Bankers Life & Cas. Co. v. Alexander, s. 47738

• Decision Date: 12 December 1950
• Docket Number: 47800,Nos. 47738,s. 47738
• Citation: 45 N.W.2d 258,242 Iowa 364
• Parties: BANKERS LIFE & CAS. CO. v. ALEXANDER, Insurance Com'r.
• Court: Iowa Supreme Court

Page 258

45 N.W.2d 258

242 Iowa 364

BANKERS LIFE & CAS. CO. v. ALEXANDER, Insurance Com'r.

Nos. 47738, 47800.

Supreme Court of Iowa.

Dec. 12, 1950.

Rehearing Denied Feb. 13, 1951.

Robert L. Larson, Atty. Gen., Kent Emery, Asst. Atty. Gen. and Samuel E. Orebaugh, Special Asst. Atty. Gen., for appellant.

Sterling Alexander, of Des Moines, pro se.

Bump & Bump, of Des Moines, for appellee.

GARFIELD, Chief Justice.

We think the principal question presented by this appeal is whether defendant, Iowa insurance commissioner, has the power to require a foreign insurance company to discontinue distribution in Iowa of advertising material found by him to be deceptive and misleading, in violation of law, and to order that lack of compliance with this requirement would result in revocation of the company's license to do business in Iowa. The trial court held the commissioner had no such power. We cannot affirm this decision.

Plaintiff is a corporation organized under Illinois laws engaged in life and casualty insurance business with its principal office in Chicago, licensed to do business in Iowa August 3, 1948. On October 28, 1949, following notice to plaintiff and a hearing before defendant commissioner, he found certain advertising material distributed by plaintiff in Iowa was misleading and deceptive, in violation of law, in several respects, and ordered plaintiff to discontinue such distribution and cease use in Iowa of the slogan 'White Cross Plan' after December 31, 1949, under penalty of revocation of its license to do business in Iowa.

On December 23, 1949, plaintiff filed its petition in equity asking the court to determine that its advertising was not false or misleading and to enjoin enforcement of the commissioner's order. The petition alleges the commissioner acted beyond his powers and authority and in an arbitrary and discriminatory way in issuing the order. Copy of the order is attached to the petition.

On December 30, 1949, pursuant to a court order we understand was ex parte, temporary writ issued enjoining defendant from enforcing the order of October 28.

Defendant's answer admits formal allegations of the petition and making the order of October 28 but denies most of the rest of plaintiff's petition and alleges in detail wherein plaintiff's advertising was misleading and deceptive.

Plaintiff's reply states no evidence was taken at the hearing before the commissioner but the commissioner and his deputies and plaintiff's representatives talked informally.

On February 27, 1950, plaintiff amended its petition by stating that since commencement of this action it has endeavored to satisfy defendant's objection to its advertising by eliminating certain features and its advertising is not deceptive. The court was asked to so find and declare. Defendant moved to strike the amendment to the petition upon several grounds unnecessary to explain now.

After issues were joined plaintiff, pursuant to rule 105, R.C.P., asked the court to determine the law issues involved and to hold defendant is without authority in law to deprive plaintiff of the use of the slogan 'White Cross Plan,' his order of October 28 is void, plaintiff had eliminated from its advertising the parts to which defendant objected, there was nothing further to try and the injunction should be made permanent.

Defendant also asked the court to determine as matters of law that defendant was exercising a judicial function in determining plaintiff's advertising was misleading, plaintiff is not entitled to injunctive relief, the court cannot control the exercise of defendant's discretion and the matter of plaintiff's present advertising practices is not properly before the court but is within the discretion of the commissioner.

In response to these requests for adjudication of law points the court found and held the commissioner is without power or authority to revoke the license of an insurance company to do business in Iowa for use of advertising material in securing applications even though it might be misleading or deceptive; the commissioner had no power or authority to order plaintiff to discontinue its advertising or to make the order of October 28, 1948, which is void; taking proof in the case would be of no avail to either party; determination of the law points is decisive of the case and plaintiff is entitled to a decree making the temporary injunction permanent. From decree accordingly entered March 15, 1950, defendant has appealed.

On March 22, 1950, plaintiff filed in the same case a supplemental petition stating defendant was attempting to circumvent the decree of March 15 by refusing to renew the licenses of plaintiff and its agents to do business in Iowa on April 1, 1950, because of the use of plaintiff's advertising material; defendant had notified plaintiff and its agents of hearings to be held by him (on March 27 and 29) at which they could show why renewal of their licenses should not be denied because of the use of such advertising; it would be useless to attend the hearings because defendant's mind is made up as to what he will do; the commissioner is acting in an arbitrary and despotic manner. The court was asked to hold it was the purpose and intent of the decree of March 15 that defendant had no power or authority either to revoke plaintiff's license or refuse to renew it because of its advertising.

Upon filing the supplemental petition defendant was ordered ex parte to issue licenses to plaintiff and its agents for the year commencing April 1, 1950, and a mandatory writ which so provided was served on defendant.

Defendant moved to dismiss the supplemental petition and to dissolve the order of March 22 on numerous grounds which need not now be enumerated.

It was stipulated that the advertising material referred to in the pleadings has been issued by plaintiff and used by its agents and the commissioner has declined to renew the licenses of plaintiff and its agents solely because of the use thereof. Also that the hearings before the commissioner referred to in the supplemental petition are waived with the same effect as if they were held and findings made against plaintiff and its agents on the sole ground above stated.

On August 10, 1950, without hearing evidence, upon examination of the pleadings and the above stipulation and after arguments of counsel, the court overruled defendant's motion to dissolve the temporary mandatory writ issued on March 22; held its decree of March 15 means defendant is without power or authority either to revoke or refuse to renew plaintiff's license because of the use of its advertising; while section 522.3, Code, 1950, I.C.A., provides the commissioner may 'for good cause' decline to issue or revoke an agent's license, the use of certain advertising by the company is not 'good cause.'

We granted defendant an appeal under rule 332 from the order of August 10, 1950. We need not consider whether such order was a final decision which might be appealed as a matter of right under rule 331.

It is apparent from the above the case has not been tried on its merits, no evidence has been taken, and the decree of March 15 and the order of August 10 are based on the trial court's determination the commissioner was without power or authority in law to revoke or refuse to renew the licenses of plaintiff or its agents to do business in Iowa because of the distribution of advertising material found by him to be misleading and deceptive.

It is the ultimate function of the courts to determine whether the commissioner has acted within the powers conferred upon him by law. Mutual Benefit Life Ins. Co. v. Welch, 71 Okl. 59, 175 P. 45, 50; North British & Mercantile Ins. Co. v. Craig, 106 Tenn. 621, 62 S.W. 155, 160; Utah Ass'n of Life Underwriters v. Mountain States Life Ins. Co., 58 Utah 579, 200 P. 673. We consider now whether defendant so acted here.

Section 505.8, Codes, 1946, 1950, I.C.A., provides, 'The commissioner * * * shall have general control, supervision, and direction over all insurance business transacted in the state, and shall enforce all the laws of the state relating to such insurance.'

Code section 507.10 I.C.A. states: 'If upon investigation or examination it shall appear that any company * * * is doing an illegal or unauthorized business * * * the commissioner of insurance may suspend its authority to transact business within this state until it shall have complied in all respects with the laws applicable to such company * * * or he may revoke its certificate of authority to transact business within this state * * *.'

Section 515.65 reads: 'The commissioner of insurance shall withhold his certificate or permission of authority to do business from any company neglecting or failing to comply with the provisions of this chapter.'

One of 'the provisions of this chapter', section 515.144, is that no insurance company doing business in this state or its agents shall issue any false or misleading representations by signs or cards tending to conceal or misrepresent the true identity of the insurer and 'the type or lettering used in any advertisement or representation shall set forth the name of the company or organization assuming the risk more conspicuously than that of any department or general agency.' Section 515.145 makes any violation of 515.144 punishable by a fine not exceeding $500.

Section 515.119 provides, 'Every insurance company * * * doing business in this state shall conform to all the provisions of this chapter and to other laws of this state, * * *.'

Section 515.42 states, 'Such certificate of authority shall expire on the first day of April * * *, and shall be renewed annually so long as such company shall transact business in accordance with the requirements of law; * * *.'

Section 515.77 provides for issuance to a foreign company of a certificate to do business and that it shall be renewed annually on April first 'if the commissioner is satisfied...