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Tucson Federal Savings & Loan Ass'n v. Aetna Investment Corp

Supreme Court of Arizona

June 16, 1952

TUCSON FEDERAL SAVINGS & LOAN ASS'N
v.
AETNA INVESTMENT CORP

Page 424

Judgment affirmed.

Fickett & Dunipace, of Tucson, for appellant.

Stahl, Murphy & Bishop, of Phoenix, and Krucker & Evans, of Tucson, for appellee.

Udall, Chief Justice. Stanford, Phelps, De Concini and La Prade, JJ., concur.

OPINION

Udall, Chief Justice.

Page 425

[74 Ariz. 166] Aetna Investment Corporation, an Arizona company which is engaged in the insurance business with its principal place of business in Phoenix, was awarded damages by the superior court in the sum of $ 10,000 against defendant Tucson Federal Savings and Loan Association, a corporation, for the breach of a written agreement theretofore entered into between them. The matter is now brought before us for review.

In the interest of clarity we will refer to the defendant-appellant as Tucson Federal and to the plaintiff-appellee as Aetna.

Tucson Federal is a federal savings and loan association organized and existing under the Home Owners Loan Act of 1933, 12 U.S.C.A. § 1461 et seq., and carrying on its business in Tucson, Arizona. Under its charter and the rules and regulations of the Federal Home Loan Bank, by whom it is supervised, Tucson Federal is required to obtain fire and extended coverage insurance as collateral security on all mortgage loans made by it. Tucson Federal on November 30, 1941 entered into a written agreement with Aetna to provide this coverage. The contract, which recites a consideration of mutual promises, was to run for a ten-year period, and it obligated Tucson Federal to purchase exclusively from Aetna all policies of insurance needed in connection with its business, to be paid for at the rate at which said policies of insurance and bonds are written in Pima County, Arizona. Aetna on its part agreed to secure such insurance and bonds as "may be needful or required" by Tucson Federal.

For nearly five years the parties operated under this agreement but with a change in the directorate of Tucson Federal its board of directors on September 16, 1946 revoked and rescinded, effective immediately, [74 Ariz. 167] the prior agreement. Suit by Aetna followed, seeking damages. By its amended answer Tucson Federal admitted the execution of the written agreement and that since September 16, 1946 it had refused to comply with same. It then alleged certain affirmative defenses, viz: lack of authority of its then officers to enter into the agreement; lack of knowledge of the board of directors of Tucson Federal concerning the existence of the agreement; absence of consideration; violation of the statute governing restraint of trade; fraud perpetrated upon it by its former president, Joseph G. Rice, for the purpose of his own enrichment, etc., etc. Following a trial upon the merits before the court sitting without a jury, the court found as a fact that the agreement was entirely honest and fair; that there was an adequate consideration for the same; that as a direct and proximate result of Tucson Federal's breach of the agreement Aetna had been damaged in the sum of $ 10,000. Appropriate conclusions of law were made resolving all issues favorable to Aetna, and judgment in accordance therewith was regularly entered. This appeal followed.

Appellant's opening brief contains some 15 assignments of error and 17 propositions of law, covering in all 28 pages, hence it is impracticable to set them out in extenso. The contentions which we deem deserving of consideration will be hereafter set forth with the pertinent facts relative thereto.

Restraint of Trade -- Monopoly

Tucson Federal contends that since it is bound to purchase its entire insurance requirements from the Aetna, that the agreement is in restraint of trade under section 74-101, A.C.A. 1939, and therefore illegal and void. The pertinent parts of section 74-101, supra, as follows:

"A trust is a combination of capital, skill, or acts, by two (2) or more

of section 74-101, supra, is as follows:

purpose ...

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