Bowling v. Department of Ins.

• Decision Date: 13 February 1981
• Docket Number: No. PP-379,PP-379
• Citation: 394 So.2d 165
• Parties: James H. BOWLING, Appellant, v. DEPARTMENT OF INSURANCE, Appellee.
• Court: Florida District Court of Appeals

Page 165

394 So.2d 165

17 A.L.R.4th 1090

James H. BOWLING, Appellant, v. DEPARTMENT OF INSURANCE, Appellee.

No. PP-379.

District Court of Appeal of Florida, First District.

Feb. 13, 1981.

Tyrie A. Boyer, of Boyer, Tanzler, Blackburn & Boyer, and John London Arnold, Jacksonville, for appellant.

Patrick F. Maroney, Tallahassee, for appellee.

ROBERT P. SMITH, Jr., Judge.

Bowling's appeal concerns the substantiality of evidence supporting an order of the Department of Insurance revoking Bowling's licenses and his eligibility to be licensed as an insurance agent. A hearing officer of DOAH recommended findings, and the Department's final order found, that Bowling committed several similar violations of the insurance code, notably Section 626.611(10), Florida Statutes (1979), which requires license suspension or revocation if the agent is found guilty of

Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license.

The central allegation in each count of the administrative complaint, and the corresponding finding in the revocation order, is that Bowling through his insurance agency collected automobile liability insurance premiums from insureds, for policies to be issued by United States Fidelity and Guaranty Company, yet forwarded only a premium deposit to USF&G with the application, thereby misappropriating, converting, and unlawfully withholding the premium balance then payable. We find that the record as a whole lacks substantial competent evidence that the agent was required in the regular course of business to forward to USF&G the entire premium received, rather than a deposit only, at the time of forwarding the application for insurance. We therefore vacate the Department's revocation order, dismiss certain charges, and remand the case to the Department for further action on the charges not dismissed.

The charges against Bowling are based on Section 626.611, which in contrast to Section 626.621 (authorizing "discretionary" action against licensees) specifies "grounds for compulsory refusal, suspension, revocation of license or permit." The revocation grounds stated in the Department's order include Bowling's "demonstrated lack of fitness or trustworthiness to engage in the business of insurance," ¹ his willful failure to comply with ² or circumvention of ³ Chapter 626 requirements for insurance agents, his "fraudulent or dishonest practices," ⁴ and, as stated above, his "misappropriation, conversion, or unlawful withholding" of money belonging to USF&G or others. All these charges gain at least some specificity from Section 626.561, which imposes responsibility on insurance agents for "reporting and accounting for funds":

(1) All premiums, return premiums or other funds belonging to insurers or others received by an agent ... in transactions under his license shall be trust funds so received by the licensee in a fiduciary capacity, and the licensee in the applicable regular course of business shall account for and pay the same to the insurer, insured or other person entitled thereto.

(2) Any agent ... who, not being lawfully entitled thereto, diverts or appropriates such funds ... to his own use, shall upon conviction be guilty of larceny by embezzlement and shall be punished as provided by law.

Under these statutes the Department made eight charges based on seven transactions in which Bowling's agency, Atlas Insurance Agency, Inc., sold a USF&G auto insurance policy under the Florida Joint Underwriting Association program to insure a high risk driver. USF&G was assigned by JUA as servicing carrier for insureds produced by Atlas through its several Jacksonville offices. The evidence and findings in support of each count may be summarized as follows:

Count 1, Lashley. On April 4, 1977, Lashley paid Atlas, Bowling's agency, the entire annual premium of $307, of which Atlas sent USF&G only $100 with the application, and retained the balance. USF&G banked the deposit and mailed the policy to the agency on May 12, 1977. Bowling testified from Atlas records that on May 31 Atlas paid the premium balance to USF&G by check 19837, but the check never cleared the bank and USF&G on December 21 gave notice of cancellation for nonpayment of the full premium. Lashley furnished proof that he had paid Atlas the full premium and USF&G reinstated his policy. The hearing officer found the Department failed to disprove that Atlas forwarded the premium balance on May 31, as Bowling said, but

(T)his does not excuse Atlas nor its managing agent, Bowling, from the necessity to forward all moneys received from Lashley on April 4, 1977, when it was received, and in one lump sum.

Found : Bowling received the Lashley premium in trust for USF&G, and should have forwarded "the full premium payments of $307 in April, 1977, as opposed to $100 in April and $207 in May, 1977," or should have returned the balance to Lashley. Bowling thereby willfully failed to comply with or circumvented code requirements, engaged in fraudulent or dishonest practices, and misappropriated, converted or unlawfully withheld money belonging to others.

Count 2, McGowan. Devco, a premium finance company, ⁵ financed McGowan's $546 premium and paid it to Atlas, Bowling's agency, in response to Bowling's draft on January 16, 1976. Atlas sent $150 to USF&G with the application and kept the balance. Due to computer difficulties and a backlog of business, USF&G did not bank the $150 deposit nor issue the policy until June 2. Meanwhile, McGowan had not repaid Devco, which requested policy cancellation in March. Because USF&G's computer was incapable of cancelling a policy before it was issued, USF&G did not cancel until mid-July 1976, and then returned to Devco the unearned portion of the $150 deposit previously received. Bowling testified from Atlas records that Atlas check 18779 paid the $366 return premium balance to Devco from Atlas's retainage in April 1977 (nine months after the policy was cancelled), but the check did not clear the bank and Devco claimed it never received the return premium. Found : Bowling received the McGowan premium in trust for USF&G and should have forwarded "the full premium payment of $546, as opposed to a payment of $150," or else should have returned the balance to McGowan. (The hearing officer appears to have assumed but did not expressly find that Bowling did mail Devco a check in April 1977.) Bowling thereby willfully failed to comply with or circumvented code requirements, engaged in fraudulent or dishonest practices, and misappropriated, converted or unlawfully withheld money belonging to others.

Count 3, Morgan. Morgan paid Atlas, Bowling's agency, $95 down; Devco financed and in response to Bowling's bank draft paid Atlas the balance of Morgan's $270 premium, of which Atlas sent $100 with the application to USF&G on December 23, 1975, and kept the balance. Due to computer difficulties and a business backlog, USF&G didn't bank the down payment and issue the policy until May 20, 1976; meanwhile, Morgan repaid Devco sporadically, and Devco requested policy cancellation January 20, 1976, reinstatement on April 2, and cancellation again on April 26. USF&G cancelled on June 30, 1976, but sent Devco no refund because the earned premium exceeded the $100 deposit received in December 1975. Atlas did not reimburse Devco the balance of the unearned premium from the amounts retained; but in March 1979 (two years and nine months after cancellation), Bowling paid Devco the balance of $170 by check of another Bowling insurance agency, Atlas having been dissolved in December 1978. Found : Bowling received the Morgan/Devco payments in trust for USF&G and should have forwarded the full $270 when received, not merely $100, or should have returned the money to Morgan. Bowling thereby willfully failed to comply with or circumvented code requirements, engaged in fraudulent or dishonest practices, and misappropriated, converted or unlawfully withheld money belonging to others.

Count 4, Owens. The Department charged that Owens paid Atlas, Bowling's agency, $116 on account of a total premium of $330, and Devco financed and paid the balance, of which Atlas remitted $100 to USF&G and kept the balance in violation of the same insurance code requirements. USF&G and the Department belatedly found that Atlas was not delinquent on USF&G's books, which contained an erroneous double charge, so the Department voluntarily dismissed this charge before the hearing.

Count 5, Rader. Rader paid Atlas, Bowling's agency, $137 down on a total premium of $370; Devco financed and on Bowling's draft paid the balance to Atlas, which forwarded $100 with the application to USF&G on January 14, 1976, and retained the balance. Due to the same logistical difficulties, USF&G did not bank the $100 deposit until June 21. At Devco's request USF&G cancelled in July 1976 due to Rader's nonpayment to Devco, but USF&G sent Devco no return premium because the earned premium exceeded the $100 deposit received. In April 1978 (one year and eight months later) Atlas reimbursed Devco the adjusted unearned premium of $270. Found : Bowling received a $370 premium payment in trust for USF&G and should have forwarded the entire payment when received, not just $100, or should have returned the balance to Rader. Bowling thereby willfully failed to comply with or circumvented requirements of Chapter 626, engaged in fraudulent or dishonest practices, and misappropriated, converted or unlawfully withheld money belonging to others.

Count 6, Weidman. Weidman paid Atlas $64 on account of a total premium of $184; Devco on December 9, 1975, financed and on Bowling's draft paid the balance to Atlas, which forwarded $50 with the application to USF&G and retained the balance. Due to the same difficulties, USF&G did not bank the deposit and issue the policy until March 30,...