We have repeatedly pointed out that, under the McCarran Act, the Federal Trade Commission has some jurisdiction in the business of insurance. Within that jurisdiction, and in performance of duties imposed by Congress, 41 complaints have been issued. Where the Commission has jurisdiction, we would hold insurance companies to a high degree of responsibility in their dealings with the public. Consequently, we do not approve of some of the statements made by the hearing examiner in his consideration of the advertising in question. However, that matter is not now before us. Since the filing of the initial decision, Mississippi has adopted the model code, effective as of February 29, 1956. The law governing such a situation is clearly expressed in United Corporation, et al. v. Federal Trade Commission (1940), 110 F. 2d 473, as follows: "And since the power of the Federal Trade Commission is purely regulatory and not punitive, it is clear that jurisdiction must exist at the time of the entry of its order. Jurisdiction at the time of the commission of acts objected to as unfair trade practices or at the time of the filing of the complaint with regard thereto is not sufficient; for the order to be entered does not relate to past practices or determine rights as of the time of the filing of the complaint, as in an action at law, but commands or forbids action in the future." In Chamber of Commerce of Minneapolis, et al. v. Federal Trade Commission (1926), 13 F. 2d 673, the Court said: "As the orders of the Commission are purely remedial and preventative, the effect thereof is entirely in the future. Therefore, the jurisdiction of the Commission should, in this respect, be measured as of the time of the order rather than as of the filing of the complaint or as of the hearing thereon." It thus appears that in every State involved in this case, State regulation now prevents further action by the Commission. In accordance with the views expressed in this dissent, we would deny the appeal and dismiss the complaint. APRIL 24, 1956. UNITED STATES OF AMERICA, BEFORE FEDERAL TRADE COMMISSION Docket No. 6237 In the Matter of The American Hospital and Life Insurance Company, a Corporation ADDITIONAL VIEWS OF COMMISSIONER MASON The issue here resolves itself basically into that ever fundamental questionstates' rights versus centralized government. Our problem is not the determination of which philosophy is right-that is a legislative function. Our sole duty is to determine which road Congress has directed us to follow in the instant matter. In my opinion, if the rationale on which the majority bases its decision in this case stands, it must of necessity follow that the Federal Government has almost unlimited control over the management of the insurance business. This would apply not only to false advertising of health and accident policies, the present center of our attention in 41 cases, but would include all other aspects of the business of insurance, such as the approval of policy forms, the establishment of rates, the maintenance of reserves, the regulation of agency commissions, and the countless other components of the internal management of any single company or companies. To transfer in one fell swoop the control of every phase of the business of insurance, whether regulated or not by state law, to the Federal Government when crossing state lines is to flout the expressed intent of Congress. APRIL 24, 1956. FEDERAL TRADE COMMISSION, Mr. ELTON J. LAYTON, Clerk, Committee on Interstate and Foreign Commerce, House Office Building, Washington, D. C. DEAR MR. LAYTON: Since writing you today, I have discovered a very good chart giving the information as to the action of the various courts in regard to the constitutionality of the fair trade laws. This is found in CCH, volume 1, under Resale Price Fixing Fair Trade, section 3003. You will note that in some instances the act in general was declared unconstitutional, whereas in other cases, the determination of constitutionality applied only to nonsigners. Very sincerely, JOHN W. GWYNNE, Chairman. UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 14972 JAMES F. CRAFTS, Appellant, vs. FEDERAL TRADE COMMISSION, Appellee. Feb. 27, 1957 Upon Appeal from the United States District Court for the Northern District of California, Southern Division Before: LEMMON, FEE and CHAMBERS, Circuit Judges JAMES ALGER FEE, Circuit Judge: This is an appeal from an order enforcing a subpoena duces tecum issued by the Federal Trade Commission to Crafts in a proceeding against Fireman's Fund Indemnity Company. The trial court issued an order as follows: "ORDER REQUIRING THE GIVING OF EVIDENCE AND THE PRODUCTION OF DOCUMENTARY EVIDENCE "The Federal Trade Commission, having invoked the aid of this Court in requiring the attendance and testimony of James F. Crafts and the production of documentary evidence by James F. Crafts, as a witness in a proceeding instituted by the Federal Trade Commission against Fireman's Fund Indemnity Company (D. 6310), and "The Court having considered the application, it is hereby "Ordered: That the application be, and the same hereby is granted, and that the said James F. Crafts be, and he is, hereby ordered to appear upon not less than ten days' notice at a time and place to be set by the Federal Trade Commission or a Hearing Examiner thereof designated by the said Commission to take testimony and receive evidence, and to perform all other duties authorized by law in the prosecution of the inquiry pending before said Commission entitled, 'In the Matter of Fireman's Fund Indemnity Company, a corporation, Docket No. 6310,' or an examiner subsequent hereto designated by it for such purposes to give evidence and testimony at the aforesaid time and place touching matters brought in question by the complaint of the Federal Trade Commission against Fireman's Fund Indemnity Company, a corporation, and the answer thereto, to then and there produce the documentary evidence identified and described in a subpoena issued by the said Commission, on September 22, 1955, and already served upon said James F. Crafts, and which the said James F. Crafts has not produced, and to answer at said time and place every question relevant and material to said proceeding and necessary and proper to the conduct thereof and to attend before said Examiner of the Federal Trade Commission from day to day until his examination shall have been completed. "It Is Further Ordered: That this Order and its effectiveness be and the same is hereby stayed for the time permitted by law for an appeal therefrom, and if such appeal is filed, thereafter until final determination of such appeal." The subpoena which was thus enforced read: "United States of America Federal Trade Commission "SUBPOENA DUCES TECUM "To Mr. James F. Crafts, Fireman's Fund Indemnity Company, 401 California Street, San Francisco 20, California. "You are hereby required to appear before J. Earl Cox, a Hearing Examiner of the Federal Trade Commission, at Room 261, U. S. Post Office and Court House, 7th and Mission Streets in the City of San Francisco, California, on the 17th day of October, 1955, at ten o'clock a. m., of that day, to testify at the instance of the Federal Trade Commission in the Matter of Fireman's Fund Indemnity Com pany, Docket No. 6310, and you are hereby required to bring with you and produce at said time and place the following books, papers, and documents: described in Schedule 'A' attached hereto and incorporated by reference as if fully rewritten herein. "Fail not at your peril. "In testimony whereof, the undersigned, a Hearing Examiner of the Federal Trade Commission, has hereunto set his hand and the said Federal Trade Commission has caused its seal to be affixed at Washington, D. C., this 22nd day of September, 1955. [SEAL] "SCHEDULE 'A' /s/ J. EARL Cox, Hearing Examiner. "1. One copy of each form letter, bulletin, circular, folder, brochure, stuffer, newspaper advertisement, magazine advertisement, or other written or printed advertising material which was disseminated by respondent Fireman's Fund Indemnity Company (hereinafter described in this Schedule 'A' as respondent) to the general public, or to its employees or agents for dissemination to the general public or which was disseminated to the general public by any person, partnership, or corporation with the permission of, request of, order by, or under the terms of any contract with the respondent from March 1, 1954, to date, which advertised, described, or related to any of the accident and health insurance policies named in the complaint or any policies issued by the respondent since March 1, 1954, as substitutes or modifications for such policies. "2. All contracts, memorandums of agreement, or correspondence between respondent, its officers, agents, employees, or contractors, or any records, books of accounts, or verified summaries thereof which have reference to the following listed advertisements and which show on a state by state basis volume of dissemination of such advertisements by respondent to the general public or to its agents for redissemination to the general public during the years 1953 and 1954 "1. Form letter of A & H No. 2. "2. Form letter of A & H No. 7. "3. Form letter of A & H No. 9. "4. Form letter of A & H No. 10. "5. Circular bearing form No. A & H 4800. "6. Postcard bearing form No. A & H 4800-A. "7. Circular bearing form No. A & H 4801. "8. Postcard bearing form No. A & H 4801-A. "9. Circular bearing form No. A & H 4803. "10. Postcard bearing form No. A & H 4803-A. "11. Pamphlet bearing form No. A & H 4804. "12. Pamphlet bearing form No. A & H 4807. "3. One specimen copy of each accident and health insurance policy issued by respondent since March 1, 1954, as a substitute or modification for any of the accident and health insurance policies named in the complaint. “4. Original books, records, or accounts of the respondent, or verified summaries thereof, showing: the dollar volume of the premium receipts received by it from insureds residing in each of the several states of the United States and in the District of Columbia during the years 1953 and 1954 to whom respondent has issued during those years one or more of the following listed policies on a family or group basis; or the total number of such policies issued by respondent during the years 1953 and 1954 in each of the several states of the United States and the District of Columbia : "1. The Basic Equity Accident Policy (No. BA). "2. The Basic Income Equity Accident Policy (No. BAI). "3. The Basic Equity Life and Limb Accident Policy (No. BAL). "4. The Basic Health Policy (No. BHP). "5. The Budget Hospital and Medical Policy (No. GMA). "6. The Hospital Nurses and Expense Policy (No. HNE). "7. Hospital and Medical Policy (No. IMH). "8. Polio Policy (No. PS). "[Endorsed] : Filed October 18, 1955." The complaint in the original proceeding is of extremely broad scope: "United States of America Before Federal Trade Commission Docket No. 6310 "In the Matter of: "COMPLAINT FIREMAN'S FUND INDEMNITY COMPANY, a Corporation "Pursuant to the provisions of the Federal Trade Commission Act, as that Act is applicable to the business of insurance under the provisions of Public Law 15, 79th Congress (Title 15, U. S. Code, Sections 1011 to 1015, inclusive), and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Fireman's Fund Indemnity Company, a corporation, hereinafter referred to as respondent, has violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows: "Paragraph One: Respondent, Firemen's Fund Indemnity Company, is a corporation, duly organized, existing and doing business under and by virtue of the laws of the State of California, with its office and principal place of business located at 410 California Street, San Francisco, California. "Paragraph Two: Respondent is now, and for more than two years last past has been, engaged as an insurer in the business of insurance in commerce, as 'commerce' is defined in the Federal Trade Commission Act, by entering into the insurance contracts with insureds located in various States of the United States in which the business of insurance is not regulated by state law to the extent of regulating the practices of respondent alleged in this complaint to be illegal. Respondent maintains, and at all times mentioned herein has maintained, a substantial course of trade in said insurance policies in commerce between and among the several States of the United States. "Respondent, during the two years last past, has sold insurance indemnification in a variety of policies, among which are the following: "1. The Basic Equity Accident Policy (No. BA). "2. The Basic Income Equity Accident Policy (No. BAI). "3. The Basic Equity Life and Limb Accident Policy (No. BAL). "4. The Basic Health Policy (No. BHP). "5. The Budget Hospital and Medical Policy (No. GMA). "6. The Hospital Nurses and Expense Policy (No. HNE). "7. Hospital and Medical Policy (No. IHM). "8. Polio Policy (No. PS). "Paragraph Three: Respondent is licensed, as provided by the respective State laws, to engage in the business of insurance, as heretofore generally described, in all of the forty-eight States of the United States and the District of Columbia. "Paragraph Four: In the course and conduct of its aforesaid business, respondent, during the two years last past, disseminated, and caused to be disseminated, in the form of printed and written matter, false, misleading and deceptive advertising statements concerning the terms and provisions of its contracts of insurance, as reflected by policies as aforesaid. These statements were disseminated by letters, bulletins, circulars, etc., through the United States mail and by other means; or through its agents in commerce, between and among the various States of the United States. The purpose and effect of these statements was and is to induce members of the public to become insured by the respondent under the terms and provisions of the policies advertised. "Paragraph Five: In the course and conduct of its said business in said commerce, as aforesaid, the respondent has disseminated, among others of similar import and meaning, not herein set out, advertisements relating to its said policies containing the statements hereinafter set forth: "1. ‘Available to Males ages 18-54 ... Females 18-54 . . . Renewable to age 70.' "2. 'A Perfect Combination for Full Coverage Disability Insurance.' "Let Accident and Health Insurance Protect Your Income as Fre Insurance Protects Your Home.' 66 'Adequate Sickness Protection Combined With Sound Accident Insurance.' 'BASIC COVERAGES "Hospital Confinement cases: Benefits Plan A "1. Hospital room and board for a period not exceeding 100 days "Children, per day up to-- "2. Actual expense incurred for operating room, anaesthesia, anaesthetist's fee, drugs, dressings, diagnostic X-ray and laboratory examinations, up to an aggregate maximum of "Ambulance Expense: "Transportation to or from the hospital, up to‒‒‒‒ $5.00 4.00 100.00 15.00' 'OPTIONAL COVERAGES "Surgical Operation Expense: "Whether at hospital, doctor's office or home schedule up to__-- $250. 00 "Housewives and Unemployed Females___ "Doctor's Visits During Hospital Confinement: "In non-surgical cases, reimbursement will be made for physi- 187.50 3.00 "4. 'Loss of Business Time Weekly Income up to 52 Weeks "Confining Illness Coverage from first day or with waiting period of 7, 14, 21 or 28 days.' "Paragraph Six: Through the use of such statements and representations, and other similar import and meaning, not specifically set out herein, the respondent represents and has represented directly or by implication, with respect to said policies of insurance, as follows: "1. That the policies providing indemnification against loss caused by accident or sickness may be continued at the option of the insured to a specific age or for life as long as the insured makes such premium payments within the time and in the amounts as are required by the terms of the policy. "2. That complete indemnification is provided for any or all sicknesses, illnesses or accidents suffered by the insured. "3. (a) That indemnification is provided in the form of cash benefits for the payment of hospital room and board at the rate of $5.00 per day for a period not to exceed 100 days for any one disease or injury which may be suffered by the insured. "(b) That indemnification in the form of cash benefits in an amount up to $250.00 is provided for surgical expense incurred by the insured as a result of illness or injury. "(c) That indemnification is provided for doctors' visits in nonsurgical cases during hospital confinement at the rate of $3.00 per day for a maximum 100 days for each sickness or injury suffered by the insured. “4. That indemnification is provided for any confining sickness which may be suffered by the insured during the policy term from the first day of such sickness or after a waiting period of 7, 14, 21, or 28 days as the policy may prescribe. "Paragraph Seven: The aforesaid statements and representations are false, misleading and deceptive. In truth and in fact: "1. Contrary to the statements made in paragraph 1 of Paragraph Five, respondent's policies may not be renewed at the option of the insured until the age of 70 years or any other specific age by the timely payment of premiums in the amounts required by such policies. On the contrary, respondent's policies provide, in effect, that they are subject to cancellation by the respondent at any time for any reason or for no reason at all. "2. Contrary to the statement made in subparagraph 2 of Paragraph Five concerning respondent's Basic Health Policy and Basic Equity Accident Policy, the insured is not provided with complete indemnification by such policies against any loss which may be incurred by reason of any or all sicknesses or accidents. For example, Respondent's Basic Health Policy provides, (a) in effect, that no cash benefits are payment for any loss due to sickness the cause of which is traceable to a condition existing prior to or within 15 days after the effective date of the policy; (b) any loss due to pregnancy, childbirth or miscarriage; and (c) suicide or any attempt thereat, |