Foster v. McConnell

• Decision Date: 12 August 1958
• Docket Number: No. 18041,18041
• Citation: 162 Cal.App.2d 701,329 P.2d 32
• Parties: Merritt Hardman FOSTER, Petitioner and Appellant, v. F. Britton McCONNELL, as Insurance Commissioner of the State of California, et al., Respondents.
• Court: California Court of Appeals Court of Appeals

Page 32

329 P.2d 32

162 Cal.App.2d 701

Merritt Hardman FOSTER, Petitioner and Appellant, v. F. Britton McCONNELL, as Insurance Commissioner of the State of California, et al., Respondents.

No. 18041.

District Court of Appeal, First District, Division 1, California.

Aug. 12, 1958.

Rehearing Denied Sept. 11, 1958.

Hearing Denied Oct. 10, 1958.

Allan L. Sapiro, Arthur N. Ziegler, San Francisco, for appellant.

Edmund G. Brown, Atty. Gen., Harold B. Hass, Deputy Atty. Gen., for respondents.

BRAY, Justice.

Appellant's petition to the superior court for a writ of mandate to compel respondent Insurance Commissioner to restore his restricted insurance licenses was denied. He appeals.

Questions Presented.

1. Was appellant entitled to a trial de novo in the trial court?

2. Is there substantial evidence to support the findings of the commissioner?

3. Did the commissioner have jurisdiction to discipline appellant for misrepresentations made at Fort Ord, a government reservation?

4. Was there a violation of the United States Constitution or the California Constitution?

Record.

Appellant had been licensed as a fire and casualty agent, life and disability agent, and fire and casualty broker. For violations of the Insurance Code all licenses were suspended for two months (from December 14, 1951, to February 13, 1952). At the end of the suspension period and pursuant to section 1690, Insurance Code, the Department of Insurance issued appellant restricted agent's licenses only. On April 24, 1952, an accusation was filed against appellant charging (1) that during the suspensory period appellant transacted more than 100 policies of insurance with Western Pioneer Insurance Company without a license so to do, and (2) that on certain dates at Fort Ord military reservation appellant knowingly made untrue representations specifically set out in the accusation to three named soldiers respectively to induce each to purchase a life insurance policy from appellant. The hearing officer found all charges to be true and recommended the revoking of appellant's licenses. The commissioner thereafter adopted the findings and decision of the hearing officer and revoked the licenses. The trial court, upon the hearing of the petition for writ of mandate, found 'That substantial evidence in the light of the full record supports the findings of respondent complained of * * *; that said findings afforded ample support to the order of the said respondent, and said order was properly issued * * *' and denied the petition for writ of mandate.

1. Trial De Novo.

Appellant contends that Nardoni v. McConnell, 1957, 48 Cal.2d 500, 310 P.2d 644, required the court to reweigh the evidence and exercise its independent judgment in the proceedings on the writ rather than do, as the court did, merely determine if the commissioner's findings were supported by the evidence. (See also 2 Cal.Jur.2d 384-385.) In the Nardoni case and in the ones referred to in the above reference to 2 Cal.Jur.2d, the courts were dealing only with proceedings brought to suspend or revoke licenses. It has been held such rule applies only to such proceedings. McDonough v. Goodcell, 1939, 13 Cal.2d 741, 753, 91 P.2d 1035, 123 A.L.R. 1205; McDonough v. Garrison, 1945, 68 Cal.App.2d 318, 336, 156 P.2d 983. It does not apply where an application for a license is denied by the commissioner (McDonough v. Garrison, supra, 68 Cal.App.2d 318, 156 P.2d 983), nor where the licensee is seeking the restoration of a revoked license. Housman v. Board of Medical Examiners, 1948, 84 Cal.App.2d 308, 312, 190 P.2d 653, 192 P.2d 45. In those cases the scope of review is to determine whether the administrative agency abused its discretion which means that the court's power is limited to determining the sufficiency of the evidence to support the administrative findings. McDonough v. Garrison, supra, 68 Cal.App.2d at page 337, 156 P.2d at page 993. There are two provisions in the Insurance Code which seem to indicate that the Legislature intended such discretion as alluded to above to repose in the commissioner in dealing with restricted licenses. Section 1690, Insurance Code, provides that the commissioner may issue a restricted license where, as here, he finds that a licensee has been found to have violated any provision of the code which would justify the suspension or revocation of his license. Section 1690.3 provides that a restricted license 'does not confer any property right in the privileges to be exercised thereunder, and the holder of a restricted license does not have the right to renewal of such license. * * * The commissioner may, with or without hearing, revoke a restricted license whether the holder has violated any provision of this code or restriction or condition of the license or not.' Thus, the granting of a restricted license and its revocation is entirely within the discretion of the commissioner. Hence, when he has revoked such a license the only inquiry the court may make is whether he has abused his discretion and such an inquiry does not require a trial de novo. It calls only for a determination of whether there is substantial evidence to support the commissioner's determination.

2. The Evidence.

The evidence as to the transaction with the Western Pioneer Insurance Company follows: Upon his suspension appellant was informed that he could exercise no rights or privileges under his licenses. He was also instructed in writing that he was permitted to handle only renewals and reinstatements of policies which were entirely issued prior to his suspension and of which he was the producer of record; also there could be no gap in coverage. During the period of his suspension appellant was informed by the general manager of Pioneer Underwriters that they were cancelling as of now all of his substandard automobile insurance risks. Appellant went to the Western Pioneer Insurance Company, bringing with him all of his records and correspondence, dealing with over 100 policies. He told Voss, the manager, of his suspension and asked him to find out from the Department of Insurance whether the company could accept the cancelled business. Voss called the commissioner's office. He assumed that the person whom he was calling was familiar with appellant's case and would know that appellant was not licensed as an agent for Western. Voss was told that the company could accept the business but could not pay appellant a commission. Voss then sent a regular form of appointment of appellant as an agent for Western to the department. It was approved and returned. Appellant admitted that during the suspension period he wrote two new Western policies, also some 15 or 20 of the policies he turned over to Western were policies which had expired on other companies during the suspension period; also there was a group of 28 policies which were new policies for which applications had been sent to other companies prior to his suspension, rejected by them, returned to appellant, and accepted by Western during the suspension. Appellant had no contact with the department during this period. He thought that the appointment obtained for him by Western was all he needed. He had Western communicate with the department because he felt that the company had 'cleaner hands' than he. The letter of instructions given him by the department at the time of suspension recommended that he get another broker. He approached two or three but they did not want to become involved with a man under suspension. He does not claim that his acts were not in violation but that the appointment sent him by the commissioner on Western's application amounts in effect to an estoppel. He relies on Snyder v. Redding Motors, 1955, 131 Cal.App.2d 416, 280 P.2d 811, which, however, is not in point. There an insurance company was held liable for a judgment and costs of defense suffered by an automobile owner who had applied to the company for automobile insurance and the company neither rejected the application nor issued the insurance. Obviously there is no resemblance between the facts of that case and ours. Voss in communicating with the department did not make a full disclosure of the situation, as he was only interested in determining whether appellant would be entitled to commissions. He did not state that appellant was turning over new business although he knew that 'renewal' (which was all appellant was entitled to turn over) did not apply to new policies. Appellant read all of the documents pertaining to his suspension. The evidence supports the conclusion that he knew that even with the appointment he could not negotiate new business. The finding against him on this branch of the case is well supported.

As to the alleged misrepresentations we see no reason to completely detail the evidence for the reason that the testimony of the soldiers amply supports a finding that appellant misrepresented the policies that he sold them, that he did so knowing the representations to be untrue and that he made them for the purpose of selling the policies. Appellant denied making the statements which the solidiers claimed he made. This, of course, merely constituted a conflict which the hearing officer and the commissioner had the duty to resolve and which they resolved against appellant. Additionally, appellant contends that he cannot be held liable for any misrepresentations because he relied upon and used a demonstrator sheet and material supplied by the insurance company, citing Graham v. Ellmore, 1933, 135 Cal.App. 129, 26 P.2d 696, to support his contention. He also contends that certain statements on the company's literature to the effect that the figures showing returns on the policies, etc., are merely illustrative and not guarantees, coupled with the ruling...