Ex parte Allstate Ins. Co.

• Decision Date: 07 December 1966
• Docket Number: No. 18584,18584
• Parties: Ex parte ALLSTATE INSURANCE COMPANY, Petitioner. In re SOUTH CAROLINA INSURANCE COMMISSION, Appellant, v. ALLSTATE INSURANCE COMPANY, Respondent. Ex parte STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner. In re SOUTH CAROLINA INSURANCE COMMISSIONER, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Respondent.
• Court: South Carolina Supreme Court

Page 849

151 S.E.2d 849

248 S.C. 550

Ex parte ALLSTATE INSURANCE COMPANY, Petitioner.

In re SOUTH CAROLINA INSURANCE COMMISSION, Appellant, v. ALLSTATE INSURANCE COMPANY, Respondent.

Ex parte STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Petitioner.

In re SOUTH CAROLINA INSURANCE COMMISSIONER, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Respondent.

No. 18584.

Supreme Court of South Carolina.

Dec. 7, 1966.

Atty. Gen. Daniel R. McLeod, Asst. Atty. Gen. Ben T. DeBerry, Robert W. Brown, Glen E. Craig, Columbia, for appellant.

Turner, Padget, Graham & Laney, Nelson, Mullins, Grier & Scarborough, Columbia, for respondent.

LEWIS, Justice:

The Chief Insurance Commissioner of South Carolina began, in March, 1966, an investigation into the actions of Allstate Insurance Company and State Farm Mutual Automobile Insurance Company relative to the publication of pamphlets and newspaper advertisements by them in opposition to the adoption by the General Assembly of this State of certain legislation affecting the automobile insurance business. In separate actions instituted in the Richland County Court, each of the insurance companies challenged the authority of the Insurance Commissioner to conduct the foregoing investigation upon the grounds that his actions were (1) without statutory authority; and (2) constituted a violation of their constitutional rights as guaranteed by Article 1, Section 4, of the South Crolina Constitution and the First Amendment of the Constitution of the United States. Responsive pleadings of the Insurance Commissioner also brought in issue the jurisdiction of the Richland County Court to entertain the action and, if it had jurisdiction, whether the companies had an adequate remedy at law which should have been exhausted before seeking equitable relief. The lower court entered judgment in each case sustaining its jurisdiction and the challenge to the authority of the Commissioner, and enjoined the further prosecution of the investigation.

The Insurance Commissioner has appealed from the judgment so entered, presenting, in our view, the following basic issues for determination, to wit:

(1) Did the Richland County Court have jurisdiction to entertain the action;

(2) If so, did the companies have an adequate administrative remedy which should have been exhausted before seeking redress in the courts; and

(3) Did the Insurance Commissioner have authority to conduct the investigation in question?

While separate actions were instituted by the companies and separate appeals have been filed, they have been consolidated for the purpose of argument and decision since they have the same factual background and present identical issues.

On March 1, 1966, a bill (H--2073) was passed in the South Carolina House of Representatives providing, among other things, for the establishment of a State Rating Bureau 'for the purpose of establishing uniform and standard rates, rating plans, programs or system, statistical plans and policy contracts' for automobile insurance. The bill was sent to the Senate and received first reading in that body on March 2, 1966. It was then referred to the Senate Committee on Banking and Insurance where it has since remained.

Both, Allstate and State Farm, opposed the enactment of the foregoing legislation. The opposition of Allstate was expressed in a full-page advertisement in several of the major newspapers throughout the State. The advertisement was in the form of an open letter from Allstate's agents in South Carolina to its policyholders, in which the legislation was attacked upon the grounds that a state rating bureau would eliminate competition among companies selling automobile insurance in South Carolina and would result in an increase in insurance rates. The opposition of State Farm was expressed in a pamphlet or brochure mailed to its policyholders in which the legislation was opposed on similar grounds to those urged by Allstate and, additionally, setting forth the alleged cost in North Carolina for the operation of a similar state rating bureau.

In addition to the arguments advanced against the proposed legislation, the advertisement published by Allstate and the pamphlet circulated by State Farm contained a list of the names of the members of the South Carolina General Assembly and a request that they be contacted by the policyholders with an expression of their opposition to the bill.

Thereafter, the House of Representatives passed a Resolution condemning the publication and circulation of the advertisements and pamphlets released by the insurance companies, as containing false and misleading information relating to the bill before the General Assembly, and requested that the Chief Insurance Commissioner 'investigate the actions taken by certain insurance companies in opposition to House Bill 2073 and to see that they are prosecuted to the fullest in the event that any of our laws have been violated.'

In response to the Resolution passed by the House of Representatives, the Chief Insurance Commissioner initiated the requested investigation by issuing subpoenas directed to several of the agents and officers of Allstate and State Farm requiring them to appear, with their relevant records, before representatives of the South Carolina Insurance Department to testify concerning the publication of advertisements and pamphlets in opposition to the legislation. The subpoenas, in each instance, recited that they were issued 'pursuant to the provisions of Sections 37--68 and 37--287 of the South Carolina Code of Laws and in accordance with the request of the South Carolina House of Representatives.'

Following the service of the subpoenas upon their agents, the insurance companies, after a hearing, obtained from the Richland County Court the orders, now under appeal, permanently enjoining the Chief Insurance Commissioner from proceeding with the aforesaid investigation.

At the outset, it is argued that the Richland County Court had no jurisdiction over the particular cause. This is based upon the contention that the present proceeding is in the nature of an appeal from a decision of the Insurance Commissioner and that the Richland County Court has no appellate jurisdiction in such matters.

The jurisdiction of the Richland County Court in civil matters is conferred by Section 15--764, 1962 Code of Laws, as amended by Act No. 698 of the 1964 Acts of the General Assembly. This statute confers upon the county court concurrent jurisdiction with the Court of Common Pleas of Richland County, within monetary limits not here relevant, 'in all civil cases and special proceedings, both at law and in equity.' However, its appellate jurisdiction is limited to appeals from judgments rendered in magistrate's courts in civil cases. City of Columbia v. South Carolina Public Service Commission, 242 S.C. 528, 131 S.E.2d 705.

The question as to the jurisdiction of the Richland County Court over the present proceeding is confined by the briefs to whether this is a original action or an appeal from a decision or order of the Insurance Commissioner; and our decision of the question is so limited. The brief of the Commissioner concedes that, 'if the matter was an original action or proceeding, the Richland County Court would undoubtedly have jurisdiction. On the other hand, if it was, in reality, an appeal from an order or decision of the Commissioner, then it is equally clear that the Richland County Court would not have jurisdiction since its appellate jurisdiction is limited to appeals from judgments rendered in magistrate's courts in civil cases.'

The proceedings brought by the insurance companies were clearly original actions and not appeals. The Insurance Commissioner had initiated an investigation into the actions taken by the companies. The first action taken by the Commissioner was the issuance of subpoenas directing the companies' agents to appear to testify. These proceedings were instituted immediately thereafter. They did not seek a review of any administrative decision or order, but were brought to challenge and restrain the investigation alleged to have been initiated without statutory authority. Since the proceedings were original actions, and not appeals, they were within the jurisdiction of the Richland County Court.

It is next contended that Allstate and State Farm were not the real parties in interest and therefore could not maintain the present actions. This contention is based upon the premise that the activities of their agents were under investigation and not the companies. Of course, 'unless the real party in interest institutes the suit and is before the Court, the Court is without jurisdiction.' Wilson v. Gibbes Machinery Co., 189 S.C. 426, 1 S.E.2d 490.

The record conclusively shows that the insurance companies are the real parties in interest. The House Resolution, requesting that the investigation be made, referred to the actions of the 'insurance companies'; and the subpoenas issued by the Commissioner were directed to the individuals as agents and officers of the companies. In addition, the Answer and Return of the Commissioner in each case alleges that 'the request by the South Carolina House of Representatives for an investigation of this matter, caused the...