments.
The complaint further alleges that Hershey demands in each of
said lawsuits the maximum premium alleged to have been
specified in each policy of insurance, regardless of whether
plaintiff and others had notice of the pendency of the Circuit
Court suit, or of the orders entered therein; and regardless of
whether the "member" ever applied volitionally for the policy,
or consented to its issuance, if he ever did; and regardless of
whether the "member" received any protection under the contract
of insurance, even if he had applied and paid the premium in
full; and regardless of the fact that it was always Hershey's
obligation, and that of his predecessor, to prevent insolvent
insurance companies from issuing assessable or contingent
liability insurance policies to an unsuspecting public.
Finally, plaintiff contends that Hershey had no authority to
levy such assessments against plaintiff and others because they
did not receive notice of a claim, therefor, within one year
after the termination of the policies of insurance allegedly
issued to them, as provided by the Illinois Insurance Code,
S.H.A. Ch. 73, § 672; and further, that they were
constitutionally entitled to notice of the Circuit Court suit,
and of the orders entered therein.
Plaintiff seeks a declaratory judgment that defendant has no
authority to levy said assessments or to collect them, and an
injunction restraining defendant and his agents from attempting
to collect said levy of assessments. Plaintiff also requests
damages for attorneys' fees, costs, and expenses incurred in
defending those actions allegedly wrongfully brought by
defendant acting "under color and pretense of the Insurance
Code of Illinois."
Since jurisdiction is based upon 28 U.S.C. § 1343, the
question arises whether this is a suit to redress the
deprivation, under color of Illinois law, of any right,
privilege or immunity secured to plaintiff and other members of
the class by either the Constitution or the Federal Civil
Rights Acts. Some old cases have suggested that § 1343 does not
apply to cases involving mere property rights, as opposed to
"civil rights" or human rights. Carter v. Greenhow,
114 U.S. 317, 5 S.Ct. 928, 29 L.Ed. 202 (1884); Pleasants v. Greenhow,
114 U.S. 323, 5 S.Ct. 931, 29 L.Ed. 204 (1884); Holt v. Indiana
Mfg. Co., 176 U.S. 68, 20 S.Ct. 272, 44 L.Ed. 374 (1900); Hague
v. C. I. O., 307 U.S. 496, 518, 531-532, 59 S.Ct. 954, 83 L.Ed.
1423 (concurring opinion of Mr. Justice Stone). However, modern
day courts have taken a more latitudinarian view. E. g.,
McGuire v. Sadler, 337 F.2d 902 (5th Cir. 1964); Hornsby v.
Allen, 326 F.2d 605 (5th Cir. 1964); Cobb v. City of Malden et
al., 202 F.2d 701, 705 (1st Cir. 1953).
Although corporations are not entitled to "privileges and
immunities" of citizens, Orient Insurance Co. v. Daggs,
172 U.S. 557, 561, 19 S.Ct. 281, 43 L.Ed. 552 (1899); Hague v. C.
I. O., 307 U.S. 496, 500, 514, 59 S.Ct. 954 (1939) (concurring
opinion of Mr. Justice Roberts), they have long been held to be
"persons" within the meaning of the Equal Protection Clause,
Santa Clara County v. Southern Pacific RR, 118 U.S. 394, 6
S.Ct. 1132, 30 L.Ed. 118 (1886), and the Due Process Clause,
Minneapolis & St. Louis RR v. Beckwith, 126 U.S. 26, 9 S.Ct.
207, 32 L.Ed. 585 (1889), of the Fourteenth Amendment. See,
Graham, The "Conspiracy Theory" of The Fourteenth Amendment,
47 Yale L.J. 371-75 (1938).
No difference in constitutional protection between property
rights and human rights is expressed in the language of § 1343
itself, nor can any meaningful distinction be made or justified
between rights "secured" by the Constitution, and rights
"arising under" or "protected" by the Constitution. Neither
logic nor policy compels the conclusion that property rights
are less deserving of protection under the Constitution and
Civil Rights Act than are human freedoms. It appears, under
current statutory interpretation, that the right of an
individual or a corporation not to be deprived of property
without due process of law is a "right * * * secured by the
Constitution" within the meaning of § 1343. Accord, Progress
Development Corp. v. Mitchell, 286 F.2d 222 (7th Cir. 1961);
Adams v. City of Park Ridge, 293 F.2d 585 (7th Cir. 1961);
Northwestern Fertilizing Co. v. Hyde Park, 18 Fed.Cas. 393 (No.
10,336) (C.C.N.D.Ill. 1873).
Defendant contends that the constitutional question presented
is insubstantial. A claim of unconstitutionality of official
action should not be dismissed for lack of jurisdiction unless
it appears, to a legal certainty, that the claim is wholly
insubstantial and frivolous so far as the Constitution is
concerned. Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed.
939 (1946); Montana-Dakota Utilities Co. v. Northwestern Public
Service Co., 341 U.S. 246, 71 S.Ct. 692, 95 L.Ed. 912 (1951);
Wheeldin v. Wheeler, 373 U.S. 647, 83 S.Ct. 1441, 10 L.Ed.2d
605 (1963). This rule has been applied in actions under the
Federal Civil Rights Act, where the jurisdictional (28 U.S.C. § 1343)
and substantive (42 U.S.C. § 1983) provisions are
similarly worded. Congress of Racial Equality v. Clemmons,
323 F.2d 54, 59 (5th Cir. 1963); Campbell v. Glenwood Hills
Hospital, 224 F. Supp. 27, 29 (D.Minn. 1963). Experience teaches
that the wiser and better practice is for the court to assume
for the purpose of determining whether the complaint states a
claim upon which relief can be granted. Rogers v. Provident
Hospital, 241 F. Supp. 633, (N.D.Ill. 1965); Harrison v. Murphy,
205 F. Supp. 449 (D.Del. 1962); Byrd v. Sexton, 277 F.2d 418
(8th Cir. 1960). Since the merits of the constitutional
question presented will be discussed below, it is sufficient to
state at this point that it does not appear to a legal
certainty that the question is wholly insubstantial and
frivolous as to justify dismissal for lack of jurisdiction.
Plaintiff bases his cause of action upon 42 U.S.C. § 1983 and §
1985. The latter section is inapplicable, since it applies only
to conspiracies to deprive a person of the equal protection of
the laws or the equal privileges and immunities under the laws.
Egan v. City of Aurora, 291 F.2d 706, 708 (7th Cir. 1961);
Jennings v. Nester, 217 F.2d 153, 154 (7th Cir. 1955). The
complaint does not allege any conspiracy, and the right
allegedly violated here is the right not to be ...