Case Name: In the Matter of Guardian Life Insurance Company of America, Appellant, against Alfred J. Bohlinger, as Superintendent of Insurance of the State of New York, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1954-05-18
Citations: 284 A.D. 110
Docket Number: 
Parties: In the Matter of Guardian Life Insurance Company of America, Appellant, against Alfred J. Bohlinger, as Superintendent of Insurance of the State of New York, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 284
Pages: 110–123

Head Matter:
In the Matter of Guardian Life Insurance Company of America, Appellant, against Alfred J. Bohlinger, as Superintendent of Insurance of the State of New York, Respondent.
First Department,
May 18, 1954.
James B. Donovan of counsel (Daniel J. Reidy and Clarke S. Ryan with him on the brief; MacNeil Mitchell, attorney), for appellant.
Samuel A. Hirshowits of counsel (Wendell P. Brown with him on the brief; Nathaniel L. Goldstein, Attorney-General, attorney), for respondent.
Robert M. Benjamin of counsel (Parker, Duryee, Benjamin, Zunino & Malone, attorneys), for Life Insurance Association of America, amicus curiæ.

Opinion:
Botein, J.
This is an appeal by Guardian Life Insurance Company from an order of Special Term denying its application, under article 78 of the Civil Practice Act, to annul a determination of the Superintendent of Insurance, who in turn denied an application by Guardian for approval of a purchase of real estate.
Guardian asserts that it proposes to use part of the real property for its own use — a purpose requiring the approval of the superintendent. Subdivision 7 of section 81 of the Insurance Law deals with real estate investments; paragraph (a) thereof authorizes the acquisition of real estate for a principal office; and paragraph (b) authorizes the acquisition of real estate " [s]uch as shall be requisite for its convenient accommodation in the transaction of its business ". Subdivision 7 further provides that no real property may be acquired for the purposes recited in paragraph (a) or paragraph (b) with out the approval of the superintendent. The provisions of paragraph (b) are directly applicable in this proceeding.
Guardian, prior to its application to the superintendent, had acquired certain vacant land in North White Plains, Westchester County. It purchased this property originally for investment purposes only, and not for company use, intending to improve it with an office building calculated to produce a reasonable return on its investment. Section 81 (subd. 7, par. [h]) does not require the superintendent's approval for an investment in real estate for the production of income, up to a total amount not exceeding 3% of the carrier's assets.
When Guardian applied to the City of White Plains to rezone the property, it struck the snag which required it to seek the superintendent's approval, pursuant to section 81 (subd. 7, par. [b]) for its own contemplated occupancy of the proposed building. The representatives of White Plains, who had been attracted by Guardian's earlier consideration of a large site for its principal office, balked at rezoning a smaller area " for use as an investment by Guardian so Guardian can make money It appears that to win over the White Plains authorities Guardian finally informed them that it would itself occupy the proposed two-story office building in whole or in part. This eleventh-hour commitment compelled Guardian to seek the superintendent's approval under section 81 (subd. 7, par [b]). The superintendent did not " look with favor " on the application, but volunteered to grant Guardian a hearing. The superintendent contends that this hearing was granted as a matter of grace and not as a matter of statutory right. There is rio provision for a hearing in connection with an application under paragraph (b) of subdivision 7, although the Insurance Law provides a right to a hearing in a number of other situations.
At the hearing Guardian presented a somewhat indefinite program. It was uncertain as to what departments and what personnel would be removed to the new building, and as to how long it would occupy space in that building. Guardian owns a twenty-story building in New York County, in which it occupies thirteen floors and rents the remaining seven floors. The seven rented floors contain sufficient space for Guardian's expansion purposes. Since 1946 it has spent over $400,000 in modernizing this building. In addition, the superintendent some years ago approved the acquisition of an adjoining building to provide room for expansion, which building is not being used for that purpose. No adequate study was made of the facilities avail able to Guardian. The contemplated move to White Plains was concededly planned as a temporary expedient, with Guardian taking some of the space for an undetermined period. Conflicting views were expressed as to the desirability of piecemeal moving of isolated departments of the insurance company. The deputy superintendent who conducted the hearings reported in part as follows: " The Department would have no objection to the relocation by Petitioner of all its home office activities to a new building to be erected on a site of Petitioner's choosing elsewhere in New York State, provided a suitable plan was in contemplation for the orderly sale of its present building, and that such relocation and sale appeared to be in the interest of its policyholders. Admittedly, Petitioner's thinking in this regard is still in the stage of indecision."
Guardian contended its present quarters were unsuited to its present and developing needs. It argued, in evident good faith, for the desirability of gradually vacating the New York County building that housed its principal office; but was unable to furnish the ultimate destination of the future principal office. After a thorough exploration of the facts the superintendent held that the proposed White Plains building was not " requisite " for the convenient accommodation of Guardian's business.
We believe that the determination of the superintendent is not subject to more than a threshold judicial review to determine whether the superintendent misconceived or exceeded his authority, because such review is precluded by the statute. The right of the Legislature to proscribe judicial review of certain actions of administrative officers and boards is now well established (Switchmen's Union v. Board, 320 U. S. 297; Labor Board v. Cheney Lumber Co., 327 U. S. 385; Federal C. C. v. RCA Communications, 346 U. S. 86, 90; Matter of Schwab v. McElligott, 282 N. Y. 182).
The pattern of the Insurance Law indicates a careful and consistent legislative design to grant judicial review in certain specific situations and to preclude such review in all others. Section 34 reads in part: " Whenever by the provisions of this chapter any order or other act of the superintendent is declared to be subject to judicial review at the suit of any person, such person may maintain a proceeding under article seventy-eight of the civil practice act."
While section 34 does not in so many words bar judicial review where the right is not explicitly granted, such proscription clearly emerges when read in the setting of the entire Insurance Law. Of course, any other construction would stamp section 34 as a meaningless and unnecessary reaffirmation of the rights of an aggrieved party to pursue his remedies pursuant to article 78 of the Civil Practice Act; and the implication naturally follows that when the right is not specifically granted, article 78 may not be invoked.
In 1938, when general revision of the entire Insurance Law was under consideration by the Legislature, several insurance company organizations drove for the enactment of a provision for judicial review of all orders or acts of the superintendent. This effort was vigorously opposed by the superintendent, who argued that such " reviewing procedure would include many acts for which judicial review is not appropriate " (see Memoranda of Association of Life Insurance Companies, Association of Casualty and Surety Executives, and Committee on Law Revision of the Insurance Department). Section 34 must be read in the light of this legislative history.
The Legislature has etched a recognizable design in granting judicial review. In general, it appears that provisions for licensing, or for the suspension or revocation of licenses, such as those affecting insurers (§ 40, subd. 7), salesmen of insurance securities (§ 51), insurance agents (§§ 117, 139-c), insurance brokers (§ 119) and adjusters (§ 123), all carry concomitant authorizations for judicial review. In similar vein, so do provisions for the merger, consolidation or conversion of insurers (§§ 486, 487). But provisions designed to protect policyholders ' assets against improvident or illegal depletion, such as the one under consideration here, do not generally offer judicial review.
Similarly, section 121 of the Alcoholic Beverage Control Law authorizes judicial review of certain specified acts of the Liquor Authority, but is silent as to review of other actions. The courts have consistently held that section 121 constitutes a legislative mandate against judicial consideration of those actions of the Liquor Authority for which review is not authorized (Matter of Millman v. O'Connell, 300 N. Y. 539; Matter of Calvary Presbyterian Church v. State Liq. Auth., 249 App. Div. 288, affd. 275 N. Y. 552; Reckler v. Quinn, 255 App. Div. 873, affd. 280 N. Y. 768; Matter of Roden v. New York State Liq. Auth., 258 App. Div. 1076). It should be noted, however, that the argument for exclusion of judicial review where not specified is strengthened by a statement contained in section 2 — the policy and purpose section — to the effect that the Liquor Authority's power to determine public convenience and advantage is " subject only to the right of judicial review hereinafter provided for ".
The norms that govern the acquisition of real estate by an insurer for its own use — namely, " Such as shall be requisite for its convenient accommodation in the transaction of its business ' — were originally contained in the first general incorporation act for insurers in New York, over a century ago (L. 1849, ch. 308, § 9). Approval by any public official of such transactions was not required then — not until re-enactment of section 20 of the former Insurance Law in 1906, following disclosure of the evils uncovered by the Armstrong Committee (Report of Joint Committee of Senate and Assembly on Life Insurance Companies [1906]). After reporting " flagrant abuses ", juggling of book values and use of dummy titleholders to cover up purchases of property not requisite for business use, the committee concluded with the following recommendation, which gave birth to the requirement of approval now contained in paragraph (b) of subdivision 7: " No further purchase of property should be permitted under subdivisions 1 and 2 of section 20 of the Insurance Law or under section 14 of the General Corporation Law without the consent of the Superintendent of Insurance upon his finding that the acquisition is necessary." (P. 384.)
In the light of its legislative background it would appear that the power of approval granted to the superintendent does not limit him, as suggested by Guardian, to a mere supervisory function of checking its technical compliance with the standard established by section 81 (subd. 7, par. [b]).
Of course, if the superintendent misconceived or exceeded his statutory grant of authority, a reviewing court could curb or correct such abuses or errors (Matter of Barry v. O'Connell, 303 N. Y. 46). People ex rel. Metropolitan Life Ins. Co. v. Hotchhiss (136 App. Div. 150) strongly urged as precedent by Guardian for its right to judicial review, held nothing more than that the superintendent had misconceived the extent of his power. In that case, decided in 1909, there was before the court the construction of the forerunner of paragraph (b) of subdivision 7. Metropolitan sought to buy real property to construct a hospital for the care of tuberculosis sufferers among its employees. The company sought the superintendent's approval on the basis that it was a contemplated purchase of realty " requisite for the company's convenient accommodation in the transaction of its business ". The superintendent denied the application " solely for want of power " (p. 152), believing that the purpose to which the hospital was to be put was outside the scope of Metropolitan's business. The determination was annulled and remitted for " consideration upon the merits ". Furthermore, in 1909 the predecessor of section 34 had not yet been enacted, nor was the Insurance Law studded with as many provisions for judicial review as are now contained in the law.
Guardian also contends that the superintendent exceeded his authority in failing to adhere to the statutory standard of " convenient accommodation " in considering its application. A reading of the report of the hearing deputy, however, indicates that he polarized his consideration of the problem, as well as his findings, to the legislative criteria. His ultimate findings indicate an awareness of the basic statutory standard. For example, he found:
" 4. The Petitioner has not demonstrated that its present quarters are inadequate for the convenient transaction of. its business or that economies in the best interests of policyholders will flow from such acquisition.
" 5. The proposed building project is purely an interim measure to serve until the Petitioner finds what it may consider a more adequate and proper location for the erection of a new Home Office building.
" 6. The cost of the project will be upwards of $1,300,000.
"7. As of the date of the hearing on the petition, the plans for actual use by various departments of the Petitioner had not yet been crystallized.
" 8. Petitioner is still endeavoring to find a proper location for a new Home Office building.
" 9. The property was acquired in violation of the Insurance Law Section 81-7 (b), cf. Insurance Law, Section 89."
It is clear, from the evidence and the hearing deputy's report and findings, that there is no basis in fact for Guardian's complaint that the superintendent is attempting to " supplant management or to formulate those business decisions which properly are the sole responsibility of management."
Therefore, and to repeat, in view of the statutory preclusion of judicial review of the superintendent's action, and since he acted appropriately within the scope of his legislative grant of power, this court does not possess the power to review such action.
However, even if the court does have the power to review, the facts and circumstances do not warrant annulling the. superintendent's ruling. The hearing granted to Guardian was not required by statute, but there is no point to laboring the question whether Guardian's application called for administrative action rather than quasi-judicial determination by the superintendent. Appraised by rules too often enunciated to require repeating, the decision of the superintendent was neither arbitrary nor capricious, it had a reasonable basis and was amply supported by the evidence adduced upon the hearing. Such evidence has been outlined above.
Accordingly, the order of Special Term should be affirmed.