INS. CO. OF NORTH AMERICA v. Morgan, 80-1469.
| Decision Date | 02 December 1981 |
| Docket Number | No. 80-1469.,80-1469. |
| Citation | 406 So.2d 1227 |
| Court | Florida District Court of Appeals |
| Parties | INSURANCE COMPANY OF NORTH AMERICA, Appellant, v. William MORGAN, As Personal Representative of the Estate of Linda J. Morgan, Deceased, and C & W Leasing, Inc., and Canal Insurance Company, Appellees. |
Robert A. Hannah of Pitts, Eubanks & Ross, P.A., Orlando, for appellant.
Harry W. Lawrence of Lawrence, Griffin & Dick, Orlando, for appellee Canal Ins. Co.
No appearance for appellees William Morgan and C & W Leasing, Inc., etc., et al.
This appeal concerns a dispute between two insurance companies arising from a suit wherein William Morgan as personal representative of the estate of Linda J. Morgan, deceased, recovered a judgment from appellee, C & W Leasing, Inc., a trucking firm.
Appellant Insurance Company of North America (INA), had insured C & W Leasing, Inc. but alleged that its policy had expired prior to the date of the accident. C & W had replaced its INA coverage with a policy from Canal Insurance Company which was in effect on the date of the accident. INA failed to notify the Public Service Commission that the policy had expired by filing Form K until after the date of the accident. Therefore, Canal contended the INA coverage was still effective and therefore INA was obligated to contribute fifty percent of the loss.
Canal invited the participation of INA in settlement of the claims, placed INA on notice of intent to settle and to seek contribution for such settlements. INA declined to participate and refused contribution. Summary final judgment for contribution was entered in favor of Canal. INA appeals.
The first point on appeal questions whether Public Service Commission Rule 25 is an unconstitutional exercise of agency rule-making power in violation of article II, section 3, Florida Constitution.
Rule 25-5.31(5)(A), Florida Administrative Code,1 requires thirty days notice to the Commission before the effective expiration or cancellation of an insurance policy issued to a motor carrier.
Section 120.54(7), Florida Statutes (1979), requires that each administrative rule refer "to the specific rule-making authority pursuant to which the rule was adopted ... to the section or subsection of the Florida Statutes or the Laws of Florida being implemented, interpreted, or made specific." Rule 25-5.31(5)(A) cites as authority chapter 323, Florida Statutes, and the rules and regulations of the Florida Public Service Commission adopted thereunder.
It is Canal's position that the Legislature enacted a comprehensive plan regulating motor carriers and then conferred upon the Public Service Commission the authority to administer that plan with the primary intent of protecting the public. INA maintains that established rules of statutory construction compel the conclusion that the Legislature intended to exclude the subject of expiration from the operation of section 323.06(3) or at least, create a reasonable doubt as to the power of the Public Service Commission to include expiration in Rule 25, and therefore this application of Rule 25 is an incorrect exercise of agency rule-making power.
INA notes that section 323.07, Florida Statutes (1979), provides the Public Service Commission with general regulatory authority over motor carriers but argues that those general provisions cannot be used to imply the power to require notice of expiration because the specific provisions of Section 323.06(3), Florida Statutes (1979), preempt this area. Section 323.07 provides in pertinent part:
The Commission may supervise and regulate every motor carrier in the state operating under the authority of this part, fix or approve ... rules and regulations for such motor carriers, regulate the service and safety of operations of each such motor carrier ... require the filing of annual and other reports and other data by the motor carriers; and supervise and regulate motor carriers in all other matters affecting the relationship between such companies and the traveling and shipping public.
Canal argues that the two statutory subsections should be construed in pari materia because they involve the same subject. State ex. rel. McClure v. Sullivan, 43 So.2d 438 (Fla. 1949). Canal refers to cases supporting the legislative intent to extend broad discretion to the Public Service Commission in making its decisions. See Kimball v. Hawkins, 364 So.2d 463 (Fla. 1978); Greyhound Lines, Inc., Southern Greyhound Lines Division v. Mayo, 207 So.2d 1 (Fla. 1968); Fogarty Brothers Transfer, Inc. v. Boyd, 109 So.2d 883 (Fla. 1959). Other cases grant authority by necessary implication within the limits of that discretion. Deltona Corporation v. The Florida Public Service Commission, 220 So.2d 905 (Fla. 1969).
The legislative intent of chapter 323 was the protection of the public against injury caused by the negligence of motor carriers. INA's contention that Rule 25-5.31(5)(A) is an abuse of the Public Service Commission's authority and therefore unconstitutional would result in a gap in such protection if the first insurer failed to file notice and the motor carrier did not secure replacement insurance.
We conclude that to construe the Public Service Commission's authority in a narrow sense would defeat the intent of the Legislature to protect the public. We therefore hold that Rule 25-5.31(5)(A) is not an abuse of the commission's rule-making authority.
INA also contends that its policy and the Canal policy "did not share an identity of the nature of the risk covered," because INA's coverage was secondary as compared to primary coverage by Canal. It points out that INA received no premiums from C & W Leasing for coverage after April, 1978. On the other hand, Canal was paid the requisite premium and had accepted the contract obligation to provide coverage during the period in which the accident occurred. The only reason a claim is possible is because INA failed to file Form K notifying the Public Service Commission that the policy had expired.
A case directly on point is National Indemnity Company v. Pennsylvania National Mutual Insurance Company, 363 So.2d 151 (Fla. 3d DCA 1978), cert. denied, 370 So.2d 461 (Fla. 1979), which was an action for declaratory judgment by one insurer of a motor transport company against a former insurer of the same company. On January 23, 1971, Penn cancelled its policy but did not notify the Public Service Commission. Six days later National issued a policy and filed its certificate with the Public Service Commission. When an accident occurred a few weeks later, the Public Service Commission had two certificates on file. The injured party filed suit against the insured, and National subsequently settled with the plaintiffs and filed an action for declaratory relief against Penn. The appellate court ruled that Penn's policy was still in effect and that National's cause of action for contribution or indemnity was viable.
We agree, however, with Judge Pearson's dissent in National Indemnity:
I would affirm upon the principle that a legislative act should not be construed so strictly so as to defeat the obvious and more plausible intention of the lawmakers... . Common sense would indicate that neither the motor carriers nor the public could expect two liability policies to exist at the same time in a situation such as this. Of course, the public eventually pays for the insurance policies deposited by motor carriers. Therefore, to hold a first insurer liable after the second insurer has been substituted and accepted by the regulatory body is waste... . I would follow the administrative interpretation of the statute shown by the acceptance of the new policy as a substitute. (Citations omitted.)
The requirement of a bond as a condition of a valid permit to operate carries out the legislative intent to assure that anyone injured by a trucking company's vehicle will have funds to compensate for his damages. Notice to the Public Service Commission assures the commission time to revoke the permit if for any reason the bond (or policy) is to terminate. Section 323.06(3), Florida Statutes (1979), provides:
No certificate or permit shall be valid until such bond has been filed and approved, and no such bond so accepted shall be cancelled by the company issuing the same upon thirty days' notice to...
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