Chicago Title Ins. Co. v. Huff

• Decision Date: 29 June 1977
• Docket Number: No. 2-57752,2-57752
• Parties: CHICAGO TITLE INSURANCE COMPANY, Appellant, v. William H. HUFF, III, as Commissioner of Insurance of the State of Iowa, Appellee, Iowa State Bar Association, Intervenor-Appellee, Iowa Land Title Association, Intervenor-Appellee.
• Court: Iowa Supreme Court

Page 17

256 N.W.2d 17

CHICAGO TITLE INSURANCE COMPANY, Appellant, v. William H. HUFF, III, as Commissioner of Insurance of the State of Iowa, Appellee, Iowa State Bar Association, Intervenor-Appellee, Iowa Land Title Association, Intervenor-Appellee.

No. 2-57752.

Supreme Court of Iowa.

June 29, 1977.

Michael P. Joynt, Wasker, Sullivan, Wheatcraft & Ward, Des Moines, for appellant.

Richard C. Turner, Atty. Gen., Elizabeth A. Nolan, Asst. Atty. Gen., for appellee.

John A. McClintock, Hansen, Wheatcraft & McClintock, Des Moines, for intervenor-appellee Iowa State Bar Association.

B. A. Webster, Gamble, Riepe, Burt, Webster & Fletcher, Des Moines, for intervenor-appellee Iowa Land Title Association.

Considered en banc.

RAWLINGS, Justice.

Equity action by plaintiff seeking to enjoin enforcement by defendant of Section 515.48(10), The Code 1973, which prohibits corporations doing business in this jurisdiction from insuring titles to real estate, resulted in adjudication adverse to plaintiff and it appeals. We affirm.

Plaintiff, Chicago Title Insurance Company (Chicago Title), is a foreign corporation. May 29, 1972, it duly caused to be filed in the office of defendant, William H. Huff III, Iowa Insurance Commissioner, an application for authority to operate as an insurer of real estate titles in this jurisdiction. August 8, this application was denied because of the aforesaid statutory enactment which provides:

"Any company organized under this chapter or authorized to do business in this state may:

"Insure any additional risk not specifically included within any of the foregoing classes, which is a proper subject for insurance, is not prohibited by law or contrary to sound public policy, and which, after public notice and hearing, is specifically approved by the commissioner of insurance, except title insurance or insurance against loss or damage by reason of defective title, encumbrances or otherwise. When such additional kind of insurance is approved by the commissioner he shall designate within which classification of risks provided for in Section 515.49 it shall fall." (emphasis supplied).

The present action ensued. By its petition seeking injunctive relief Chicago Title asserts, in material part:

"That Section 515.48(10) of the Code of Iowa violates the Plaintiff's property rights under the Constitutions of the United States and the State of Iowa in that the Plaintiff is being denied the right to do business in Iowa without due process of law, and is being denied the equal protection of the laws. With the sole exception of the State of Iowa, the business of title insurance is recognized as a lawful commercial enterprise in every jurisdiction of the United States, and said statute is unreasonable, arbitrary and constitutes unconstitutional class legislation." (emphasis supplied).

August 23, 1974, after hearing on the merits, trial court entered "Findings of Fact and Conclusions of Law". In salient part the court below concluded:

"It is not the function of the Court to question the wisdom of the legislature in the enactment of Section 515.48(10) Code of Iowa 1973 prohibiting the sale of title insurance in the State of Iowa. That prohibition violates neither the plaintiff's Fourteenth Amendment rights under the United States Constitution or the rights of a citizen of Iowa guaranteed by Article I, Section 1 of the Constitution of the State of Iowa. The prohibition does not take plaintiff's property without due process of law, or deny it the equal protection of the laws. Plaintiff's prayer for injunctive relief must therefore be denied." (emphasis supplied).

October 14, 1974, a decree was attendantly entered from which this appeal is taken.

Plaintiff here raises these issues:

(1) Did trial court err by applying federal standards of due process?

(2) Does Section 515.48(10) deprive plaintiff of a property right without due process of law? (Iowa Const. art. 1, § 9; U.S.Const. amend. XIV, § 1).

(3) Does Section 515.48(10) violate the equal protection clause of the U.S.Const. (amend. XIV, § 1) or the uniformity clause of the Iowa Const. (art. 1, § 6)?

(4) Does Section 515.48(10) violate the commerce clause of the U.S.Const. (art. I, § 8, cl. 3)?

We have been materially aided in resolving these questions by able amicus curiae briefs submitted on behalf of intervenors, Iowa State Bar Association and Iowa Land Title Association.

I. Our review is de novo. See Wilden Clinic, Inc. v. City of Des Moines, 229 N.W.2d 286, 289 (Iowa 1975); Iowa R. Civ. P. 334, 344 (f)(7).

II. By way of exclusion, the last assignment will be first considered.

As previously noted Chicago Title now takes the position, inter alia, Code § 515.48(10) violates the commerce provision, U.S.Const., art. I, § 8, cl. 3, which says in relevant part: "The Congress shall have Power * * * to regulate Commerce * * * among the several States * * *." Plaintiff concedes, however, this issue is not raised by the pleadings. On the other hand, it contends testimony in course of trial "reveals the extensive concern of the parties with the interstate features." Another argument advanced is that trial court considered the issue as evidenced by citations included in the conclusions of law which involved interstate commerce burdens imposed by state economic regulations. We are not so persuaded.

In the first place any sporadic and phantasmagoric course of trial allusion to interstate features of the present case is a far cry from invocation of the subject commerce clause. It never alerted opposing counsel to existence of any such constitutional issue and, by the same token, accorded them no fair opportunity to make a counter showing.

Moreover, it is evident trial court never entertained or resolved the commerce clause as an issue in the case. Rather, an examination of its "Findings of Fact and Conclusions of Law", reveals the adjudication from which this appeal is taken focuses upon and resolves nothing more than the due process of law and equal protection issues as plead by plaintiff.

Citation of cases in analysis of the due process and equal protection issues, which may also involve the commerce clause, are not deemed a consideration of the latter by trial court.

Significantly, plaintiff never sought enlarged or amended findings and conclusions by trial court as permitted by Iowa R.Civ.P. 179(b). See also Michael v. Merchants Mutual Bonding Company, 251 N.W.2d 531, 533 (Iowa 1977).

In light of the foregoing, Chicago Title preserved nothing for review regarding any claimed Code § 515.48(10) violation of its rights under the above cited commerce clause. Johnson v. Board of Adjustment, Etc., 239 N.W.2d 873, 878 (Iowa 1976), quoting from Farmers Insurance Group v. Merryweather, 214 N.W.2d 184, 190 (Iowa 1974).

It is therefore apparent plaintiff now attempts to inject a constitutional provision never raised or considered below. In that regard this court has said:

"As a general rule, invalidity of a statute or ordinance, in order to be relied on, must be specifically raised by the pleadings distinctly pointing out in what manner or respect the statute or ordinance violates the provision invoked and the facts relied on to show unconstitutionality must be clearly made to appear.

"In Buda v. Fulton, 261 Iowa 981, 989, 157 N.W.2d 336, 341 we said:

" 'This court has consistently held a constitutional challenge must specify the provisions invoked and state with particularity the details of any claimed transgression. * * * (Citing authorities).

" 'Generally a court will not inquire into constitutional issues on its own motion. * * * (Citing authorities).

" 'Pursuing the matter one more step, an issue should not ordinarily be considered in a noncriminal proceeding unless fairly raised by the pleadings. * * * (Citing authorities).' " Cole v. City of Osceola, 179 N.W.2d 524, 531 (Iowa 1970).

Chicago Title's attempt to here, for the first time, raise the commerce clause as an issue cannot be permitted.

Though neither placed in question by the pleadings nor argued by the parties, it is deemed appropriate to observe the Congress, by the McCarran-Ferguson Act, 15 U.S.C. §§ 1011-1015, authorized the various states to regulate the insurance business, notwithstanding absence of Congressional action under provisions of United States Const., art. I, § 8, cl. 3. In actuality, "The McCarran-Ferguson Act, * * * mandates that the business of insurance shall be regulated by the states." Insurers' Action Council, Inc. v. Heaton, 423 F.Supp. 921, 926 (D.Minn.1976). Moreover, the United States Supreme Court has held the states may impose burdens on the insurance industry which, absent said Act, would be struck down under the commerce clause. Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 66 S.Ct. 1142, 90 L.Ed. 1342 (1946); In re Insurance Tax Cases, 160 Kan. 300, 161 P.2d 726 (1945), aff'd. 328 U.S. 822, 66 S.Ct. 1360, 90 L.Ed. 1602 (1946). Also, as stated in Robertson v. California, 328 U.S. 440, 458, 66 S.Ct. 1160, 1170, 90 L.Ed. 1366 (1945): "For the commerce clause is not a guaranty of the right to import into a state whatever one may please, absent a prohibition by Congress, regardless of the effects of the importation upon the local community." Robertson upheld a California statute which prevented an out-of-state insurer from operating, save on a legal reserve basis, unless engaged in such business other than on such basis prior to January 1, 1940.

It has also been judicially recognized that title insurance is an aspect of the insurance industry which the states may regulate. Lawyers Title Co. of Mo. v. St. Paul Title Ins. Co., 526 F.2d 795 (8th Cir. 1975); McIlhenny v. American Title Ins. Co., 418 F.Supp. 364 (E.D.Pa.1976).

In sum total, we are constrained to observe Chicago Title's omission of any commerce clause issue in the pleadings and trial of the case was presumably premised on the insurance industry-wide recognition of the fact there exists a...