Court Opinion

ID: 9842799
Source: CourtListenerOpinion
Date Created: 2023-09-24 02:18:43.691565+00
Date Added: 2024-06-11T09:13:49.941791
License: Public Domain

PRETTYMAN, Circuit Judge
(dissenting) .
' I would affirm in this case. It presents a close question, but I am unable to resolve my disagreement with my brethren.
The controversy concerns the renewal of a license held by a corporation, authorizing it to act as an insurance broker. Licenses are issued for one year.1 The controlling statute2 provides that renewals shall be subject to “the provisions for examination as set forth in section 35-1336”. The latter section *763sets forth the conditions for the issuance of a license. The meaning of these two sections, read together, is the issue here.
The issue resolves into three problems. The first, in logical order, is the place of the examination provisions in the scheme of the original-issuance section. The second is the application of the original-issuance provisions to a corporation. The third problem is the meaning of the renewal section when it adopts by reference “the provisions for examination” in the original-issuance section.
The original-license section of the statute, condensed, provides that before issuing a license to an agent or broker the Superintendent shall subject each “such person” to a personal written examination relating to the person’s knowledge of the business and his competency to act as a licensee. Then the statute provides that “Following such examination” the Superintendent shall issue the license “when he is satisfied” the applicant is “(a) competent and trustworthy and intends to act in good faith”, with a provision as to commission income; and “(b) that he has a good business reputation and has had experience, training, or education, or is otherwise qualified * * * ”; and (c) is reasonably familiar with insurance laws and regulations. Quite obviously part of the required findings by the Superintendent can be derived from the personal written examination; such, for example, as the reasonable knowledge of the law. But equally obviously other parts of the findings cannot be so derived. A person’s trustworthiness, intended good faith, and business reputation cannot be gleaned from a personal written examination. Other inquiry is necessary. The statute says the Superintendent shall issue the license “when he is satisfied” as to trustworthiness, competency, and good faith. Perhaps he could be satisfied as to knowledge and some phases of competency by a written examination, but he could hardly be satisfied as to trustworthiness and good faith by this means alone. Obviously other inquiry is permitted.
As a matter of structure of the statute these examination provisions are not set up as a separate, distinct step in a series of separate steps; they are integrated into the text dealing with qualifications. If Congress had meant to provide a series of independent steps in the process of securing a license, it could have done so. It did not so construct this statute. The examination provisions are not even fairly separable from the rest.
It seems to me perfectly clear that the personal written examination is a phase of the qualification process and that it has no purpose or result except as part of the material upon which the Superintendent bases his conclusion of trustworthiness and competency.
The next question is whether the Superintendent may consider the trustworthiness of the controlling shareholder of a corporation in determining the trustworthiness of the corporation itself. Section 35-1336 of the Code provides that licenses may be issued in the name of a corporation. It further provides that the Superintendent shall issue a license when he is satisfied “the person to be licensed” is, among other things, “competent and trustworthy”. The statute defines “Person” to include a corporation.3 So the Superintendent must be satisfied that a corporation is “trustworthy” before he issues it a license. That a corporation cannot take a personal written examination is no reason for concluding that it cannot be found trustworthy. The Federal Communications Commission, for example, is constantly considering the probabilities that a corporation will fulfill its promises. Illustrations could be multiplied. And the statute now before us requires that the person to be licensed be found trustworthy. This finding in turn obviously depends on the trustworthiness of the principal shareholders *764of the corporation, where they are in actual control of its operation. This is the usual method of determining the character and ability of a corporation. Sometimes the character of the management determines the character of the corporation; certainly in the case of a closely held or small corporation the character of the owners tells the corporate character.
The complicating feature is the proviso pointed out by my brethren — the provision that only those officers or members of a firm who solicit insurance or countersign policies need be listed on its license and that no others “shall be required to comply with this section”.
The prime object of Section 35-1386 is to protect the public. There is no reason why both the corporate licensee and its individual agents should not be found competent and trustworthy. The two requirements do not conflict; they go hand in hand. Both the responsible licensee and those who are active for it in its dealings with the public are covered by the Act. Since this result is important in the public interest, and since it is. clearly consonant with the purpose of the statute, the language of the Act ought to be so read if it reasonably can be. I think it can. The quoted clause can be read to mean that among the individual agents and employees of a corporate licensee only those named in the application need comply with the requirements. It need not be read as negating the whole qualification process as respects the licensee itself. The trustworthiness of the licensee must be established even though not all its agents and employees (but only its listed ones) can qualify. The statute should be read in the order in which it is written. First, the licensee must be found qualified. Second, those individuals who solicit or countersign policies must be found qualified. Third, if these latter individuals qualify, no other individuals need do so. The last step should not be carried backward so as to nullify the first.
The next question is the meaning of the renewal section. Section 35-1339' provides that renewals shall be subject, “to the provisions for examination as. set forth in section 35-1336”. The latter section is the original-issuance section. I think the “provisions for examination” include the provision for a finding of trustworthiness. I think we said so in Columbia Auto Loan v. Jordan.4 To be sure, it was dictum there, but in my view it was sound. In any event such a construction is both reasonable and practicable. The “provisions for examination” certainly include the finding of trustworthiness on the. part of individual licensees and individual agents of corporate licensees.. Such a finding is the only purpose of the examination. If no such finding is-required, the examination is an empty gesture, a proceeding hanging in midair. If a finding as to the trustworthiness of an individual licensee is required upon a renewal of his license, the same requirement ought to apply to a corporate licensee. I think it does.
These licenses expire each year and must be renewed annually. The renewal section does not make too much sense if it is read to require a re-submission to' personal examination but no re-finding as-to trustworthiness. If a licensee has sufficient knowledge of the insurance laws this year, he will have equal or greater knowledge next year and the years following. It is in his character, his reputation, or his trustworthiness that change may occur or new facets be discovered.
If renewals be equated with suspension or revocation it is difficult to ascertain any substantial purpose in providing that licenses shall expire annually. Certainly there could have been no intention of requiring renewals year after year, ignoring the record and reputation established by an existing licensee so long as he successfully avoids the *765limited prohibitions which are the basis for suspension or revocation of an existing annual license. So to hold is to ignore the strong public policy evident in the Act.5 This policy is not served by a requirement, without more, that all applicants, however experienced, must annually take a new written examination. Nor is it served by subjecting the public to untrustworthy firms or individuals for whatever length of time they see fit to apply for licenses. Congress cannot be presumed to have intended to limit the protection of the public in so substantial a fashion. I think the examination of which the renewal section speaks is an examination of an applicant’s qualifications, the criteria for which are clearly set forth in Section 35-1336.
It seems to me my brethren read this statute to provide that the trustworthiness of an agent is sufficient protection to the public, even where the corporate principal is wholly unreliable. They seem to hold that a corporation can secure a license simply by designating several minor officials or “members” to solicit and countersign policies and by showing that these — and these alone— are competent and trustworthy. I cannot subscribe to such a result.
In sum, it is my view that the original-issuance section (Section 35-1336) is an integrated whole, including the personal examination provisions; that a corporate licensee must be found to be trustworthy and of good faith and the character of the owners, at least of a small corporation like this one, is a material factor in that determination; and that the renewal provisions refer to and incorporate the whole of the qualification process and the phrase “provisions for examination as set forth in section 35-1336” means just that.

. 54 Stat. 1079 (1940), D.C.Code § 35-1337 (1951).

. 54 Stat. 1079 (1940), D.C.Code § 35-1339 (1951).

. 54 Stat. 1064 (1940), D.C.Code § 35-3303 (1951).

. 1952, 90 U.S.App.D.C. 222, 226, 196 F.2d 568, 572.

. The House Report (No. 9722, 76th Cong., 3d Sess. (1940) indicated that the principal purpose of the Fire and Casualty Act was to secure higher standards for the protection of the public. These standards were thought comparable to those of the Life Insurance Act and the regulatory statutes of New York, Virginia, Illinois, and other states not specifically named. Under the Life Insuranee Act, in the case of solicitors or agents, renewals may be had in the absence of “a contrary ruling by the superintendent”. 48 Stat. 1139 (1934), D. C.Code § 35-425 (1951). That Act also provides that suspensions and revocations may be predicated upon the untrustworthiness of the licensee. 48 Stat. 1140 (1934), as amended, D.O.Oode § 35-426 (1951).