Court Opinion

ID: 9773440
Source: CourtListenerOpinion
Date Created: 2023-08-29 17:46:05.07699+00
Date Added: 2024-06-11T07:31:53.950505
License: Public Domain

HYDE, Judge.
This is an original proceeding in prohibition to prevent respondent from exercising jurisdiction in the case of John T. Barker and Floyd E. Jacobs vs. C. Lawrence Leggett, Superintendent of the State Division of Insurance, in the Circuit Court of Jackson County, except to enter a final judgment dismissing same for want of jurisdiction. Barker and Jacobs are hereinafter referred to as plaintiffs.
The case against the Superintendent was commenced in Jackson County, the county of plaintiffs’ residence (Secs. 536.100 and 536.110, statutory references are to RSMo and V.A.M.S. except as otherwise specified), on the theory that it was a proceeding for review of a “contested case” under the Administrative Procedure Act. Laws 1945, p. 1504. Re*355view of administrative decisions, in matters which are not within the classification of contested cases under the Act, may be had under Sec. 536.105, but the venue would be in Cole County. State ex rel. State Tax Commission v. Walsh, Mo.Sup., 315 S.W.2d 830. Therefore, relator’s jurisdiction in the case against the Superintendent depends upon whether or not plaintiffs’ claim for attorneys’ fees is a “contested case” as defined in Sec. 536.-010(3). There is no doubt whatever that plaintiffs’ claim is a claim about which there is a contest, but a “contested case”, to which the provisions of the statutes invoked by plaintiffs apply, has a much narrower meaning than that.
An account of the employment and services of plaintiffs will be found in Jacobs v. Leggett, Mo.Sup., 295 S.W.2d 825, 828, showing they were lawfully employed and had performed their services but could not be paid out of the funds recovered for insurance rate overcharges in the litigation (the method of payment provided in their contract) because these funds belonged to policy holders and the provisions of the insurance code provided other and exclusive methods of payment. After the decision in that case and in Barker v. Leggett, Mo.Sup., 295 S.W.2d 836, plaintiffs filed a claim for their fees with the Superintendent making among others the following requests:
“(a) Accept jurisdiction of and recognize these claims and this and preceding applications as merged herein.
“(b) Proceed under the Insurance Code and Chapter 536, R.S.Mo.,1949, on notice to hear and determine this application and preceding applications praying allowance of the claims set forth herein, and to hear evidence thereon.
“(c) Allow and approve these claims as expenses of the Insurance Department in a full and adequate reasonable amount as may be justified by the evidence which will be presented by the applicants.
“(d) Determine whether these claims and each of them (1) should be allowed as expenses of ‘proceedings’ against insurance companies involved in the restitution proceedings, and assessed against them ratably; or (2) are usual expenses of the Division (formerly Department) of Insurance payable out of amounts appropriated by law from the Insurance Division fund on warrants issued on such fund on vouchers approved by the Superintendent and Comptroller.”
Relator’s petition for prohibition states that he concluded “that he was not required by law to grant a hearing upon claimants’ application and that he was without authority to allow them a fee”; and that “he therefore denied the claim.” Plaintiffs’ return states that “without any notice, without opportunity to be heard and without any statement of the reasons therefor, the Superintendent notified the claimants by letter that their application for hearing had been denied and their claims had been denied peremptorily”.
The Insurance Code provides two methods of payment of expenses which are invoked by plaintiffs. Section 374.220 provides: “The expenses of proceedings against insurance companies * * * shall be assessed by the superintendent upon the company proceeded against * * * and shall be in the first instance paid by such company, on the order of the superintendent directly to the person or persons rendering the service.” Sec. 374.260 provides that, if the expenses of the Division exceed the fees required to be collected, “the superintendent shall, annually, assess upon all insurance companies doing busi-. ness in this state a sum equal to such excess;” and that “such assessments shall be made in proportion to the relative .amounts of the assets of each company.” The intent of these provisions, of course, is that all expense of the operation of the Division of Insurance shall be paid by the companies so that it would cost the state nothing. See Sec. 374.160. Undoubtedly, it is intended that the Superintendent shall *356have discretion as to the use of these authorized methods, which plaintiffs apparently recognized by asking him to do one or the other. Of course, as suggested in Aetna Ins. Co. v. O’Malley, 343 Mo. 1232, 124 S.W.2d 1164, 1168, the Legislature could make an appropriation out of general revenue to pay plaintiffs, without action by the Superintendent.
The Administrative Procedure Act of 1945 covered two matters: (1) Promulgation of rules by agencies and determination of their validity (Secs. 2-5, now Secs. 536.020, 536.030, 536.040, 536.050); and (2) Procedure for trial and review of contested cases in agencies. Secs. 6-10, in 1949, 536.060, 536.070, 536.080, 536.090 for Secs. 6-9, all -of which were amended in 1957; and Secs. 536.100, 536.110, 536.120, 536.130, 536.140 for Sec. 10. For amendments see Laws 1953, p. 679, Laws 1957, p. 748. The definition section (536.010, Sec. 1 of the 1945 Act) states that “‘contested case’ means a proceeding before an agency in which legal rights, duties or privileges of specific parties are required by law to be determined after heaving.” (Emphasis ours throughout.) We think this means that a “contested case” (to which the Administrative Procedure Act and its judicial review provisions apply) is a case which must be contested before an administrative agency because of a requirement (by constitutional provision, statute, municipal charter provision or ordinance; see Sec. 536.105, subd. 1) for a hearing before it of which a record must be made unless waived. § 536.060. The original act provided only for such cases; in fact, its definition of a “contested case” was one in which a hearing was “required by statute”. The amending act of 1957 states in its title it is an act to repeal certain numbered sections and enact in lieu thereof others (numbers stated) “relating to administrative officers and bodies existing under the Constitution or by law, and to contested cases (as defined) before the same; defining terms; providing for and relating to procedure in connection with contested cases, as defined, * * In other words, “contested case” within the meaning of the Act does not mean every case in which there may be a contest about “-rights, duties or privileges” but instead one in which the contest is required by law to be decided in a hearing before an administrative agency.
This is made clearer by the fact that, at the next session of the Legislature after the adoption of the original act, another act was introduced (prepared by the Administrative Law Committee of the Missouri Bar), however not enacted until 1953 (Laws 1953, p. 678), which is now Sec. 536.105, providing for judicial review of administrative decisions which are not required to be contested in a hearing before the agency. State ex rel. State Tax Commission v. Walsh, supra. The report on this bill (set out in the Walsh case, Mo.Sup., 315 S.W.2d loc. cit. 834) states:
“ ‘This is a companion bill to the proposed “Administrative Procedure Act of Missouri.” It is supplementary to L.Mo.1945, p. 1504, and to Section 22, Article V of the Constitution. The Constitution and the 1945 act deal with judicial review of administrative decisions where evidence is taken before an agency so that there is a record to review of the same kind that exists when an appellate court reviews the judgment of a lower court.
“ ‘There are numerous cases, however, where agencies may act without having a hearing or making a record of evidence heard. In those cases the remedies of cer-tiorari, mandamus, etc., are frequently inadequate, because of the inability of the court to consider the facts bearing on the merits of the agency’s decision, because no record of evidence has been made for the court to review.
“ ‘This bill is designed to correct this situation. It provides for the making in court, in a certiorari proceeding, for example, of the same kind of record that would be made before the agency in a case reviewable under Section 22 of Article V of *357the Constitution. In other words it gives the court power to hear evidence on the merits of the plaintiff’s case before the agency, so that it can determine in the light of the facts as they appear to the court whether the agency’s decision is proper.’ ”
The comment of the Committee in regard to Section 2, contained in the same report, reads as follows:
“ ‘This act applies only where “there is no other provision by statute, municipal charter or ordinance for judicial or administrative review.” .This refers to particular review provisions so provided. Inasmuch as Section 10 of L.1945, p. 1504, applies “unless some other provision for judicial review is provided by statute,” it is important that contested cases reviewable under Section 10 be expressly excluded from the operation of this act, so that there will be no possibility of conflict.’ ”
Sec. 536.105 is as follows: “1. When any administrative officer or body existing under the constitution or by statute or by municipal charter or ordinance shall have rendered a decision zvhich is not subject to administrative review, determining the legal rights, duties or privileges of any person, including the denial or revocation of a license, and there is no other provision for judicial inquiry into or review of such decision, such decision may be reviewed by suit for injunction, certiorari, mandamus, prohibition or other appropriate action, and in any such review proceeding the court may determine the facts relevant to the question whether such person at the time of such decision was subject to such legal duty, or had such right, or was entitled to such privilege, and may hear such evidence on such question as may be properly adduced, and the court may determine whether such decision, in view of the facts as they appear to the court, is 'Unconstitutional, unlawful, unreasonable, arbitrary,- or capricious or involves an abuse of discretion; and the court shall render judgment accordingly, and may order the administrative officer or body to take such further action as it may be proper to require; but the court shall not substitute its discretion for discretion legally vested in such administrative officer or body, and in cases where the granting or withholding of a privilege is committed by law to the sole discretion of such administrative officer or body, such discretion lawfully exercised shall not be disturbed.
“2. Nothing in this section * * * shall apply to contested cases reviewable pursuant to sections 536.100 to 536.140.
“3. Nothing in this section shall be construed to impair any power to take summary action lawfully vested in any such administrative officer or body, or to limit the jurisdiction of any court or the scope of any remedy available in the absence of this section.”
Both the Administrative Procedure Act of 1945 and Sec. 536.105 are based upon Sec. 22, art. V, of the Constitution, which recognises that there are administrative decisions made without a hewing in the agency, and which provides: “All final decisions, findings, rules and orders of any administrative officer or body existing under the constitution or by law, which are judicial or quasi-judicial and affect private rights, shall be subject to direct review by the courts as provided by law; and such review shall include the determination whether the same are authorized by law, and in cases in which a hearing is required by law, whether the same are supported by competent and substantial evidence upon the whole record.”
We said in Wood v. Wagner Electric Corporation, 355 Mo. 670, 197 S.W.2d 647, 649, concerning this constitutional provision: “The provision in Section 22 that administrative decisions ‘shall be subject to direct review by the courts as provided by law’ refers to the method of review to be provided (certiorari, appeal, etc.) and not to the scope of the review ‘in cases in which a hearing is required by law.’ *358For the latter, this stated minimum standard ('supported by competent and substantial evidence upon the whole record’) is mandatory and requires no legislation to put it into effect.” Thus it was left to the Legislature to provide the method of review, but the scope of review was provided by the Constitution for all cases in which a hearing in the agency was required by law before it made its decision, which are those classified as contested cases by the Administrative Procedure Act. The Legislature has now provided an adequate method of judicial review in all cases, namely: review under Secs. 536.100 and 536.140 for cases which must be contested in a hearing in the agency before a decision is made; and review under Sec. 536.105 for cases decided by the agency without a hearing. In both classes of cases “legal rights, duties or privileges of specific parties” may be involved, and due process requires a hearing “at some stage before the proceedings become final” (Henry v. Manzella, 356 Mo. 305, 201 S.W.2d 457, 460, and cases cited). However, it is not true as plaintiffs contend “that in any case where individual rights are involved there must be an administra> tive hearing with all the attributes of due process of law.” Due process is satisfied if there be either an administrative hearing subject to judicial review or the right to have a hearing in a court which may adequately review the administrative decision. The judicial review under Sec. 536.105 is broader in scope than that required by the constitutional provision (Sec. 22, art. V) for cases in which a hearing is required by law in the agency, being in effect a hearing de novo. This is authorized by the first part of Sec. 22, art. V, giving legislative authority to make administrative decisions “subject to direct review by the courts as provided by law;” and it adequately affords due process. Anything said to the contrary in Kansas City v. Rooney, 363 Mo. 902, 254 S.W.2d 626, is overruled for the reasons stated in State ex rel. St. Louis Public Service Co. v. Public Service Commission, 365 Mo. 1032, 291 S.W.2d 95, 102.
The trouble with plaintiffs’ contention (as to their right to invoke the review procedure of Secs. 536.100 and 536.110) is that they can point to no law requiring a hearing on their claim before the Superintendent such as is required to make it a contested case before him within the meaning of the Act. There are provisions of the Insurance Code which do require such hearings. Sec. 375.020 requires a hearing on revocation of agents’ -licenses; Sec. 375.060 authorizes hearings to determine the condition of any company, and Sec. 375.070 requires a hearing before filing a report of examination; Sec. 375.890 requires a hearing before revocation or suspension of a certificate of authority; Sec. 378.470 requires a hearing before revocation of the license of a fraternal benefit society; Sec. 379.505 provides for a right to a hearing on rate orders made without a hearing; and Sec. 381.170 requires a hearing before an order of suspension of license under the Title Insurance Law. Thus the Legislature did provide for hearings where it deemed hearings should be required before action by the Superintendent. There would seem to be reasons for not requiring hearings by the Superintendent on claims which would come within the classification of “expenses of proceedings against insurance companies, and examinations of the assets or liabilities and valuations of policies of insurance companies” (Sec. 374.220) or of “expenses of this division”. Sec. 374,260. Such claims would be not only for attorneys’ fees but also stenographers’ fees, examiners’ fees and expenses, stationery, printing, equipment, furniture and supplies of all kinds. The main difference, between such claims in the division of insurance and claims for expenses of many other divisions of the state government, is that the amounts required to pay them may be assessed against insurance companies instead of coming from funds raised by general taxation, as would be true of many state agencies; and as “expenses of proceedings” could be ordered to be paid direct to the person rendering *359the service (Sec. 374.220) or to be paid into the state treasury as assessments under Sec. 374.260, and then appropriated. See Sec. 374.160. No requirements for hearings in divisions or departments on claims for such expenses is provided anywhere in the state government that we know of, no doubt because the money to pay them must be appropriated by the Legislature (even if they are derived from fees or assessments, Sec. 36, art. Ill, Const.), and because the state cannot be sued on them without its consent. (Sec. 28, art. IV, of the Constitution says, “nor shall any obligation for the payment of money be incurred unless the comptroller certifies it for payment and the state auditor certifies that the expenditure is within the purpose of the appropriation, * * and by Sec. 33.140 for comptroller’s authority to require hearing.) “The state can adopt. whatever mode or method it elects to determine whether it shall become liable and discharge a given obligation.” 81 C.J.S. States § 198 p. 1264, see also 49 Am.Jur. 278, Sec. 65, p. 285, Sec. 74; as to judicial control and review see 81 C.J.S. States § 209 p. 1296. Plaintiffs’ claims, at least at this stage, are claims against the state, their lawful employment having been by the state (see Sec. 5678, R.S.1929, now 374.120), and plaintiffs recognize the authority and discretion of the Superintendent to assess the companies under either Sec. 374.220 or 374.260. There is not now a claim of any kind against the companies because no assessment has been made.
Plaintiffs rely on State ex rel. Police Retirement System of City of St. Louis v. Murphy, 359 Mo. 854, 224 S.W.2d 68, 71, for their contention that a hearing is required on their claim by the Superintendent. That decision held that Sec. 9469, R.S.1939, “imposes the duty on the board to hold hearings and to receive evidence and proof,” on claims for accidental death benefits from the St. Louis Police Retirement System. That ruling was based on the language of the statute under which the board of trustees had the duty to decide “upon the receipt of evidence and proof” whether the death of a policeman, under the System, “was the result of an accident in the performance of duty and not caused by negligence” on his part. On a claim made by the widow of a policeman as his beneficiary a hearing was had, in which witnesses appeared and the testimony was transcribed, and we held the beneficiary’s right of review was under the Administrative Procedure Act. We think that decision was correct and that it was a reasonable construction of the provisions of the statute involved to hold that it did require that board to determine such a claim after hearing. No similar language in the Insurance Code is pointed out by plaintiffs as applicable to their claim and we find none.
Plaintiffs also rely on what was said in the Barker case (295 S.W.2d loc. cit. 840) denying their right to maintain a suit against the Superintendent in quantum meruit, in which we pointed out we had uniformly held that the Insurance Code indicated “an intention to regulate the business from beginning to end”; and that “the superintendent of insurance is the administrative officer in charge of that interest, and courts are without authority to interfere with his administration of the Code.” We then said: “We believe it is the intent of the insurance code to vest the superintendent with primary jurisdiction to approve the usual expenses and to assess the expenses of proceedings against companies. We believe this right of primary decision by the superintendent is exclusive, subject only to review by the courts in the manner provided in the insurance code or as otherwise provided by Chapter 536, RSMo 1949, V.A.M.S., and more particularly § 536.100 dealing with judicial review of administrative decisions.” However, the question of which review statute (536.100 or 536.105) was applicable to claims for such expenses was not an issue in that case and so was not decided therein. Since either statute provides adequate review to satisfy due *360process, what we said concerning- plaintiffs’ constitutional contentions therein was correct. Our conclusion must be that the review provisions and procedure of Secs. 536.100, 536.110 and 536.140 are not applicable and that the Circuit Court of Jackson County has no jurisdiction in this matter.
Our preliminary rule in prohibition is made absolute.
STORCKMAN, J., dissents in separate opinion filed.
HOLLINGSWORTH, €. J., dissents and concurs in dissenting opinion of STORCKMAN, J.
WESTHUES, LEEDY and DALTON, JjT., concur.
EAGER, J., not voting.