183 Ga. 1 | Ga. | 1936
Lead Opinion
The Hartford Steam Boiler Inspection and Insurance Company, a non-resident corporation licensed to transact business as a casualty insurance company in the State of Georgia, and W. M. Francis, of Fulton County, Georgia, filed a petition for mandamus against William B. Harrison as insurance commissioner of Georgia, praying that the defendant be compelled by mandamus to issue to' W. M. Francis a license as an insurance agent for the writing of casualty insurance. It was alleged that the insurance company filed with the insurance commissioner an application for the issuance of such license to Francis; that the insurance commissioner declined to issue the license solely upon the ground that under section 1 of the act of the General Assembly approved March 28, 1935 (Ga. L. 1935, p. 139), prescribing the terms on which the insurance commissioner was authorized to license insurance agents, no salaried employees of an insurance company should be licensed to act as agent or to issue contracts of insurance, except employees of mutual insurance companies; that this provision of the act of 1935 is violative of the fourteenth amendment to the constitution of the United States, in that said provision is arbitrary, unreasonable, and capricious, and bears no reasonable relation to the public or to any other matter or thing within the police power of the State, and deprives the petitioners of their property and of their liberty, without due process of law; that for the same reason said act violates art. 1, sec. 1, par. 3, of the constitution of Georgia, wherein it is provided that no person shall be deprived of property without due process of law; that said
The superior court having by mandamus ordered the insurance-commissioner of Georgia to issue a license to W. M. Francis, the local agent for the Hartford Steam Boiler Inspection and Insurance Company at Atlanta, and the commissioner having excepted by bill of exceptions, the question is presented as to whether the act approved March 28, 1935, upon the subject of agents and solicitors of insurance is unconstitutional. The superior court held that section 1 of the foregoing act (Ga. L. 1935, p. 139) is violative of the fourteenth amendment to the constitution of the United States (Code, § 1-815), and in conflict with sec. 1, art. 1, par. 2 and par. 3 of the constitution of Georgia (Code, §§ 2-102, 2-103). If, as charged in the petition for mandamus in this case, the classification made by the General Assembly in the passage of this act is arbitrary, capricious, and not based upon any reasonable ground, but upon grounds which have no reasonable relation to the subject of fire insurance, it should be admitted that section 1 of the act of 1935, which it is sought to obliterate from the statute books, is unconstitutional. If the General Assembly, in the passage of this legislation with relation to fire-insurance companies, exceeded its constitutional power to classify businesses in determining the regulations to be applied to occupational taxes, it is unconstitu
If the Hartford Steam Boiler Inspection and Insurance Company, one of the applicants for mandamus, is a foreign corporation, it has no inherent right to a license which the courts of this State are required to recognize or enforce .by mandamus. Mr. Francis, the applicant for a license as the local agent, being a citizen of this State, the question will be considered as to him. One of the reasons upon which it is claimed that the act of the General Assembly now under consideration is unconstitutional is that it interferes with and destroys the right of contract. As to this we will use the language of Mr. Justice Holmes of the Supreme Court of the United States, where he said, in a dissenting opinion in Adkins v. Children’s Hospital, 261 U. S. 525, 568 (43 Sup. Ct. 394, 67 L. ed. 785), that a contract is "merely an example of doing what you want to do, embodied in the word liberty. But pretty much all law consists in forbidding men to do some things that they want to do, and contract is no more exempt from law than other acts. Without enumerating all the restrictive laws that have been upheld, I will mention a few that seem to me to have interfered with liberty of contract quite as seriously and directly as the one before us. Usury laws prohibit contracts by which a man receives more than so much interest for the money that he lends. Statutes' of frauds restrict many contracts to certain forms. Some Sunday laws prohibit practically all contracts during one seventh of our whole life. Insurance rates may be regulated. German Alliance Insurance Co. v. Lewis, 233 U. S. 389” (supra). See other instances cited therein, as to the control properly exercised by government over contract, on page 569 of Adkins v. Children’s Hospital, supra. In German Alliance Insurance Co. v. Lewis, supra, dealing with the business of fire insurance as to the case now under consideration, the Supreme Court of the United States held that the business of' insurance is so far affected with the public interest as to justify legislative regulation (legislative regula
Treating, as we do, that one’s right to contract is property of which he can not be deprived except by due process of law, we proceed to the holding in the Munn case (supra), as stated in head-notes 5 and 6: “Eights of property, and to a reasonable compen
“When the people of the United Colonies separated from Great Britain, they changed the form, but not the substance, of their government. They retained for the purposes of government all the powers of the British Parliament, and, through their State constitutions, or other forms of social compact, undertook to give practical effect to such as they deemed necessary for the common good and the security of life and property. All the powers which they retained they committed to their respective States, unless in express terms or by implication reserved to themselves. Subsequently, when it was found necessary to establish a national government for national" purposes, a part of the powers of the States and of the people of the States was granted to the United States and the people of the United States. This grant operated as a further limitation upon the powers of the States, so that now the governments of the States possess all the powers of the Parliament of England, except such as have been delegated to the United States or reserved by the people. The reservations by the people are shown in the prohibitions of the constitutions. When one becomes a member of society, he necessarily parts with some rights or privileges which, as an individual not affected by his relations to others, he might retain. ‘A body politic/ as aptly defined in the preamble of the constitution of Massachusetts, ‘is a social compact by which the whole people covenants with each citizen, and each
The statement in the Munn case on page 133 is in our opinion
Our sister State of South Carolina has an act approved March 2, 1916, which provides “for the licensing of insurance brokers,” defined to be “such person as shall be licensed by the insurance commissioner to represent citizens” of the State “for the placing of
In support of the contention that the act of 1935 now under review is unconstitutional, we are cited by counsel for the defendant in error to the case of Liggett Co. v. Baldridge, 278 U. S. 105 (49 Sup. Ct. 57, 73 L. ed. 45), in which the plaintiff assailed the constitutionality of a Pennsylvania act providing that every pharmacy or drug-store shall be owned only by a licensed pharmacist,- and, in the case of corporations, associations, and copartnerships, requires that all the partners or members thereof shall be licensed pharmacists with certain stated exceptions. The Liggett Company was a Massachusetts corporation authorized to do business in Pennsylvania. At the time of the passage of the act it was empowered to own and conduct, and thereafter continued to own and operate, a number of drug-stores in that State, and intended to carry on a retail business under the title of “drug-store” or “pharmacy.” All of the stockholders were not registered pharmacists, and the Pennsylvania State Board of Pharmacy refused to grant the company a permit to carry on the business. The State attorney-general and
We do not deem the case of Adair v. United States, 208 U. S. 161 (28 Sup. Ct. 277, 52 L. ed. 436), as apposite or applicable to the case before us. The Adair case involved the question whether it was within the power of Congress to make it a criminal offense against the United States for a carrier engaged in interstate commerce to discharge an employee simply because he was a member of a labor organization; and the court properly held that the Federal law was an invasion of the personal liberty as well as of the right of property, and therefore unenforceable under the provisions of the fourteenth amendment which declares that no person shall be deprived of his liberty or property without due process of law. The case of Coppage v. Kansas, 236 U. S. 1 (35 Sup. Ct. 240, 59 L. ed. 441, L. R. A. 1915C, 960), related to a Kansas statute declaring it a misdemeanor punishable by fine or imprisonment for
So recently as March 2, 1936, the Supreme Court of the United States, in Bayside Fish Flour Co. v. Gentry, 297 U. S. (56 Sup. Ct. 513, 80 L. ed. 522), decided that a California statute regulating manufacture, canning, and packing of sardines within the State was not an unlawful interference with interstate commerce, since, to the extent that the act regulated the use of fish brought into the State from the outside,-it was justified as a shield against covert depletion of local supply; also, that the statute limiting the taking of sardines for use in a reduction plant and prohibiting the use of any part of fish except offal in a reduction plant or by a reduction process did not deny due process, as against the contention that it deprived the owner of the reduction plant of the right to contract for'the purchase of sardines taken from the high seas and brought into the State. Thereupon thé court held, what is applicable in this State,’ that the statute does 'not become unconstitutional merely because it has created a condition Of affairs which renders ineffective the making of a related contract lawful
Many authorities, such as the decisions of the Supreme Court of the United States and the courts of many of our sister jurisdictions, have been cited by eminent counsel in support of the proposition that section 1 of the act of 1935 (Ga. L. 1935, p. 139) offends art. 1, sec. 1, par. 2, and art. 1, sec. 1, par. 3, of the constitution of Georgia, and is also violative of the fourteenth amendment to the constitution of the United States. One basis of the argument is the contention that the provision of the act which relieves mutual fire-insurance companies from the provision applicable to stock fire-insurance companies, that no local fire-insurance agent can be appointed who holds a salaried position with a stock fire-insurance company, is arbitrary, unreasonable, and capricious, and bears no reasonable relation to the subject or to the public or anything which is within the police power of the State. Therefore it is apparent that the question for our determination is
That there is a radical difference (and the word “radical,” taken from the Latin, means a difference in'the root) between stock insurance companies and mutual insurance companies, was held by this court in Carlton v. Southern Mutual Insurance Co., supra. All the reasons given by this court for the wide distinction between mutual life-insurance companies and stock life-insurance companies apply with equal force when fire insurance is'involved, as in this case. In that case it was held: “A mutual insurance company is based upon the idea that each of the assured becomes one of the insurers, thereby becoming interested in the profits and liable for the losses. Without a charter, such an organization would be governed by the general law of partnership. When incorporated, they are subject to the terms of their charter. The charter stands 'in
We agree with learned counsel for the defendant in error that “(1) mere difference is not enough; (2) the classification must be reasonable, and not arbitrary; (3) the difference upon which the classification is based must bear some reasonable relation to the purposes of the legislation;” but we can not agree with them that “The difference in the method required is not only arbitrary, as heretofore pointed out, but furthermore the discrimination as between the types of companies and their agents rests on a difference which has no reasonable relationship to the legislative purpose.” As pointed out in Carlton v. Southern Mutual Insurance Co., supra, every officer, whether he be at the top or a mere local agent, in a mutual company is interested in the profits and losses of the concern. Not so with a stock insurance company. The legislature seemed to be well aware of what this court and every other court knows — that the local agent is largely dependent upon insurers for being able to procure any business, and that one who wishes to insure his home generally takes his insurance to a friend in whom he has confidence; and for this reason they incorporated in section 1 the provision that a salaried officer of a stock insurance company could not be a resident agent. Counsel for the petitioner for mandamus plants his whole case upon the alleged discrimination in the portion of the act which relieves mutual companies from the foregoing provision. It is an old rule of jurisprudence in this court that if this court has any doubt as to the constitutionality of an act, the benefit of the doubt will be given in favor of constitutionality. In this case we are not troubled with any doubt; for our opinion is that the section of the act of 1935 which is attacked does not offend either the State or the Federal constitution. The learned judge erred in making the mandamus nisi absolute, and in requiring the insurance commissioner to issue a license contrary to the provisions of the act of 1935.
Judgment reversed.
Dissenting Opinion
Justice, dissenting. It is settled that the business of insurance is affected with the public interest. Therefore it may be regulated by the State; but it is equally well settled that such regulation must not be arbitrary and must operate constitutionally. “No duty rests more imperatively upon the courts than the enforcement of those constitutional provisions intended to secure that equality of rights which is the foundation of free government. . . It is apparent that the mere fact of classification is not sufficient to relieve a statute from the reach of the equality clause of the fourteenth amendment, and that in all cases it must appear not only that a classification has been made, but also that it is one based upon some reasonable ground — some difference which bears a just and proper relation to the attempted classification, — and is not a mere arbitrary selection.” Gulf &c. Ry. Co. v. Ellis, 165 U. S. 150, 160 (17 Sup. Ct. 255, 41 L. ed. 666). In Louisville Gas & Electric Co. v. Coleman, 277 U. S. 32 (48 Sup. Ct. 423, 72 L. ed. 770), it was said: “The classification ‘must be reasonable, not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly circumstanced shall be treated alike' Royster Guano Co. v. Virginia, 253 U. S. 412, 415 [40 Sup. Ct. 560, 64 L. ed. 989]; Air-Way Corp. v. Day, 266 U. S. 71, 85 [45 Sup. Ct. 12, 69 L. ed. 169]; Schlesinger v. Wisconsin, 270 U. S. 230, 240 [46 Sup. Ct. 260, 70 L. ed. 557]. That is to say, mere difference is not enough; the attempted classification ‘must always rest upon some difference which bears a reasonable and just relation to the act in respect to which the classification is proposed, and can never be made arbitrarily and without any such basis' Gulf, Colorado and Santa Fe Ry. v. Ellis, 165 U. S. 150, 155 [17 Sup. Ct. 255, 41 L. ed. 666]. Discriminations of an unusual character especially suggest careful consideration to determine whether they are obnoxious to the constitutional provision.” In Gregory v. Quarles, 172 Ga. 45, 48 (157 S. E. 306), Mr. Justice Atkinson discussed a similar question, and spoke for the entire court on the subject of reasonable classification of business. It was there stated that “There should be some reasonable ground for such subclassification, some difference which bears a just and proper relation to the attempted classification; . . some reason connected with or growing out of that paramount cause (public health) relied on for
It is readily conceded that a just classification for some purposes might be made as between mutual companies and stock companies, but it does not follow that the same classification may be legally made as between mere employees of such companies. It is a matter of common knowledge that insurance agencies accept business subject to approval by the companies which they represent. It is not apparent, either from the statute or the brief of the plaintiff in error, how or in what manner the employee who accepts applications for insurance may affect the rights of those who aTe insured, or how the duties of the one affect the public interest differently from the other. The mere fact that one is an employee of a stock company, and therefore receives compensation from such company, does not stand upon any substantially different footing towards the insured than an employee doing the same business and employed by a mutual company. Neither of them can affect the rates or the terms of the contract. The terms of the statute apply not only to such employees of stock companies as may be paid a stipulated salary, but apparently apply to all such employees who receive any compensation, whether by salary or otherwise, from the company. Any such employee can not, under the statute, be licensed to do the business of an insurance agent. The statute does not undertake to regulate insurance agents. At one stroke it puts out of business one class. It restricts all such business to the competitor who is an employee of a mutual company. The only difference is that in one case the employee receives compensation from a stock company, and is forbidden to carry on the business, whereas if such an employee is an employee of a mutual company, he may be legally licensed to do business. It clearly is intended to impose a handicap on stock companies, so that the competitor will not be on even terms. If this may be constitutionally done, then the next step may easily follow — the actual outlawing of stock insurance companies. If this may be done in the case of insurance companies, it may be done in the case of any business affected with a public interest. I think the statute is unconstitutional and subject to the attacks made by the defendant iri error, because there is no just and proper relation to the object sought. The classification is wholly unreasonable and arbitrary.
Dissenting Opinion
Justice, dissenting. An act of .the General Assembly approved March 28, 1935 (Ga. L. 1935, p. 139, sec. 1), provides as follows: “No licensed fire or casualty insurance company or company writing fidelity or surety bonds shall write or issue any policy or indemnity contract on any risk in this State, except through a resident agent licensed by the insurance commissioner. . . The words ‘resident agent’ as used in this section are deemed to mean resident agents engaged in the solicitation of such business from the public generally, and shall not include any salaried employee of any insurance company doing business in this State; but shall include any agents of mutual insurance companies however compensated.” The Hartford Steam Boiler Inspection and Insurance Company, a stock company duly authorized to do a casualty insurance business in this State, and W. M. Francis, a salaried employee of such company, applied to the insurance commissioner for a license to be issued to such employee as an agent of the company to write or issue policies of insurance in its behalf. The commissioner refused to issue the license, upon the sole ground that under the act of 1935 a license could not be issued to any salaried employee of such company. Whereupon the applicants filed a suit for the writ of mandamus to compel the commissioner to issue a license to such employee in accordance with the application, contending that the provision of this statute which prohibits the licensing of a salaried employee, as distinguished from an employee who is compensated on a commission basis, is repugnant to the due-process clauses of the State and Federal constitutions, and also that the exemption of agents of mutual insurance companies, however compensated, results in an unreasonable and arbitrary discrimination against the plaintiffs, causing the act to offend the equal-protection clauses of such constitutions. Upon the trial of the mandamus case the court held that the provisions in question were unconstitutional on both grounds, and granted a mandamus absolute. To this judgment the insurance commissioner excepted.
1. The statute does not attempt to prescribe the amount of compensation to be paid to agents of insurance companies (cf. O’Gorman v. Hartford Ins. Co., 282 U. S. 251, 51 Sup. Ct. 130, 75 L. ed. 324), but as to stock companies places a restraint upon the manner of compensation to the extent of prohibiting license
2. While there is a difference between stock companies and mutual companies engaged in the insurance business, the difference is not such as bears any reasonable relationship to the mere manner of compensating agents, and thus does not afford a sufficient basis for classifying such companies for the purpose of providing that the one may not compensate its agents by salary, while the other may remunerate its agents either by salary or commissions. It follows that the exemption as to agents of mutual companies contains an arbitrary and unwarranted discrimination against stock companies and their salaried agents, and renders the challenged provisions of the statute contrary to the equal-protection clauses of the State and the Federal constitutions. Gregory v. Quarles, supra; Louisville Gas & Electric Co. v. Coleman, 277 U. S. 32 (48 Sup. Ct. 423, 72 L. ed. 770); Quaker City Cab Co. v. Pennsylvania, 277 U. S. 389 (48 Sup. Ct. 553, 72 L. ed. 927). It is my opinion that the judgment should be affirmed.