Union Ins. Co. v. State ex rel. Indiana Dept. of Ins.
| Citation | 401 N.E.2d 1372 |
| Decision Date | 24 March 1980 |
| Docket Number | No. 2-978-A-330,2-978-A-330 |
| Parties | UNION INSURANCE COMPANY, Appellant (Defendant Below), v. STATE of Indiana ex rel. INDIANA DEPARTMENT OF INSURANCE, Appellee (Plaintiff Below). |
| Court | Indiana Appellate Court |
Paul G. Smith, Smith, Pearce, Barr & Howard, Noblesville, for appellant.
Theodore L. Sendak, Atty. Gen., Alembert W. Brayton, Deputy Atty. Gen., Indianapolis, for appellee.
Defendant-appellant Union Insurance Company (Union) appeals the entry of a summary judgment for a mandatory injunction against it, claiming: procedural errors; error by the trial court in ruling that Union must comply with the insurance laws and regulations of the State of Indiana; and that res judicata estops the State.
We affirm.
The facts 1 necessary to our disposition of this appeal are: Union's predecessor, the Franklin Insurance Company, was incorporated on February 13, 1851, by a special charter granted and approved by the Indiana General Assembly which provided that the corporation was to exist for fifty years after the passage of the law, that is, until February, 1901.
The Franklin Insurance Company's charter was granted under the Indiana Constitution of 1816, which was superseded by Indiana's present Constitution adopted November 1, 1851.
In 1869, and again in 1873, the Indiana General Assembly purportedly amended the act creating the Franklin Insurance Company by granting to it, inter alia, perpetual existence.
Between the years of 1946 and 1973 Union (and its predecessors) was involved in litigation concerning Union's existence under its original charter as amended. This litigation was followed in 1975 by the State commencing this suit for a mandatory injunction in the Hamilton Superior Court, claiming the charter upon which Union based its existence had expired, thereby requiring Union to comply with the regulations of the Department of Insurance.
Union filed a motion to dismiss which the court treated as a motion for summary judgment, an evidentiary hearing was held, and summary judgment was granted for the State pursuant to Indiana Rules of Procedure, Trial Rule 56.
Union now appeals.
Union presents three issues for our consideration: 2
1. Was the proper procedure followed in granting summary judgment on an injunction in that the State did not prove nor did the court find that the State did not have an adequate remedy at law and that it had suffered irreparable injury.
2. Was Union a valid charter insurance company and therefore not subject to regulation by the Department of Insurance?
3. Whether previous litigation on the issue of Union's legitimate existence require application of the doctrine of res judicata and serve as a bar to this litigation.
ISSUE ONE Was the proper procedure followed in granting the summary judgment.
PARTIES' CONTENTIONS Union contends that a prerequisite to the grant of a summary judgment is proof by the plaintiff and a finding by the trial court that the plaintiff did not have an adequate remedy at law and that it had suffered irreparable injury.
The State responds that the power to seek a summary judgment is provided to the State by statute and no such showing is necessary.
CONCLUSION Ind. Code 27-1-3-19 authorizes the State to seek a mandatory injunction if it believes an insurance company is engaging in illegal practices, and no showing of irreparable injury or an inadequate remedy at law is necessary.
The governing statute is rather specific. Ind. Code 27-1-3-19 provides, inter alia :
Whenever it shall appear, to the department that any insurance company to which this act is applicable, is conducting its business contrary to law ; or in an unsafe or unauthorized manner; or that the capital or the surplus fund of any such insurance company is impaired or has been reduced below the amount required by law; or that any such insurance company has failed, neglected or refused to observe and comply with any order, rule or regulation of the department, then the department is hereby authorized . . . (to) bring an action against any such insurance company, its officers and agents, to enjoin any such insurance company from conducting or engaging in any such illegal, unauthorized or unsafe practice, or to require it to restore any impairment of its capital or surplus fund, or to compel any such insurance company to observe and comply with any such lawful order, rule or regulation duly issued by the department. Every such action shall be brought by the attorney-general for the state of Indiana in the name of the state of Indiana on the relation of "the department of insurance," in the circuit or the superior court of the county in which any such insurance company has its principal place of business . . . . (emphasis added)
Thus, the legislature has declared that if an insurance company is engaged in any of the prohibited practices, there is no adequate legal remedy and irreparable injury exists as a matter of law. No separate proof or finding of these elements need be made. It is within the power of the Indiana General Assembly to modify common law rules and remedies. See Schrenker v. Clifford (1979), Ind., 387 N.E.2d 59; see also, e. g., Bissell Carpet Sweeper Co. v. Shane Co. (1957), 237 Ind. 188, 143 N.E.2d 415; Cook v. Mercury Lumber Co. (1977), Ind.App., 359 N.E.2d 600.
ISSUE TWO Was Union a valid charter insurance company and therefore not subject to regulation by the Department of Insurance.
PARTIES' CONTENTIONS Union contends that it exists pursuant to a valid charter granted in 1851 and subsequently amended to confer upon it perpetual existence; Union's status as a special insurance company immunizes it from the rules and regulations of the Department of Insurance.
The State responds that the charter by which Union claims its existence has expired and the attempts by the legislature to extend the charter were null and void.
CONCLUSION Union's charter expired in 1901; the legislature did not have the power to extend the charter.
Oft repeated are the appellate principles that a summary judgment can be granted only if there is no material issue of fact to be determined at trial, North Miami Consolidated School District v. State ex rel Manchester Community Schools (1973), 261 Ind. 17, 300 N.E.2d 59; Central Realty, Inc. v. Hillman's Equipment, Inc. (1969), 253 Ind. 48, 246 N.E.2d 383; Tekulve v. Turner (1979), Ind.App., 391 N.E.2d 673, and that in reviewing an order for a mandatory injunction we will reverse only if there is an abuse of discretion. Weis v. Cox (1933), 205 Ind. 43, 185 N.E. 631; City of Muncie v. Pizza Hut of Muncie, Inc. (1976), Ind.App., 357 N.E.2d 735; Johnson v. Northwestern School Corp. (1976), Ind.App., 352 N.E.2d 531.
The parties agree and the record supports the conclusion that there was no genuine issue as to any material fact before the trial court. Only questions of law are to be determined.
The central legal question revolves around the act which created the charter establishing Union, the amendments of the act by the General Assembly attempting to extend this charter, and the Constitution under which these amendments were enacted. If Union does not exist pursuant to a valid charter the trial court acted within its discretion by entering a mandatory injunction ordering Union to cease doing business until it complies with Indiana insurance laws.
The original charter granted February 13, 1851, creating Union's predecessor provided for an existence of fifty years after the passage of the law. The Indiana Constitution of 1816 under which this charter was granted was superseded by Indiana's present Constitution which was adopted November 1, 1851.
The 1851 Constitution states:
All laws now in force, and not inconsistent with this Constitution, shall remain in force, until they shall expire or be repealed. (emphasis added) 3
It also provides in Article 11, Section 13 of Indiana's of 1851 Constitution that "Corporations other than banking shall not be created by special act but may be formed under general laws." (emphasis added).
In 1869 and again in 1873 the Indiana General Assembly purportedly amended the act creating Union's predecessor by granting to it, inter alia, perpetual existence. Could the legislature so act? No, said the Indiana Supreme Court in the vintage case of In re Bank of Commerce (1899), 153 Ind. 460, 53 N.E. 950, 55 N.E. 224; appeal dismissed 189 U.S. 506, 23 S.Ct. 851, 47 L.Ed. 921. Confronted with a situation almost identical to the one before us the Court decided that the attempted extension of a limited charter of an insurance company by an act passed after the adoption of the 1851 Constitution was void. The Court carefully considered the language of Article 11, Section 13 and distinguished between an act of the General Assembly regulating an existing special charter corporation and an act creating a special charter corporation, holding:
To determine whether or not the extension of an old special charter is violative of the present constitution, it is necessary to ascertain exactly what a legislature does in creating business corporations by special laws. If the action in granting a new special charter and in extending an old special charter is found to be identical in essence, and if the mischief intended to be remedied is the same, the cases are equally offensive. . . . To grant leave to certain persons to act as a corporation, who have not conducted business together before, and to grant leave to certain persons to act as a corporation, who have been or are conducting business together through a corporate organization, are identical in essence.
153 Ind. at 472-73, 53 N.E. at 955.
In a case questioning the regulation of a street railway, the Supreme Court put it more concisely:
It is one thing to create a corporation, bring it into existence, and quite another, as an existing corporation, to regulate its conduct...
To continue reading
Request your trial
-
Avemco Ins. Co. v. State ex rel. McCarty
...to injunctive relief pursuant to Indiana Code section 27-1-3-19, and under the principles of Union Insurance Co. v. State ex rel. Indiana Department of Insurance, 401 N.E.2d 1372 (Ind.Ct.App.1980). Having found that the Commissioner demonstrated a likelihood of success; the court relied on ......
-
National Salvage & Service Corp. v. Commissioner of Indiana Dept. of Environmental Management
...source poses an imminent and substantial endangerment, there is no adequate remedy at law. See Union Ins. v. State Ex Rel Ind. Dept. of Insurance (1980), Ind.App., 401 N.E.2d 1372. No separate proof or finding of this element is required. Id. "It is within the power of the Indiana General A......
-
Carroll v. Lordy
...were directly involved in prior litigation concerning the same subject matter or claim. Union Insurance Co. v. State ex rel. Indiana Department of Insurance, (1980) Ind.App., 401 N.E.2d 1372. A "party" is one "who is directly interested in the subject matter and had a right to make defense ......
-
City of Gary v. Stream Pollution Control Bd. of State of Ind.
...injunctive relief need show neither irreparable injury nor a balance of hardship in their favor. Union Ins. Co. v. State ex rel. Ind. Dept. of Ins., (1980) Ind.App., 401 N.E.2d 1372; Rees v. Panhandle Eastern Pipe Line Co., supra. The granting of a preliminary injunction rests within the so......