Koster v. Holz

• Decision Date: 23 January 1958
• Citation: 3 N.Y.2d 639,171 N.Y.S.2d 65,148 N.E.2d 287
• Parties: , 148 N.E.2d 287 In the Matter of Henry J. KOSTER, Appellant, v. Leffert HOLZ, as Superintendent of Insurance of the State of New York, Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 65

171 N.Y.S.2d 65

3 N.Y.2d 639, 148 N.E.2d 287

In the Matter of Henry J. KOSTER, Appellant, v. Leffert HOLZ, as Superintendent of Insurance of the State of New York, Respondent.

Court of Appeals of New York.

Jan. 23, 1958.

Harrop A. Freeman, Ithaca, and Herman Adlerstein, New York City, for appellant.

Louis J. Lefkowitz, Atty. Gen. (Samuel A. Hirshowitz, New York City, and John R. Davison, Albany, of counsel), for respondent.

FROESSEL, Judge.

Petitioner, who is presently 29 years old, applied for a license as an insurance broker, under section 119 of the Insurance Law, Consol.Laws, c. 28, on November 14, 1955. This application contained all the requested information, including a certificate of character signed by three persons and a statement by his employer, an insurance broker. In answer to one of the questions on the application, petitioner stated that he had been convicted of a crime in 1951. Attached to his application was a statement by him that he was 'a conscientious objector to war and military service on philosophical and religious grounds'; that he 'applied to the local draft board for a conscientious objector's classification. Such a classification would have lawfully deferred me from military service, but instead would have subjected me to some form of compulsory civilian activity not in any way connected with a war effort'; that his request for classification as such had been denied on the basis of recommendations premised upon investigations whose results were not made available to him. Petitioner further stated that he reported to the armed forces induction center, but 'as a conscientious objector, (he) refused to complete the induction procedure', and he was charged with and convicted of a violation of the Selective Service Act of 1948 (U.S.C.A., tit. 50 Appendix, § 462). The statement concluded that since the date of petitioner's conviction in 1951, 'there has been some clarification of the issues involved, and had my case come to a head at this time, no prosecution or conviction would have ensued'.

It may be noted that petitioner was tried while the Korean War was pending, and that the maximum sentence of five years' imprisonment was at first imposed, on condition that an application for reduction of sentence would be entertained if petitioner would consent to induction. Upon the Trial Judge's discovery of the fact that petitioner would not be acceptable to the armed forces even if he volunteered, he reduced petitioner's sentence to three years' imprisonment.

In December, 1955 petitioner took the examination for an insurance broker's license, and was notified that he passed. Apparently on February 29, 1956 he was 'interviewed' by a representative of the Insurance Department concerning his conviction. On March 7, 1956 the Superintendent of Insurance, through a deputy superintendent, denied petitioner's application on the ground that 'it has been concluded as a result of the information furnished in connection with your affirmative answer to the question asking whether you have ever been arrested, indicted for or convicted of any crime, that you may not be regarded as a competent and trustworthy person, within the contemplation of the Insurance Law, to be licensed as an insurance broker.'

Petitioner, in a letter by his attorney dated March 15, 1956, requested that he be granted a hearing so that he might show why denial of his application was erroneous. On April 12, 1956 an 'informal hearing' was arranged to be held before the principal insurance examiner attached to the Complaints Bureau. No stenographic record was taken of the hearing, the record here comprising an affidavit by the examiner based on notes he took at the time and statements by petitioner's attorney based upon his recollection of the hearing. These are not without conflict as to what transpired.

Petitioner states that he requested the Insurance Department to 'go behind the conviction to see why petitioner refused to accept Military Service'; he contended that 'a person who stands on (his) conscience is a trustworthy person', and that a license had been granted to one Kassin whose situation was similar to petitioner's. The examiner replied, as admitted in respondent's answer, that the Insurance Department 'would not go behind the conviction', and that the policy of the department had changed since the granting of the license to Kassin.

In the course of the hearing, the examiner asked petitioner (1) 'to what religious denomination he belongs'; (2) 'whether he had ever attended any religious services'. Petitioner answered both in the negative. It is further alleged in the petition that the examiner stated to petitioner that a person who was not a church member should not be recognized as a conscientious objector; respondent denied that the examiner made this statement. The examiner asserts that petitioner stated the basis of his refusal to be inducted was a religious objection to war which was common to all religions, and petitioner tells us in his reply that he 'spoke about his religion and belief in God and about the fact that the Selective Service Act does not provide for all conscientious objectors, and that did not make those not recognized not sincere'. The examiner agreed during the course of the hearing to allow petitioner to file a brief in support of his contentions.

This brief stated that petitioner was denied his claim of status as a conscientious objector by his Selective Service Board on the ground that the evidence in support of his contention was insufficient, though he submitted four statements that 'he was of excellent moral character averse to violence, or contention and that was (sic war) and military service would violate his innermost ethic'. It was further stated that on petitioner's appeal two witnesses testified as to the sincerity of petitioner's beliefs; that the appeal to the appeal board was heard by an officer later objected to as prejudiced against conscientious objectors and not allowed to hear their appeals; and that petitioner never received a copy of the Federal Bureau of Investigation report or Justice Department recommendation, depriving him of an opportunity to answer statements therein. The memorandum also alleged that petitioner 'could not avoid' his conviction, because the courts are bound by the classification of the Selective Service Boards, even if they are erroneous; ^* that the conviction should not be final in determining his trustworthiness; that his probation officer would vouch for his trustworthiness; and that he had lived a good, clean life for many years.

The examiner then, 'upon information contained in the files of the Department of Insurance, which included the application of Mr. Koster, the evidence adduced at the informal hearing and the brief filed by Mr. Koster's attorney', determined that petitioner was not a trustworthy person under section 119 (subd. 2) of the Insurance Law, which determination was communicated to petitioner's attorney by a letter dated June 11, 1956. The latter then sought 'a personal reconsideration' of this matter by the Superintendent of Insurance himself, who replied on June 20, 1956 that he had personally examined the entire file and concluded that the denial of the application was proper and should be adhered to.

Petitioner urges that the hearing before the examiner was for the sole purpose of inducing the Insurance Department to 'go behind the conviction', and on this understanding no evidence was sought to be introduced as to the general good moral character of petitioner. Respondent, on the other hand, argues that petitioner had been offering evidence to 'minimize the effect of' his conviction, that the hearing was a general one in which petitioner was to show that he was a trustworthy person, and that on the evidence adduced it was not an abuse of discretion to deny petitioner a license.

Special Term dismissed this article 78 proceeding after sustaining the Superintendent of Insurance, and the Appellate Division unanimously affirmed. In our opinion, these determinations cannot stand. Section 119 of the Insurance Law, as we read it in the light of its history and purpose, requires that the Superintendent of Insurance hold a formal hearing on the issue of petitioner's trustworthiness and, since no such hearing was held the matter must be remitted to the Superintendent for compliance with the statute.

Section 119 (subd. 12) provides, so far as pertinent here, that 'The action of the superintendent in * * * refusing to issue * * * an insurance broker's license * * * shall be subject to judicial review'. Section 34 of the Insurance Law, prior to its amendment by chapter 932 of the Laws of 1956, stated: 'Whenever by the provisions of this chapter any order or other act of the superintendent is declared to be subject to judicial review at the suit of any person, such person may maintain a proceeding under article seventy-eight of the civil practice act.' Section 119, as supplemented by said section 34, replaced former section 143 (subd. 13) of the Insurance Law, Laws 1936, c. 625, § 9, which then provided: 'The action of the superintendent of insurance in * * * refusing to grant * * * a certificate of authority * * * shall be subject to review by order of certiorari.' (Emphasis supplied.)

In order that there could be a review by certiorari under former section 143, there would have had to be a hearing at which a record was made (see Newbrand v. City of Yonkers, 285 N.Y. 164, 33 N.E.2d 75; New York Edison Co. v. Maltbie, 271 N.Y. 103, 2 N.E.2d 277; Matter of Standard Bitulithic Co., 212 N.Y. 179, 105 N.E. 967). And so, where a hearing is prescribed by law, expressly or impliedly, an administrative determination is reviewable by certiorari (1 Benjamin on Administrative Adjudication in New York 91; Third Annual Report of N. Y. Judicial Council (1937), p. 146). Review by certiorari in license cases has been...