Case Name: PROFESSIONAL ADJUSTERS, INC., Appellant, v. Dr. P. TANDON, Rojini Tandon, and United States Fidelity and Guaranty Company, Appellees
Court: Supreme Court of Indiana
Jurisdiction: Indiana
Decision Date: 1982-04-14
Citations: 433 N.E.2d 779
Docket Number: No. 379S60
Parties: PROFESSIONAL ADJUSTERS, INC., Appellant, v. Dr. P. TANDON, Rojini Tandon, and United States Fidelity and Guaranty Company, Appellees.
Judges: GIVAN, C. J., and DeBRULER, J., concur.
Reporter: North Eastern Reporter 2d
Volume: 433
Pages: 779–787

Head Matter:
PROFESSIONAL ADJUSTERS, INC., Appellant, v. Dr. P. TANDON, Rojini Tandon, and United States Fidelity and Guaranty Company, Appellees.
No. 379S60.
Supreme Court of Indiana.
April 14, 1982.
Frank E. Spencer, Jerry M. Burton, Johnson & Weaver, Indianapolis, for appellant.
Luther G. Johnson, Mann, Chaney, Johnson, Hicks & Goodwin, Terre Haute, for appellees.

Opinion:
PIVARNIK, Justice.
Plaintiff-appellant Professional Adjusters, Inc., appeals action of the trial court in dismissing their cause of action for "failure to state a claim upon which relief could be granted." Plaintiff's complaint was based on allegations of a contract obligating defendants Tandon to pay a contingent amount for services by Plaintiff in adjusting the settlement of a claim of Tandon's against their insurance company, United States Fidelity and Guaranty Company. Plaintiffs complaint against USF & G was based on the fact that USF & G settled with the Tandons and paid to them and their attorney a settlement amount without protecting plaintiffs on their alleged contract and assignment of the claim rights.
Defendant's response in its motion to dismiss was that the statutes under which Plaintiff proposed to act as public adjusters in its representation of defendants Tandon, authorized Plaintiffs to practice law in derogation of the Indiana Constitution, specifically, Art. VII, § 4, which places the exclusive control of regulation and supervision of the practice of law in the Supreme Court of Indiana, and Art. Ill, § 1, which provides for the separation of powers of the legislative, executive and judicial branches, and prohibits any of these branches from exercising any of the functions of another branch except as expressly provided in the Constitution. It was the defendant-appel-lee's contention that the alleged contract was therefore unenforceable. The trial court granted Defendant-appellee's motion to dismiss, finding that Ind.Code § 27-1-24-1 et seq. (Burns 1975) was unconstitutional since it authorized the practice of law by plaintiff corporation in derogation of Indiana Constitution Art. VII, § 4, and Art. Ill, § 1, and, further, was in conflict with Ind.Code § 33-2-3-1 (Burns 1975).
The facts show that defendants Tandon had a fire loss on their mobile home in Terre Haute, Indiana, on December 22, 1976. They had a policy of insurance to cover such loss with defendant USF & G, and filed a claim with that company. USF & G offered to settle the claim for eight-thousand dollars, ($8,000) which figure was unacceptable to the Tandons. The Tandons then hired Professional Adjusters, Inc., to handle their claim against USF & G for them. Plaintiffs prepared estimates of repair cost, temporary electrical costs, depreciation from actual cash value, replacement of outdoor furniture and fixtures, equipment and carpeting, estimates on unscheduled property with dates of purchase and current value and depreciated value, and a claim for additional living expenses, including projections for completion and repair which they claim required the expending of sixty-five hours of time. Professional Adjusters, Inc., then submitted this claim to GAB Service, Inc., which was the adjusting agency of USF & G. In response, Professional Adjusters received from GAB Service, Inc., an offer to settle the claim for substantially more than the original offer of eight-thousand dollars ($8,000). Defendants Tandon, in the meantime contacted a lawyer and subsequently settled the claim with USF & G. Tandons tendered a check in the amount of five-hundred dollars ($500) to Professional Adjusters, Inc., which was offered as payment, which was refused.
In its complaint, and throughout this proceeding, the plaintiff claims that the parties entered into a written contract for plaintiff's services and remunerations therefor. Though the precise question is not presented to us in this appeal, we cannot help but notice that this "contract" was never signed by Professional Adjusters, Inc. They have obligated themselves to do nothing in consideration for the obligations of the Tan-dons under the written instrument. Copies of the agreement appearing in the Record appear to be photocopies that cut off some of the words and figures and are partially illegible. Basically, however, the document carries the caption of Professional Adjusters, Inc., with a logo and with a statement, "Certified Public Insurance Adjusters, Licensed by State of Indiana." The document then addresses itself "To The Interested Insurance Companies." There then is a recitation wherein the Tandons employ professional adjusters to assist in adjustment for loss and damage by fire, describing the fire in question here and agreeing to pay them for their services and assigning the loss proceeds to them as below agreed upon. The Tandons have signed the document. Below those signatures appears an agreement by Tandons to pay and assign to Professional Adjusters the proceeds of the loss in consideration of the adjusting assistance in the insurance claim and set out percentage figures of the amounts recovered that would be payable to Professional Adjusters, Inc. It appears then that this is not a contract entered into by the parties, but a unilateral agreement and assignment by the Tandons without consideration. As stated above, this precise issue is not before us since the defendants never reached the stage of answering the complaints on the merits, but raised a motion to dismiss on a 12(B)(6) motion.
The statute in question is as follows: "(a) The term "public adjuster" shall include every person or corporation who, or which, for compensation or reward, acts on behalf of, or aids in any manner, an assured, in negotiating for, or effecting, the settlement of a claim or claims for loss or damage under any policy of insurance covering real or personal property and any person or corporation who, or which, advertises, solicits business or holds itself out to the public as an adjuster of such claims, Provided, however, That no public adjuster shall act in any manner in relation to claims for personal injury or automobile property damage.
(b) This chapter [27-1-24-1 — 27-1-24-9] shall not apply to, and the following are not included in the term public adjuster:
(1) An attorney at law admitted to practice in the state of Indiana who adjusts insurance losses in the course of the practice of his profession;
(2) An officer, regular salaried employee, or other representative of an insurer or of an attorney in fact of any reciprocal insurer of Lloyd's underwriter licensed to do business in the state of Indiana who adjusts losses arising under his employer's or principal's own policies;
(3) An adjustment bureau or association owned and maintained by insurers to adjust or investigate losses of such insurers, or any regular salaried employee who devotes substantially all of his time to the business of such bureau or association;
(4) Any licensed agent or an authorized insurer or officer or employee of the same who adjusts losses for such insurer, and any agent or representative of a farmers mutual insurance company operating under the farmers mutual insurance laws of this state on behalf of an insurer; and
(5) Any independent adjuster representing an insurer.
Thus, Ind.Code § 27-1-24-2 (Burns 1975) provides that before anyone can act as a certified public adjuster he must be issued a certificate of authority by the Commissioner of Insurance of the State of Indiana and succeeding sections of the chapter provide for the mechanics to be employed by the Insurance Commissioner. Ind.Code § 27-1-24-5 (Burns 1975) provides for a written examination for the Commissioner to give applicants to determine the trustworthiness and competence of the applicant and provides that such testing shall include but not be limited to the following areas: 1) the Indiana Insurance Code; 2) inventory and appraisal procedures; 3) building construction; 4) standard fire policy; 5) insurance contracts related to claims on real or personal property; and 6) insurance coverage questions regarding business interruptions, improvements and betterments, replacement cost coverage, concurrent and non-concurrent apportionment, co-insurance and contribution."
Indiana Code § 27-1-24-1 et seq. (Burns 1975) creates a new type of adjuster heretofore unknown in the insurance field. All of the traditional forms and duties of insurance adjusters are excepted from this statute. Adjusters have traditionally been employees or agents of insurance companies hired by them to attempt to ascertain the nature of a loss under one of their policies and to attempt to settle it in behalf of the company. This was true of independent adjusting agencies that were hired by insurance companies to act as their agents in making an adjustment. Those adjusters who were employees of the company were, of course, agents who acted in full authority to bind the company in settling with its insured. Independent adjusting firms were hired by companies to act as independent appraisers to help the company fix and determine the amount of a loss so that the company could then settle the claim with the insured. This statute proposes to create a public adjuster which represents an insured and receives compensation to act on behalf of that assured to negotiate for and effect the settlement of a claim for loss or damages. It does not limit the activity and authority of the adjuster to appraise the loss and report back to the client the fair value of the claim so that the client can then go forward and settle his claim. It authorizes the adjuster to go forward and to negotiate for and effect that settlement as a direct agent and representative of the insured. This is, pure and simple, the practice of law. In acting as the statute authorizes a public adjuster to act, he is acting as an attorney at law.
In the present case, Professional Adjusters, Inc., made a determination of the loss of Tandons and then submitted this claim to the insurance carrier for negotiation of a settlement. The fact that the negotiations did not reach the stage where there was a bargaining process of offers and counter-offers does not make it any less negotiation. Plaintiffs were in all ways acting as attorneys-at-law for Tandons by submitting a figure which they would deem acceptable for their loss and contemplating in return a response from the insurance carrier that would effect the settlement. They expected to receive remuneration in an amount that was contingent upon the amount they recovered. As one of the allegations of their complaint, the plaintiffs alleged: "6. On February 3, 1977, the defendant USF & G formally rejected the proof of loss filed by defendant Tandon on January 10, 1977, and on March 18, 1977, the plaintiff furnished all of the above claim information to GAB Business Service, Inc., the adjusting agent for USF & G pursuant to said contract."
Thus, in their complaint, the plaintiffs state that not only did the contract contemplate that it would be the duty of plaintiffs to take the claim forward to USF & G, but they alleged that is, in fact, what they did. In discussing the subject of the practice of law, this Court stated, in Matter of Perrello, (1979) Ind., 386 N.E.2d 174, 179:
"The core element of practicing law is the giving of legal advice to a client and the placing of oneself in the very sensitive relationship wherein the confidence of the client, and the management of his affairs, is left totally in the hands of the attorney. The undertaking to minister to the legal problems of another, creates an attorney-client relationship without regard to whether the services are actually performed by the one so undertaking the responsibility or are delegated or subcontracted to another. It is the opinion of this Court that merely entering into such relationship constitutes the practice of law."
We further said, in Groninger v. Fletcher Trust Co., (1942) 220 Ind. 202, 207, 41 N.E.2d 140:
"The practice of law is restricted to natural persons who have been licensed upon the basis of established character and competence as a protection to the public against lack of knowledge, skill, integrity, and fidelity. Disbarment procedure is available in the case of those who do not conform to proper practice. The practice of law involves advising or rendering services for another. A natural person may plead his own case in court or do any of the things for himself which if done for another would constitute practicing law. He may discuss the legal aspects of his affairs with other interested parties or with strangers. Either a natural person or a corporation may employ lawyers to do these things."
See also Code of Professional Responsibility adopted by the Supreme Court of Indiana on March 8, 1971; EC 3-1, EC 3-2, EC 3-3, EC 3 — 4, EC 3-5, and EC 3-6.
The very criteria required under Ind.Code § 27-1-24-1 et seq., in its creation of Certified Public Adjusters is knowledge and competency in dealing with rights and liabilities of other persons as required in the ethical considerations in case law heretofore relied upon, but does not require admission to the Bar in this State and therefore does not subject those so acting to the disciplinary rules of this Court. Undertaking the determination of rights and liabilities under an insurance contract and the negotiation of settlements requires the interpretation of the terms of that contract. In Dollman v. Pauley, (1930) 202 Ind. 387, 394, 174 N.E. 729, this Court observed:
"No more precise language can be found to state the principle that statutes and the law as otherwise existing become a part of every contract and must be read into it, than made by Chief Justice John Marshall in the words, 'in every forum a contract is governed by the law with a view to which it was made.' Wayman v. Southard (1825), 10 Wheat. 1, 48, 6 L.Ed. 253. See Beck, etc., Co. v. Evansville Brewing Co. (1900) 25 Ind.App. 662, 58 N.E. 859; Southern R. Co. v. Bouknight (1895), 70 F. 442, 30 L.R.A. 823, 826; Armour Packing Co. v. United States (1907), 153 F. 1, 82 C.C.A. 135, 14 L.R.A. (N.S.) 400. A city ordinance comes within the rule. Kansas City Hydraulic Press Brick Co. v. Youmans (1908) 213 Mo. 151, 112 S.W. 225; Wright v. Computing Scale Co. (1907) 47 Wash. 107, 110, 91 P. 571."
The trial court properly found that IC § 27-1-24-1 et seq., was unconstitutional in that it violated the Constitution of the State of Indiana Art. 7 § 4, and Art. 3 § 1, and further is violative of the Code of Professional Responsibility as adopted and promulgated by this Court.
The trial court is in all things affirmed.
GIVAN, C. J., and DeBRULER, J., concur.
PRENTICE, J., concurs in result with separate opinion.
HUNTER, J., dissents with opinion in which PRENTICE, J., concurs in part with separate opinion.
PRENTICE, J., concurring and dissenting with separate opinion.