Williams v. Bankers Nat. Ins. Co.

• Decision Date: 15 May 1956
• Docket Number: No. 6109,6109
• Citation: 297 P.2d 344,80 Ariz. 294
• Parties: E. T. 'Eddie' WILLIAMS, Jr., as Treasurer of the State of Arizona, Appellant and Cross-Appellee, v. BANKERS NATIONAL INSURANCE COMPANY, a corporation, Commercial Life Insurance Company, a corporation, National Life and Casualty Insurance Company, a corporation, Trans-Pacific Insurance Company, a corporation, United Security Life, a corporation, Appellees, and Sun Life Insurance Company, a corporation, Cross-Appellant.
• Court: Arizona Supreme Court

Page 344

297 P.2d 344

80 Ariz. 294

E. T. 'Eddie' WILLIAMS, Jr., as Treasurer of the State of Arizona, Appellant and Cross-Appellee, v. BANKERS NATIONAL INSURANCE COMPANY, a corporation, Commercial Life Insurance Company, a corporation, National Life and Casualty Insurance Company, a corporation, Trans-Pacific Insurance Company, a corporation, United Security Life, a corporation, Appellees and Sun Life Insurance Company, a corporation, Cross-Appellant.

No. 6109.

Supreme Court of Arizona.

May 15, 1956.

Robert Morrison, Atty. Gen., D. Kelly Turner, Asst. Atty. Gen., for appellant.

Lewis, Roca, Scoville & Beauchamp, by John P. Frank, Phoenix, for appellees and cross-appellant.

PHELPS, Justice.

This is an appeal by 'Eddie' Williams, Jr., treasurer of the state of Arizona, from an order granting summary judgment in Count I of plaintiffs' complaint in favor of plaintiffs, Bankers National Insurance Company, Commercial Life Insurance Company, National Life and Casualty Insurance Company, Trans-Pacific Insurance Company, and United Security Life, and from an order on cross-appeal dismissing Count II of the complaint and denying motion for summary judgment in favor of Sun Life Insurance Company as cross-appellant against 'Eddie' Williams, Jr., treasurer of the state of Arizona, cross-appellee.

This case arises out of the adoption of a new insurance code by the state of Arizona in 1954 to become effective January 1, 1955, A.R.S. § 20-101 et seq. Under the old code provisions, section 61-301 et seq., 1952 Supp., A.C.A.1939, the insurance laws were administered as follows:

'(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 in this chapter.

'(c) The commission shall provide all necessary books and blanks for the administration of the insurance laws, compile such laws in pamphlet form for the use of interested persons, and take all measures required for the administration of the insurance division.'

The director of insurance was provided for, but he acted under the supervision of the corporation commission.

In 1954 the old insurance code was repealed and a new one adopted. Under the new code the director is appointed by the corporation commission subject to approval by the senate but he now acts as exclusive head of the department of insurance and is delegated the following duties, section 61-1403, 1954 Supp., A.C.A.1939 (A.R.S. § 20-142):

'(a) The director shall enforce the provisions of this code, and shall execute the duties imposed upon him by this code.

'(b) The director shall have powers and authority expressly conferred upon him by or reasonably implied from the provisions of this code.

'(c) The director may conduct such examinations and investigations of insurance matters, in addition to examinations and investigations expressly authorized, as he may deem proper to determine whether any person has violated any provision of this code or to secure information useful in the lawful administration of any such provision. The cost of such additional examinations and investigations shall be borne by the state.'

By section 61-1404, 1954 Supp., A.C.A.1939 (A.R.S. § 20-143), he is granted the power to make necessary rules and regulations for effectuating any provision of the insurance code. In effect, the obvious intent of the legislature in the passage of this new insurance code was the creation of a distinct department of insurance, the function of which is that of an administrative body to control the administration of insurance matters as they relate to the state.

The tax provisions relating to insurance were also revised in the new code provisions. Insofar as they relate to this case, they are as follows, section 61-1524, 1954 Supp., A.C.A.1939 (A.R.S. § 20-224):

'(a) Each authorized insurer, and each formerly authorized insurer referred to in subsection (c) of section 6 (§ 61-1506) of this article, shall file with the director, on or before March 31 each year, a report in form as prescribed by the director showing total direct premium income including policy membership and other fees and all other considerations for insurance from all classes of business whether designated as a premium or otherwise received by it during the preceding calendar year on account of policies and contracts covering property, subjects, or risks located, resident, or to be performed in Arizona, after deducting from such total direct premium income applicable cancellations, returned premiums, the amount of reduction in or refund of premiums allowed to industrial life policyholders for payment of premiums direct to an office of the insurer, all policy dividends, refunds, savings coupons and other similar returns paid or credited to policyholders within this state and not reapplied as premiums for new, additional or extended insurance. No deduction shall be made of the cash surrender values of policies or contracts. Considerations received on annuity contracts, as well as the unabsorbed portion of any premium deposit, shall not be included in total direct premium income, and neither shall be subject to tax.

'(b) Coincident with the filing of such tax report each such foreign or alien insurer shall pay to the state treasurer, through the director, a tax of two per cent (2%) of such net premiums, and each domestic insurer shall so pay a tax of one per cent (1%) of such net premiums.'

Failure to pay this tax has the following result, section 61-1525, 1954 Supp., A.C.A.1939 (A.R.S. § 20-225):

'(a) Any insurer failing for thirty (30) days after any March 31 to pay the premium tax prescribed by section 24 (§ 61-1524) of this article shall be liable to a fine of $25 for each additional day of delinquency.

'(b) The director may refuse to renew the certificate of authority of any insurer failing to pay such tax on or before the date it is due. The director shall revoke the certificate of authority of any insurer failing to pay such tax for more than thirty (30) days after it was due.'

Should the amount of the tax assessed or the applicability of these sections be desired to be questioned the aggrieved person is provided with redress machinery under the provisions of section 61-1420, 1954 Supp., A.C.A.1939 (A.R.S. § 20-161), as follows:

'The director may hold hearings for any purpose deemed by him to be necessary and within the scope of this code. The director shall hold a hearing if required by any provision of this code, or upon written demand therefor by a person aggrieved by any act, threatened act of (or) failure of the director to act, or by any report, rule, regulation or order of the director (other than an order for the holding of a hearing, or an order on hearing or pursuant thereto). Any such demand shall specify the grounds to be relied upon as a basis for the relief to be demanded at the hearing, and unless postponed by mutual consent, such hearing shall be held within thirty (30) days after receipt by the director of demand therefor.'

The hearing would follow according to the provisions of section 61-1424, 1954 Supp., A.C.A.1939 (A.R.S. § 20-165):

'(a) In conducting any such hearing the director shall sit as a quasijudicial officer. Within thirty (30) days after termination of the hearing or of any rehearing thereof or reargument thereon, he shall make his order on hearing, covering matters involved in such hearing and in any rehearing or reargument thereof, and shall give a copy of such order to the same persons given notice of the hearing.

'(b) The order shall contain a concise statement of the facts as found by the director, a concise statement of his conclusions therefrom, and the effective date of the order.

'(c) The order may affirm, modify, or nullify action theretofore taken or may constitute the taking of new action within the scope of the notice of hearing.'

If then, and only then, the aggrieved person is satisfied that the proper result has not been reached with regard to his problem, he may avail himself of the appeal provisions of section 61-1425, 1954 Supp., A.C.A.1939 (A.R.S. § 20-166), under which he is given the right to be heard de novo in the superior court, with right of appeal thereafter from the judgment thereof to this court. Section 61-1425 reads as follows:

'(a) An appeal from the director shall be taken only from an order on hearing or an order refusing a hearing. Any person aggrieved by any such order may, within thirty (30) days after the order has been mailed or delivered to the persons entitled to receive the same, or within thirty (30) days after the director's order denying rehearing or reargument has been so mailed or delivered, appeal from such order on hearing or such order refusing a hearing by petition to the superior court for Maricopa County. A copy of such petition shall also forthwith be served upon the director and other parties in interest, if any, and the director shall thereupon certify and file in such court a transcript of the record of such hearing and a copy of the order appealed from.

'(b) Upon filing of the petition the court shall have full jurisdiction, and shall determine whether such filing shall operate as a stay of the order appealed from.

'(c) The court shall hear the matter be novo, including any intermediate order or matter involving the merits and necessarily affecting the order appealed from, advancing the cause upon its calendar as are other causes to which the state is a party.

'(d) After hearing the appeal the court may affirm, modify, or reverse the order or action of the director in whole or in part, or remand the action to the director for further...