Title: Allen v. Pavach

State: indiana

Issuer: Indiana Supreme Court

Document:

335 N.E.2d 219 (1975)
Lloyd M. ALLEN, As Commissioner of Department of Insurance, State of Indiana, Appellant (Defendant below),
v.
Anthony PAVACH and Damon S. Roach, Appellees (Plaintiffs below).
No. 574S107.

Supreme Court of Indiana.
October 7, 1975.
Rehearing Denied December 4, 1975.
*220 Duge Butler, Jr., Butler, Brown & Hahn, Indianapolis, for appellees.
Theodore L. Sendak, Atty. Gen., Arthur M. Small, Deputy Atty. Gen., Indianapolis, for appellant.
GIVAN, Chief Justice.
This appeal arises from Appellees' action for injunctive and declaratory relief in Marion Superior Court. This Court entertains jurisdiction pursuant to Ind. Rules of Proc. Rule AP. 4(A)(8), as the trial court found Acts 1973, P.L. 326, §§ 4 and 5, to be unconstitutional.
The facts were stipulated as follows:
1. The plaintiff is a resident of Marion County, State of Indiana, and is a Professional Bail Bondsman.
2. The defendant is the duly appointed Commissioner of the Department of Insurance of the State of Indiana.
3. The plaintiff is registered and has qualified as a Professional Bondsman, pursuant to Ind. Ann. Stat. 9-3701 et seq., with the Department of Insurance, State of Indiana.
4. The First Regular Session of the 98th General Assembly of the State of Indiana passed Public Law 326, which statute amends Ind. Ann. Stat. 9-3701.
5. The plaintiff's license to operate as a professional bondsman expired on September 30, 1973, but all such licenses were extended by the Insurance Commissioner to date of October 8, 1973, which date falls on a holiday.
The issues presented by the complaint are:
Whether Public Law 326, Acts of 1973, has deprived the plaintiff of his right to *221 due course of law under the Indiana Constitution, Article 1, Sec. 12, his right to equal protection under the Indiana Constitution Art. 1, Sec. 23, and his right to due process of law under the Constitution of the United States, 14th Amendment, Sec. 1, by:
Following argument and submission of briefs to the trial court, the judge made the following conclusions of law:
Appellant raises one issue for review: Whether the trial court erred in finding §§ 4 and 5 of P.L. 326, Acts of 1973, to be arbitrary and unreasonable and therefore unconstitutional.
Appellees admit that the bail bond business, because of its close relation to the criminal justice system, is a proper subject for legislative regulation. In fact, other jurisdictions have uniformly so held. See e.g., Jackson v. Beavers (1923), 156 Ga. 71, 118 S.E. 751; McDonough v. Goodcell (1939), 13 Cal. 2d 741, 91 P.2d 1035. See also Annot., 13 A.L.R.3d 618 (1967).
At the outset, it should be noted that a corporation is a "person" within the meaning of the equal protection and due process provisions of the United States Constitution. 18 Am.Jur.2d Corporations, § 21.
The equal protection clauses of the United States and Indiana Constitutions do not prevent the legislature from indulging in classifications which treat one group differently from another. The test is whether the difference in treatment is an invidious discrimination. Lehnhausen v. Lake Shore Auto Parts Co. (1973), 410 U.S. 356, 93 S. Ct. 1001, 35 L. Ed. 2d 351. Similarly, the due process clause protects only against invidious discrimination. Ferguson v. Skrupa (1963), 372 U.S. 726, 83 S. Ct. 1028, 10 L. Ed. 2d 93. Generally, if a classification has a rational or reasonable basis, it will be sustained. Graham v. Richardson (1971), 403 U.S. 365, 91 S. Ct. 1848, 29 L. Ed. 2d 534; State ex rel. Miller v. McDonald (1972), Ind., 297 N.E.2d 826, 37 Ind.Dec. 332. Corporations may be classified and treated differently when the classifications are based upon distinctions having a fair and reasonable relation to the purpose of the legislation. Atchison, T. & S.F. Ry. Co. v. Vosburg (1915), 238 U.S. 56, 35 S. Ct. 675, 59 L. Ed. 1199. Further, *222 the enactment is presumed to be valid, the burden resting upon the party challenging its validity to overcome the presumption. Graham, supra; State ex rel. Miller, supra.
Acts 1973, P.L. 326, § 4, amending the deposit requirements of professional bondsmen, reads in part, as follows:
IC XX-X-X-XX (Burns' Ind. Stat. Ann., 1975 Repl.) pertaining to the insurer's deposit, reads as follows:
The State is attempting to protect itself from bail bond forfeitures and to insure that defendants will be present for trial. Although the statute provides two different deposit requirements for the writing of bail bonds, a rational basis for the differentiation can be found. In determining the constitutionality of statutes, legislative classifications will not be set aside if any state of facts rationally justifying them is demonstrated to or perceived by the courts. United States v. Maryland Savings-Share Ins. Corp. (1970), 400 U.S. 4, 91 S. Ct. 16, 27 L. Ed. 2d 4; State ex rel. Miller v. McDonald, supra.
The ability to meet forfeitures is dependent on the assets of the bondsman. The assets of an "insurer" are required by law to be substantial. See IC XX-X-X-XX, (Burns' Ind. Stat. Ann., 1975 Repl.); IC XX-X-X-XX, (Burns' Ind. Stat. Ann., 1975 Repl.); IC XX-X-XX-X, (Burns' Ind. Stat. Ann., 1972 Repl.). Further, insurers are heavily subject to control by the Department of Insurance. IC 27-1-1-1, (Burns' Ind. Stat. Ann., 1975 Repl.).
On the other hand, professional bondsmen are not required to have a minimum amount of assets, nor are they as heavily regulated by the Department of Insurance. Thus, there are real and substantial differences between professional bondsmen and insurers relating to the protection of the State against forfeitures which justifies treating the classes differently. Given the above differences, the trial court's finding that the standards are arbitrary is unfounded. If the classification has some reasonable basis, it does not offend the Constitution merely because the classification is not mathematically precise or because in practice it results in some inequality. Dandridge v. Williams (1970), 397 U.S. 471, 90 S. Ct. 1153, 25 L. Ed. 2d 491. Further, the greater deposit required of individuals decreases any chance that a bondsman would forfeit a deposit and migrate rather than pay a large judgment. Because of its required assets and multiple investors, an insurance company is relatively stable of itself.
*223 Appellees also urged below that §§ 4 and 5 of P.L. 326, violates their rights to due process and equal protection by excluding surety bondsmen from deposit requirements and by establishing a limit upon the amount of bail bonds that could be written by a professional bondsman while not setting a limit upon surety bondsmen. These arguments are based upon the premise that surety bondsmen and professional bondsmen are in the same class. However, surety bondsmen are, in fact, agents of and execute bonds for insurers. IC 35-4-5-1 (Burns' Ind. Stat. Ann., 1975 Repl.) A forfeiture on a bond written by a surety bondsman would be covered by the insurer's deposit and assets. Thus, surety bondsmen are not in the same class as professional bondsmen, but rather are a part of the insurer classification. The discussion above, differentiating between insurers and professional bondsmen, is, therefore, applicable here. That there is a rational basis for different treatment of insurers and professional bondsmen, as noted above, is sufficient to uphold the different treatment of surety bondsmen and professional bondsmen.
Acts 1973, P.L. 326, § 5 reads as follows:
The legislative determination that the limit on the amount of bail bonds written by professional bondsmen is necessary to safeguard the State's interest because of the lack of close regulation of the professional bondsmen, is not a matter for which this Court should substitute its judgment. In Ferguson v. Skrupa, supra, the United States Supreme Court, in upholding a Kansas statute which prohibited debt adjusting except by attorneys, stated:
Continuing, the Court found that as there was no invidious discrimination, the equal protection guarantee of the Fourteenth Amendment was not violated. The language of the Court in Skrupa is equally applicable to the situation at bar. The legislature has set financial requirements that insure a certain permanency to a bondsman's operation, which in turn increases the security of the State against unpaid forfeitures, and more importantly, increases the probability that the bondsman will present the defendant for trial.
For the foregoing reasons, the trial court erred in finding Acts 1973, P.L. 326, §§ 4 and 5, to be unconstitutional. The trial court is, therefore, reversed.
ARTERBURN and HUNTER, JJ., concur.
DeBRULER, J., concurs in result with opinion.
PRENTICE, J., dissents.
DeBRULER, Justice (concurring in result).
In the court below there was no trial of the issue of whether the harsh and disparate treatment of bondsmen who are sole proprietors would be justified in furtherance of the State's interest in a dependable and honest bail bond industry. That issue could be decided only upon a consideration by the trial court of the relative nature, character and performance of people bondsmen and surety companies. A comparison of these two classes by the trial court either after a contested trial, a trial upon an agreed state of facts, or even upon facts judicially noticed and made part of the record, is the judicial act which is the sine qua non of a valid court judgment declaring the absence of a rational basis for the disparate treatment of the two classes. Here there was no trial, no stipulation of fact, and no fact judicially noticed, supporting the trial court judgment. In Howard County Board of Commissioners v. Kokomo City Plan Commission (1975), Ind., 330 N.E.2d 92, this Court recently stated:
Here the parties agreed that there was no issue of fact to be determined and that the court should enter a judgment. As there were substantial issues of fact to be determined, that agreement should have been rejected.
Because of the absence of a factual determination of matter necessary to a valid judgment declaring this statute to be unconstitutional I would reverse and order a new trial.