National Auto. & Cas. Ins. Co. v. Downey

Decision Date25 July 1950
Citation220 P.2d 962,98 Cal.App.2d 586
CourtCalifornia Court of Appeals Court of Appeals
PartiesNATIONAL AUTOMOBILE & CASUALTY INS. CO. v. DOWNEY. Civ. 16760.

Fred N. Howser, Atty. Gen., T. A. Westphal, Jr., and Harold B. Haas, Dep. Attys. Gen., for appellant.

Wright, Wright, Green & Wright, formerly Wright & Millikan and Neil Cunningham, San Francisco, for respondent.

WOOD, Justice.

On March 21, 1945, the insurance commissioner issued an order directing the National Automobile and Casualty Insurance Company to appear and to show cause why its certificate of authority to transact insurance in the State of California should not be suspended for a period not to exceed one year. It was stated in part therein that said order was based on reports made to the commissioner that: said insurance company had as a matter of ordinary practice settled claims arising under workmen's compensation policies through the medium of a compromise and release form which form bore the heading, 'Before the Industrial Accident Commission of the State of California'; said form contained recitals that the facts set forth therein were for the purpose of obtaining 'the approval of the Industrial Accident Commission thereto,' and that said facts were to be submitted 'to the said Commission'; said insurance company had knowingly and wilfully failed to submit said form to the Industrial Accident Commission for its approval; said insurance company had used said form to settle claims for amounts less than the amounts due, and had compelled claimants to accept less than the amounts due or to resort to litigation. Partial lists of transactions showing such alleged 'activities' were attached to and made a part of said order.

The hearing on said order to show cause was commenced on June 11, 1945, and proceeded, with the exception of periods of recess, until November 8, 1945. A deputy insurance commissioner, who was not an attorney, and who had no civil service classification, was designated by the commissioner to preside at the hearing. Another deputy insurance commissioner, who was an attorney with civil service classification, was designated to act as legal adviser to the deputy who presided. On May 15, 1946, the presiding deputy filed his 'Proposed Decision' which included his findings of fact. The legal adviser concurred in the proposed decision and that decision was adopted by the insurance commissioner as his decision. It was found in effect that the insurance company had engaged in the practices referred to in the order to show cause; and it was ordered that the certificate of authority of said insurance company, in so far as it authorized said company to solicit or execute new contracts of insurance, be thereby suspended for a period of 90 days; that its certificate of authority be restored at the end of a period of 30 days if the insurance company, as evidence of its good faith, did certain acts which included discontinuing the practices set forth in the findings of the presiding deputy, and the filing with the Industrial Accident Commission, for its approval or disapproval, every compromise and release agreement entered into after June 30, 1941, on the form thereinbefore referred to.

In an amended petition for a writ of mandate the insurance company, hereinafter referred to as petitioner, sought to have the superior court order the insurance commissioner to vacate the order of suspension and to set aside and annul the findings and decision adopted by the commissioner in said order of suspension. It was alleged in said petition, among other things, that by the Statutes of 1945, Chapter 867, Section 1, the provisions of the Government Code were amended by adding to and including therein sections 11500 to 11528, inclusive; that said sections became effective on September 15, 1945, while the hearing on the order to show cause was in progress; that no 'Hearing Officer' was designated to act in the proceeding pursuant to section 11502 of the Government Code; and that the hearing deputy (who presided at the hearing) and the insurance commissioner were without jurisdiction to hear or conduct the proceeding on the order to show cause on or after September 15, 1945, without the assignment of a 'Hearing Officer' as provided for in said section 11502.

A hearing was had in the superior court on said petition, and evidence both oral and documentary was received. The court found, among other things, that: sections 11500 to 11528, inclusive, of the Government Code became effective on September 15, 1945, at which time the hearing on the order to show cause was in progress; at no time on or after September 15, 1945, was a hearing officer appointed to act in said proceeding pursuant to the provisions of section 11502 of the Government Code; and the deputy who presided at the hearing and the commissioner were without jurisdiction to hear or conduct the proceedings on the order to show cause on or after September 15, 1945, without the assignment of a hearing officer. Also in the findings the court stated that said amendments to the Government Code made it mandatory that a hearing officer be designated to preside at the hearing on said order to show cause on and after September 15, 1945, as provided by sections 11500 to 11528, inclusive, of the Government Code and by an amendment to section 704 of the Insurance Code which likewise became effective on September 15, 1945; the failure to have a hearing officer appointed 'went to the jurisdiction' of the proceeding on the order to show cause and rendered null and void the findings of fact of the deputy who presided at the hearing; and the commissioner was without jurisdiction to make his order of suspension, and the deputy who presided at the hearing was without jurisdiction to make the proposed decision and order. The judgment commanded the commissioner to set aside the order of suspension and the decision, and directed that a peremptory writ of mandate issue commanding the commissioner to set aside said order and decision. The commissioner appeals from said judgment.

Appellant contends that the commissioner did not lose jurisdiction to proceed with the hearing on September 15, 1945, when the new sections 11500 to 11528 of the Government Code and the amendment to section 704 of the Insurance Code became effective. One of the arguments of appellant is that the hearing was in progress at the time said sections and amendment became effective; that 'over 3,000 pages of testimony had been taken and thousands of pages of exhibits introduced' with which a 'Hearing Officer' would not have been familiar.

Sections 11500 to and including section 11528 of the Government Code comprise Chapter 5, Part 1, Division 3, Title 2, of said code, and said chapter is entitled 'Administrative Procedure.' The amendment to section 704 of the Insurance Code, above referred to, provides that proceedings relating to suspension of a certificate of authority of an insurer shall be conducted in accordance with said Chapter 5 of the Government Code, and that the 'commissioner shall have all the powers granted therein.'

Section 11502 of the Government Code pertains to the qualifications of 'Hearing Officers' and provides in part as follows: '(a) * * * Any agency [including the insurance commissioner] requiring full-time hearing officers for the purposes of this act has power to appoint them for the particular agency. Each hearing officer shall have been admitted to practice law in this State for at least five years immediately preceding his appointment and shall possess any additional qualifications established by the State Personnel Board for the particular class of position involved. (b) All persons now employed * * * who, pursuant to and in accordance with the terms and provisions of their civil service classifications and prior to the effective date of this act, shall have performed functions similar to those of a hearing officer in an agency may act as hearing officers in the same agency and shall not be subject to the qualifications provisions of subdivision (a).'

As above shown, the deputy insurance commissioner who presided at the hearing on the order to show cause was not an attorney (as required by subdivision (a) of section 11502), and he had not, pursuant to a civil service classification, performed functions similar to those of a hearing officer (as required by subdivision (b) of said section). Consequently said deputy was not qualified to act as a hearing officer within the meaning of section 11502 of the Government Code. The hearing had been in progress about three months prior to the effective date of the sections, and the hearing proceeded about two months after said effective date; and the presiding deputy filed his proposed decision eight months after said date. A principal question herein is whether the provisions of said new sections of the Government Code became applicable to the proceedings on the order to show cause. Sections 11500 to and including section 11528 of said code are procedural statutory provisions. See Bartosh v. Board of Osteopathic Examiners, 82 Cal.App.2d 486, 495-496, 186 P.2d 984. Statutes affecting only matters of procedure are applicable to actions which are pending when the statute becomes effective. California Emp., etc., Comm. v. Smileage Co., 68 Cal.App.2d 249, 252, 156 P.2d 454; Sour v. Superior Court, 1 Cal.2d 542, 545, 36 P.2d 373; Rosefield Packing Co. v. Superior Court, 4 Cal.2d 120, 122, 47 P.2d 716; Pacific Vegetable Oil Corp. v. C. S. T., Ltd., 29...

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    ...to permit the Commission to exercise its discretion properly. (Code Civ. Proc., § 1094.5, subd. (f); National Auto. & Cas. Ins. Co. v. Downey (1950) 98 Cal.App.2d 586, 594, 220 P.2d 962.) The Department of Finance contends remand is inappropriate because there is nothing for the Commission ......
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