Aetna Life Ins. Co. v. Park

Decision Date28 March 1984
Docket NumberNo. 9370,9370
Citation5 Haw.App. 115,678 P.2d 1101
PartiesAETNA LIFE INSURANCE COMPANY, Aetna Life Insurance and Annuity Company, The Aetna Casualty and Surety Company, The Standard Fire Insurance Company, Combined Insurance Company of America, Connecticut Mutual Life Insurance Company, The Equitable Life Assurance Society of the United States, The Guardian Life Insurance Company of America, John Hancock Mutual Life Insurance Company, Massachusetts Indemnity and Life Insurance Company, Massachusetts Mutual Life Insurance Company, Metropolitan Life Insurance Company, The Mutual Life Insurance Company of New York, New York Life Insurance Company, The Prudential Insurance Company of America, Transamerica Occidental Life Insurance Company, Transamerica Life Insurance and Annuity Company, Union Mutual Life Insurance Company and Unionmutual Stock Life Insurance Co. of America, Appellants, v. Susan Kee-Young PARK, Insurance Commissioner, State of Hawaii, Appellee.
CourtHawaii Court of Appeals

Syllabus by the Court

1. The insurance commissioner has no authority to adjudicate the per se constitutionality of any part of the statute from which she obtains her powers.

2. Judicial review of the insurance commissioner's decision is confined to issues properly raised in the proceedings before the insurance commissioner.

Anthony S. Chan, Honolulu (Shawn B. Thompson, Honolulu, with him on briefs), for appellants.

Clifford K. Higa, Deputy Atty. Gen., for appellee.

Before BURNS, C.J., HEEN, J. and KANBARA, Circuit Judge, in place of TANAKA, J., recused.

BURNS, Chief Judge.

Nineteen insurance companies (Companies), "foreign insurers" under Hawaii Revised Statutes (HRS) § 431-81(b), appeal from a decision rendered by the circuit court. That decision dismissed Companies' appeal from the Insurance Commissioner's (Commissioner) dismissal of their petition for a refund of taxes. We affirm.

On June 18, 1982 Companies petitioned the Commissioner (Docket No. 82-4, Department of Commerce and Consumer Affairs, Insurance Division) for the following orders:

1. Declaring that the provisions of HRS § 431-318, 1 which impose higher tax rates on foreign insurance companies than on domestic insurance companies, are unconstitutional and void; and

2. Authorizing a refund under HRS § 431-319 2 of the excess taxes paid by them from 1974 through 1981 plus interest.

On September 1, 1982 the Commissioner filed a Decision and Order Dismissing Petition on the grounds that "an administrative agency has no authority to determine the constitutionality of a statute[.]"

On September 23, 1982 Companies appealed the Commissioner's decision to the circuit court under HRS § 431-68. The State argued that since the Commissioner was correct, the circuit court had to dismiss the appeal. Companies argued that the Commissioner was not correct, and even if she was correct, the circuit court should decide the constitutional issue.

On May 4, 1983 the lower court entered an Order Dismissing Appeal with Prejudice.

The issues and our answers are as follows:

I. Does the insurance commissioner have the authority to adjudicate the per se constitutionality of any part of the statute from which she obtains her powers (her governing statute)? No.

II. In an appeal from an administrative determination, can the circuit court review matters beyond the record of the prior agency proceeding? No.

I.

The United States Supreme Court, in interpreting the Federal Administrative Procedures Act, 5 U.S.C. §§ 701 et seq., has posited the rule that adjudication of the constitutionality of their governing statutes is beyond the jurisdiction of federal administrative agencies. Johnson v. Robison, 415 U.S. 361, 368, 94 S.Ct. 1160, 1166, 39 L.Ed.2d 389 (1974); Weinberger v. Salfi, 422 U.S. 749, 765, 95 S.Ct. 2457, 2466, 45 L.Ed.2d 522 (1975); Public Utilities Com'n v. United States, 355 U.S. 534, 539, 78 S.Ct. 446, 450, 2 L.Ed.2d 470 (1958).

State courts, in interpreting their administrative procedures acts, have generally come to the same conclusion. Armed Forces Co-op v. Dept of Ins., 622 P.2d 1318, 1333 (Wyo.1981); Belco Petroleum Corp. v. State Bd. of Equal., 587 P.2d 204, 214 (Wyo.1978). See also Dation v. Ford Motor Co., 314 Mich. 152, 22 N.W.2d 252-255 (1946); Yakima Clear Air Authority v. Glascam Builders, Inc., 85 Wash.2d 255, 534 P.2d 33, 34 (Wash.1975); Jarussi v. Board of Trustees of School Dist. No. 28, Lake County, 664 P.2d 316 (Mont.1983); Flint River Mills v. Henry, 234 Ga. 385, 216 S.E.2d 895 (Ga.1975). But see Southern Pac. Transp. v. Public Utilities Com'n, 18 Cal.3d 308, 134 Cal.Rptr. 189, 556 P.2d 289 (1976).

We agree with the holding of the overwhelming majority that an agency cannot use the powers which flow entirely from its governing statute to adjudicate the constitutionality of its governing statute. Engineers Public S. Co. v. Securities and Exchange Com'n, 138 F.2d 936 (D.C.Cir.1943); 4 K. Davis, Administrative Law Treatise, § 26.6 (1983); L. Jaffe, Judicial Control of Administrative Action, 438 (1965).

Commentators have suggested that an agency may in some instances adjudicate the constitutionality of its governing statute as applied by that agency but reserve to the courts the adjudication of the per se constitutionality of the agency's governing statute. See 4 Davis Administrative Law Treatise §§ 26.4, 26.6 (1983). We do not reach that issue because Companies' sole contention is that a part of the Commissioner's governing statute is unconstitutional per se and thus does not involve determinations within the sphere of expertise of the agency, see, e.g. In re: Hawaii Electric Light Co., 60 Haw. 625, 594 P.2d 612 (1979), or a specific action of the agency. L. Jaffe, Judicial Control of Administrative Action, 438 (1965).

II.

Section 431-69, HRS, states: "How Appeal taken. The appeal [from the Commissioner's order] shall be taken in the manner provided in chapter 91."

Section 91-14(f), HRS (1979), states:

(f) The review shall be conducted by the appropriate court without a jury and shall be confined to the record, except that in the cases where a trial de novo, including trial by jury, is provided by law and also in cases of alleged irregularities in procedure before the agency not shown in the record, testimony thereon may be taken in court. The court shall upon request by any party, hear oral argument and receive written briefs.

It is explicit in the provisions of HRS § 91-14, and in the case law interpreting those provisions, that a review of the Commissioner's decision is confined to the issues properly raised in the record of the proceedings leading up to that decision. McGlone v. Inaba, 64 Haw. 27, 636 P.2d 158 (1981); Life of the Land v. Land Use Commission, 58 Haw. 292, 568 P.2d 1189, 1193 (1977); Waikiki Shore Inc. v. Zoning Board of Appeals, 2 Haw.App. 43, 625 P.2d 1044, 1046 (1981); City and County of Honolulu v. Ambler, 1 Haw.App. 589, 623 P.2d 92, 93 (1981). But see Armed Forces Co-op, Etc. v. Dept. of Ins. 622 P.2d 1318 (Wyo.1981); Motor and Equipment Mfrs. Ass'n, Inc. v. E.P.A., 627 F.2d 1095 (D.C.Cir.1979); Belco Petroleum Corp. v. State Board of Equal., 587 P.2d 204 (Wyo.1978).

The dispositive issue faced by the Commissioner was whether she had the power to adjudicate the per se constitutionality of part of her governing statute. This issue goes beyond the scope of the record of the administrative proceedings and is not a...

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