Department of Financial Institutions v. Johnson Chevrolet Co., 28615

• Decision Date: 08 June 1950
• Docket Number: No. 28615,28615
• Citation: 228 Ind. 397,92 N.E.2d 714
• Parties: DEPARTMENT OF FINANCIAL INSTITUTIONS v. JOHNSON CHEVROLET CO.
• Court: Indiana Supreme Court

Page 714

92 N.E.2d 714

228 Ind. 397

DEPARTMENT OF FINANCIAL INSTITUTIONS v. JOHNSON CHEVROLET CO.

No. 28615.

Supreme Court of Indiana.

June 8, 1950.

J. Emmett McManamon, Atty. Gen., John H. Fetterhoff, Deputy Atty. Gen., for appellant.

Barney & Hughes, Indianapolis (Francis M. Hughes, Indianapolis, of counsel), for appellee.

JASPER, Justice.

This action was instituted by appellee against appellant, asking that appellant be permanently enjoined from enforcing part of Section 111 of General Order No. 1, as adopted and promulgated by appellant, which section fixes fixes the maximum amount of the dealer participation, the pertinent part of which reads as follows: 'And in the event that the retail seller himself sells any such insurance to the retail buyer, or otherwise, directly or indirectly, receives or in any manner becomes entitled to receive a commission or brokerage on any insurance sold to the retail buyer and the cost of such insurance to the retail buyer is included or financed in the retail installment contract, then no dealer's participation shall be paid by the licensee to the retail seller, and the maximum dealer's participation, in such event, is now fixed by the Department at nil.'

Said order became effective on February 13, 1947. Appellee's complaint was based on the theory that the above portion of the order is arbitrary, capricious, an abuse of discretion, unconstitutional, in excess of statutory authority, and short of statutory right. To this complaint a demurrer was filed, which was overruled, following which an answer of affirmation and denial was filed. The decision and judgment of the trial court perpetually enjoined appellant from enforcing the above portion and provision of Section 111 of General Order No. 1.

The assignment of errors questions the overruling of the demurrer to the complaint, the overruling of the motion for new trial, and the jurisdiction of the trial court over the subject-matter and the person of the appellant.

Appellant contends that the trial court committed error by overruling the demurrer to appellee's complaint. The complaint was in one paragraph, and rhetorical paragraph four thereof is as follows: '4. That in procuring such insurance from an insurance company in those instances in which plaintiff is authorized by the retail buyer to do so, plaintiff acts through its president who is a duly licensed insurance agent under the laws of the State of Indiana, and through Sterling Insurance Agency, Inc., an Indiana corporation affiliated with the plaintiff, and by virtue thereof plaintiff indirectly receives or becomes entitled to receive a commission or brokerage paid by the insurance company from which said insurance is procured; that plaintiff desires and intends to extend its corporate powers so as to qualify it to act as a licensed insurance agent in procuring insurance as aforesaid and thus to become entitled as a licensed agent directly to receive a commission or brokerage on such insurance as it procures from the insurance company.'

The ground for demurrer was that the complaint did not state facts sufficient to constitute a cause of action. The portion of the memorandum to the demurrer applicable herein is as follows:

'6. The theory of said complaint is based upon an illegal premise: * * *

'(b) Said complaint further admits (Rhetorical Paragraph 4) that it is not legally qualified under the statutes to act as an insurance agent or broker, yet the foundation of this action is predicated on the theory of commissions or brokerages, directly or indirectly, as an insurance agent or broker. This is also in violation of the statutes.

'7. The complaint shows that the plaintiff is not legally qualified to write insurance for its retail buyers, nor to act as agent for either its president or its affiliate.

'8. The complaint shows that plaintiff has and is being credited with 'Dealer Participation' with nothing to show that it has in any manner been retarded by defendant in collecting and receiving the same.'

Appellee, Johnson Chevrolet Company, to qualify as an insurance agent, would have to make application under § 39-4503, Burns' 1940 Replacement, which provides as follows:

'Any individual, copartnership or corporation desiring, as an agent, as a solictor, or as a broker, to engage in the insurance agency business, shall first apply to the department in the manner hereinafter prescribed, for an insurance agent's license, an insurance solicitor's license, or an insurance broker's license, as the case may be, authorizing such agent, solicitor or broker to engage in and transact such business. The applicant for such license shall file with the department, his, their or its written application for a license authorizing him, them or it to engage in the general insurance business, or any special line thereof which may lawfully be written in this state, as an agent, as a solicitor or as a broker, and the applicant shall make a sworn statement as to the qualification hereafter prescribed, on uniform forms and supplements prepared by the department. The applicant for an agent's license shall be vouched for by an official or a representative of the company in whose behalf the agent proposes to act; the applicant for a solicitor's license shall be vouched for by the agent in behalf of whom the solicitor proposes to act; the applicant for a broker's license shall be vouched for in statements by at least two (2) licensed resident insurance agents; such vouchers shall set forth the following:

'(a) That the applicant is personally known to him;

'(b) That the applicant has had experience or instruction in the general or some mentioned special line of insurance, surety or indemnity coverage;

'(c) That the applicant is of good business reputation and is worthy of a license; '(d) That the applicant proposes to engage in the business of insurance;

'(e) That the applicant has or has not been, to the knowledge of such agent, refused or had revoked a license by the department of insurance of any state; and that if to the knowledge of such agents or either of them, the applicant has been refused or had revoked a license by he department of insurance of any state, such facts and circumstances relating thereto, as are known, shall be set forth.

'Such vouchers shall be signed and sworn to by the person executing the same and shall be a part of the form of application prescribed by the department.'

And further meet the requirements of § 39-4504, Burns' 1940 Replacement.

A person or corporation...