State ex rel. Swearingen v. Bond

• Decision Date: 08 April 1924
• Citation: 122 S.E. 539,96 W.Va. 193
• Parties: STATE EX REL. SWEARINGEN ET UX. v. BOND, STATE AUDITOR, ETC.
• Court: West Virginia Supreme Court

122 S.E. 539

96 W.Va. 193

STATE EX REL. SWEARINGEN ET UX. v. BOND, STATE AUDITOR, ETC.

Supreme Court of Appeals of West Virginia.

April 8, 1924

Submitted April 1, 1924.

Syllabus by the Court.

Section 15d, c. 15, of the Acts of 1923, which gives to the insurance commissioner authority to refuse a certificate of authority or license to act as an insurance agent to one whom he finds not trustworthy and competent to transact the business for authority to do which the application is made, and authorizing him to revoke a certificate or license of such agent whenever upon investigation after due notice and trial he is satisfied that such agent is guilty of a violation of the insurance laws, or is incompetent or untrustworthy, is not in contravention of the federal or state Constitutions.

Said section, properly construed, does not give the insurance commissioner arbitrary power to refuse such certificate or revoke it, so as to render the section unconstitutional; and if upon investigation and due trial he has found that the applicant or holder has violated the insurance laws, and is untrustworthy or incompetent to transact the business authorized by such certificate or license, his judgment and discretion will not be controlled by mandamus, unless it is clear that his decision was the result of caprice, passion partiality, or some ulterior motive.

Original mandamus by Donald C. Swearingen and wife against John C Bond, State Auditor, etc. Writ denied.

E. T England, Atty. Gen., Charles Ritchie, Asst. Atty. Gen., and Robert B. McDougle, of Parkersburg, for respondent.

LIVELY, J.

Donald C. Swearingen and Lorena M., his wife, seek to compel, by writ of mandamus, John C. Bond, auditor of West Virginia, and ex officio insurance commissioner, to issue to them certificates of authority or licenses to act as insurance agents in this state, as of the 1st of April, 1924. The petition in substance avers that since the year 1917 they have been engaged in general fire insurance business in this state, and continuously from that time have received certificates of authority to act as insurance agents representing several substantial fire insurance companies all authorized to do business in this state, and which are now authorized to do business in this state, and which have requested them to continue to act as agents for the year beginning April 1, 1924; that they are each trustworthy and fully competent to transact insurance business as agents, and never have been convicted of the violation of the insurance laws, and have fully complied with all the insurance laws, and are now entitled to receive certificates of authority or licenses to act as such agents, but that the insurance commissioner has refused to issue to them such certificates of authority; and the prayer is that he be compelled to do so.

The return admits the allegations of the petition, except that it denies that the applicants are trustworthy and fully competent to transact insurance business as agents in this state, and denies that they have fully complied with all the laws governing the issuance of certificates of authority for the doing of such business in the state. The reasons given for the refusal are that the applicants, while acting as insurance agents prior to 1922, violated the provisions of the insurance laws in the employment of Henry H. Hersch to solicit and procure for them policies of insurance, he not then being a licensed solicitor, and contrary to the provisions of sections 15d and 15c of chapter 34 of the Code; that afterwards, on March 1, 1923, they had Hersch appointed as their solicitor, the object being to secure the business of the United Woolen Mills Company, and that the appointment was made to circumvent the anti-rebate laws of this state; and that applicants were guilty of placing insurance in an unauthorized company in at least two instances, contrary to the provisions of section 60A (1) and section 53a of chapter 34 of the Code. The return further says that in the summer of 1923 he caused notices to be served on the applicants, setting out in detail the substance of the above alleged violations, and stating a day for a hearing thereon in Parkersburg, W.Va., and that Donald C. Swearingen, representing himself and his wife, appeared and was present at the hearing; the evidence taken at the hearing was preserved and transcribed (all which is made a part of the return), from which the insurance commissioner found that the defendants were guilty of the infractions of the insurance law charged, and that they were not trustworthy or competent to transact business as insurance agents; but that upon request of Donald C. Swearingen his finding was not reduced to writing or made public, but the same was held in abeyance upon request of Swearingen, and upon his assurance that he would dispose of his insurance agency and business before the expiration of his license; and acceding to this request and relying upon these assurances he then took no action until the petitioners made application in the month of March for the renewal of their license for the year beginning April 1, 1924, when he reduced his finding to writing and notified them by letter that he would refuse to renew; and a copy of the letter and finding are exhibited with the return. The return says the evidence of the violation of the insurance laws, taken at the hearing in Parkersburg, fully sustains the charges, and that by consideration thereof he found that applicants are not trustworthy and competent to act as fire insurance agents.

The petitioners demurred to the return and moved to quash. The allegations of fact contained in the return are not disputed. To sustain the motion to quash, and the motion to award the peremptory writ, petitioners rely solely upon the proposition that section 15d of chapter 15 of the Acts of 1923, amending chapter 34 of the Code, the insurance laws, is unconstitutional, null and void, because it gives arbitrary power to the insurance commissioner to issue or refuse to issue licenses to agents; that to that extent it is void, as being in contravention of the Fourteenth Amendment to the federal Constitution and section 10 of our bill of rights. Section 15d of chapter 15 of the Acts of 1923 reads:

"No person shall act in the solicitation or procurement of applicants for, or policies of, insurance * * * without first procuring a certificate of authority as agent from the insurance commissioner, which certificate shall be renewable on the first day of April in each year; and said insurance commissioner shall not issue such certificate of authority to any person * * * whom he finds not trustworthy and competent to transact the business for authority to do which application is made; and on conviction of any person acting as such agent, of the violation of any provision of this law the insurance commissioner shall forthwith revoke the certificate of authority issued to him, and no certificate shall be thereafter issued to such convicted person, until one year from the date of conviction.

Whenever the insurance commissioner upon investigation is satisfied that any agent acting under his supervision and holding a certificate of authority from him is violating or has violated the insurance laws of West Virginia, or that he is incompetent or untrustworthy, or whenever he shall proceed to revoke a certificate or license of such agent under any section of this law he shall notify such agent of his findings, and state in writing the complaint against him and require such person on a date named, which date shall not be less than thirty days after service of notice, to show cause why his license should not be revoked."

The remaining part of the section provides that if the agent does not present good and sufficient reasons why his authority should not be revoked, the commissioner may revoke it, and provides that the decisions and findings of the insurance commissioner "made under the provisions of this section shall be reviewable by proper proceedings in any court of competent jurisdiction within this state." The statute is attacked as unconstitutional because it does not provide any method by which the untrustworthiness and incompetency of an applicant may be judicially determined. Courts are not quick to declare a law unconstitutional. The presumption is that every act of the Legislature is in consonance with the Constitution. The conflict between the organic law and a statute must be clear and palpable in order to defeat and annul the latter. This court recognizes that it is a grave responsibility to declare invalid the deliberate enactments of a co-ordinate branch of the government. It will never be done in a doubtful case. If possible, the statute will be given life and validity by reasonable construction.

The insurance business is quasi public in its character, and the state may, under its police power, determine who may engage in the business, and prescribe the terms and conditions on which it may be conducted, and generally to regulate it and all persons engaged in it. In the exercise of this power it may pass statutes for the regulation of insurance agents and the conduct of their business. La Tourette v McMaster, 248 U.S. 465, 39 S.Ct. 160, 63 L.Ed. 362; Phenix Ins. Co. v. Burdett, 112 Ind. 204, 13 N.E. 705. The Legislature may require qualifications in persons engaging as agents in the insurance business, may require them to obtain license therefor, and may provide for the refusal to issue, or revoke such licenses, after having been issued, for causes, specifying them. It is generally held that the Legislature cannot invest an officer with arbitrary power to determine whether an agent selected by an insurance company is a suitable person to act as such;...