Case Name: J. Edwin LARSON, State Treasurer of the State of Florida, as Insurance Commissioner of the State of Florida, Appellant, v. Melvin M. LESSER, Appellee
Court: Florida Supreme Court
Jurisdiction: Florida
Decision Date: 1958-11-05
Citations: 106 So. 2d 188
Docket Number: 
Parties: J. Edwin LARSON, State Treasurer of the State of Florida, as Insurance Commissioner of the State of Florida, Appellant, v. Melvin M. LESSER, Appellee.
Judges: HOBSON, DREW and O’CONNELL, JJ., concur.
Reporter: Southern Reporter, Second Series
Volume: 106
Pages: 188–195

Head Matter:
J. Edwin LARSON, State Treasurer of the State of Florida, as Insurance Commissioner of the State of Florida, Appellant, v. Melvin M. LESSER, Appellee.
Supreme Court of Florida.
Nov. 5, 1958.
Richard W. Ervin, Atty. Gen., and Allan-F. Milledge, Asst. Atty. Gen., for appellant.
Cypen, Salmon & Cypen and Michael H. Salmon, Miami Beach, for appellee.

Opinion:
THORNAL, Justice.
Appellant Larson, who was defendant below in a declaratory judgment proceeding, seeks reversal of a final decree declaring Section 636.261, Florida Statutes 1957, F. S.A., to be unconstitutional.
The point to be determined is whether the cited statute constitutes an invalid attempt to invade the appellee's right to contract.
Appellee Lesser was engaged in the business of a "public adjuster" as defined by Section 636.23, Florida Statutes, F.S.A. He advertised his business publicly and in addition directly solicited contracts for his services. The record reveals that approximately ninety percent of the business of the appellee was obtained by such direct solicitation. The manner of his operation was simply that when he learned of a loss contemplated by the statute, which we hereafter quote, he contacted the insured and solicited the business. He was paid on a contingent fee basis depending on the ultimate results of any settlement reached. The extent of the services rendered by appellee was that he aided in preparing an inventory of the property lost as the result of a fire; he assisted in fixing a value on such property; he made estimates as to possible salvage values and also assisted in the preparation of the claim to be submitted by the insured. The record reveals that appellee did not undertake to advise the insured as to the legal effect of his insurance contract. He did not undertake to interpret the contract, advise as to the validity of the claim, the possibility of recovery or the necessity for filing suit.
As will be pointed out in more detail, Section 636.261, Florida Statutes, F.S.A., prohibits the direct or indirect solicitation of business by so-called public adjusters. The appellee filed a complaint for a declaratory decree asking the Chancellor to declare Section 636.261, Florida Statutes 1957, F.S.A., unconstitutional. By his final decree the Chancellor held the statute under attack to be violative of the organic law. The appellant seeks reversal of this decree.
It is the contention of the appellant that the statute involved is no more than a reasonable regulation of a business affected with a public interest and that in the exercise of its police power, the State has adequate authority to promulgate such a regulation.
It is the contention of the appellee that the business of a public adjuster is recognized by law as being a legitimate occupation and that the statutory regulation under assault is tantamount to absolute prohibition contrary to the protective guaranties of Section 12, Declaration of Rights, Constitution of Florida, F.S.A., and the Fifth and Fourteenth Amendments to the Constitution of the United States.
Section 636.23, Florida Statutes 1957, F.S.A., defines various types of adjusters as follows:
"(5) 'Public adjuster' shall mean any person, except a duly licensed attorney at law as hereinafter provided, who, for money, commission, or any other thing of value, acts or aids in any manner on behalf of an insured in negotiating for or effecting the settlement of a claim or claims for loss or damage covered by an insurance contract, other than life, annuity, accident and health, or who advertises for employment as an adjuster of such claims; and shall also include any person who, for money, commission or any other thing of value, investigates or adjusts such claims on behalf of any such public adjuster.
"(6) 'Independent adjuster' who undertakes on behalf of an insurer to ascertain and determine the amount of any claim, loss, or damage payable under any contract of insurance, .
"(7) 'Company employee adjuster' who undertakes on behalf of such insurer to ascertain and determine the amount of any claim, loss or damage payable under any contract of insurance, .
"(8) 'Claims investigator' whose responsibilities shall be as defined above for an independent adjuster •or company employee adjuster, .
"(9) 'Nonresident adjuster' who is a currently licensed or authorized adjuster in his home state for the type or kinds of insurance he intends to adjust claims for in this state, .
"(10) 'Catastrophe' or 'Emergency •adjuster' to adjust claims, losses, or damages under the policies of insurance issued by said insurers." (Emphasis added.)
Section 636.23(3), Florida Statutes 1957, F.S.A., defines a policy of insurance as follows:
"(3) 'Contracts' or 'policies of insurance' shall include all kinds of insurance contracts or policies, other than life, annuity, accident and health, including membership certificates and reciprocal or interinsurance agreements or contracts."
It will be noted that the so-called public adjuster is the only one who is limited by •definition to act on behalf of an insured. The others, by definition, represent insurers. Another difference is that the public adjuster is limited to dealings between the insured and the insurer. The other types of adjusters defined by Statute represent insurers in the settlement of any claims under an insurance contract.
Section 636.261, Florida Statutes, F.S.A., which is the particular section under assault, reads as follows:
"Public adjusters, personal solicitation prohibited
"No public adjuster shall personally solicit or contact, either directly or indirectly, on his own behalf or on the behalf of any other person, firm or corporation any person or their legal representatives, husband or wife, dependents or next of kin for the purpose of representing their interest in any claim arising out of a contract or policy of insurance as defined in § 636.23(3). Upon proof of any violation of this section, the commissioner may revoke said adjuster's license."
By the last quoted statute the Legislature undertook to prohibit the public adjusters within the limit of their authority from soliciting or contacting an insured for the purpose of representing his interest in any claims arising out of an insurance policy. No similar provision imposing the same restriction on other types of adjusters has been enacted by the Legislature. Likewise, all types of adjusters, including public adjusters, are permitted to advertise their services without restriction.
Actually, it appears to us that the distinction between "advertising" and "soliciting" is merely one of degree rather than substance. It could hardly be denied that advertising publicly is a form of solicitation. This is so for the reason that one who advertises his wares or services does so with the obvious objective of inviting the public to purchase what he has to sell or employ the services which he has to offer. It is unnecessary, however, for us to labor this point.
The effect of the statutory provision under assault simply is that the public adjuster who represents insureds is prohibited from soliciting business. The other types of adjusters representing insurers are free to solicit business at will. The Chancellor had the view that there was a sufficient difference between the services rendered by a public adjuster to an insured and the services rendered by other types of adjusters to the insurers as to justify some difference in regulation insofar as the contended denial of equal protection of the laws was concerned. This view of the Chancellor is not here contested by the parties. We therefore offer no further comment on it. However, the Chancellor also had the view that inasmuch as the Legislature has recognized public adjusting as a perfectly legitimate business, he could find no merit to the contention that it was in the interest of the public welfare to sustain the prohibition against solicitation provided by Section 636.261, Florida Statutes, F.S.A.
At the outset we dispense with any notion that we are here dealing with a problem related to the unauthorized practice of law or otherwise affecting the practice of law. In the first place the definition of a public adjuster set out in Section 636.23, supra, excepts "a duly licensed attorney at law as hereinafter provided". Section 636.36, Florida Statutes 1957, F.S.A., excepts duly licensed attorneys at law from the licensing requirement of the Insurance Adjusters Act.
The parties agree here, as they did before the Chancellor, that a determination of the legal question presented does not involve any consideration of possible im-pingements on the practice of law as such or any relaxation of the rule of ethics which prohibits lawyers from soliciting or advertising for business. Since attorneys at law are not affected by the act we offer no further comment on the subject save to observe that the solicitation of and advertising for business by lawyers naturally remains one of discipline to be disposed of under the Canons of Ethics, 31 F.S.A. rule B, § 1, subd. 27. Similarly should be public adjuster engage in the practice of law, his offense would become one for prosecution under appropriate statutes.
We think it well to interpolate that the decree of the Chancellor comes to us without the customary presumption of correctness in view of the fact that it involved his determination of the unconstitutionality of a statute. While it is true that ordinarily a final decree under assault is reviewed in the light of a presumed correctness on the part of the lower court, this rule, however, does not apply when the trial judge has adjudicated the unconstitutionality of a statute. Rather, the act of the Legislature comes to us. clothed with presumed constitutionality and it remains the burden of one who contends for its invalidity to overcome this presumption even on appeal. Mayo v. Florida Grapefruit Growers' Ass'n, 112 Fla. 117, 151 So. 25.
We now reach the actual ruling of the Chancellor which is under assault. On the basis of the record presented to him he followed the rule that it is appropriate to consider the effect of a statute on the constitutional rights of a citizen from the aspect of its practical impact rather than the strict letter of the law itself. He had the further view that when the practical effect of a statute is to prohibit the operation of a lawful business, under the guise of regulation, then the statute may properly be declared unconstitutional unless the public welfare demands the contrary. In sum, he concluded that the effect of Section 636.261, Florida Statutes 1957, F.S.A., would be to make it impossible from a practical standpoint for public adjusters to engage in a business which is otherwise recognized by statute as being lawful. He found no public need for the so-called statutory regulation. Consequently, he held the act unconstitutional.
We hold that he ruled correctly. It requires no extensive citation of authorities to support the proposition that in order to justify the exercise of the police power the Legislature must be supported by some sound basis of necessity to protect the public morals, health, safety or welfare. Sweat v. Turpentine & Rosin Factors, 112 Fla. 428, 150 So. 617.
We ourselves have held that while there is no such thing as an absolute freedom of contract, nevertheless, freedom is the general rule and restraint is the exception. Any restraints imposed by legislation on the right to contract must not be arbitrary or unreasonable. The right to make contracts, .whether for the acquisition of property or for personal employment, is an aspect of private property which should not be struck down or arbitrarily restrained unless such restraint be reasonably justified by the needs of the public health, safety or welfare. Ex parte Messer, 87 Fla. 92, 99 So. 330; Riley v. Sweat, 110 Fla. 362, 149 So. 48; Adkins v. Childrens Hospital, 261 U.S. 525, 43 Sup.Ct. 394, 67 L.Ed. 785.
In the instant case the privilege of engaging in the business of a public adjuster has been recognized as a valid and legitimate occupation by legislative definition. Search as we have done in this record, we fail to find any reasonable basis whatever in the public health, welfare or safety that justifies the imposition of a restriction which, according to this record, would have the practical effect of prohibiting the appellee from actually engaging in the business which the Legislature itself recognizes as being perfectly legitimate. In other words there appears to be no rational relationship between the demands of the public welfare and the restraint imposed by the act.
We distinguish the instant case from McCloskey v. Tobin, 252 U.S. 107, 40 Sup.Ct. 306, 64 L.Ed. 481, which involved a statute of the State of Texas making it unlawful for a person to seek employment to prosecute, defend, present or collect any claim by solicitation. Vernon's Annotated Penal Code, art. 430. The evil obviously sought to be prohibited by the Texas statute was commonly known as barratry or stirring up litigation. The Texas statute leveled restraint not only against presenting or collecting claims but also against prosecuting or defending claims as the result of having solicited them. It was the stirring up or conducting of litigation as a product of solicitation that justified the enactment of the Texas statute in the McCloskey case. We are not confronted with the same situation here because the public adjuster has no authority to prosecute or defend claims. The limits of his authority are merely to represent an insured in the preparation and submission of a claim under his insurance contract. His dealings are entirely between the insured and the insurer. There is no contention whatever that he is authorized to litigate the claim or in any fashion present or prosecute it through the courts. In fact, if he were to do so, he would be trespassing upon the area defined for the practice of law and would be subject to appropriate penalties.
Holding as we do that the Chancellor ruled correctly in his conclusion that Section 636.261, Florida Statutes 1957, F.S.A., is unconstitutional, the final decree is—
Affirmed.
HOBSON, DREW and O'CONNELL, JJ., concur.
TERRELL, C. J., and THOMAS and ROBERTS, JJ., dissent.