American Sur. Co. v. Jones

• Decision Date: 29 October 1942
• Docket Number: Gen. No. 9355.
• Citation: 44 N.E.2d 762,316 Ill.App. 197
• Parties: AMERICAN SURETY CO. ET AL. v. JONES, DIRECTOR OF INSURANCE.
• Court: United States Appellate Court of Illinois

316 Ill.App. 197

44 N.E.2d 762

AMERICAN SURETY CO. ET AL.

v.JONES, DIRECTOR OF INSURANCE.

Gen. No. 9355.

Appellate Court of Illinois, Third District.

Oct. 29, 1942.

Appeal from Circuit Court, Sangamon County; L. E. Stone, Judge.

Petition for review by American Surety Company and others against Paul F. Jones, Director of Insurance of the State of Illinois, to set aside an order and decision of the defendant granting a certificate of authority to Lloyds. From a judgment dismissing the petition, plaintiffs appeal.

Affirmed. Gillespie, Burke & Gillespie, of Springfield (Edmund Burke and George B. Gillespie, both of Springfield, of counsel), for appellants.

George F. Barrett, Atty. Gen., for appellee.

DADY, Justice.

On July 26, 1941, the plaintiffs, seventeen in number, filed in the circuit court of Sangamon County their petition, herein referred to as a petition for review, basing their right to file the same and for relief on the Illinois Insurance Code (Rev.Stats. of 1941, Ch. 73, §§ 726, 1019), particularly on Sections 114 and 407 thereof.

The circuit court allowed the motion of defendant to strike such petition and dismissed the same on the ground that the plaintiffs were not such companies as might maintain a petition for review under such Section 407. This appeal is from such order of the circuit court.

The petition for review alleged that at all of the times in question the plaintiffs were insurance companies organized and existing under the laws of States other than Illinois, duly licensed and authorized to conduct the business of surety insurance in this State, and that their business in this State is large and extensive.

The petition for review further alleged that on June 7, 1941, the plaintiffs filed with the defendant as Director of Insurance, hereafter styled “Director”, their verified petition; that such petition of June 7th, in addition to alleging the foregoing facts, averred and set forth: That on July 1, 1940, the Director issued to Underwriters at Lloyds, hereafter styled “Lloyds,” (having its home office and principal place of business in London, England), a purported certificate of authority to transact surety insurance business in this State, that under the conditions prescribed by Section 114 of such Code, Lloyds, upon payment of the annual privilege tax imposed by the Code and without application therefor, would obtain a certificate of authority to transact surety insurance business in this State until June 30, 1942; that petitioners would be aggrieved by the issuance of such certificate in this that Lloyds had not, as required by the Code, made and maintained in this State deposits, and maintained in this or any other State in which Lloyds was authorized to transact business, cash or securities.

The petition for review further alleged that the petition of June 7th asked that the petitioners therein be heard by the Director in the matter of the issuance to Lloyds of such certificate of authority to transact business in this State during the period beginning July 1, 1941.

The petition for review further alleged that on July 1, 1941, the Director issued his order or decision in which he advised the plaintiffs that it was his opinion that Lloyds had duly qualified and would be entitled to a certificate of authority to transact its business in this State, that the issuance of such certificate to a company “is a matter of compliance with the law by the applying company,” and that “other companies that may be licensed to transact the same kind of business that the applying company is seeking to transact are not proper parties to be heard on the application of such applying company.”

The petition for review further alleged that on July 1, 1941, the Director issued a purported certificate of authority to Lloyds to transact such surety insurance business, that the plaintiffs were aggrieved by such order and decision of the Director and by the issuance of such certificate in this, that the same was issued without requiring Lloyds to maintain in this or any other State cash and securities, or make deposits of underwriters, or to file a copy of a trust or other agreement, as required by the Code.

The petition for review prayed that such order and decision of the Director be set aside and that the certificate of authority so issued to Lloyds be declared of no force and effect.

The material parts of such Code are as follows:

Section 114,

“(1) The Director shall renew for one year the certificate of authority of a foreign or alien company on the first day of July of the calendar year following the calendar year in which it is admitted to transact business in this State and annually thereafter, without application by the company, upon payment of the annual privilege tax imposed by this Code, if any, provided the Director is satisfied that

“(a) none of the facts specified in this article as grounds for revoking a certificate of authority exists; and

“(b) the company is complying with the conditions for admission, except for surplus requirements in excess of those which similar domestic companies transacting the same kind or kinds of business are required to maintain.

“(2) Except in case of non-payment of taxes, the Director shall give notice of his intention to refuse to renew the certificate of authority of a foreign or alien company and the grounds therefor at least twenty days before the end of the term for which the existing certificate was issued, and, the company shall be given an opportunity for a hearing before the end of such term.”

Section 201, “No order, judgment or decree enjoining, restraining or interfering with the prosecution of the business of any company, * * * shall be made of granted otherwise than upon the petition of the Director * * * as provided in this article, * * *.”

Section 407,

“(1) Any order or decision made, issued or executed by the Director, * * * whereby any company or person is aggrieved, shall be subject to review by the Circuit Court of Sangamon County or the Circuit or Superior Court of the county in which the principal office in this State of the company aggrieved by such order or decision is located, or where the person so aggrieved resides. A petition for the review of the action of the Director shall be filed within thirty days from the date of the service of a copy of the order or decision made by the Director upon such company or person. A copy of such petition for review as filed with and certified to by the Clerk of such Court shall be served upon the Director or in his absence upon some one in active charge of the Department of Insurance within five days after the filing thereof. If such petition for review is not filed within the said thirty days the parties aggrieved shall be deemed to have waived the right to have the merits of the order or decision reviewed and there shall be no trial of the merits thereof by any court to which application may be made by petition or otherwise, to enforce or restrain the enforcement of the same.

“(3) The court shall have jurisdiction to affirm or to set aside the order or decision of the Director and to restrain the enforcement thereof.”

Defendant contends that because of the provisions of Section 201 (section 813) this proceeding cannot be maintained by plaintiffs. In the view we take of the case we do not consider it necessary to pass upon or discuss the effect of such section.

Plaintiffs contend the Director issued a certificate to Lloyds without authority because Lloyds had failed to comply with certain requirements of the Code as set out in their petition, that they were aggrieved by the issuance of such certificate because it deprived them of the right to be free from competition of a company that had not complied with the provisions of the Code, and that this right to be free from such competition gave them a direct interest in the matter of the issuance of such certificate of authority to Lloyds. Their interest, they contend, entitled them to do two things, first, to intervene and be heard before the Director as prayed for in their petition, and, second, if unsuccessful in opposing the certificate to Lloyds, to file a review under Section 407.

In determining the questions at issue, it is necessary to consider the subject matter presented to the Director for decision. He was called upon to renew Lloyds' certificate of authority under the provisions of Section 114 of the Code. No language in such section, either by express inclusion or by fair implication or otherwise, authorizes a rival insurance company to intervene or be heard in the matter of the issuance of a renewal of a certificate of authority held by another company. The procedure for renewing a certificate of authority is simple and explicit. If the Director is satisfied that a company, having a certificate the renewal of which is under consideration, has complied with the conditions required, then upon payment of the annual privilege tax he renews such certificate without application by such company. It is only in case the Director intends to refuse to renew such a certificate...