Harrison v. Hartford Steam Boiler Inspection & Ins. Co.

• Citation: 187 S.E. 648,183 Ga. 1
• Docket Number: 11191.
• Decision Date: 03 June 1936
• Parties: HARRISON, Insurance Com'r, v. HARTFORD STEAM BOILER INSPECTION & INS. CO. et al.
• Court: Supreme Court of Georgia

187 S.E. 648

183 Ga. 1

HARRISON, Insurance Com'r, v. HARTFORD STEAM BOILER INSPECTION & INS. CO. et al.

No. 11191.

Supreme Court of Georgia

June 3, 1936

Judgment Adhered to after a Rehearing July 28, 1936.

Syllabus by the Court.

1. Courts cannot lightly declare an act of the General Assembly unconstitutional; for every presumption is in favor of the constitutionality of the acts of the legislative department of the state government, and it is a fixed rule that if there should be a doubt upon the subject, the doubt must be resolved in favor of the constitutionality of the act.

2. It is not to be denied that there is a limit to the power of classification beyond which the state of Georgia cannot go. A mere difference in the nature or character of the businesses which it is sought to regulate by legislative enactment will not be sufficient to justify classification of such businesses into different classes.

3. Where the business is affected with a great public interest in which all the citizens of the state are concerned, and injury will result to the general public unless regulatory control be applied, a right of classification arises on behalf of the general public.

4. The state of Georgia has an inherent, sovereign right to reasonably and properly classify all businesses carried on within its borders.

5. That which a state may do with corporations of its own creation it may do with foreign corporations admitted into it. The state may distinguish, select, and classify objects of legislation and necessarily the power must have a wide range of discretion. "Classification for such purposes is not invalid because not depending on scientific or marked differences in things or persons or in their relations. It suffices if it is practical, and is not reviewable unless palpably arbitrary."

6. In German Alliance Insurance Co. v. Lewis, 233 U.S 389, 34 S.Ct. 612, 58 L.Ed. 1011, L.R.A.1915C, 1189, and in other cases, the Supreme Court of the United States has held that the business of insurance is so far affected with a public interest as to justify legislative regulation. It is within the power of the Legislature to regulate the personal contracts involved in such business. It is the business that is the fundamental thing; property is but the instrument of such business. "A business by circumstances and its nature may rise from private to public concern, and consequently become subject to governmental regulation; and the business of insurance falls within this principle. That which makes for the general welfare is a matter of legislative judgment; and judicial review is limited to power, and excludes policy. The inactivity of a governmental power, no matter how prolonged, does not militate against its legality when exercised. If the legislature has the power to enact discriminatory legislation, the discrimination is not invalid under the equal-protection provision of the Fourteenth Amendment to the constitution of the United States, if not so arbitrary as to be unreasonable and beyond the wide discretion that a legislature may exercise. Legislation is addressed to evils as they appear, and even degrees of evil may determine its exercise."

7. A contract may be voided, and, although legal at the time it was made, may be made illegal and unenforceable by legislative enactment. "If one agrees to do a thing which it is lawful for him to do, and it becomes unlawful by an act of the legislature, the act avoids the promise."

8. While freedom of contract is the general rule and restraint the exception, "there is, of course, no such thing as absolute freedom of contract. It is subject to a great variety of restraints."

9. Under the powers inherent in every sovereignty, a government may regulate the conduct of its citizens toward each other and, when necessary for the public good, the manner in which each shall use his own property. This is the very essence of government, and it is well expressed in the maxim sic utere tuo ut alienum non laedas. From this source comes the police powers, which "are nothing more or less than the powers of government inherent in every sovereignty, that is to say the power to govern men and things." When private property is affected with a public interest, it ceases to be juris privati only.

10. Property becomes clothed with a public interest when used in a manner to make it of public consequence, and the manner in which it is used affects the community at large.

11. "Neither is it a matter of any moment that no precedent can be found for a statute precisely like this." The business to be affected is one in which the whole public has a direct and positive interest.

12. To say that a local agent of a fire insurance company shall be paid by salary instead of by commissions, as required by the act of 1935 (Ga.Laws 1935, p. 139), and to declare that the legislation is illegal, is to put a restraint upon a power that (under the state's right of classification) has practical justification.

13. In the act now under consideration no discrimination is made on account of citizenship.

14. No unconstitutional discrimination exists because the act was not made to apply to agents of mutual fire insurance companies. There are as will be seen in Orient Insurance Co. v. Daggs, 172 U.S. 557, at page 562, 19 S.Ct. 281, 283, 43 L.Ed. 552, "Many differences between fire insurance and other insurance, both to the insurer and the insured,-differences in the elements insured against and the possible relation of the parties to them, producing consequences which may justify, if not demand, different legislative treatment. Of course, it is not for us to debate the policy of any particular treatment, and the freedom of discretion which we have said the state has."

Error from Superior Court, Fulton County; John D. Humphries, Judge.

Mandamus proceeding by the Hartford Steam Boiler Inspection & Insurance Company and another against William B. Harrison, Insurance Commissioner. To review a judgment for plaintiffs, defendant brings error.

Reversed.

GILBERT and HUTCHESON, JJ., dissenting.

Statute prohibiting writing of fire or indemnity insurance except through resident agents licensed by insurance commissioner held constitutional (Laws 1935, p. 140, § 1).

M. J. Yeomans, Atty. Gen., and B. D. Murphy, Asst. Atty. Gen., for plaintiff in error.

Harold Hirsch & Marion Smith and Hamilton Lokey, all of Atlanta, for defendants in error.

RUSSELL Chief Justice.

The Hartford Steam Boiler Inspection & Insurance Company, a nonresident corporation licensed to transact business as a casualty insurance company in the state of Georgia, and W. M. Francis, of Fulton county, Ga., filed a petition for mandamus against William B. Harrison as insurance commissioner of Georgia, praying that the defendant be compelled by mandamus to issue to W. M. Francis a license as an insurance agent for the writing of casualty insurance. It was alleged that the insurance company filed with the insurance commissioner an application for the issuance of such license to Francis; that the insurance commissioner declined to issue the license solely upon the ground that under section 1 of the act of the General Assembly approved March 28, 1935 (Ga.Laws 1935, pp. 139, 140), prescribing the terms on which the insurance commissioner was authorized to license insurance agents, no salaried employees of an insurance company should be licensed to act as agent or to issue contracts of insurance except employees of mutual insurance companies; that this provision of the act of 1935 is violative of the Fourteenth Amendment to the Constitution of the United States, in that said provision is arbitrary, unreasonable, and capricious, and bears no reasonable relation to the public or to any other matter or thing within the police power of the state, and deprives the petitioners of their property and of their liberty, without due process of law; that for the same reason said act violates article 1, § 1, par. 3, of the Constitution of Georgia, wherein it is provided that no person shall be deprived of property without due process of law; that said statute, in discriminating against stock companies and the agents thereof and in favor of mutual companies and the agents thereof, sets up an arbitrary and capricious classification bearing no reasonable relation to the subject-matter of the legislation, and no reasonable relation to the protection of the public, or any other matter within the legislative authority; and that said provision is also violative of article 1, § 1, par. 2, of the Constitution of Georgia, providing that protection to person and property is the paramount duty of government, and shall be impartial and complete. The insurance commissioner in his response admitted that the license prayed for had been refused solely on the ground that Francis was a salaried employee of the insurance company, and that under the terms of the act of 1935 he was ineligible to be so licensed. The judge of the superior court, upon the pleadings, granted a mandamus absolute, requiring the insurance commissioner to issue the license prayed, holding that the classification made in the act of 1935 is unconstitutional. To this judgment the insurance commissioner excepted.

1. The superior court having by mandamus ordered the insurance commissioner of Georgia to issue a license to W.M. Francis the local agent for the Hartford Steam Boiler Inspection & Insurance Company at Atlanta, and the commissioner having excepted by bill of exceptions, the question is presented as to whether the act approved March 28, 1935, upon the subject of agents and solicitors of insurance is unconstitutional. The superior court held that section 1 of the foregoing act (Ga.Laws 1935, p. 139) is violative of...