Commonwealth v. Gregory

Opinion by

Judge Nunn

Affirming.

This suit was brought in the form of a penal action by the Commonwealth of Kentucky against R. E. Gregory, who was an agent of the Citizens Life Insurance Co. of Kentucky, a domestic corporation, in which the prayer of the petition is for a judgment for a penalty of $75 against the appellee for doing business as the agent of the Citizens’ Life Insurance Co. without having first procured a license as such agent. The purpose of the suit was to determine whether or not a domestic insurance company— that is, an insurance company created under the laws of Kentucky — is required to procure a license for each of its agents. The lower court determined that such licenses were not required, and the Commonwealth has appealed.

It is admitted by the Commonwealth that no licenses have ever been required.of the agents of domestic insurance companies previous to the institution of this action. This action was instituted for the purpose of obtaining a construction of the present statutes upon the subject. We have examined *259Hie statutes relative to this question, -which have been enacted during the last 25 or 30 years, and we find no material change in them with reference to the question involved on this appeal. Chap. 32, art. 4, from sec. 617 to sec. 762, inclusive, of the Ky. Stats. of 1903, contain the provisions of the private corporation laws by which this liability must be determined. We have not been able to find, nor have we been cited to, any provision of the statutes which requires an agent of a domestic insurance company to pay a fee and obtain a license. Upon the other hand, we find three secs., viz., 634, 681 and 694, which expressly require the agents of foreign insurance companies doing business in this State to obtain a license before transacting any business. The fact that the General Assembly enacted the three sections referred to, requiring that license should be obtained by the agents of foreign insurance companies, and failed to enact any provision requiring the agents of domestic companies to obtain a license, is convincing that it was not the intention of the General Assembly that agents of domestic companies should be required to obtain a license. In other words, it was the intention of the Legislature that they should have the advantage in that respect.

The appellant refers to sec. 761, and contends that this section applies to the agents of all companies, both foreign and domestic. We quote that part of it necessary to an understanding of the proposition: “There shall be collected by the commissioner and paid into the State Treasury, to the credit of the insurance department, the following fees: * * * For license to each agent of life companies, and certificate of seal of office for each $5.” * * * This section evidently refers to such agents as were required by the previous sections to obtain a license, *260and not to those who were not required to obtain them. The same may be said of sec. 640. If the-contention of the Commonwealth be correct, that this section applied to the agents of all companies, it was useless and folly in the General Assembly to require in secs. 634, 681 and 694 that agents of foreign companies be required to obtain a license.

It is the further contention of the Commonwealth that by secs. 627 and 753 the agents of domestic companies are required to obtain a license.. There is some plausibility in this contention. By the first section named it is provided that, if the company fails to make a report as required in that section, it shall be punished by a fine, and it shall also be the duty of the commissioner to revoke the license issued to agents, etc. By the second section it is provided: “If, upon examination, he (commissioner) is of .opinion that any domestic insurance company is insolvent, or has exceeded its powers, or has failed to comply with any provision of law, * * * he shall revoke or srispend all licenses issued to it or its agents,” etc. By these sections it would seem that when the General Assembly enacted, them it was under the impression that it had required such-agents to obtain, a license. But in fact it had not. It is clear to our miiids that the words “its agents,” were used in these two sections by inadvertence, or that they had. reference to the revocation of the certificate — i. e., license — as mentioned in sec. 620. The-Commonwealth is unable to.point out any provision of the statutes requiring domestic insurance companies to take out license for their agents, and its contention that a license is required, of such agents is based solely upon mere inference and implication in the statutes, such as we have indicated.

But, if there is any doubt upon this question, it *261Is obliterated by the long-continued contemporaneous construction of these statutes, covering the period of at least twenty-five years or more; participated in by all the officers of the State engaged in executing this law, .as well as by the insurance companies and their agents operating under it. The answer of appellee in this case pleads expressly that it has always been the construction placed upon these statutes by the officers of the State until within the last few months, and by insurance companies created by the laws of this State, that domestic insurance companies were not required to procure license for their agents, and that never until within the last few months did the State of Kentucky ever demand or require a license of an agent of a domestic company, nor issue a license to such an agent, nor receive any license fee from such an agent. These allegations of the answer were admitted by the demurrer to be true.

In the case of Harrison v. Commonwealth, 83 Ky., 162, 7 Ky. Law Rep., 74, this court held that the .statute allowing the county assessor- “fifteen cents for each person’s list of taxable property” should be construed as allowing him 15 cents for each name of a person returned on the assessor’s book, whether he had any taxable property or not. And it reachedthis conclusion largely on account of the long-continued contemporaneous construction of the statute to this effect by the officers of the law. Speaking on that subject, the court said: “The very fact that persons, and even courts, are differing as to its meaning, tends strongly to show that it is at least of doubtful import. It is alleged in the answer, and admitted by the demurrer to it, that the State, through its county courts and its executive departments, has for many years allowed and paid fop *262eacli list, whether it embraced property or not. The-executive branch of a government must necessarily give a construction to the laws which it must execute; and, if its construction has been followed (for years, and in view of and without interference by the lawmaking power, then such contemporaneous and long-continued construction should not be departed from without the most cogent reasons. A long-continued practice under a statute, under such circumstances, ripens into an authoritative construction of it.”

In Clark’s Run, &c., Turnpike Co. v. Commonwealth, 96 Ky., 525, 16 Ky. Law Rep., 681, 29 S. W., 360, the court said: “If we were called on to construe these acts without regard to the construction adopted by all concerned some thirty odd years ago, we might readily agree with the appellee. What we conclude is that the construction contended for by the appellant is not an inadmissible one, and, in view of this contemporaneous interpretation of the meaning of the acts and the long and continued usage under the law by those claiming a right under it, we think their construction the proper one.” (Barbour v. City of Louisville, 83 Ky., 95, 7 Ky. Law Rep., 17; Louisville Tobacco Warehouse Co. v. Commonwealth, 106 Ky., 171, 20 Ky. Law Rep., 1747, 49 S. W., 1069, 57 L. R. A, 33.)

The Commonwealth makes the point that if a domestic insurance company is permitted to do business in the State without having to take out and pay for a license for each agent through whom it does business, while a foreign insurance company doing-business in the State is required to take out and pay $5 for a license to each agent through whom it does business in the State, this is an unlawful and unconstitutional discrimination. In this the Com*263monwealth is in error, as lias been repeatedly decided by the Supreme Court of the United States. In the case of Paul v. Virginia, 8 Wall., 168, 19 L. Ed., 357, the State of Virginia required that all foreign insurance companies should make a certain deposit of bonds with the State, as a condition precedent to the issue of license to do business in the State, whereas no such requirement was made of domestic companies. Paul, an agent of a foreign company, applied for a license, complying with all the provisions of the law except that as to the deposit of bonds. On this ground a license was refused. He then proceeded to do business without a license, whereupon he was indicted, convicted and fined under the statutes. He appealed to the Supreme Court of the United States, insisting that the Virginia statutes were in violation of sec. 2 of art. 4 of the Federal Constitution, which provides that “the citizens of each State shall be entitled to all privileges and immunities in the several States,” and that it was also in violation of the commerce clause of the Constitution, which gives Congress the power to regúlate interstate commerce. The Supreme Court answered the first point, to wit, that the statute was a violation of the section providing that the citizens' of each State shall be entitled to all privileges and immunities of citizens of the several States, by holding that a corporation, within the meaning of this section of the Constitution, is not a citizen; and it answered the second point, to wit, that the statute was an attempt to regulate interstate commerce, by holding that insurance is not commerce. On the position that a corporation is not a citizen, within the meaning of the section of the Constitution referred to, this case is approved as late as the case of Blake v. McClung, 172 U. S., 239, 19 Sup. Ct., 165, *26443 L. Ed., 432, and on the proposition that insurance is not commerce it is approved as late as New York Life Ins. Co. v. Cravens, 178 U. S., 401, 20 Sup. Ct., 962, 44 L. Ed., 1116.

Again, it is contended that a statute of this kind, governing foreign insurance companies and making provisions for them different from those made as to domestic insurance companies, is a violation of the fourteenth amendment to the Federal Constitution is conclusively settled by the case of Philadelphia Fire Association v. New York, 119 U. S., 110, 7 Sup. Ct., 108, 30 L. Ed., 342, in which the appellant in that case insisted that after it had begun to do business in New York, and was recognized as rightfully doing business there, the statute was passed which was applicable to it as a foreign company, but not to domestic companies. It insisted, therefore, that this was in violation of the fourteenth amendment to the Constitution, which forbids any State from depriving any person of life, liberty or property, or denying to any person the equal protection of the laws. The Supreme Court denied this proposition, and said: “But we are unable to take that view.of the case.” It then proceeded to quote and approve the case of Paul v. Virginia, supra, as follows: “Having no absolute right of recognition in other States, but depending for such recognition and the enforcement of its contracts upon their assent, it follows, as a matter of course, that such assent may be granted upon such terms and conditions as those States may think proper to impose. They may exclude the foreign corporation entirely, they may restrict its business to particular localities, or they may exact such security for the performance of its contracts with their citizens as in their judgment would best promote the public *265interests. The whole matter rests in their discretion.’’

The court, continuing, said: “The same rulings were followed in Ducat v. Chicago, 10 Wall., 410, 19 L. Ed., 972, where it was said that the power of a State to discriminate between her own corporations and those of other States desirous of transacting business within her jurisdiction being clearly established, it belonged to the. State to determine as to the nature or degree of discrimination, subject only to such limitations on her sovereignty as may be found in the fundamental law of the Union.”

The court referred to several authorities to the same effect, and continued: “The State, having power to exclude entirely, has the power to change the conditions of admission at any time for the future, and to impose as a condition the payment of a new tax, or á further tax, as license fee. If it imposes such license fee as a prerequisite for the future, the foreign corporation, until it pays such license fee, is not admitted within the State or within its jurisdiction. It is outside at the threshold seeking admission, with consent not yet given. * * * By going into the State of New York in 1872 it assented to such prerequisite of its admission within the jurisdiction of New York. It could not be of right within such jurisdiction until it should receive the consent of the State to its entrance therein under the new provisions, and such consent could not be given until the tax, as a license fee for the future, should be paid. ”

For these reasons, the judgment of the lower court is affirmed.