Preston v. Meigs
| Decision Date | 26 February 1971 |
| Citation | 464 S.W.2d 271 |
| Parties | Robert D. PRESTON, as Commissioner of Insurance, Commonwealth of Kentucky, Petitioner, v. Honorable Henry MEIGS, II, Judge of the Franklin Circuit Court, and Nationwide Mutual Insurance Company, Respondents. |
| Court | United States State Supreme Court — District of Kentucky |
Lloyd Graper and Charmaine Marlowe, Dept. of Insurance, Frankfort, for petitioner.
Henry Meigs, II, Judge, Franklin Circuit Court, Frankfort, Donald P. Moloney, Lexington, J. Roth Crabbe, David L. Maynard, Columbus, Ohio, for respondents.
The Commissioner of Insurance seeks to invoke the original jurisdiction of this court under Section 110 of the Constitution of Kentucky, and to thereby secure the issuance of an order of prohibition addressed to the respondent judge of the Franklin Circuit Court in which it would be directed that the respondent has no jurisdiction to hear and determine a declaratory judgment action now pending in the court over which he presides. This suit is styled 'Nationwide Mutual Insurance Company v. Commonwealth of Kentucky, Department of Insurance, and Robert D. Preston, Commissioner of Insurance.' Complex and delicate questions of the proper relationship between courts and administrative agencies underlie the dispute. Under accepted judicial procedure, however, we are rather narrowly confined in the extent of action we may properly take because of the manner in which the issue is posed.
Nationwide Mutual Insurance Company is engaged in the property and casualty insurance business and is licensed to do business in Kentucky. This insurer adopted a company-wide corporate policy applicable to all states in which it does business, effective September 1, 1970, by which it refused to accept applications for automobile insurance from customers new to it. It sought to confine its Kentucky automobile insurance business to renewals of existing policies. It nevertheless, proposed to continue to accept new business by which it would insure new customers for other types of property and casualty insurance. A deputy commissioner of insurance and the Department's general counsel advised Nationwide that this corporate underwriting policy would have the effect of causing the insurer to be in violation of several provisions of the Kentucky Insurance Code. 1 The Code is a statutory scheme for regulation of the insurance business in this state; the primary function of regulation is placed in the Insurance Department and in the Commissioner of Insurance as head of that department.
The insurer first requested a hearing before the Commissioner of Insurance but before notice of hearing was issued the request was withdrawn and Nationwide filed the declaratory judgment action in the Franklin Circuit Court against the Insurance Department and its commissioner. Nationwide sought a declaration of rights to the effect that the adoption of the corporate underwriting policy was not in violation of any statute of the state nor of any rule or regulation of the Insurance Department and that any effort to revoke or suspend its license or to administer other punishment because of the adoption of the underwriting policy would be in excess of the powers granted under the Insurance Code and would be unconstitutional, illegal and void. The insurer also asked the trial court fo find that it was unnecessary to pursue or exhaust the administrative remedies provided by the Code. By agreed order a temporary injunction was issued prohibiting the Commissioner from taking any action so far as Nationwide was concerned during the pendency of the declaratory judgment action. The Commissioner thereupon applied to this court for an order of prohibition which would direct the circuit court not to proceed further in the pending declaratory judgment action or take any further steps therein.
The Commissioner had issued a notice of administrative hearing after the institution of the declaratory judgment action. The notice set out in detail various assertions concerning the effect of the adoption of the underwriting policy as evidence of lack of present financial stability of the insurer, and concerning impermissible deleterious effects upon insurance-purchasing citizens of the state, upon other competing insurers, and upon the insurer's own agents. Among the assertions was one which posed a question concerning whether the effect of the adopted underwriting policy so affected a recently granted premium rate increase, which the Commissioner had granted the insurer, as to render the increased premium rate excessive. Another assertion in the notice posed the question concerning whether the express reason for the adoption of the underwriting policy indicated the necessity for examination of the insurer's current financial status so that a determination in the public interest could be made as to whether the company is sufficiently financially stable to continue to write insurance business in this state. This notice of hearing was appended to a motion to dismiss Nationwide's complaint for a declaratory judgment in the circuit court. The respondent circuit judge overruled the motion to dismiss the complaint and thereby found that the circuit court had jurisdiction to act.
At the outset it appears that extremely delicate questions of policy are presented by the institution of the declaratory action. We feel perfectly safe in assuming that the able and experienced trial judge is as aware of this problem as we are. On the one hand, it is surely true that when the legislature has by statutory scheme vested primary jurisdiction to regulate an industry or activity in an administrative agency, there are strong and compelling reasons for the courts to respect not not only the legislative directive, but also to seek and give credence to administrative determinations in the regulated area. This is vital, if for no other reason than to assure uniform and consistent regulation of the concerned industries or activities in the public interest. On the other hand, however, the courts cannot abdicate their constitutional role to afford effective relief from arbitrary action. Therefore, the ultimate issue to resolve in deciding the question of whether a court should initially determine a legal question arising from administrative regulation or asserted authority is at what point should a court intervene in the dispute. This necessary decision inevitably involves a balancing of policy considerations. What are the imminent consequences to the party subject to administrative regulation if the court defers a decision until the administrative agency has completed action, as weighed against the ultimate consequences inimical to consistent and uniform regulation in protection of the public interest by the administrative agency where the court intervense precipitously?
Nationwide argues in this case that there...
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Puckett v. Cabinet for Health & Family Servs.
... ... agency has determined some question or some aspect of some question 621 S.W.3d 409 arising in the proceeding before the court." Preston v. Meigs , 464 S.W.2d 271, 274 (Ky. 1971). In Preston , we quoted United States Supreme Court Justice Marshall, who explained, "When there is a basis ... ...
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Petrey v. Cain
... ... An inferior court's jurisdiction within the meaning of the rules applicable to prohibition connotes subject matter jurisdiction. Preston v. Meigs, Ky., 464 S.W.2d 271, 275 (1971). Ordinarily, "subject matter jurisdiction" refers to a court's authority to determine "this kind of case" ... ...
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Knoppe v. Lincoln Nat'l Life Ins. Co.
... ... Preston v. Meigs, 464 S.W.2d 271, 273 (Ky. 1971). Kentucky recognizes two exceptions to the doctrine of exhaustion where: 1) a regulation is void on its ... ...
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Commonwealth v. White
... ... Petrey v. Cain, 987 S.W.2d 786, 788 (Ky. 1999), overruled on other grounds by Masters v. Masters, 415 S.W.3d 621 (Ky. 2013); Preston v. Meigs, 464 S.W.2d 271, 275 (Ky. 1971). Subject matter jurisdiction is "[j]urisdiction over the nature of the case and the type of relief sought; ... ...