Scranton Leasing Co. v. Industrial Commission of Utah

• Decision Date: 29 January 1918
• Docket Number: 3127
• Citation: 51 Utah 368,170 P. 976
• Court: Utah Supreme Court
• Parties: SCRANTON LEASING CO. v. INDUSTRIAL COMMISSION OF UTAH

170 P. 976

51 Utah 368

SCRANTON LEASING CO. v. INDUSTRIAL COMMISSION OF UTAH

No. 3127

Supreme Court of Utah

January 29, 1918

Mandamus by the Scranton Leasing Company against the Industrial Commission of Utah.

Alternative writ quashed, and peremptory writ denied.

Marioneaux Straup, Stott & Beck for plaintiff.

Dan B Shields, Atty. Gen., and James H. Wolfe and O. C. Dalby, Asst. Attys. Gen., for defendant.

THURMAN, J. FRICK, C. J., and McCARTY, CORFMAN, and GIDEON, JJ., concur.

OPINION

THURMAN, J.

The complaint of the plaintiff, in substance, alleges that plaintiff is a corporation organized under the laws of Utah and engaged in the business of mining in Tooele county, and has in its employ about thirty employees in its said business; that the Interstate Casualty Company of Birmingham, Ala., is a corporation organized under the laws of Alabama doing business in the state of Utah as an insurer of employers against loss from liability imposed upon employers under the provisions of chapter 100, Sess. Laws Utah 1917, known as the Workmen's Compensation Act; that on or about the 1st day of July, 1917, plaintiff entered into a contract with said Interstate Casualty Company for insurance against liability under the terms of said act, and procured an insurance policy from said company, the rate of insurance therein being agreed upon and fixed at $ 5 for one year per $ 100 employees' pay roll; that said policy was presented by plaintiff to defendant on or about the 26th day of July, 1917, for its acceptance and for filing, but that defendant refused to accept or file it or otherwise recognize it at all; that defendant's reason for so refusing to accept or file said policy, as stated by it, was because the rate for ore mining was $ 5.59 per $ 100 employees' pay roll, whereas the rate provided in the policy offered for acceptance was only $ 5, and for the further reason that said policy contained the following clause:

"It is mutually understood and agreed by and between the company and the assured that this policy is issued by the company and accepted by the assured as a participation policy, provided the policy has run its full term herein specified."

Plaintiff then alleges, in substance, that the reasons for refusing said policy are ill founded, because said defendant is not authorized or empowered to fix the rate of insurance in a policy between the insured and the insurer, except for state insurance under the act, and that the same is true concerning defendant's refusal to accept or file the policy because of the clause making it a participating policy. It is then alleged that it is the plain duty of defendant, under the law, to accept and file said policy, as tendered, and that plaintiff has no plain, speedy or adequate remedy in the ordinary course of law. Plaintiff prayed for an alternative writ of mandate commanding defendant to immediately accept and file said policy, or show cause at a time and place specified by the court why it has not done so.

An alternative writ was issued, and the defendant appeared by its counsel, the Attorney General of the state, and demurred thereto on the grounds that the same does not state facts sufficient to constitute a cause of action.

The case was argued orally to the court many weeks ago, and reasonable time given counsel on both sides to file printed briefs. Defendant's brief was filed in due time. The brief of plaintiff has not been filed, although the time has expired, but the nature of the case and the business of the court demand that the case be disposed of without further delay.

As we understand the contention of plaintiff during the oral argument, it involves: (1) The constitutional power of the Legislature to interfere with plaintiff's right to enter into the insurance contract referred to; (2) the constitutional power of the Legislature to delegate such power to defendant; and (3) that the language of the act itself does not warrant the assumption of power exercised by the defendant. These propositions necessarily open up a wide field for controversy, and the case therefore becomes one of unusual importance.

The tendency of legislation in recent years has been decidedly along progressive lines. Many things in the way of legislation are now done and tolerated which two or three generations ago would not only have been vigorously assailed, as in contravention of the state and federal Constitutions, by the ablest exponents of constitutional law in the country, but would have been judicially condemned and declared void for the same reason. But since the period of which we speak every state in the Union, and the country at large, have made wonderful progress in nearly every department of human activity. New and different laws have been rendered necessary in order to keep pace with the marvelous progress to which we have referred. It must be admitted that a large percentage of what is now known as progressive legislation finds justification for its existence in the beneficial effects resulting therefrom, and the apprehensions of danger expressed in many instances have proven to be without foundation. In this connection, as apropos, we quote from an opinion of the Supreme Court of the United States, to which we will presently refer, as the leading case upon some of the most important questions involved in the present controversy. Mr. Justice McKenna, in rendering the opinion of the court in the case of German Alliance Insurance Co. v. Kansas, 233 U.S. at page 409, 34 S.Ct. at page 618 (58 L.Ed. 1011, L. R. A. 1915C, 1189), says:

"Against that conservatism of the mind which puts to question every new act of regulating legislation, and regards the legislation invalid or dangerous until it has become familiar, government, state and national, has pressed on in the general welfare; and our reports are full of cases where in instance after instance the exercise of regulation was resisted and yet sustained against attacks asserted to be justified by the Constitution of the United States. The dread of the moment having passed, no one is now heard to say that rights were restrained or their constitutional guaranties impaired."

The case referred to was a case in equity to restrain the enforcement of an act of the state of Kansas (Laws 1909, c. 152) entitled "An act relating to fire insurance, and to provide for the regulation and control of rates of premium thereon, and to prevent discriminations therein." Under the act the superintendent of insurance was charged with the administration of matters relating to fire insurance, as the defendant in this case is charged with the administration of matters relating to the insurance of employers under the Utah law known as the Workmen's Compensation Act, above referred to. Section 3 of the Kansas act is especially assailed in that case as being in violation of both the state and federal Constitutions. It reads as follows:

"When the superintendent shall determine * * * any rate * * * is excessive or unreasonably high, or * * * not adequate to the safety or soundness of the company, * * * he is authorized to direct the * * * company to publish and file a higher or a lower rate, which shall be commensurate with the character of the risk; but in every case the rate shall be reasonable."

From the language of the section quoted it is readily seen that the law attempts to clothe the superintendent with power to fix the rate of insurance. The power to require the rate to be raised or lowered until it is satisfactory to the superintendent undoubtedly means that he could, in the first instance, absolutely fix the rate, and it would be binding upon the company unless declared to be unreasonable.

The bill in equity, among other things, alleges that the complainant, under protest, filed its schedule of rates as required by the act, and that the superintendent thereafter made a reduction of 12 per cent. from the rate so filed, whereupon the complainant notified the superintendent that it would, under protest, and reserving the rights which it had under the law, comply with the provisions of the order. It is then alleged that the superintendent is threatening to make other and further reductions and to revoke plaintiff's license to do business, etc. The bill declared the act to be unconstitutional, wherefore it prayed for an injunction against the enforcement of the law. The respondent demurred to so much of the bill as charged the act to be unconstitutional, either as to the state or federal Constitutions. The demurrer was sustained and the bill dismissed in the Kansas court. From thence complainant appealed to the Supreme Court of the United States. The opinion of the court is elaborate and well considered. Many cases are reviewed and a conclusion reached that the decree of the lower court should be affirmed.

It cannot be denied that, if the reasoning of the opinion and the conclusion reached is sound, it settles and determines conclusively the first two propositions upon which plaintiff relies in the present case. It determines the fact that the Legislature not only had the constitutional power to enact the law, but that the superintendent was clothed with power to administer it.

It must be remembered that in the present case the reasonableness or unreasonableness of the rate fixed by the state is not in question. That would present a question entirely different and one not necessary to be determined by this opinion.

The sole question presented by the two propositions above stated is the power of the Legislature to exercise the authority complained of and to delegate it to the defendant.

A dissenting opinion was filed in the Kansas case by Mr Justice Lamar which was concurred in by Chief Justice White and Mr. Justice Van...