Title: Holmstrom v. Sullivan
Citation: 192 Kan. 746, 391 P.2d 100
Docket Number: 43,555, 43,576
State: Kansas
Issuer: Kansas Supreme Court
Date: April 11, 1964

192 Kan. 746 (1964)
391 P.2d 100
PAUL HOLMSTROM, Appellee and Cross-Appellant,
v.
FRANK SULLIVAN, Commissioner of Insurance, State of Kansas, Appellant and Cross-Appellee.
Nos. 43,555 and 43,576 Consolidated

Supreme Court of Kansas.
Opinion filed April 11, 1964.
O.R. Sites, Jr., Assistant Attorney General, of Topeka, argued the cause, and William M. Ferguson, Attorney General, Harry W. Colmery and Joel A. Sterrett, all of Topeka, were with him on the briefs for the appellant.
William L. Fry and Jerry Ann Foster, both of Wichita, argued the cause, and were on the briefs for the appellee.
The opinion of the court was delivered by
HATCHER, C.:
This is an appeal from a judgment granting a peremptory writ of mandamus commanding the Commissioner of Insurance to issue a life insurance agent's license.
*747 On the 17th day of January, 1963, the plaintiff, Paul Holmstrom, filed his petition which, in addition to formal and procedural matters leading to the complaint, stated:
The prayer of the petition reads:
On January 17, 1963, the district court issued an order directing the defendant, the Commissioner of Insurance, to issue the license or appear and show cause on January 24, 1963. On the date mentioned the Commissioner appeared and moved to vacate the show cause order because of the insufficiency of the petition to state a cause of action for numerous reasons. The motion was overruled. The Commissioner then filed his answer which denied all but the formal parts of the petition and alleged:
Plaintiff made an oral motion to require the answer to be made definite and certain by setting forth the grounds, reasons and facts upon which the defendant based his conclusion that he had not acted arbitrarily, capriciously or unlawfully, but had acted wholly in good faith. The trial court permitted the defendant to amend his answer by adding the following:
The plaintiff renewed his motion to make definite and certain which was overruled. The case was set for trial on the merits, to commence February 1, 1963.
The case proceeded to trial and at the close thereof, February 8, 1963 the trial court took the matter under advisement. On February 14, 1963, it concluded:
A peremptory writ of mandamus followed, which decreed:
The defendant has appealed alleging certain trial errors and contending that the court erred in holding the actions of the defendant *749 in denying plaintiff's application for license was beyond defendant's lawful discretion and was arbitrary and capricious, and in entering its order of February 14, 1963, granting plaintiff a peremptory writ of mandamus.
The plaintiff has filed a cross appeal challenging certain trial rulings and contending that the court erred in failing to require defendant to make his answer definite and certain by setting forth the grounds, reasons and facts upon which defendant refused to issue plaintiff a license, and in ruling that Section 40-241, General Statutes of Kansas, 1949, was constitutional.
On February 21, 1963, this court, on application of appellant, issued an order in which the judgment of the district court granting the peremptory writ of mandamus was stayed until further order of this court.
The facts material to the determination of the issues will be stated.
Formerly the appellee had been licensed as an agent to sell life insurance for the Green Shield Life Insurance Company. On November 19, 1962, the Franklin Life Insurance Company, through its supervisor of agent's licenses, addressed a letter to the appellant requesting a license for the appellee as its agent to sell life insurance. The necessary forms were enclosed, including the application of the appellee to be licensed as an agent.
On December 4, 1962, the appellant addressed a letter to the appellee which reads:
On December 7, 1962, the appellee visited the appellant's office and talked with one of the department's attorneys. The appellee requested information as to "what he had to do." He was given the names and addresses of certain people to whom he had sold Green Shield Life Insurance Company policies and who had filed complaints against him. He was informed that it would not be *750 unwise for him to talk to these people and if they had any clarifying or correcting statements, such statements should be submitted for further consideration.
On December 28, 1962, the appellee again called on the department's attorney. We are informed of the conversation as follows:
On January 15, 1963, the appellant had occasion to consult with members of his staff concerning the appellee's application for a license. We are informed:
"Q. What did you advise in that regard?
"Q. Relating to what, sir?
"A. His activities as an agent.
"A. They did.
"A. No 
"A. Certainly is."
On the same day, January 15, 1963, the appellee again came to the appellant's office and conferred with the staff's attorney. He was informed of the appellant's conclusion as to a hearing. The appellee *751 made no complaint to the appellant that the terms under which a hearing on the application for a license would be held were unreasonable or burdensome, but two days later, January 17, 1963, filed his petition in the district court for relief in the form of mandamus.
Without considering the case on its merits we are confronted with a jurisdictional question. Was the action to compel the appellant to issue a license to the appellee premature?
Although not specifically called to our attention by the parties, this court will on its own motion note a jurisdictional question. (Riley v. Hogue, 188 Kan. 774, 365 P.2d 1097; Farm Bureau Mutual Ins. Co. v. Barnett, 189 Kan. 385, 369 P.2d 350; Alliance Mutual Casualty Co. v. Bailey, 191 Kan. 192, 380 P.2d 413 and Hotchkiss v. White, 191 Kan. 534, 382 P.2d 325.)
The statute (G.S. 1949, 40-243) providing for court relief on the refusal of the Commissioner of Insurance to issue an agent's license to sell insurance states:
An examination of the record does not disclose that the appellant has refused to issue a license to the appellee. It rather discloses that the ruling on the application was pending on the appellant's suggestion that a hearing would be held. The action lies only after the refusal to license.
There is yet another reason why this action is premature. A court should not take upon itself the responsibility of making discretionary and administrative decisions while the administrative officer is in the process of making the decision. The appellant had suggested a hearing. He had not as yet denied the application. Whether the suggested hearing was contingent on unreasonable conditions presents another question which will be considered later.
In Bohl v. Teall, 155 Kan. 505, 126 P.2d 216, this court stated:
*752 In Hayward v. State Corporation Comm., 151 Kan. 1008, 101 P.2d 1041, it is stated:
Until an order or determination of an administrative officer, agency, or commission is fully, finally and completely made, a writ of mandamus will not issue to compel a particular action. (State, ex rel., v. Flannelly, 96 Kan. 372, 386, 152 Pac. 22; State, ex rel., v. Mo. Pac. Rly. Co., 55 Kan. 708, 41 Pac. 964.)
We must conclude that the action was prematurely brought insofar as it sought to compel the Commissioner of Insurance to issue the license and the district court was without jurisdiction to make the administrative decision.
The question of the reasonableness of the requirements which the appellant placed on the holding of a hearing presents a more difficult problem.
Although the statute (G.S. 1949, 40-241) does not require the Commissioner of Insurance to hold a hearing before refusing to grant an insurance agent's license, it cannot be denied that he has such authority under the broad powers granted by G.S. 1961 Supp., 40-102; G.S. 1949, 40-103 and 40-241, if he deems a hearing advisable and in the interest of justice. However, once the Commissioner of Insurance has suggested that a hearing is advisable or may be of benefit to the applicant, he cannot surround the right to be heard with such unreasonable terms and conditions as to make the hearing a burden on the applicant or an impossibility.
Even though a court may not take upon itself the determination of a matter which is left to the discretion of an administrative officer because it is not satisfied with the administrative procedure, it may direct that the administrative officer proceed under reasonable rules and in a reasonable manner.
In Butler v. Rude, 162 Kan. 588, 178 P.2d 261, it is stated:
As a prerequisite to a hearing the appellant required that the requisitioning company make application for the hearing and agree to pay the costs of a reporter to transcribe the proceedings. The appellee did not inform the appellant that the conditions which he placed on holding the hearing were unreasonable or impossible of performance. We do not approve of an applicant first making such objections to a court. However, the petition alleged that the appellant knew or should have known that the requisitioning company, Franklin Life Insurance Company, would not comply with the requirement that it ask for a hearing. A representative of the company testified that it would not request the hearing.
We are forced to conclude, under the facts disclosed by the record, that the rulings of the appellant as to the conditions on which the hearing would be held were unreasonable. The Commissioner, having suggested the hearing, should be directed to proceed to hold it, without unreasonable rules, conditions or requirements.
The appellee challenges the constitutionality of G.S. 1949, 40-241 for the reason that it vests discretion in the Commissioner of Insurance to grant or refuse an agent's license without prescribing any rule of action. We do not agree with appellee's contention.
It is well settled that the insurance business is a quasi public business and that it is so impressed with the public interest that a state under its police power may regulate all features of the business including the agents which sell the insurance to the general public. In 44 C.J.S. Insurance, § 85b (1), p. 589, the rule as applicable to licensing agents is stated:
*754 G.S. 1949, 40-241 provides the standards by which the qualifications of an insurance agent will be measured. It provides in part:
Whether an applicant has (1) a good business reputation, (2) has had experience or training, or (3) is otherwise qualified in the line of business, is a sufficient yardstick by which to measure the right of the applicant to be licensed. The statutes need not outline the facts and evidence by which the standards of qualification will be determined.
We have examined the cases cited by appellee dealing with statutes from other states. The cases are not helpful because of the language in the statutory provisions. We are impressed with what the Supreme Court of West Virginia said in the case of Swearingen v. Bond, Auditor, 96 W. Va. 193, 122 S.E. 539:
Under the conclusions reached there is no occasion to review the record for the purpose of determining whether the trial court observed the rule announced in Murphy v. Hobbs, 139 Kan. 799, 33 P.2d 135, where it was held in the syllabus:
Neither is there any occasion to review the alleged trial errors presented by the appeal and cross appeal.
The judgment is reversed with instructions to the district court to deny the application for a peremptory writ of mandamus commanding the Commissioner of Insurance to issue a license to the plaintiff, but that it direct the Commissioner of Insurance to proceed with a hearing on the application of the plaintiff without unreasonable rules or conditions.
APPROVED BY THE COURT.