Waite v. Holmes

• Decision Date: 25 June 1958
• Docket Number: No. 9569,9569
• Citation: 327 P.2d 399,133 Mont. 512
• Parties: Gardner C. WAITE, Appellant, v. John J. HOLMES, as State Auditor of the State of Montana, etc., et al., Respondents.
• Court: Montana Supreme Court

Page 399

327 P.2d 399

133 Mont. 512

Gardner C. WAITE, Appellant,

v.

John J. HOLMES, as State Auditor of the State of Montana,

etc., et al., Respondents.

No. 9569.

Supreme Court of Montana.

Submitted Dec. 2, 1957.

Decided June 25, 1958.

Lobel & Picotte, Helena, Gene A. Picotte and Henry Loble, Helena, argued orally, for appellant.

Forrest H. Anderson, Atty. Gen., C. W. Leaphart, Jr., Helena, Vernon Hoven, Plentywood, Kline & Langen, Glasgow, Vernon Hoven, Plentywood, and John Marriott Kline, Glasgow, argued orally, for respondents.

HARRISON, Chief Justice.

This is an appeal from a judgment granting the defendants' motion for judgment on the pleadings and denying relief prayed for by the plaintiff.

The plaintiff in this action is Gardner C. Waite, a licensed insurance agent in this state. Defendants are John J. Holmes, as State Auditor of the State of Montana, and, ex officio, the Commissioner of Insurance, hereafter referred to as Holmes, and Saskatchewan Guarantee and Fidelity Company, Ltd., hereafter referred to as defendant corporation.

The plaintiff alleged in his complaint that: 1. He is a resident and citizen of the State of Montana, and is duly licensed under the laws of Montana, and has as his business, for profit, the transaction of insurance business in fire and allied lines within Montana as agent for various insurance companies, both domestic and foreign, which said companies are duly licensed under the laws of Montana to do such insurance business therein. The plaintiff is compensated in the course of his business on a commission basis, according to the amount of insurance business obtained by him for such companies;

2. The defendant, is a purported insurance corporation of the province of Saskatchewan, Canada;

3. The defendant, John J. Holmes, is the State Auditor of Montana, and ex officio, the Commissioner of Insurance;

4. Prior to November 1, 1949, the defendant corporation was a private insurance corporation, duly organized and existing under the laws of the province of Saskatchewan, Canada;

5. On November 1, 1949, or thereabouts, the Crown of the British Commonwealth of Nations, in the right of the Province of Saskatchewan, became, and ever since has been the sole owner of said Saskatchewan Company, and the sole operator and manager thereof. Ever since the last mentioned date, said Saskatchewan Company has been, in truth and in fact, although not nominally, a branch and arm of and an integral, organic part of and identical with the government of the province of Saskatchewan; alleging that, it is indeed, a department of the Saskatchewan government, and all of its business and affairs are conducted by and are functions of that government. The government of Saskatchewan does a general insurance business in the Province of Saskatchewan in the name of said Saskatchewan Company, making, writing, and selling all types of insurance in Saskatchewan except life insurance;

6. On November 14, 1953, Holmes, acting in his official capacity of State Insurance Commissioner and purporting to act pursuant to sections 40-1302 and 40-1303, R.C.M.1947, issued to the defendant, a supposed license as a foreign insurance corporation to do business within the State of Montana in fire and allied lines of insurance, as those lines are designated in subdivision 1 of section 40-1409, R.C.M.1947;

7. Since the issuance of said supposed license on November 14, 1953, the defendant has conducted insurance business within the State of Montana in fire and allied lines, in competition with the plaintiff; and

8. Plaintiff them prays that the license granted by Holmes to the defendant corporation be declared void, and of no effect whatsoever upon the grounds that it violates section 11, article XV, of the Montana Constitution and section 40-1422, R.C.M.1947, because domestic companies of like character are forbidden by the provisions of section 26, article V and section 1, article XIII of the Montana Constitution to enjoy the advantages of being chartered, owned, operated, and financed by a government, under special or local law, as is the defendant; that it violates section 9, article XV, because by virtue of government ownership the defendant corporation would be permitted to engage in destructive competition with the plaintiff, destroy his business and disrupt the general economy of the State of Montana; that the negotiations carried on between Holmes and the defendant corporation fall within the proscription of section 10, clauses 1 and 3, article I of the United States Constitution enjoining the states from entering into any treaty, agreement or compact with a foreign nation.

On April 16, 1954, Holmes filed a motion to strike and a general demurrer to the complaint which were subsequently overruled by the district court.

On September 7 the defendant filed its special and general demurrer which was overruled, subsequent to which both Holmes and the defendant corporation filed their separate answers.

Then, on December 17, the defendant corporation and Holmes filed a joint motion for judgment on the pleadings on the following grounds: (1) That plaintiff was not a proper party plaintiff to bring an action to cancel or declare null and void a license of a foreign insurance company to do business in the State of Montana; (2) that plaintiff did not have sufficient interest in the outcome of this lawsuit to be a proper party to bring the action; (3) that plaintiff had not pursued his administrative remedies, which as a matter of law must be exhausted as a condition precedent to bringing this action; and (4) that from the pleadings there were no factual issues before this court.

On March 7, 1955, a hearing was held on the motion for judgment on the pleadings, and on April 8 the court filed its order granting the motion, and entered judgment on the pleadings in favor of the defendants. The grounds for sustaining the motion were stated in the court's order: (1) 'That the plaintiff is not a proper party to bring an action to cancel or declare null and void a license of a foreign insurance company to do business in the State of Montana;'

(2) 'That, as shown by the pleadings in this action, the plaintiff does not have sufficient interest in the outcome of this law suit to be a proper party to bring the action.'

From this judgment the plaintiff has perfected this appeal.

Since this is an appeal from a judgment on the pleadings, a summary of the rules applicable to such a judgment is necessary to properly frame the issues.

In Mihelich v. Butte Electric Ry. Co., 85 Mont. 604, 617, 281 P. 540, 546, this court said 'the motion for judgment on the pleadings is, in effect, a demurrer to the sufficiency of the complaint. However, on such a belated attack the pleading should not be held insufficient unless clearly bad, nor if there is a reasonable doubt as to such sufficiency. Equity Co-op. Ass'n v. Equity Co-op. Milling Co., 63 Mont. 26, 206 P. 349; Samuell v. Moore Mercantile Co., 62 Mont. 232, 204 P. 376.'

And, as this court held in Harri v. Isaac, 111 Mont. 152, 156, 107 P.2d 137, 139:

'It is elementary that judgment on the pleadings is not warranted if the allegations of the complaint, liberally construed, state a cause of action on any theory.' To the same effect see 71 C.J.S. Pleading Sec. 426, pp. 866, 868; Patterson v. Pacific Indemnity Co., 119 Cal.App. 203, 6 P.2d 102, 103, 104.

We now consider the first issue presented upon this appeal--whether or not plaintiff is the proper party to have cancelled and declared null and void the license of a foreign insurance company.

As stated in his main brief and reply brief, the plaintiff based his contention that he is the proper party to bring this action on the basis that he is a 'resident and citizen of Montana, and is * * * duly licensed * * * and has as his business, for profit, the * * * transaction of insurance business * * * as agent * * * of various insurance companies,' who are licensed in Montana in competition with the defendant corporation; that the unlawful action of Holmes in issuing the defendant corporation a license to enter into insurance business in Montana, in competition with the plaintiff, is destructive of plaintiff's business, which in effect gives him the right to bring this action. Emphasis supplied.

It is evidence that plaintiff predicates his right to sue upon his membership in the 'fraternity' of insurance agents, who must compete with the wares of other insurance companies with whom they have no agency. Plaintiff alleges he has a paid-up membership in his 'fraternity' by virtue of the license fees he has paid the State of Montana.

It would appear from the gravamen of plaintiff's complaint and the content of his briefs that basically, he is bringing suit to enjoin competition from one whose advent into competition with himself is based upon a void license--one unlawfully issued.

Stated in the form of an interrogatory, plaintiff's proposition may be phrased: Does plaintiff have any right to enjoin competition which stems from a competitor operating under a void license or franchise, or a right to have such competitor's license cancelled or revoked?

Thus it becomes amply apparent that whether the void license is issued as alleged, to a foreign government, a domestic corporation or a natural person, is unimportant, since plaintiff must, as he contends, base his cause of action upon his alleged property right to be free from unlicensed competition.

While Alabama Power Co. v. Ickes, 302 U.S. 464, 58 S.Ct. 300, 82 L.Ed. 374, and Tennessee Electric Power Co. v. Tennessee Valley Authority, 306 U.S. 118, 59 S.Ct. 366, 83 L.Ed. 543, relied upon by the district court in making its order in favor of defendants, are distinguishable from the instant case in some respects, nevertheless, certain statements contained in those opinions will aid this court in properly framing the problem presented.

In Alabama Power Co. v. Ickes, supra, 302...