Prudential Property and Cas. Co. v. Grimes

• Decision Date: 12 June 1986
• Docket Number: No. 66589,66589
• Citation: 725 P.2d 1246
• Parties: PRUDENTIAL PROPERTY AND CASUALTY COMPANY, et al., Appellants, v. Gerald GRIMES, Insurance Commissioner, State of Oklahoma, Appellee.
• Court: Oklahoma Supreme Court

Page 1246

725 P.2d 1246

1986 OK 32

PRUDENTIAL PROPERTY AND CASUALTY COMPANY, et al., Appellants, v. Gerald GRIMES, Insurance Commissioner, State of Oklahoma, Appellee.

No. 66589.

Supreme Court of Oklahoma.

June 12, 1986.

Rehearing Denied Oct. 7, 1986.

Ben L. Burdick, Harvey D. Ellis, Jr. and Gayle Barrett, Crowe & Dunlevy, Oklahoma City, for appellants.

Michael C. Turpen, Ned Bastow and Susan Brimer Loving, Atty. Gen., Oklahoma City, for appellee.

SUMMERS, Justice.

Plaintiffs are fifty out-of-state insurance companies who have challenged Oklahoma's gross premium tax laws on the basis that they deny plaintiffs equal protection of the law. Plaintiffs commenced this action in 1981, and since that time have followed the statutory procedures for a constitutional challenge to the taxes as set forth in 62 O.S. 1981 § 206. Section 206 provides that taxes alleged to be unconstitutional shall be paid under protest to the collecting officer (here the Insurance Commissioner) with notice in writing stating the grounds for the complaint and that suit will be brought to recover the taxes so paid. The statute then provides:

"It shall be the duty of said officer to deposit said fees or taxes to his credit in a special trust fund in his depository account in the State Treasury to be known as his protest Fund' and to retain the same therein for a period of sixty (60) days, and if within such time summon shall be served upon him in a suit for the recovery of said fees or taxes or a specified part thereof he shall further so retain the fees or taxes sued for until the final determination of the suit,...." (Emphasis supplied.)

In the event plaintiffs prevail, § 206 further provides for a judgment accompanied by a court order directing the collecting officer "to pay the amount of said judgment by voucher ... from his said protest fund to the plaintiff."

Over $55 million which was paid by these plaintiffs under protest and deposited in the Insurance Commissioner's Protest Fund in these actions has been transferred to the Department of Human Services and the Office of Public Affairs, through special legislative acts purporting to authorize such transfers by the Insurance Commissioner. Approximately $13 million in interest on such monies has been transferred from the Protest Fund into the General Revenue Fund. There are present legislative plans to direct the transfer of an additional $42 million out of the Insurance Commissioner's Protest Fund, in order to set off shortfalls in planning the budget for the 1986-87 fiscal year. The appeal before us does not seek to invalidate these transfers or recapture the transferred money for the Protest Fund. But plaintiffs have on May 14, 1986, filed a Supplemental Petition with an application for injunctive relief enjoining further transfers from the Protest Fund pending the outcome of their actions.

The original suit on the constitutionality of the gross premium tax remains pending in the district court. On May 22, 1986, the judge of the district court denied the supplemental petition for injunctive relief. It is from that order that the plaintiffs appeal.

The Insurance Commissioner urges that the present action is premature for want of a justiciable controversy--that the legislative action sought to be averted in transferring more money from the Protest Fund is merely threatened and not yet enacted. In the hearing on plaintiffs' application for injunctive relief, however, defendants produced affidavits and testimony of the Governor of Oklahoma, the Senate President Pro Tempore, and the Speaker of the House of Representatives, all of whom were in agreement that the State has a substantial need of the use of the monies in the Insurance Commissioner's Protest Fund, that the use of such monies is an important component of the budget which is planned for the 1986-87 fiscal year, and that if the State were prohibited from using these funds, it would be disruptive to the State in planning its fiscal affairs for the coming year. Additionally, the President Pro Tempore in his testimony gave assurances that he would expect any judgment obtained by plaintiffs in this action to be satisfied notwithstanding a deficiency in the Insurance Commissioner's Protest Fund. Senator Lee Cate had previously testified that the 1986-1987 budget would include the appropriation of $42 million from the Protest Fund. If so taken the Fund would then have a balance of approximately $30 million of a total of $139 million that the Fund would have but for the transfers. In In re Goodwin, 597 P.2d 762, 764 (Okl.1979) we said:

"Whenever widespread interest may demand an immediate resolution of some vital public law issue, no impediment arising from infirmity in the procedural posture of the case--however well recognized in purely private litigation--will bar our exercise of reviewing powers." (Court's emphasis.)

We find before us a very real, and therefore justiciable, controversy of vital interest to the public and proceed to consider the case on its merits.

At the outset we note that just as it is the legislature that would take funds from the Protest Fund to meet the current revenue shortfall, it was the legislature that established the Fund under Section 206 in first place. And as the legislature may give, the legislature may also take away. Unless, that is, and this is a large "unless", that which it would take away is a right protected under the Constitution of either the State of Oklahoma or the United States. Plaintiffs have tendered for our consideration several provisions of the state and federal constitutions ¹ which they urge will be violated by the pending transfer out of the Insurance Commissioners Protest Fund. We need address only one, however, for Art. 5, § 54 of the Oklahoma Constitution is dispositive of the case. It provides in pertinent part:

"The repeal of a statute shall not ... affect any accrued right, or penalty incurred, or proceedings begun by virtue of such repealed statute." (Emphasis supplied).

Our question, then, is to determine whether the plaintiffs' acts of paying the taxes to the Commissioner, serving their notices of protest, and timely filing suit in the district court, all done pursuant to Section 206, constitute a "proceeding begun" which may not be constitutionally interdicted by changing the statute. As the following cases indicate, the constitutional provision is no stranger to this court.

In Harlow v. Bd. of Com'rs., 33 Okl. 353, 125 P. 449 (1912) a statute prohibited the construction of bridges within six miles of another bridge on the same stream. The commissioners resolved to build a bridge contrary to that rule. Plaintiff, a taxpayer, sued to enjoin the carrying out of the contract for the bridge. The trial court issued, but then dissolved an injunction. Taxpayer appealed. The Supreme Court noted that while the appeal was pending the "six mile" statute was repealed by the legislature, but held that by reason of Art. 5, Section 54 the repealing act did not affect the proceeding, and ruled for the plaintiff.

In Gayman v. Mullen, 58 Okl. 477, 161 P. 1051 (1916) plaintiff sought to vacate an assessment for drainage benefits. On appeal the assessment was upheld, notwithstanding a change in the statute which provided for a different method of selecting drainage district viewers. The court in its syllabus stated (P. 1051)

"(a) Under section 54, art. 5 (Williams, § 144), of the state Constitution, the repeal of a statute does not affect proceedings begun by virtue of such repealed statute, where the rights to which the proceedings relate remain unchanged, although such proceedings are in a matter involving legislative as well as judicial questions and in the main are of legislative character."

In Green v. Board of Com'rs of Lincoln Co., 126 Okl. 300, 259 P. 635 (1927) the commissioners by resolution and notice called an election at which county bonds for road improvements could be voted. On the afternoon of the election day the Governor signed a bill passed by the legislature which amended or repealed the law under which the bonds were to be voted. The Lincoln County voters approved the bonds, but suit was brought to enjoin their issuance and sale on the basis that the law was changed before the election was final. This court rejected the suit with the following language:

"If the voting, issuance, and sale of the bonds in question can be termed a 'proceeding,' as contemplated by section 54 of article 5 of the Constitution, then it is clear that Senate Bill No. 87 has no application, and the county commissioners are justified and authorized to issue and sell the bonds according to their contract with Mr. Trapp."

"In 32 Cyc. 406, proceeding is defined as follows:

'In its general acceptation, an act which is done by the authority or direction of the court, express or implied; an act necessary to be done in order to obtain a given end; a prescribed mode of action for carrying into effect a legal right; performances of an act, wholly distinct from any consideration of an abstract right; the form and manner of conducting judicial business before a court or judicial officer; regular and orderly progress in form of law; including all possible steps in an action, from its commencement to the execution of judgment....' "

"In the light of these authorities we cannot agree with the contention of learned counsel who argue in their briefs that what was done in the instant case does not constitue (sic) a 'proceeding,' within the contemplation of the section of the Constitution above quoted, and having reached the conclusion that the proceeding having been commenced under the law as it existed prior to the approval by the Governor of Senate Bill No. 87, we must necessarily conclude that the proceeding was governed entirely by the law as it existed prior to the passage and approval of Senate Bill No. 87."

"In other words, when the board of county commissioners, by their resolution and...