Hardware Mut. Cas. Co. v. Premo

• Decision Date: 01 March 1966
• Citation: 217 A.2d 698,153 Conn. 465
• Court: Connecticut Supreme Court
• Parties: HARDWARE MUTUAL CASUALTY COMPANY et al. v. Alfred N. PREMO, Insurance Commissioner , et al.

Page 698

217 A.2d 698

153 Conn. 465

HARDWARE MUTUAL CASUALTY COMPANY et al. v. Alfred N. PREMO, Insurance Commissioner [William R. Cotter Insurance Commissioner, Substituted Defendant], et al.

Supreme Court of Connecticut.

March 1, 1966.

Frank E. Callahan and John D. Fassett, New Haven, for plaintiffs.

Joseph P. Cooney, Hartford, with whom were William K. Cole and Colin C. Tait, Hartford, for defendants (The Aetna Casualty & Surety Co., et al.).

Raymond J. Cannon, Asst. Atty. Gen., with whom, on the brief, was Harold M. Mulvey, Atty. Gen., for named defendant.

Before KING, C. J., and MURPHY, ALCORN, SHANNON, and HOUSE, JJ.

KING, Chief Justice.

No. 347 of the 1963 Public Acts, hereinafter sometimes referred to as the Act, amended §§ 38-116, 38-187 and 38-189(e) of the General Statutes, which regulate the making of rates by insurance companies. This action was brought by the named plaintiff and nine other nonstock insurance companies. It originally sought, in the first count, a declaratory judgment determining that the sections as amended by the Act were unconstitutional, and, in the second count, that two so-called 'directives', referred to as exhibits A and B, promulgated by the insurance commissioner in supervising rating plans filed pursuant to the Act, were invalid as unauthorized and unreasonable. The defendants are the insurance commissioner, hereinafter referred to as the commissioner, and three stock insurance companies writing insurance under the provisions of the statutes as amended by the Act. Notice to every insurance company regulated by the commissioner under the Act was given pursuant to Practice Book § 309(d). See Hardware Mutual Casualty Co. v. Premo, 25 Conn.Sup. 309, 317, 203 A.2d 433.

Section 38-116 of the General Statutes, which is the section amended by § 1 of the Act, forms part of chapter 679, which embraces the statutory provisions for the regulation of rates for fire, marine and inland marine insurance.

Sections 38-187 and 38-189(e) of the General Statutes, which are respectively amended by §§ 2 and 3 of the Act, form part of chapter 682, which embraces the statutory provisions for the regulation of rates for certain casualty insurance including bonds and motor vehicle insurance.

The plaintiffs, in their attack on the Act, draw no real distinction between the amendments to the two different chapters, and for the sake of brevity we confine our discussion to the amendments to chapter 682 (§§ 2 and 3 of the Act), although it should not be overlooked that there are differences in the two chapters in the rate regulatory procedure provided in the amended sections. Chapters 679 and 682, except as modified by the Act, were largely derived from chapters 219 and 221, respectively, of the 1947 Cumulative Supplement to the General Statutes (Rev.1949, c. 294, c. 297), which formed part of the 'All-Industry' legislation adopted in 1947. See Employers Mutual Liability Ins. Co. v. Premo, 152 Conn. 610, 613, 211 A.2d 154. That case, like the present, involved a controversy between nonstock and stock insurance companies. In the opinion in that case, the general background of the making of rates is touched upon, beginning on page 612, 211 A.2d 154.

It is also important to note that in this case the plaintiffs' claim of unconstitutionality is restricted to the sections of the statutes as amended by the Act. In other words, there is no claim of unconstitutionality of any one of the sections as it stood prior to, or except as amended by, the Act.

To facilitate an understanding of the plaintiffs' claims, it is virtually essential to have at hand the sections of the affected statutes discussed in this opinion, both immediately prior, and immediately subsequent, to the effective date of the Act, which was May 29, 1963. For this reason, §§ 2, 3 and 4 of the Act are set out in the footnote, the italicized words being those which the Act added to §§ 38-187 and 38-189(e) and the bracketed words being those which the Act deleted from those sections. ¹

I

The plaintiffs' claim of unconstitutionality, raised in the first count, is based on four main grounds. Before examining these grounds certain basic principles governing our decision should be borne in mind. In the first place, because of the fundamental separation of powers, legislation cannot be stricken down by the courts on the ground of unconstitutionality unless its invalidity on that ground is proven beyond a reasonable doubt. Patterson v. Dempsey, 152 Conn. 431, 444, 207 A.2d 739, and cases cited. A corollary of this principle is the rule that no one has standing to attack the constitutionality of a statute unless he alleges facts which, if proven, would establish that, in its impact upon him, the legislation attacked adversely affects his constitutionally protected rights. Coyle v. Housing Authority, 151 Conn. 421, 424, 198 A.2d 709; St. John's Roman Catholic Church Corporation v. Town of Darien, 149 Conn. 712, 718, 184 A.2d 42. And aside from the mere question of standing, if his attack is to be successful, a plaintiff must sustain the burden of proving the facts essential to his standing, that is, that the effect or impact of the challenged statute on him adversely affects a constitutionally protected right which he has. This means a right which he proves that he has under the facts of his particular case and not merely under some possible or hypothetical set of facts not proven to exist. Karen v. Town of East Haddam, 146 Conn. 720, 727, 155 A.2d 921; State v. Sul, 146 Conn. 78, 81, 147 A.2d 686, and cases cited. Of course the fact that the plaintiffs originally chose to seek a declaratory judgment in nowise changes or relieves them from the burden of proof resting on them. Holt v. Wissinger, 145 Conn. 106, 109, 139 A.2d 353. The procedure finally followed is somewhat unusual, however, in that, instead of a direct stipulation as to the operative facts, the parties stipulated for a reservation of the case to this court on an agreed statement of facts, and in lieu of the declaratory judgment and ancillary injunctive relief originally claimed by the plaintiffs, the parties propounded eight questions as to which answers are sought. These questions are set out in the footnote. ² The procedure finally adopted was apparently patterned on that customarily followed in will construction suits. See Practice Book §§ 738 and 739 and Form No. 614, p. 759. But whatever reason the parties may have had for changing over to the reservation procedure finally adopted, it in nowise affected the burden of proof resting on these plaintiffs. This burden flows from the inherent nature of an attack made on the constitutionality of a legislative enactment, and it cannot be ameliorated or avoided by any procedural maneuver.

II

Question 1 asks whether the plaintiffs have standing to contest the constitutionality of the Act. Question 8 asks whether the second count alleges facts adequate to entitle the plaintiffs to a declaratory judgment on that count. The defendants maintain that the plaintiffs have shown no standing at all to pursue either count of this action, and this claim presents a question of some difficulty, especially under the reservation form which this proceeding finally assumed. On the other hand, all the parties stipulated that the questions raised should be promptly settled because they are in the public interest and are of major importance with respect to the regulation of insurance rates.

Faced with this situation, we have decided to consider the questions as to the constitutionality of the Act raised by the plaintiffs' attack upon it and the questions as to the validity of the 'directives' referred to in the second count. But in so doing we find it unnecessary to determine whether the plaintiffs have established their standing to maintain this action as to either count of the complaint, and consequently we do not answer questions 1 or 8. This is because, as hereinafter set forth, the plaintiffs have failed to sustain their burden of proof on the merits as to either count of the complaint, and thus the question of standing, as such, becomes academic.

III

The first claim of unconstitutionality is raised in question 2 and is that the Act contains phrases so vague as to be meaningless. In their brief, the plaintiffs specify three such phrases: 'provide for recognition,' 'appropriate eligibility criteria' and 'significant risks.'

A basic change wrought by the Act was the clarification of the amended sections to remove any doubt that, subject, of course, to the commissioner's power of approval or disapproval of a filing, underwriting judgment might be used to determine to what extent variations in expense provisions (cost of acquisition, such as advertising and agency commissions, and cost of servicing and supervising the risk) and variations in hazards may properly affect the expenses or losses of a given risk and, in turn, the premium cost to the insured, provided that the rate produced otherwise conformed to the statutory requirements, including the primary standards that the rate must not be 'excessive, inadequate or unfairly discriminatory.' General Statutes § 38-187(a)(4).

Under § 1-1 of the General Statutes, in the construction of statutes, 'words and phrases shall be construed according to the commonly approved usage of the language; and technical words and phrases * * * shall be construed and understood accordingly.' While the quoted statutory rule of construction includes technical legal terms, it also includes technical terms associated with the trade or business with which a given statute is concerned. Here that trade or business is insurance. Thus the terms in question should be accorded the meaning which they would convey to an informed person in the insurance trade or business. Order of Railway Conductors of America v. Swan, 329 U.S. 520, 525, 67 S.Ct. 405, 91 L.Ed. 471; 50 Am.Jur. 265, Statutes, § 277.

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