Opinion ID: 901489
Heading Depth: 1
Heading Rank: 4

Heading: issues

Text: [¶ 12.] Whether it was error to revoke Tinklenberg's license for a violation of SDCL XX-XX-XXX when the statute was repealed before administrative proceedings to revoke his license were commenced. [¶ 13.] Tinklenberg's alleged violations of SDCL XX-XX-XXX took place between December 1993 when he transferred the policy to himself and March 2000 when he collected the death benefit proceeds and kept them. The administrative proceeding to revoke Tinklenberg's license was commenced in January 2002. SDCL XX-XX-XXX was repealed by the South Dakota Legislature effective July 1, 2001, prior to the commencement of the administrative action, but after the alleged violation of the statutory section. See 2001 SDSessLaws ch 286 § 280. Tinklenberg asserts the repeal of the statute cancelled any action against him pursuant to the statute and that no savings clause revives SDCL XX-XX-XXX. The Division argues that the general saving clause of SDCL 2-14-18 allows a proceeding pursuant to the statute, even though it has been repealed, as the conduct at issue had occurred while the statute was in force and because a penalty is involved. Alternatively, the Division argues that SDCL XX-XX-XXX was simultaneously re-enacted by SDCL XX-XX-XXX. This issue involves a question of law which we review de novo. [¶ 14.] Prior to its repeal, SDCL XX-XX-XXX provided: The director may suspend for not more than twelve months, or may revoke or refuse to continue any license issued under this chapter, or any surplus lines broker's license if, after hearing held on not less than twenty days' advance notice of such hearing and of the charges against the licensee given to the licensee and to the insurers represented by such licensee or to the appointing agent of a soliciting agent, he finds that as to the licensee any one of the following causes exists: (1) Any cause for which issuance of the license could have been refused had it then existed and been known to the director; (2) Obtaining or attempting to obtain any such license through fraud or through willful misrepresentations or misstatements as to any material matter; (3) Violation of or noncompliance with an applicable provision of this title, or for willful violation of any lawful rule, regulation, or order of the director; (4) Misappropriation or conversion to his own use, or illegal withholding, of moneys or property belonging to policyholders, or insurers, or beneficiaries, or others and received in conduct of business under the license; (5) Conviction, by final judgment, of a crime involving moral turpitude; (6) For material misrepresentation of the terms of any insurance contract or proposed insurance contract; or (7) If in the conduct of his affairs under the license the licensee has used fraudulent or dishonest practices, or has shown himself to be incompetent or untrustworthy. [¶ 15.] It is general basic law that the effect of the repeal of a statute, where neither a saving clause within the repealing statute itself nor a general saving statute exists to prescribe the governing rule for the effect of the repeal, is to destroy the effectiveness of the repealed act in futuro and to divest the right to proceed under the statute which, except as to proceedings passed and closed, is considered as if it had never existed. State Highway Commission v. Wieczorek, 248 N.W.2d 369, 372 (S.D.1976). The legislature did not enact a specific savings clause as to SDCL XX-XX-XXX. Therefore, we must consider whether South Dakota's general savings cause contained in SDCL 2-14-18 preserved SDCL XX-XX-XXX as to this administrative proceeding against Tinklenberg. SDCL 2-14-18 provides: The repeal of any statute by the Legislature shall not have the effect to release or extinguish any penalty, forfeiture, or liability incurred under such statute unless the repealing act shall so expressly provide, and such statute shall be treated as still remaining in force for the purpose of sustaining any proper action or prosecution for the enforcement of such penalty, forfeiture, or liability. (emphasis added) [¶ 16.] Black's Law Dictionary 1168 (8th ed 2004) defines penalty as: [p]unishment imposed on a wrongdoer, usu. in the form of imprisonment or fine; esp., a sum of money exacted as punishment for either a wrong to the state or a civil wrong (as distinguished from compensation for the injured party's loss). Though usu. for crimes, penalties are also sometimes imposed for civil wrongs. Under the Division's administrative rules, sanctions which may be imposed for violations of the insurance code are characterized as a penalty. ARSD 20:06:01:02 provides: In determining the penalty for a violation of an insurance law by an agent, broker, or insurer, the director may consider, but is not limited to, the following factors: (1) Prior violations of the law by the agent, broker, or insurer; (2) Number of violations of a statute; (3) Number of statutes violated; (4) Penalties assessed against other agents, brokers, or insurers for the same violations; (5) Magnitude of the harm to the public and insured; and (6) Any mitigating circumstances. (emphasis added). [¶ 17.] There can be little question that the revocation of a professional license is a serious matter with significant consequences. Setliff, 2002 SD 58, ¶ 23, 645 N.W.2d at 608 (citing Bruggeman v. S.D. Chem. Dependency Counselor Certification Bd., 1997 SD 132, ¶ 12, 571 N.W.2d 851, 853 (additional citation omitted)). This Court has characterized the revocation of a resident insurance agent's license as a penalty. Kent v. Lyon, 1996 SD 131, ¶ 53, 555 N.W.2d 106, 117. We conclude that the revocation of Tinklenberg's license for his misconduct is a penalty for the purposes of SDCL 2-14-18. Therefore, it was not error for the Division to seek revocation of Tinklenberg's license under the authority of SDCL XX-XX-XXX, [1] since his conduct occurred during the time when the statute was in force. [¶ 18.] Our conclusion has support from other courts which have addressed this issue. The cases are summarized thus: To alleviate the hardship and to rectify the injustice of the common-law rules of construction and interpretation as they prescribe the effect of the repeal of a statute, a majority of the jurisdictions have enacted general savings statutes with the express purpose of achieving the continuation of repealed statutes in respect to past activity and pending legal actions. . . . Although these general savings statutes have been designated as mere rules of construction to be applied only to resolve a question of legislative intent, the prevalent and more favored view is to construe the savings provisions as positive legislation which should be given the effect as though they were incorporated into every future enactment involving a substantive right. Where a statute is repealed, a general saving statute operates to save any substantive right of a private nature, liability, right of action, penalty, forfeiture, or offense which has accrued under the repealed statute. Consequently, any action predicated upon the repealed statute may be commenced and prosecuted to a conclusion under the provisions of the repealed act. 1A Norman J. Singer, Sutherland Statutory Construction § 23:38 (6th ed) (emphasis added). [¶ 19.] Further, there is a South Dakota decision which discussed the general savings clause in relation to a liability. In Schultz v. Jibben, 513 N.W.2d 923 (S.D. 1994), a vendor under a contract for deed commenced an action to foreclose the interest of the purchasers and their assignee. The assignee counterclaimed for an equitable adjustment of the contract referring to SDCL 21-50-2. However, this statute was repealed after execution of the original contract for deed. In denying application of the general savings statute to preserve the right of equitable adjustment for the assignees, we determined that the right of equitable adjustment was not a liability and therefore could not be saved under SDCL 2-14-18. Yet, we considered the preservation of a liability under this general savings statute, if the liability existed prior to the repeal and was not mentioned in the repealed statute, by writing: [T]he repeal of a statute does not bar actions commenced after the repeal if predicated upon liability which accrued when the act was in force [.] [2] Id. at 925 (emphasis in original) (citing Colorado v. McMillin, 150 Colo. 23, 370 P.2d 435 (1962)).