Allstate Ins. Co. v. Knutson

Decision Date16 April 1979
Docket NumberNo. 9564,9564
CourtNorth Dakota Supreme Court
PartiesALLSTATE INSURANCE COMPANY and Allstate Indemnity Company, Plaintiffs and Appellees, v. Byron KNUTSON, as North Dakota Insurance Commissioner, Defendant and Appellant. In the Matter of the FILINGS OF REVISED RULES AND RATES FOR PRIVATE PASSENGER AND UTILITY AUTOMOBILES BY ALLSTATE INSURANCE COMPANY and the filing of Revised Rules and Rates for Private Passenger Cars by Allstate Indemnity Company. Civ.

Thomas O. Smith, Bismarck, for plaintiffs and appellees.

Alan J. Sheppard, Special Asst. Atty. Gen., Insurance Commission, Bismarck, for defendant and appellant.

ERICKSTAD, Chief Justice.

In this case, the Insurance Commissioner for the State of North Dakota appeals to this court from an order for judgment of the District Court of the Fourth Judicial District, entered on the 29th day of September, 1978. Although we have often said that an order for judgment is not appealable, 1 we shall in this case, because it appears that both parties are anxious to have this court reach the merits, and because a denial of the appeal on that ground would in this case only result in a temporary remand for the purpose of permitting the Commissioner to appeal from the judgment, consider this as an appeal from the judgment of the district court which was entered on the 4th day of October, 1978.

The judgment reversed the decision of the Insurance Commissioner dated May 18, 1978, which denied the filing for a rate increase of Allstate Insurance Company and Allstate Indemnity Company, whom we shall hereinafter refer to as Allstate. The judgment remanded the case to the Insurance Commissioner for the purpose of allowing him to enter an order approving the rate filings, and further provided that if the Commissioner did not enter an order approving the rate filings within 10 days of the date the record was returned to the Commissioner, the rate filings were to be deemed approved. We affirm the judgment of the district court.

Chapter 26-28, N.D.C.C., relating to casualty insurance rates is generally applicable to this case. Sections 26-28-03, 26-28-04(1), and 26-28-05(1), N.D.C.C., and particularly subsection (3) thereof, are especially pertinent. 2 Section 26-28-18(3), N.D.C.C., makes any order or decision of the Insurance Commissioner subject to review by appeal within the time and in the manner provided by Chapter 28-32, N.D.C.C., the Administrative Agencies Practice Act. The pertinent section of that Act is Section 28-32-19, N.D.C.C. 3 In this case, it appears that what we have is a dissatisfaction by the Commissioner with the technique used by Allstate in arriving at its proposed rates.

The district court, in its memorandum opinion supporting its order reversing the Commissioner, said:

"In summary,

"(1) The initial presentation made by Allstate results in a prima facie showing of a need for an increase in rates.

"(2) There is no evidence of record, by way of opinion or otherwise, that would justify some other conclusion.

"(3) The opinions reexpressed by Dr. Ceyhun and Mr. Hoag regarding the adequacy of Allstate's presentation were based on the erroneous assumption that Allstate had not explained or supported its projections and estimates.

"(4) No actual deficiency in Allstate's presentation has been demonstrated.

"(5) The alternate techniques employed by Messrs. Ceyhun and Hoag produce results similar to those obtained by Allstate.

"(6) The Commissioner's conclusion that he is unable to evaluate Allstate's presentation is contrary to the evidence.

"(7) The Commissioner's decision that the application should be denied is contrary to law and should be reversed.

"It is so ordered."

Notwithstanding that it is important to know what conclusions the trial court reached and upon what facts the court reached its conclusions, as our review under the Administrative Agencies Practice Act, Ch. 28-32, N.D.C.C., is of the findings, conclusions, and decision of the administrative agency, it is crucial that we examine the findings and conclusions of the administrative agency.

Since our decision in Geo. E. Haggart, Inc. v. North Dakota Workmen's Comp. Bur., 171 N.W.2d 104 (N.D.1969), in which we applied the substantial evidence rule, both Sections 28-32-19, and 28-32-21, N.D.C.C., have been amended.

Most recently, our court speaking through Justice Sand, considered the significance of the amendment to Section 28-32-19(5), N.D.C.C., as follows:

"Section 28-32-19, NDCC, as amended, sets forth the standard for review of the agency's decision in the district court. The only rational legal conclusion that can be reached from the amendment and the Haggart case is that on appeal the Supreme Court reviews the administrative agency's decision and not the district court's decision except as to limited permissible action taken by the district court in such matters as attorney's fees on appeal and the taking of additional testimony as provided for in § 65-10-03, NDCC, as amended, § 65-10-01, as amended, and § 28-32-18. Furthermore, the standard of review in the Supreme Court is the same as the standard under which the district court reviews the decision. (§§ 28-32-21, 28-32-19, NDCC).

"Accordingly, we review the decision of the Bureau and consider these issues raised which need to be resolved.

"In considering the issues raised by the claimant whether or not the Bureau's findings are supported by the preponderance of the evidence, we note that § 28-32-19, NDCC, as amended in 1977, requires the Bureau's findings of fact to be supported by a preponderance of the evidence. The immediate previous standard based on the provisions of § 28-32-19, prior to the 1977 amendment and case law, Bank of Rhame (Application of Bank of Rhame, N.D., 231 N.W.2d 801) infra and predecessors, was substantial evidence.

"Our court, in Benzmiller v. Swanson, 117 N.W.2d 281 (N.D.1962), relying upon Barkow v. Donovan Wire & Iron Co., 190 Mich. 563, 157 N.W. 55 (1916), defined preponderance of evidence as 'evidence more worthy of belief,' or ' the greater weight of the evidence' or 'testimony that brings the greater conviction of truth.' " Steele v. North Dakota Workmen's Comp. Bur., 273 N.W.2d 692, 696-97 (N.D.1978).

In reviewing the findings of an administrator under the Administrative Agencies Practice Act, notwithstanding the amendment to Section 28-32-19(5), N.D.C.C., because of the constitutional prohibition involved in the doctrine of the separation of powers against delegation of nonjudicial functions to the judiciary and Section 94 of our State Constitution, we must exercise restraint. See Geo. E. Haggart, Inc. v. North Dakota Work. Comp. Bur., supra at 112; City of Carrington v. Foster County, 166 N.W.2d 377, 382, 385 (N.D.1969); See also Tang v. Ping, 209 N.W.2d 624, 628 (N.D.1973).

In contrast to questions of fact, questions of law are fully reviewable by our court. See State Hospital v. N. D. Employment Sec. Bur., 239 N.W.2d 819, 822 (N.D.1976); Bank of Hamilton v. State Banking Board, 236 N.W.2d 921, 925 (N.D.1976); In re Sales & Use Tax Det. by St. Tax Com'r, 225 N.W.2d 571, 576 (N.D.1974). Let us examine the Commissioner's findings pertinent to the filing.

From a procedural standpoint, the Commissioner's findings indicate that Allstate made separate filings, one on behalf of Allstate Insurance Company, and the other on behalf of Allstate Indemnity Company, for revised rules and rates, which were disapproved by the Commissioner; that thereafter Allstate sought and received a hearing on the filings, which hearing was conducted by special hearing examiner, Norbert J. Lange, on July 12, 1977; that on August 4, 1977, the Commissioner advised Allstate that its filings had been disapproved because Allstate employed a "trend factor", a practice which the Commissioner disapproved; that on August 17, 1977, Allstate sought a rehearing on the disapproval and that a rehearing was granted and was held on November 22, 1977, before Alfred A. Thompson, as special hearing examiner; that on December 23, 1977, a delayed exhibit, denominated exhibit no. 23, was filed with the examiner, and that thereafter Allstate sought and received an additional hearing which was held on February 6, 1978; and that thereafter the examiner requested that each side serve and file briefs and proposed findings of fact and that the last of such briefs was received by the examiner on March 30, 1978.

Incidentally, the record discloses that the special hearing examiner filed his findings with the Commissioner on the 6th day of April, 1978, wherein the examiner adopted certain numbered findings proposed by counsel for the Commissioner, adopted certain numbered findings proposed by Allstate, and in addition made special findings.

It is interesting to note that until that time the Commissioner had consistently rejected the filings of Allstate on the grounds that trend factors were used and he did not approve of same. In part 4 of the additional findings submitted by examiner Thompson, it is stated:

"4. That the use of 'trend factors' is a realistic and legally acceptable adjunct to and method of projecting rate-level requirements and of making rate-prognosis and falls within the purview of Sec. 26-28-03(a) (26-28-03, subd. 1, par. a) NDCC."

In the Commissioner's findings dated May 19, 1978, the Commissioner adopted the proposed findings recommended by Examiner Thompson which were recommended by counsel for the Commissioner, but rejected most of the proposed findings submitted by Allstate which were approved and recommended by hearing examiner Thompson. As for the additional findings recommended by the hearing examiner, the Commissioner adopted all of those except part 4. relating to trend factors.

Our view of the Commissioner's findings are that the crucial points are contained in what he has denominated additional findings and more specifically additional findings 4. through 9. They read as follows:

"4. A 'long...

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