*1 11 wrongfully paid by Traders & utilities com- General was pany it, employee, wrongfully to the who received both thereby were pay rendered liable to to Traders & General compensation employee, paid by amount of theretofore it together enforcement, including with the costs of a reasonable attorney’s fee therefor.” [Emphasis added.] To apply fail principle here the announced in Traders & General, supra, legislative would pur- be contravention of the pose enacting 6a, supra. Sec.
In the Lloyds Haygood, case of supra, Fort Worth v. Court approval cited cases, including with several Traders & General, supra; Perry, Houston Gas & Fuel v. Texas Co. 127 102, 623, 79 1052; Ponder, S.W. 2d 91 2d S.W. Hanson v. Texas App., 35; Comm. Ry. 300 and Galveston-Houston S.W. Electric al, Co. et al v. Reinle et App., 783, 264 Civ. wr. ref. The Court then went on principle to hold: fundamental “[T]he * * * underlying the compensa- cases cited above is that where paid tion has injured employee, been representatives, to an or his they against later party feasor, file suit the third tort money paid representa- employee, recovered or his first tives, belongs compensation carrier paying compensa- tion, paid full, and until employee, it is representa- or his * * tives, rights have no funds [Emphasis added.] judgment Appeals of the Court of Civil should reversed judgment against should be rendered for Pan American Hi- Plains for the sum of $3250.00. Chief Justice Calvert and Associate Justices Griffin join
Hamilton in this dissent.
Opinion delivered October
Key Company, Life Western Insurance
v. al, Board of Appellees et No. A-8018. Delivered October 1961 Rehearing Denied November *2 STEAKLEY, Judge, sitting. JUSTICE GRIFFIN dis- senting. Moore,
Joe Graves, S- Dougherty Gee, Austin, & appellant. for Wilson, Atty. Gen., Will Werkenthin, Fred Ray Loftin, B. V. n Jr., Attys.- Gen., Asst. Austin, appellees. the Court. opinion delivered MR. SMITH JUSTICE appeal of the District Court from decision This a direct affirming County Commissioner action of Travis appeal Insurance Board of Insurance. Constitution; the Texas authorized Article 5 of Section 3b of 499a, Statutes, 1738a, Rule Vernon’s Civil Rules of Civil Procedure. company offices in a life with home insurance approved Policy Appellant’s
Abilene. Form Pic No. 27, 1957, August in accordance on Commissioner Code, the Insurance of Article 3.42 of with appellant immediately began public. offering March, In Insurance initiated Commissioner *3 hearings Policy regarding inquiries series of and Pic No. Form 19, 1959, lasted which until March the Commissioner with- when approval policy drew of the form in Order 3675. Com- Office gave action, including: missioner for that the several reasons his charged provided premium exceedingly high was for the benefits high justified only by promising re- in the and can contract 2, infra; Option provided turns from in in the investments for testimony policy provisions of certain evidence and view and the public hearing, presented of the at the was the Commissioner opinion policy provisions “encour- the which form contained aged unfair, inequitable, misrepresentation”, “unjust, and were contrary misleading, deceptive, public policy law and the to Furthermore, of this found that the state”. the Commissioner policy form Official No. violates Rule 20 of the Board’s Order May 26, 1958; policy participating dated a form not state; policy insurance authorized of “Guar- laws this Option” obligated Key to anteed Interim Endowment engage Western trust, investment, banking, in the or other similar busi- acting company policyholders, on ness behalf of the and the was powers; its Endowment” outside charter “the Interim Guaranteed portion provided policy reality in of a was return this, premium paid. In all found view of Commissioner 1, “By very appellant’s Policy and terms Form Pic No. itself, encourages provisions, contract and within the written deceptive unfair, inequitable, misrepresentation, unjust, and state, contrary contrary public to policy and of the Board of 20 of Board Order No. 957 State Rule Insurance, Official Code, obligates 21.21, Texas and Insurance engage Company business Key Insurance Life Western powers.” beyond The Commissioner then its charter and function findings conclusions, found that separately “these taken together, subject policy disapproval pro the entire under the (f)1 3.42, visions of Section of Article Texas Insurance Code. specifically separate The Commissioner finds that each of the disapproval policy conclusions is sufficient under Article 3.42.”
This order was affirmed Board State 31, 1959, ap- Order No. March dated 1959. March On pellant timely filed this Travis suit the 98th District Court of County to have reviewed and set aside action of Commis- sioner of Insurance and the Board Insurance. The ad- grounds ministrative order was attacked on included both challenge constitutionality statute under which (Article the action Code) was taken 3.42 of the Insurance withdrawing assertions that approval the order form was per- invalid for other than constitutional reasons. A injunction sought. manent After a trial court before the jury, judgment sought without a denying was entered all relief by plaintiff, reciting judgment the court in its “that the orders complained things supported by of are in all substantial evidence”. appeal This direct followed.
Policy plan by Key Form Pic No. 1 embodies offered West- ern opportunities in which insurance are benefits investment agents policy. offered in Key equipped one Some Western were presented with an audio-visual kit which graphic form with discussions of the value of the as an optimistic terms, say investment set out in the least. An alterna- *4 presentation substantially policyhold- tive oral was the same. All ers, regardless age, program have the same which features the same cost and policyholders. offers the same all benefits to All policyholders pay per year (“a day”). dollar a $365.00 —
Policy provided by Form Pic No. 1 contains five “benefits” designated policy; Benefits”, the are three “Death and two age as “Endowment Benefits”. death benefits at 35 are payments beneficiary following (A) to the in the amounts: $7,500.00 payable insured; (B) $2,000.00 on death of the at end pertinent part (f) 1. The of Article 3.42 is Section as follows: “(f) disapprove any The Board of Insurance Commissioners shall forthwith form, any previous approval if, only if, such or withdraw thereto any “(1) respect comply It in violation of or does not with this Code. provisions “(2) encourage misrepresentation It which contains are unjust, unfair, inequitable, misleading, deceptive contrary to law or to the public policy of this State. any title, heading “(3) or other It indication of its which misleading. insurance, on (C) each years the date of from $100.00 following insured. anniversary death of the the contract date payable are benefits” The returns characterized as “endowment living, as: insured, the contract are characterized to the if whereby “guaranteed the (A) a endowment” annual interim premiums year’s first company promises pay the to when $50.00 whereby Key “maturity paid; (B) endowment” been have single the $2,000.00 on promises pay payment of Western all, Most, policyholders have maturity the contract. if not date of “guaranteed en- annual interim (A) this elected Under above. controlling person this policy provides that “the dowment” the writing satisfactory may to the Com- elect in on forms contract according applied to one of the pany proceeds thereof have following options: payment due if the
“1. of the Annual Premium Toward premium paid. balance of proceeds May Company
“2. authorize the to transmit registered promptness thereof to a or author- with reasonable dealer, security agent ized of the underwriter or to the designated by person controlling Contract, mutual fund this purchase to offering shares or fractional shares or both at the current any
price for account of the Insured mutual controlling designate person fund Contract registered in the state of the Insured’s residence.” which is According evidence, policyholder no has ever exercised Option Option actuary heart is at the of this case. The who designed Option testified that 2 is makes what “attractive”; Annual Interim Endowment that he Guaranteed doubted company whether the could sell the extent 2; “designed Option and that to be without sold (Option 2)”. comparable the merits of Since insurance bene- on approximately $200.00, policyholders can fits be obtained electing Option pay company 2 in effect fee of $115.00 year year per simply mail thereafter first and $65.00 “guaranteed ($50.00 annual interim endowment” policyholder’s years), year, subsequent to the investment first the company. $100.00 appellant Among points presented, contends that other *5 from of the orders State Board of appeals to the District Court are of Insurance to be deter the Commissioner Insurance and rule a trial de by preponderance of the evidence in novo mined by being the Board rather than and decided heard of issues by determined the substantial evidence rule done in this as was case. We have point concluded to sustain this under the facts of this case. requires Such action judgment that the the trial of court be reversed and the cause remanded to that court for a new disposing trial. point, however, Before pass of this we shall points challenge authority which of the Board of Insurance and approval the Commissioner to withdraw by appellant. form issued Appellant’s point provision first of error of 3.42(c)2 of the Insurance Board of Code which authorizes the approval Commissioners to withdraw form of any “at time” is unconstitutional. insists that since the power approval to withdraw is not mentioned in the title of 3.42, III, 1957 amendment to Article then Article Section of the Texas Constitution has been violated.3 Legislature, Regular (55th The title of Bill 501, Senate Ses- sion, Acts of p. 1463), by Ch. which Article 3.42 was amended, is as follows: “An Act to amend the Insurance Articles 3.42 and 3.43 of (Acts 1951, Legislature, amended) Chapter Code 52nd
relating filing approval by In- with and the Board of endorsements, surance policy forms, Commissioners of all by any life, riders accident, issued and health or hos- accident pitalization state; company, doing insurance in this business prescribing filing approval providing method of for its thirty days disapproved approved within unless such or within by Board; time grounds providing specific written order for disapproval; any providing for review orders; repealing such herewith, providing all laws conflict “(c) Every filing hereby required thirty 2. such shall be made not less than days any issuance, delivery thirty expiration in advance of such or use. At the days approved by the form so filed shall be deemed Board Insurance Com- prior affirmatively approved disapproved missioners unless thereto it has been or may the written order of said Board. The Board of Insurance Commissioners days thirty period extend not more than an additional within which it may affirmatively approve disapprove any form, by giving so such notice of expiration 15-day period expiration such extension before of the initial at any period, prior such extended and in the absence of such affirmative approval disapproval, any approved. such form shall be deemed The Board may any any approval Insurance Commissioners withdraw at time. Approval any such form such Board shall constitute a waiver of unexpired portion waiting period, periods, provided.” herein (except general appropriation bills, 35. “Sec. No bill which embrace subjects accounts, ap- moneys the various for and on account of which are propriated) subject, expressed shall contain more than one shall be any subject act, expressed title. But if shall be in an embraced which shall not he title, only thereof, such act shall be void as to much so as shall not be so expressed.”
17 declaring saving clause; severability and an emer- gency.” legislators approve helps not 35 assure that our will
Section legislation containing provisions, unnoticed and unwanted even though legislative always press in the and din of it is not affairs possible parts proposed for them to examine all the each bill. Sutherland, Holman 571, v. Cowden & ref. In- 158 S.W. wr. Gulf James, surance 424, Co. Appellant v. 143 Texas 185 2d 966. S.W. details, maintains that purporting title above “descends into changes wrought amendment, reveal the substance of the gives changes but body no hint incorporated of other in the bill.” ways cites cases which deal with various may violated, including: Section independent 35 new subjects amendatory bill; in an captions which conceal the true purpose of a reasonably apprise legislator statute or do not scope prevent surprise; of the bill so as to fraud or provisions caption having relevancy in the principal no object of Leonard, 535, the Act. See Arnold v. 114 Texas 273 799; Carpenter, S.W. Cattle Pasture Ward v. Co. 109 & 105, 521; 200 Engineers City S.W. Board of Water v. of San Antonio, 111, 722; Louis, 155 Texas 283 2d S.W. Hamilton v. St. Ry. Co., S. F. T. However, & 115 Texas present closely analogous case is more to Board of Ins. Com. Sproles Freight v. Lines, Motor App., Texas Civ. 769, wr. ref. Appeals There the Court of Civil considered an giving attack on a statute the then Board of Insurance Commis- authority sioners the premium fix rates for automobile in- surance. (Chapter 253, Legisla- The title of that Act Acts 40th ture, 1927) reads: “An Act to authorize the Commissioner of In- surance Texas to fix the rate of in- automobile surance, providing penalty for violation of the there- of, declaring emergency.” provided, among Act itself things, other that “the Commissioner approval withdraw * * * judgment rate if unjust, unreasonable, in his such rate is inadequate provide obligations for the assumed made, here, insurer.” Attack was as the statute violated Constitution, because, among Article Section other reasons, “its title subject does not contain the matter relative principal objection provision thereto.” The was that there was no authorizing change in the title the Board to the rates after once having approved appropriate them. The court considered the re- quirements title, legis- subject proposed of a and held “the sufficiently lation is stated the title to the Act.” Faced with problem, a similar 3.42, supra, we hold that the title of Article requirements. meets the constitutional erred Next, appellant Commissioner contends interpretation Option
disapproving the Commissioner’s because dowe this contention 3.42(b) too literal. Article With agree. 3.42(b) follows: attached required or is to be application form which is “No *7 certificate, rider or endorse- and no policy, contract or to, connection with printed or used in ment to be attached Paragraph (a) contract, in any policy, certificate described or delivered, state used in this issued or Article shall be of this (a) this Article unless any paragraph of by insurer described application, or endorsement been rider the form of said ap- and Board of Insurance Commissioners filed with the Paragraph (c) of this by provided in proved as said Board apply Provided, however, shall not that this Article Article. dis- manner relate to the or endorsements which to riders of rights and or to the reservation tribution benefits benefits of of policies, certificates, and which are contracts and such under policy, request contract or holder the used at the the of of added.) (Emphasis certificate.” supra, Option 2, obviously has not viewed The Commissioner meaning of the above within the a “rider or endorsement” policy Option part the itself. Article, 2 a of rather considers but Option argues by 2 could result achieved that the same executing assignment policyholder an achieved have been dealer, at- same could have been securities separate paper piece and would then have tached to of been option neither a the control The without Commissioner. sense, literal and the rider nor endorsement Commis- interpret literal The chose to the statute in the sense. sioner doing. actually, provision did not err in so The was Commissioner literally, physically part itself. The Commis- option presence that of the sioner well have reasoned obtaining body probably of the instrumental in the policyholder Option per selection of 2 if for no other cent key policyholder acquiescence reason than it lulled the into in the very body option physical presence in its being emphasizing presence by separate rather than its apart as a rider. error, 3.42, point appellant its fourth asserts: “Article
In Code, vague grants sweeping is so Texas Insurance powers, such by any guides, standard or that it results in unbridled delegation Legislature authority by an unconstitutional Appellant points the Board of Insurance.” out action “encourages provision neces- misrepresentation” Board under citing sarily opinion”, matter of Railroad means “a Commission 66, 161 Company, v. Shell Oil 139 Texas 2d 1022: “* * * law constitutional principle It is well-established regulating law- any of a statute or ordinance the conduct authorizing granting industry or with- ful holding business or designated ar- permits of licenses or as the officials bitrarily choose, setting guide standard without forth govern distinguishing officials in individuals such between entitled, permits entitled to and those not such licenses so unconstitutional and void.” present prohibition does not fall case within case, regard supra.
Shell We hold that Article 3.42 in this present analogous closely constitutional. The case is more Jordan Insurance, v. State Board 160 Texas upheld worthy
That case public the standard confi- “not upholding standard, dence”. In the court Administra- cited Treatise, par. Davis, *8 2.03, by tive Law were Professor there wherein given general phrases employing numerous illustrations of standards, terms which have been held as sufficient administrative therefrom, quote and we as follows: “(T)he Supreme (of standards Court the United States) adequate ‘just reasonable’, ‘public has held include interest’, navigation’, ‘reciprocally ‘unreasonable obstruction unequal unreasonable’, ‘public convenience, interest or necessity’, quality’, ‘tea of inferior competi- ‘unfair methods of tion’, variations’, ‘unduly unnecessarily compli- ‘reasonable or holding cate company system ‘unfairly the structure’ of a or inequitably voting among power or security distribute holders’.” “encourage misrepresentation” appears The equally standard “unworthy public confidence”, as definite standard as the as well as the standards cited. true test is whether the idea phrase reasonably phrase embodied in the clear. The meets that test. appellant’s to a of
We come now consideration contention that appeals to the district court from orders of the State Board of Insurance and Commissioner of Insurance are to be determined preponderance of the evidence rule in a trial de novo and the substantial evidence rule. insists that judicial constitutional, review statutes are and that the trial court testing complained erred in the orders the substantial evi- applicable express provisions rule, contrary dence are: pertinent review statutes. The statutes 3.42(g) provides: Article
“Appeals any Insurance Com- order of the Board of from taken to the Dis- missioners under this Article issued County, Texas, with trict Court of in accordance Travis Code, any amend- Subchapter 21.44 of of this Insurance F ments thereof.” any part, Subchapter provides,
Article 21.44 F party any dissatisfied Board of decision of the with setting particular “may petition Commissioners file a forth objections to of Travis such District Court decisions” County, Texas. follows:
The statute a standard of review as sets forth questions action of law “The shall not be limited to apply, such rule but action substantial shall not evidence to the same shall be tried a trial de novo and determined appeal provided extent as now in the case from County added.) (Emphasis Justice Court Court.” (f) partly Article 1.04 of the Insurance Code is follows: any company party “If at insurance or other interest be order, rate, rule, decision, regulation, dissatisfied act with ruling adopted by Board Insur- administrative State ance, company party interest after fail- dissatisfied at ing get Insurance, may relief from the Board file *9 petition setting particular objection a forth the to de- cision, regulation, order, rate, rule, ruling, administrative act or them, or to either or all in the District Court Travis Texas, County, elsewhere, against and not the State Board of precedence Insurance as defendant. all other causes action shall have Said over nature. The action on the docket of different questions shall not be limited to the substantial evi- law and apply, dence rule shall not but such action shall be tried and determined a trial de novo to the same extent as now provided appeal in the case the Justice Court to for from County (Emphasis added.) Court.”
It is clear that the district court has not afforded trial de provided by statutes, contrary novo as the above to the but according ruling evi- the “substantial the Board’s to reviewed ruling Key on the dence rule” attack and held that Western’s concludes: failed. The Board’s No. 7635 Order CONSIDERED, ap- “THEREFORE, it ALL PREMISES pears Policy to Form Pic the Commission of Insurance by very Key Company, No. 1 of the Life Insurance Western itself, provisions, terms and and contract within written encourages unfair, misrepresentation, inequitable, unjust, misleading, public deceptive contrary and of this state, contrary and is to 20 of Official Order No. 957 Rule Insurance, 21.21, Insur- State Board of and Article Code, obligates Key Company ance Life Insurance Western engage powers. beyond its charter business function findings together, conclusions, separately These subject taken disapproval the entire under the * * *” 3.42, of Article Texas Insurance Code. by reviewing ruling
The district court
of the Board under
applicable
substantial evidence
has in
rule
effect found the
review statutes in this case to
be unconstitutional
insofar
they provide
“preponderance
review. In
evidence”
words,
other
Key
held,
effect,
the district court has
that to afford
novo,
preponderance
Western a trial de
under the
rule,
evidence
trespasses
govern-
the court
on that area of our
legislature,
ment
violating
reserved to the
thus
Sec-
tion
by
Texas Constitution.
hold that a review
We
courts
by
of the action taken
the Board of Insurance under Article
3.42, supra,
may constitutionally
in this case
had under the
be
“preponderance of the evidence” standard. The district court was
authority
without
nonstatutory
substitute
standard for that
prescribed by
Key
the statute.
entitled
Western was
review
trial de novo. Review
trial de
all
novo has
the attributes
original
of an
reviewing
action in the
court. The trial court must
weigh
“preponderance
evidence
of the evidence” stand-
ard. Trial de novo has been defined as “A
trial or retrial
new
if no trial
had
whatever
been had in the court below.” See Black’s
Dictionary;
Morales,
App.,
Law
Ex Parte
Texas Cr.
53 S.W.
“appeal”,
indepen
108. Trial de novo is not an
but is a
new
Corporation
dent action.
Peoples
See
Commission of Arizona v.
Freight Line,
(Sup.
1936) ;
Syn
for the of an administrative is a that has *10 jurisdictions vexed the courts of this and other numerous times. 22 jurisdictions
There are numerous cases in Texas and where other applied the courts rule to re- have the substantial evidence particular in- view of statute administrative decisions where complete apparently volved in redetermina- those cases called for a Department City example, tion of of the issue. Fire v. See Worth, ; 505, (1949) Bradley Ft. v. 147 Texas 217 2d 664 S.W. Liquor Board, App., Texas 108 2d 300 Control Civ. S.W. 362, (1937), history; Marsh, no 224 writ Jones v. 148 Texas ; Fredericks, 262, (1949) Appeal 280 2d 198 of Mich. 285 McLeod, 676, (1938); City 464 of 199 Miss. N.W. Jackson v. (1946). 24 2d 319 So. govern- provides powers
The Texas Constitution Legisla- departments: ment shall be divided into three distinct tive, Executive, Judicial, except ex- and that in instances pressly permitted by Constitution, person or collection “no being persons, departments, of one of these shall exercise * * power properly others, attached to either of the 2, 1, (or Sec. Texas Article 2 Constitution. Under Section of provisions states) similar contained in the of other constitutions legislatures legis- calling Acts for the review of rulings by lative determinations or a trial de novo in executive judicial tribunal have been declared invalid as violative of separation powers. power constitutional A au- doctrine of thority lawfully delegated directly judiciary which cannot be by Legislature provision because of the constitutional cannot be conferred trial courts means of de novo after an hearing. Lubbock, City administrative Davis v. 160 Texas (1959) ; Jackson, 326 2d 699 v. Md. 52 A. Cromwell ; (1947) Mississippi Commission v. Insurance America, (1948). of North 203 Miss. 2d 165 Co. So. (by determining “The criterion used the courts in the con- reviewing stitutionality statute) of the review is whether the required judicial, court is to exercise a function that is deemed non ** perplexing problem *. The is the determination what is nonjudicial.” Davis, judicial and what is Administrative Law legislative Treatise, (1958). Many 29.10 definitions of func- Sec. tions and functions have been set forth various courts. Supreme Court of United States stated: investigates, judicial inquiry “A declares and enforces lia- they present past bilities as stand on facts and under laws supposed already Legis- purpose That exist. and end. changes lation on the other hand looks to the future and exist- ing making applied conditions a new rule to be thereafter part subject power.” to all or some of those to its Prentis v.
23 Ed., 150, Sup. Line, 210, Atlantic L. 29 Coast 211 U. S. 53 Ct. 67. Corpus 306,
In 73 Juris it is said: Secundum “It final act and has been stated that the nature of the process operation, the character of the and rather than the general authority exercised, character of the determinative. body adjudicatory The action of the administrative or officer is than, particular immediate, in character if it is rather legislative rule-making action, general in the case of or future in effect.” reaching
These
specific
definitions aid us in
an answer to the
question facing this
Court:
Is the determination that
“encourage
form contains
misrepresentation
which
* * *”
unjust, unfair,
are
inequitable,
“judicial
function” or a
“legislative function” ?
Appellee urges
by
the determination made
Board
legislative
in the instant case is a
function in which the Board
“legislative
utilizes
discretion”. With this contention we do not
agree. The instant
controlled,
case is
by appellee,
as claimed
by
holding
of this
City
Court in the case of Davis v.
of Lub-
bock,
38,
160
(1959).
326
Appellee
2d
fails
appreciate
is a
types
there
distinction between the
of de-
by
cisions
agencies.
rendered
different
administrative
Some
agencies perform judicial
quasi-judicial
functions;
ex-
others
powers
ercise
essentially legislative.
which are
Harmon,
In re:
118,
2d
(1958).
Wash.
Under Article of the Insurance the Board of Code may disapprove previous Insurance Commissioners or withdraw approval policy form: “* * * only if, and if
(1) It respect comply is in in violation of or does not with this code.
(2) provisions It encourage misrepresenta- contains which unjust, unfair, misleading, tion or are inequitable, deceptive or contrary to public policy law or to the of this state. (3) any title, It heading, or other indication of its misleading. (Emphasis added.) which is only “The Board can authority exercise as is conferred byit law in clear and unmistakable terms and the same will being not be construed as implication.” conferred Board of Co., Commissioners v. Guardian Life Ins. 2d (Comm. App. 1944). Refining See also Humble Oil & Co. v. Texas, Railroad Commission of 9; 133 Texas 128 S.W. 2d Commercial Standard Ins. Co. v. Board of Insurance Commission ers, App., Texas Civ. Therefore, ref. wr. Board in the instant case could exercise no more discretion than the terms clearly provide, of the statute appears and it from a reading literal of the statute that the Board was not to have broad legislative discretion. The Board of Insurance is Commissioners empowered disapprove specific form for only certain reasons may companies dictate to the particular insurance form to only duty be used. Its is to determine whether the form policy approval submitted for its pre meets the standards scribed the statute. The action of the Board of Insurance Com particular immediate, missioners “is than, rather as in the legislative rule-making case of action, general and future in effect”. forth in dissimilarity set the standard The between case, in the Davis
3.42(f) the Court and the standard before supra, apparent. Insurance Commission readily The Board of “of a 3.42(f) ers does not make determination under Article case, supra. pure public question policy”, the Davis as in only it disapprove form “if if” violates Board provisions statute, provisions of of the statute. Under empowered disapprove or State Board of Insurance also contrary to approval policy if withdraw of a form the form particular public policy It the provision provides of the state. is to noted that public is to be no standard guide govern measured. The absence of standard or Commissioner of Insurance or the Board of Insurance type contrary the determination of what form would be public policy would it to discretion of the leave the unbridled disapprove Commissioner and the Board to in the first instance previous approval withdraw of a form. This would leave right subject arbitrary to enter into insurance contracts discretion of the This of itself would Insurance. Commissioner the State Board of Railroad
render statute void. Com See Company, supra. mission v. However, possible, Shell Oil if it is duty way of the courts to construe such a as to a statute in *13 repugnancy avoid may to the Constitution. This be done hold ing “public policy” speaks that the of which the statute is defined right in public the statute itself. It is the of in of the be free encourage “provisions surance contracts which contain which misrepresentation unjust, unfair, misleading, or inequitable, are * * deceptive Thus, the determination the Board made of clearly quasi- (f) Commissioners under is Article 3.42 a appeal by function. Such is determination reviewable on a trial de preponderance novo under the of the evidence rule. This particularly court, made clear when we consider that the the facts, determining trier of the whether or not the “en courages misrepresentation” is not limited to a consideration of phrases alone, may words and of the but consider out side, factors, pointed out, relevant as herein its evaluation of phrases. these words and Supreme Minnesota, early dealing
The Court of in an case problem determining with the given function whether “legislative” “judicial”, or said: general Legislature proposition “As lawof cannot delegate legislative powers judiciary require or judges any of the various state do which courts acts judicial. Thompson, are not in their nature Kilbourn v. 103 * * * 168, cited; 377, U.S. L. El. it is 26 cases there But 26 always easy the distinc-
not to discover the line which marks legislative functions, executive, judicial, tion between ambiguous upon imposed when duties of an judicial character are any in favor officer doubt will be resolved validity statute, judicial. powers and the held to be Com’rs., Foreman Board Minn. N.W. 207. v. Co. 64 67 many require In performance instances the acts are to done be functions, judicial and others some of which are legislative executive, interwoven and and these are often so they readily separated and distin- connected that cannot be guished. attempt this is the case court will When combination, against unravel sustain the act but will Bates, objection.” Patterson v. constitutional Minn. ex rel (1905). N.W. Appellee upon.the relies and Merchants also case of Farmers Ins., App., Ins. Co. v. State Board Texas Civ. Appeals ref.
wr. n.r.e. In that case considered of Civil Court appellant a statute novo if an were which authorized a trial de applica- respecting “dissatisfied order Board with permission tion write than the maximum insurance for less [for holding prescribed by rate the Board The court of Insurance]”. statute unconstitutional the case of Canal Co. cited Southern Engineers, App., 311 v. State Board Water Civ. 2d 938. present distinguishable the Farmers and
The case is from question Merchants case of whether a case. That involved “inadequate” “unfairly discriminatory”. rate determina The depends granted tion whether or not a rate should deviation variety are These factors of factors in the statute.4 listed “legislative or the would involve the discretion” use of deny “quasi-legislative” power. exercise Board inadequate application resulting premium “if it finds the would be unfairly discriminatory”. question is a a determination Such involving legislative susceptible discretion, to full broad and not *14 Therefore, appear by judiciary. that redetermination the it would although case, supra, decided, correctly it does the Farmers govern disposition not the of instant case. the * * considering any application give to 4. “In Board shall consideration the organizations applied by rating generally the factors or used insurers rates; rating organizations determining the financial insurers or in the bases for insurer; insurer; operation expenses of of such condition the the method of insurer, pertinent experience past prospective, including where the loss the of catastrophe any, conflagration hazards, both and without this the if within State; reasonably involved to a to all related to the kind of insurance factors insurer, and, underwriting profits margin the in case for an for the reasonable 5.26, insurers, policyholders’ participating Texas Insur- to Art. dividends.” ance Code. problems Appellee points and difficulties which out numerous attempting provide a de will to be encountered the courts type This novo decision. Court review of administrative pos- supra, Canal, emphasized results Southern the dire also sibly these views attendant from such a course of action. With is this Court in full accord.
However, may the fact that a statute have mischievous declaring even disastrous results is not the same to basis for be * * “* perhaps unconstitutional. It reiterated that should legislative acts, Courts have no concern with the wisdom of but give it plain duty is our purpose plan to effect to the stated Legislature, although us it ill or im- to seem advised * * *” practicable. Betts, Board of Insurance v. 158 Texas (1958). also, 2d 279 of Insurance See Board Com- Co., missioners v. Guardian Ins. Life (1944). 2d 906 We therefore hold that insofar as the trial held the court applied review statutes unconstitutional to instant case, it was in error. The function of the Board of Insurance 3.42(f)
Commissioners quasi-judicial, under Article and there- fore properly the courts could make the same determination on trial de novo. case,
In view trial necessary another deem we it to points discuss appellant pertaining of error raised to the relevancy and admission certain evidence before Board and the trial court. premium attacks admission rates before authority Board and contends has Board no to regulate premium rates. The trial court refused to allow testi-
mony pertaining premium premium rates. find that the We charged rate evidentiary determining whether value “encouraged misrepresentation”. premium If rates charged high high were so unreasonably returns must be promised, encourage misrepresentation. this would
Appellant insists that “If rate has be looked into in order supposed discover the inequity, provisions then it is not the which cause it appellant the rate.” but fails What recognize is that the rate undeniable on effect whether policy might necessarily have be mis- represented policy; in order to sell the therefore evidence of the charged determining “encourages rate relevant in if
28 retrial, misrepresentation” on and if in the trial court introduced charged premium as rate would be admissible. use of “encourages not the circumstantial evidence of or whether regu- indirectly attempt misrepresentation” directly to is not or rates. late pro- meaning next maintains that the provisions, unambiguous, are and that such
visions clear standing Therefore, appellant alone, anything. misrepresent do not policy provisions in rela- reasons error to that it is consider the anything policy itself. At tion to outside the four corners recurring question point again turn we our attention ato con- Board limited in this case. the Court and the be Should alone, may phrases sideration of the words and outside, relevant factors its and the Board consider Court phrases? evaluation of these words and phrase determining placed In what construction is to be on “encourages misrepresentation” (2) contained in Subdivision * * * language it other indication “If policy] [the misleading” of its which is contained Subdivision following 3.42(f), (3) supra, mindful of Article we are elementary statutory up Texas summed in 39 rules construction 218, supported Jurisprudence, pages 217, substantial at authority: Texas construed with “Thus it settled that a statute will be general and the scope, purpose, intended its reference to its ends or * * * sought statutory objects be attained. Where * * *
language meaning than it is to be taken admits of more one scope in such a intent of the sense as will conform to the act, purpose, certainly accomplish and will its best most doing language. statutory plain without Thus where violence existing evils, designed remedy it statute is afford will, signification given should a reasonable afford remedy. Contrariwise, repugnant construction object defeat, unduly of the law thwart or limit will plain purpose, possible.” will if be avoided 146; parte Flake, Rep. 216, And see: Ex 67 Crim. 149 S.W. 882; 672, 924, State, Rep. Crooms v. 40 Crim. 51 S.W. 53 S.W. Magnolia Walker, Petroleum Co. v. 125 Texas 83 S.W. 2d (cert. 623) ; Wray 929 den. 296 U.S. Bank v. Citizens National (Comm. 171; Bounds, App.), App.), (Comm. 288 Red v. S.W. Carlton, 544; Trimmier 296 v. S.W. Vaughn, 1070; Highway of Texas v. er. Comm. *16 ref.; Bida, 420, grounds at Adams v. 83 2d rev. other S.W. on Longoria 268; 693; State, 84 State, 2d 2d Oliver v. S.W. v. 71 S.W. 150, 604; Higgins Rinker, Rep. 65 47 Crim. 144 v. S.W. Irrigation 393; Wade, 148; Imperial Texas Shelton v. 4 Texas Jayne, 395, 575; Co. v. 104 Texas 138 v. S.W. Co. Schriew er, 774; 141, App., 38 2d S.W. modified 53 Comm. S.W. Smalley, First Texas 550; Ins. State v. 111 Texas Co. Vaughan,
Cannon’s Administrator 12 Texas Ex v. Miller, Parte Rep. 85 Crim. principle
With this us it evident that before becomes clearly court and considering authority the Board would within their in be pertinent arriving decision, all factors in at their just succinctly policy of the words As alone. has been stated a Louisiana court in a situation similar to our own: “* * * State, it Secretary is true that While not the Commission, responsibility power enjoin ‘any has the deceptive unfair or practice prohibited’, act or LSA-R.S. 22:1215, we properly feel that the Commission could take large notice newspaper ‘informing’ of the advertisements public of membership plan State Farm’s fee which in the Com- opinion misleading. mission’s were The is an insurance Code integrated whole. required The Commission is not to leave the stable door unlocked until the horse is stolen.” Farm Mutual Automobile Insurance Co. v. Louisiana Insurance Rat- ing Commission, al, (Ct. et App. La.). So. 2d 888 Appellant contends that the Board and the must look Court only to the policy. agree. form of the We do not hold that the We justfied Court will considering be in outside factors in its de- termination. The Board power, and the Court must have in approving disapproving policy, only to consider not policy terms of itself, form policy also but the fact that the will be used in an undesirable scheme. Our conclusion does not give the Insurance opportunities Board unbridled abuse powers. Legislature carefully provided appeal for from guard orders of against the Board to present such abuse. This action is example an excellent of the extent to which such an appeal perfected. can be
Finally, appellant contends, “The trial court erred in receiv- ing evidence, considering upholding as a for basis question, testimony orders in concerning and exhibits the means sale, was sold or advertised for because ad- vertising may materials or directly methods not be utilized ap- ground of, disapproval
indirectly or withdrawal as for contention of, appellant’s to that proval answer form.” Our suppose Commissioner is that it would be unreasonable to disregard rela- have a material facts which or the trial court must here, where, especially inquiry, tion to the matters under their question, provision advertising directly welded to urges 2, supra. Appellant not the intent Option that it was ground advertising Legislature deceptive practices be agree, advertis- disapproval this we but form. With statutory determining ing if the practices relevant be grounds from the policy form aside A exist. consideration policy as if advertising accompanying view the it would *17 vacuum”, phrased that appellee it. hold “in a has We advertising practices provisions policy and trial court view together acceptability policy This of the itself. to determine the attempt by or the Court to is no means Commissioner regulate advertising. judgment and case is reversed
The of the district court any subsequent is that court with directions that remanded to opinion. proceed this trial in a manner not inconsistent with Opinion delivered October CULVER, GREENHILL, joined by
MR. JUSTICE JUSTICE concurring. agree
I that the trial of the statute are de novo disagree policy constitutional. But I that itself should struck be misrepresentations representations made down because of oral by agents selling Any policy policy. in connection with the being it, capable misrepresented. of insurance I read is And as nothing illegal, policy itself contains which is which of itself misleading fraudulent, peculiarly to or which lends itself misrepresentation. Legislature
The has clothed the Board of Insurance with power in Article deal with broad 21.21 of the Insurance Code to stop misrepresentations advertising and in con- and made false policies. nection with the sale Board is also of insurance given power any person call it is accused of before who deceptive practices competition acts or or unfair methods of in authority It cease and business of insurance. to issue stop objectionable practices. me, desist orders this would To objectionable proper approach practices have been the this case. originally Legislature,
As Bill introduced Senate Code, became Article 3.42 of the Insurance authorized disapprove policy “(d) purchase Board to of such form If the policy being by deceptive advertising.” authority This solicited legislative in- was deleted enactment. before This evidence of misleading advertising tent that practices outside with, separately should be dealt and that should judged by be its own terms. agree misleading deceptive practices I should be stopped. disagree only I they in the manner in which should be
stopped. dissenting. MR. JUSTICE GRIFFIN agree opinion
I cannot majority with the and I therefore re- spectfully dissent.
I holding dissent from the the matter content policy provisions form of insurance can tried de novo. The content and form policies certainly of insurance most are administrative matters and not matters. In the first in- stance, permit policies would, the courts to write insurance my opinion, lead great to interminable confusion and lack of uniformity. procedure Such approval would lead of one form of company, for one approval of another and different company. form for another
Opinion delivered October Betty
Ex Parte Rhodes No. A-8552. Decided December Rehearing January 10, Denied S.W. 2d