Allin v. American Indem. Co.

• Decision Date: 09 December 1932
• Citation: 246 Ky. 396,55 S.W.2d 44
• Parties: ALLIN, Ins. Com'r, v. AMERICAN INDEMNITY CO.
• Court: Kentucky Court of Appeals

55 S.W.2d 44

246 Ky. 396

ALLIN, Ins. Com'r, v. AMERICAN INDEMNITY CO.

Court of Appeals of Kentucky

December 9, 1932

Appeal from Circuit Court, Franklin County.

Suit by the American Indemnity Company against Bush W. Allin Insurance Commissioner for the State of Kentucky. From judgment for plaintiff, defendant appeals.

Affirmed.

Bailey P. Wootton, Atty. Gen., and Wm. R. Attkisson, Asst. Atty Gen., for appellant.

Charles W. Morris and Frank A. Garlove, both of Louisville, for appellee.

PERRY J.

This is an appeal from a judgment of the Franklin circuit court rendered on the 5th day of March, 1932, in which it granted to the appellee (plaintiff below), the American Indemnity Company, a writ of mandamus against appellant (defendant below), Bush W. Allin, insurance commissioner for the state of Kentucky, commanding him to grant to the plaintiff American Indemnity Company, the authority and license to make and write insurance in the state of Kentucky upon automobiles and all other cars and vehicles, including public liability, property damage, collision, fire, burglary, and theft insurance, and to insure the owners of such automobiles and all other cars and vehicles against such losses as arise out of the ownership, operation, or maintenance of the same, and generally to do and perform all other matters and things proper to promote these objects.

The cause was heard in the lower court upon the plaintiff's petition, motion for a writ of mandamus and the defendant's demurrer thereto, and the agreed stipulation of facts filed therewith.

The agreed facts thereby appearing are as follows: The American Indemnity Company is a corporation organized under the laws of the state of Texas, with power to write all types of automobile insurance and had for many years been admitted to do such business in the state of Kentucky. On December 31, 1931, a merger was entered into by and between the American Indemnity Company and the American Fire & Marine Insurance Company, whereby the latter company was dissolved and ceased to exist; whereupon, the American Indemnity Company amended its articles of incorporation so that it was authorized and entitled under the laws of the state of Texas to insure, in addition to its automobile insurance business, houses, buildings, and other kinds of property against loss or damage by fire, lightning, or storm, and to make all kinds of insurance on goods, merchandise, and other property in course of transportation, whether on land or water or on any vessel or boat, wherever the same may be. After the merger, the American Indemnity Company applied to the insurance commissioner for the state of Kentucky for a license to write insurance upon automobiles and all other cars as above set out. The insurance commissioner refused to issue the license solely and entirely upon the reason that by its amended articles of incorporation, authority had been given to the said American Indemnity Company to insure houses, etc., against loss or damage by fire, lightning, or storm.

We have hereinabove adopted appellant's statement of facts as made in his brief, which is admitted by appellee to be a proper statement thereof.

Appellant by his appeal here presents the question as to whether, under the facts above stated, the commissioner was justified in denying the license applied for, which he contends he was, and therefore that the judgment of the Franklin circuit court, in commanding him to issue the license, should be reversed, for the reason that the American Indemnity Company should be denied a license to do business in the state of Kentucky and the insurance commissioner permitted to deny the license here applied for, where the law under which an insurance company applying therefor is incorporated is in its essence repugnant to the public policy of this state.

Under section 634, Kentucky Statutes, every insurance company not organized under the laws of this state is required to manifest certain things to the insurance commissioner. It then provides: "And the commissioner, upon being satisfied that such company has fully complied with the laws of this state, and is possessed of the legal reserve, shall furnish to such agents as the company directs a license to transact business as agent for said company under the seal of the insurance department."

Further, by sections 752 and 753 of the Statutes, ample power is given the commissioner to protect the people of the state against foreign companies and to revoke the licenses of those found not to be in sound condition or that fail or refuse to comply with the laws of the state when admitted to do business in this state.

The duty and authority of the insurance commissioner, by virtue of his office, is well set out in the case of Mutual Life Insurance Company of New York v. Prewitt, Insurance Commissioner, 127 Ky. 399, 105 S.W. 463, 465, 32 Ky. Law Rep. 298, where this court said: "The insurance commissioner is the creature of the statute. He has no authority except that which the statute confers upon him. In the state of case in which the statute authorizes him to revoke a license, his discretion, unless exercised arbitrarily, cannot be controlled by injunction; but, when he undertakes to act in a state of case in which the statute gives him no authority to act, he may be controlled by injunction. He is a ministerial officer, and his acts beyond the authority conferred upon him by law have no force. The law is the source of his authority and all of his acts must be within the limits of that authority. It is the province of the courts to construe the statute, and determine the scope of his authority."

The commissioner in the instant case justifies his refusal to grant a license to the American Indemnity Company upon the grounds that it would be against public policy to permit the appellee company to transact business in this state, as it has been authorized by its Texas charter to write both fire and automobile insurance, which is a right not given by the laws of Kentucky to its domestic companies. His ground assigned for his action requires us to inquire and determine whether the public policy of the state in this regard is as by him asserted to be.

In the case of Eversole v. Eversole et al., 169 Ky. 793 185 S.W. 487, 489, L. R. A. 1916E, 593, this court said: "The public policy of a state is determined by its Constitution and statutes, and, where these are silent, by the decisions of its cour...