Selective Life Ins. Co. v. Equitable Life Assur. Soc. of U.S.
| Decision Date | 31 March 1966 |
| Docket Number | CA-CIV |
| Citation | 3 Ariz.App. 162,412 P.2d 731 |
| Parties | SELECTIVE LIFE INSURANCE COMPANY, a corporation, Appellant, v. The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, a corporation, Appellee. 1147. |
| Court | Arizona Court of Appeals |
Lewis, Roca, Scoville, Beauchamp & Linton, by John P. Frank, Phoenix, for appellant.
Evans, Kitchel & Jenckes, by Edward C. LeBeau, Phoenix, O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears, by Wilbert G. Anderson, Phoenix, for appellee.
Snell & Wilmer, Phoenix, filed brief amicus curiae on behalf of Life Ins. Ass'n of America.
This is an appeal from a judgment of the lower court in favor of the plaintiff-appellee foreclosing a first mortgage on Arizona real property.
We are called upon to answer the following question: Does a certificate from the Director of Insurance alone authorize a foreign insurance corporation to do business as an insurance corporation in the State of Arizona?
The facts necessary for a determination of this matter on appeal are as follows: Plaintiff, Equitable Life Assurance Society of the United States, hereinafter referred to as Equitable, was authorized to write life and disability insurance business by virtue of a Certificate of Authority issued on 1 April, 1963, by George A. Bushnell, Director of Insurance, State of Arizona. Equitable, a New York corporation, was doing business in Arizona on the date the mortgage was executed and on the date it brought suit to foreclose the mortgage. Appellant, Selective Life Insurance Company, hereinafter referred to as Selective, held an inferior mortgage on the same piece of property foreclosed by Equitable, and also had a judgment lien against the subject property.
It is the contention of Selective that Equitable has not complied with the laws of the State of Arizona, and was not qualified to do business in the State on the date that its mortgage was executed, and that therefore the mortgage is void. (Article 14, Sec. 17, Constitution of Arizona, A.R.S., A.R.S. 10--482, National Union Indemnity Co. v. Bruce Brothers Inc., 44 Ariz. 454, 38 P.2d 648 (1934)). If this contention is correct, Selective's mortgage and judgment lien would be superior to any interest of Equitable. It is admitted that although Equitable has a Certificate of Authority to write life and disability insurance business in the State of Arizona, by the Director of Insurance, Equitable does not have a license from the Corporation Commission to do business as a corporation within the State of Arizona.
A discussion of the background of the laws involved is proper at this time. Prior to 1955, the Department of Insurance was a division of the Arizona Corporation Commission. Article 14, Section 17 of the Arizona Constitution states in part as follows:
'No foreign corporation shall have authority to do business in this State, until it shall have obtained from the Corporation Commission a license to do business in the State, upon such terms as may be prescribed by law. * * *' Article 15, Section 5 of the Arizona Constitution states as follows:
'The Corporation Commission shall have the sole power to issue certificates of incorporation to companies organizing under the laws of this State, and to issue licenses to foreign corporations to do business in this State, as may be prescribed by law.'
It should be noted that we are not here concerned with the power of the Corporation Commission to regulate foreign insurance companies as it does public service corporations, for as our Supreme Court has stated:
Wylie v. Phoenix Assurance Co. Ltd., 42 Ariz. 133 at 138, 22 P.2d 845 at 847 (1933).
The first Arizona legislature enacted a statute dealing with foreign insurance companies, and specifically authorized the Corporation Commission to issue Certificates of Authority to foreign insurance companies. During the ensuing 30 years as the state grew, so did the responsibility of the Corporation Commission. In 1945, the legislature mentioned for the first time the office of the Director of Insurance, providing that:
Two years later this statute was amended to read as follows:
'61--301, CORPORATION COMMISSION TO ENFORCE INSURANCE LAWS
'(a) The corporation commission shall administer the laws relating to insurance companies, and shall promulgate rules and regulations for the effective execution of such laws and the protection of the insuring public.
'(b) The commission shall have the sole power to issue certificates of incorporation, certificates of authority and licenses to corporations and organizations to do insurance business, and to impose fines and other penalties as provided by this chapter.' 61--301 A.C.A. 1939.
'61--301A, DIRECTOR OF INSURANCE
'a The commission shall appoint a director of insurance who shall have supervision, subject to the authority of the commission, of the administration of laws relating to insurance as prescribed in this chapter and regulations promulgated by the commission pursuant thereto.' 61--301a, A.C.A. 1939.
The authority and status of the Director of Insurance remained legislatively unchanged until 1955 when Sections 20--141 and 20--142, Arizona Revised Statutes, were enacted. 20--141 provided there should be a Director of Insurance, appointed by the Commission (Corporation Commission) subject to approval by the State Senate, and that the Commission might remove the Director for cause. The statute also provided that:
Section 20--101, entitled 'Commission Defined', states:
'Unless the context otherwise requires, 'commission' means the corporation commission or such other authority as may by law have original jurisdiction over the appointment of the director of insurance.' 20--101 A.R.S.
Although the connection with the Corporation Commission was maintained in this legislation, the authority of the Commission over the Director of Insurance was primarily by way of appointment and also review, in that the Director of Insurance was required to prepare and file a report once a year to the Corporation Commission. The Commission also could remove the Director of Insurance for cause.
In 1956, the Arizona Supreme Court discussed this statute and made the following statement:
Williams v. Bankers National Insurance Company, 80 Ariz. 294, 296, 297, 297 P.2d 344, 346 (1956).
Selective relies heavily on this case and contends that if it should be decided that the statutes created a separate...
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Selective Life Ins. Co. v. Equitable Life Assur. Soc. of U.S.
...been granted review of the decision of the Arizona Court of Appeals in the case of Selective Life Insurance Company v. Equitable Life Assurance Society of the United States, 3 Ariz.App. 162, 412 P.2d 731. Selective's appeal arose from a summary judgment rendered by the trial court against S......
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Lord v. Arizona Corp. Commission, 1
...if any is needed, is given by the fact that this decision of the Supreme Court vacates a previous opinion of this court, at 3 Ariz.App. 162, 412 P.2d 731 (1966). In the intermediate appellate court decision, the opinion was expressed that the Director '* * * is a part of the Corporation Com......