Department of Insurance v. Motors Ins. Corp.

• Decision Date: 13 November 1956
• Docket Number: 29375,Nos. 29383,s. 29383
• Citation: 236 Ind. 1,138 N.E.2d 157
• Parties: The DEPARTMENT OF INSURANCE of the State of Indiana, William J. Davey, as Insurance Commissioner of the State of Indiana, Appellants, v. MOTORS INSURANCE CORPORATION, Frank E. Shaver, Howard L. Hauser, John W. Moore, and Adams Pontiac, Inc., an Indiana Corporation, Appellees. STATE of Indiana on the Relation of the DEPARTMENT OF INSURANCE of the State of Indiana, William J. Davey, as Insurance Commissioner of the State of Indiana, Relators, v. The MARION CIRCUIT COURT OF MARION COUNTY, Indiana, and the Honorable Harold Barger, Special Judge of said Court, Respondents.
• Court: Indiana Supreme Court

Page 157

138 N.E.2d 157

236 Ind. 1

The DEPARTMENT OF INSURANCE of the State of Indiana, William

J. Davey, as Insurance Commissioner of the State

of Indiana, Appellants, v. MOTORS INSURANCE CORPORATION, Frank E. Shaver, Howard L.

Hauser, John W. Moore, and Adams Pontiac, Inc., an

Indiana Corporation, Appellees.

STATE of Indiana on the Relation of the DEPARTMENT OF

INSURANCE of the State of Indiana, William J.

Davey, as Insurance Commissioner of the

State of Indiana, Relators, v. The MARION CIRCUIT COURT OF MARION COUNTY, Indiana, and the

Honorable Harold Barger, Special Judge of said

Court, Respondents.

Nos. 29383, 29375.

Supreme Court of Indiana.

Nov. 13, 1956.

Edwin K. Steers, Atty.Gen., James C. Jay, Sp. Counsel, Indianapolis, Ind., for appellants and relators.

Hubert Hickam, Alan W. Boyd, Indianapolis, Ind., for appellee, Motors Ins. Corp.

Robert Hollowell, Indianapolis, Ind., for appellees other than Motors Ins. Corp.

Hubert Hickam, Alan W. Boyd, Robert Hollowell, Indianapolis, Ind., for respondents, Barnes, Hickam, Pantzer & Boyd, and Hollowell & Hamill, Indianapolis, Ind., of counsel.

BOBBITT, Judge.

These cases were consolidated for argument and will be so treated in this opinion. They arise out of an action by appellee, Motors Insurance Corporation, hereinafter referred to as the "Company," to enjoin the appellants from refusing to license applicants proposing to act as agents for the Company in the sale of automobile insurance on the sole ground that they were automobile dealers or persons engaged in the automobile business.

Appellees, Frank E. Shaver, Howard L. Hauser, John W. Moore, and Adams Pontiac, Inc. were, upon proper petition, permitted to intervene and file their complaint alleging in substance the matters set forth in the complaint of appellee Company; and, further, that they were applicants for automobile insurance agents' licenses; that they had each passed the required examination and had met all requirements of the insurance laws of the State of Indiana; and that they were among those persons for whom licenses were requested by the Company and were refused solely because they are automobile dealers.

Thereafter relators-appellants filed their motion to dismiss on the grounds that (1) the court does not have jurisdiction of the subject matter of the action; (2) the court does not have jurisdiction of the parties; and (3) the court does not have jurisdiction of this particular case.

The motion to dismiss was overruled and a temporary injunction issued enjoining relators-appellants "from refusing to issue licenses to applicants proposing to act on behalf of the plaintiff on the ground that such applicants are automobile dealers or persons engaged in or connected with the automobile business and expect to continue such business in conjunction with the insurance business and from discriminating against such applicants in the issuance of such licenses on said grounds."

Subsequently relators-appellants then filed in this court a petition for writ of mandate seeking to compel respondents, the Marion Circuit Court, and the Honorable Harold S. Barger as Special Judge thereof, to expunge from the records of such court the order on temporary injunction and to prohibit such respondents from proceeding further in said cause. We issued a temporary writ.

The question of the jurisdiction of the Marion Circuit Court is common both to the appeal and the original action. The appeal involves the additional question of whether such jurisdiction, if present, was properly exercised in granting the temporary injunction.

First, we shall consider the common question of the jurisdiction of the Marion Circuit Court.

The pertinent facts are: Motors Insurance Corporation is engaged in the business of insuring against risks of automobile damage and theft. Its uniform method of operation in the various States is to appoint as agents automobile dealers and persons engaged in the automobile business. The Company is authorized to transact business in Indiana and desires to pursue its customary method of operation in this State.

Before this action was commenced the Company had sponsored license applications for a substantial number of automobile dealers and had established and conducted classes and schools in which such dealers were taught and trained in respect to the knowledge of the insurance laws of the State of Indiana, the general obligations and duties of an insurance agent, and the general principles of insurance contracts and business policies pursued by the Company. In the operation of such schools and the conducting of agency training programs, the Company has expended substantial sums of money. A number of such applicants had taken and passed the written examination prescribed by law and had been notified by the proper authorities that they had successfully qualified for licenses to write automobile insurance. Some of the applicants sponsored by the Company already held licenses as agents for other companies writing the same type of insurance and were not, therefore, required to take such examination. Others had made application but had not taken the examination at the time this action was commenced, and others who had been interviewed by representatives of the Company were preparing to make application to take such examination.

Before any licenses were issued or refusals made to any of such persons who had successfully taken the examination, the Insurance Commissioner delivered to the Company a letter which, omitting formal parts, is as follows:

"Confirming our conversation of last Friday September 30, please be advised that I, under the provisions as granted in Burns' § 39-4504, do hereby refuse to license Automobile Dealer Agencies as agents and solicitors of insurance for the following reasons, to wit:

"1. Automobile dealers are not primarily engaged in insurance business but that of selling automobiles and therefore would not be able to devote sufficient time to the business of insurance to give the type of service to which the policyholder is entitled.

"2. An example in point is illustrated in Time Magazine dated October 3, 1955, wherein improper classification of risks by the Service Fire Company in Texas which amounted to $182,000.00 overcharge. This illustrates the point that a company dominated by a finance company such as the Service Fire Company which is owned by C.I.T. is more interested in the finance business than it is in rendering service to the customer.

"3. Coercion practices would result at the time when the automobile was purchased in that the policyholder would be loaded with a full package of coverage without even asking the purchaser.

"4. Purchasing insurance like the purchasing of automobiles should be selective by the individual and not coercive. Such selectivity would encourage competition and be to the best interest of the insuring public.

"5. Monopolization would tend to increase.

"6. Insurance is a specialized business and should not be handled by part time personnel.

"7. Automobile salesmen would not be able to devote sufficient time in keeping themselves informed as to the present trends in the insurance business.

"8. Trouble has arisen in the past when automobile dealers and finance companies were licensed to do insurance business in that they do not always inform the purchaser that he has only physical damage coverage.

"9. Licensing of automobile dealers will tend to break down the American agency system which is competitive, personal, and subject to public opinion.

"10. The solicitor, agent, would be more interested in selling his product rather than correct coverage insurance which would be a disservice to the insuring public.

"11. Hidden rebating would exist by the profits from the insurance business resulting in lower prices on the automobile.

"12. Because of the constant turnover of salesman personnel in the automobile business I feel as though such turnover would result in constant inexperienced solicitors and agents in the field of insurance.

"For the above reasons therefore, I am exercising my discretion and denying licenses to automobile dealer applicants. Hoping that I have made my position clear."

No individual applicant was personally notified of any adverse action on his application for license.

The above letter was treated by the Commissioner as a regulation and was so accepted by appellees. It was so treated in the trial court, and will be so considered here.

Jurisdiction is the right, authority and power to hear and determine a cause of action. State ex rel. Public Service Comm. v. Marion Circuit Court 1951, 230 Ind. 277, 284, 100 N.E.2d 888, 103 N.E.2d 214.

(a) Relators-appellants have, by their general appearance at the hearing on the petition for temporary injunction waived any question as to the jurisdiction of the parties. Slinkard v. Hunter, 1936, 209 Ind. 475, 480, 199 N.E. 560; Chandler v. The Citizens National Bank of Evansville, 1898, 149 Ind. 601, 49 N.E. 579; Berry-Enright Lumber Co. v. Gardner, 1937, 104 Ind.App. 9, 7 N.E.2d 523; Harvey v. Rodger, 1926, 84 Ind.App. 409, 143 N.E. 8.

(b) The Marion Circuit Court has original jurisdiction in all cases at law and in equity except as otherwise provided by statute, and is expressly authorized to issue injunctions. State ex rel. Public Service Comm. v. Marion Circuit Court, supra, 1951, 230 Ind. 277, 285, 100 N.E.2d 888, 103 N.E.2d 214.

(c) Having determined that the trial court had jurisdiction of the parties and the subject matter of the action, there then remains only the question of jurisdiction of the particular case.

Relators-appellants assert that there was no jurisdiction of this particular case because appellees and the applicants for the licenses here involved had an adequate statutory remedy provided by the Acts of 1935, ch. 162, § 214, p. 588, being § 39-4506, Burns' 1952 Replacement, which is as follows:

"Within thirty days after a revocation, suspension or...