Riley v. Wright

• Decision Date: 17 June 1921
• Docket Number: 2162.
• Citation: 107 S.E. 857,151 Ga. 609
• Parties: RILEY ET AL. v. WRIGHT, INSURANCE COM'R.
• Court: Georgia Supreme Court

107 S.E. 857

151 Ga. 609

RILEY ET AL. v. WRIGHT, INSURANCE COM'R.

No. 2162.

Supreme Court of Georgia

June 17, 1921

Syllabus by the Court.

So much of section 7 of the act of the General Assembly entitled "An act to provide for the establishment of a department of insurance," etc., approved August 19, 1912 (Acts 1912, pp. 119, 124), as provides that "the license of any soliciting agent may be revoked at any time by the insurance commissioner in his discretion," is contrary to article 1, § 1, par. 3, of the Constitution of this state (Civ. Code 1910, § 6359), which guarantees due process of law. The provision is likewise violative of the due process clause contained in section 1 of the Fourteenth Amendment to the Constitution of the United States.

Accordingly the court erred in refusing an interlocutory injunction.

Error from Superior Court, Fulton County; J. T. Pendleton, Judge.

Suit by J. L. Riley and others, doing business as J. L. Riley & Co. against W. A. Wright, Insurance Commissioner. An interlocutory injunction was refused, and plaintiffs bring error. Reversed.

J. L Riley, A. W. Malone, and George W. Price, doing business as the firm of J. L. Riley & Co., are licensed fire insurance agents, and have been engaged in the insurance business in Atlanta for many years. They value their established business at $50,000. On April 14, 1920, Hon. William A. Wright insurance commissioner of Georgia, wrote to J. L. Riley & Co., as follows:

"I am inclosing seven statements to parties named therein, on your billheads, and evidently sent from your office. Two of these are for the Stuyvesant Fire Insurance Company, one for the London Guarantee & Accident Company, one for the National Ben Franklin, and three for Globe & Rutgers. Each of these statements shows a brokerage fee or rebate of the premium. Will you kindly at once advise me why the conduct of this business in this state is not such a violation of the law, and of the rules and regulations of this department, as would render it necessary for me to revoke your license to do business in Georgia? Awaiting your reply, with return of these papers, I am," etc.

The payments made by the insurance agents to certain named persons were made under contracts between said parties and the agents. These several contracts were contained in letters and are as follows:

"Broker's Contract.

Confirming our conversation, we will allow you on and after this date a brokerage on any business which you may place in companies for which we are agent, according to the following schedule:

Fire insurance, automobiles ............. 10%

Fire insurance, nonpreferred classes .... 10%

Fire insurance, preferred classes ....... 15%

Liability insurance, all classes ........ 15%

Surety bonds, all classes ............... 15%

Steam boiler insurance .................. 20%

Personal accident and health insurance .. 25%

Note.--Dwellings, churches, schoolhouses and brick store buildings, under the city fire protection, are considered as preferred. All other classes are nonpreferred.

Under this arrangement, all policies will be charged to your personal account and must be paid for within 30 days from date of issue, and in case of cancellation before expiration, for any cause, you are to pay us the same return commission on the unearned portion of the premium at the date of cancellation as you received when the policy was issued. It is understood that you are the agent for the assured and that we are agent for the companies, and that your position in all transactions is that of a broker.

Yours very truly, J. L. Riley & Co.

I agree to the above. ________."

Failing to adjust the matter in conference, J. L. Riley & Co. filed a petition for injunction against the insurance commissioner, in which they alleged that the commissioner was threatening to revoke their license as insurance agents, upon the ground that they had paid brokerage to certain persons in writing insurance. The plaintiffs alleged that the contracts under which these payments were made were legal contracts, wholly of brokerage, and not of agency. They alleged that the threatened revocation of their license as fire insurance agents by the insurance commissioner upon the ground stated was wholly unauthorized, and that the provision of section 7 of the Insurance Act of August 19, 1912 (Acts 1912, pp. 119, 143), authorizing the insurance commissioner, in his discretion and without notice and an opportunity to be heard, to cancel the license of an insurance soliciting agent, is unconstitutional, because it violates the due process and equal protection clauses of the state and federal Constitutions, and paragraph 8 of section 7 of article 3 of the Constitution of this state, which declares that no law or ordinance shall pass which refers to more than one subject-matter, or contains matter different from what is expressed in the title thereof, in that nothing in the title of said act authorizes the regulation of insurance agents. Plaintiffs further alleged discrimination in the administration of the law and in the enforcement of section 7 of the Insurance Act of 1912, supra, upon the ground that the insurance commissioner is permitting other agents to do the same acts that plaintiffs are charged with doing, thereby depriving plaintiffs of the equal protection of the law, in violation of the Fourteenth Amendment to the Constitution of the United States, and of paragraphs 3 and 25 of article 1, section 1, of the Constitution of Georgia.

The insurance commissioner answered, admitting his intention to revoke plaintiffs' license as fire insurance agents, for the reasons stated in the petition, but averring that he had offered to adjust the matter upon plaintiffs paying the license fees due by the alleged brokers for the present and past years. Discrimination in the administration of the law was denied. Both by answer and demurrer the insurance commissioner contended that the law of Georgia does not recognize insurance brokers, but specifically makes such brokers agents, and that plaintiffs had violated the provisions of the Insurance Act of 1912, contained in section 2445 (a) and (b) of Park's Annotated Code of Georgia, in employing agents to write insurance for them without first obtaining license for such agents; that the payment of brokerage under the contracts with alleged brokers constituted in any event a rebating within the prohibition of the Insurance Act of 1912, contained in section 2440 (b) of Park's Annotated Code; that section 7 of the Insurance Act [section 2445 (b) of Park's Annotated Code] is not violative of any provision of the Constitution of Georgia or of the United States, and the power of revocation in the insurance commissioner is not subject to the control of the courts unless the power be abused, and under the plaintiffs' allegations no abuse of power appears. Upon the hearing evidence was introduced by plaintiffs, and the defendant rested his case upon the allegations and admissions made in the plaintiffs' petition. The court refused the injunction, but granted a supersedeas. To the order refusing an interlocutory injunction the plaintiffs excepted.

Watkins, Russell & Asbill, of Atlanta, for plaintiffs in error.

R. A. Denny, Atty. Gen., and Graham Wright, Asst. Atty. Gen., for defendant in error.

GEORGE, J. (after stating the facts as above).

Civil Code (1910) § 2443, provides:

"Any person who solicits in behalf of any insurance company, or agent of the same, incorporated by the laws of this or any other state or foreign government, or who takes or transmits, other than for himself, any application for insurance or any policy of insurance to or from such company or agent of the same, or who advertises or otherwise gives notice that he will receive or transmit the same, or who shall receive or deliver a policy of insurance of any such company, or who shall examine or inspect any risk at any time, or receive or collect or transmit any premiums of insurance, or

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