amount the aggregate, estimated, actual expenses of all of the companies, calculated on the basis of an expense ratio of 48.29%. After deducting this amount as well as an estimated amount of insurance losses, they reach a result indicating that the companies would sustain an annual underwriting loss of $ 257,385, or 2.50% of the total premiums. There is no showing of the effect of the order on any individual company.
It is well settled that a person claiming to be aggrieved by a rate making order has the burden of proof on the issue of confiscation. To sustain this burden, he must establish by clear and convincing evidence that the rates make it impossible to earn a fair return, American Toll Bridge Co. v. Railroad Comm., 307 U.S. 486, 494, 59 S. Ct. 948, 83 L. Ed. 1414; Los Angeles Gas Co. v. Railroad Comm., 289 U.S. 287, 305, 53 S. Ct. 637, 77 L. Ed. 1180; Lindheimer v. Illinois Bell Tel. Co., 292 U.S. 151, 164, 54 S. Ct. 658, 78 L. Ed. 1182. In Lindheimer v. Illinois Bell Tel. Co., supra, Chief Justice Hughes remarked that 'The question is whether the company has established, with the clarity and definiteness befitting the cause, that this reduction would bring about confiscation.' 292 U.S.at page 164, 54 S. Ct.at page 663, 78 L. Ed. 1182.
It has been frequently held that in case of rate fixing orders, affecting a group of persons, any person claiming to be aggrieved must establish individually that the rate as to him will result in confiscation. It is not sufficient for him to demonstrate that as a whole the rate leads to an unreasonably low rate of return for the average company.
In Missouri Rate Cases (Knott v. Chicago, B. & O.R. Co.), 230 U.S. 474, 508, 33 S. Ct. 975, 57 L. Ed. 1571, the court passed upon the validity of rates affecting a group of railroad companies. It was contended that the rates were confiscatory, in that they did not enable some of the railroads to earn a fair return. The court overruled this contention and stated in an opinion by Mr. Justice Hughes (230 U.S.at page 508, 33 S. Ct.at page 983): 'The contention raised by the complainants, that these legislative acts cannot be enforced against one company unless enforced against all, cannot be sustained. The argument, in effect, is that, although the charges of carriers may be clearly exorbitant, the state is powerless to compel them to put into effect reasonable rates because, as to another carrier differently situated, the rates thus prescribed might be unreasonably low. The acts are valid upon their face as a proper exercise of governmental authority in the establishment of reasonable rates, and each complainant, in order to succeed in assailing them, must show that as to it the rates are confiscatory.'
In Minnesota Rate Cases (Simpson v. Shepard), 230 U.S. 352, 467-473, 33 S. Ct. 729, 57 L. Ed. 1511, 48 L.R.A.,N.S., 1151, Ann. Cas. 1916A, 18, rates had been fixed by a rate-making body affecting three railroad systems. They were held confiscatory as to one of the roads, but valid as to the other two.
In Aetna Insurance Co. v. Hyde, 275 U.S. 440, 446, 48 S. Ct. 174, 72 L. Ed. 357, the Supreme Court passed on the validity of a rate fixing order of the Superintendent of Insurance of the State of Missouri. In that case, too, the contention was advanced that the rate was confiscatory in that it was too low as to some of the companies. In overruling this contention, Mr. Justice Butler wrote as follows: 'No company receiving just compensation is entitled to have higher rates merely because of the plight of its less fortunate competitors. Companies whose constitutional rights are not infringed may not better their position by urging the cause of others.'
In the case at bar, there is no showing, in fact there has been no attempt to prove, how the rates affected individual companies. In order to sustain the burden of proof that the rates are confiscatory, it is incumbent upon individual companies to demonstrate that the result would be confiscatory as to them. A speculative and conjectural calculation based on the average of all companies involved, is not sufficient. In the light of the foregoing considerations, the court reaches the conclusion that the plaintiffs have not sustained their contention that the rates fixed by the Superintendent of Insurance are confiscatory.
III. Miscellaneous Objections.
The plaintiffs further contend that certain of the basic factors that necessarily enter into the fixing of rates, were computed by the Superintendent of Insurance on an erroneous and improper basis. In the light of the disposition about to be reached, it does not appear pertinent to pass on these objections at this time, since the order of the Superintendent will be set aside for failure to comply with the basic requirement of a fair and full hearing. At such a hearing, counsel for the Superintendent, as well as counsel for all interested parties will be in a position to offer evidence on these disputed issues, and for this reason, it seems best to not prejudge them.
The order of the Superintendent will be set aside and its enforcement will be restrained because of his failure to proceed in the manner indicated in this opinion.
Judgment for the plaintiffs. Counsel will submit suggested findings of fact and conclusions of law in accord with this opinion.