Brown & Root, Inc. v. Traders & General Ins. Co.

On Appellee’s Motion for Rehearing.

This cause is before us at this time on appellee’s motion for rehearing of our judgment granting appellant’s motion for rehearing, reversing the judgment of the trial court and here rendering it for appellant.

The Legislature is competent to set up an agency to prescribe insurance rates and apply them to workmen’s compensation insurance policies, and can, of course, vest such agency with ample 'powers to enable it to function properly. But the Legislature cannot deprive the courts of their judicial function to determine the legal rights of insurance companies and policy holders, consequent upon a correction being made in rate-application by such legislative agency, and vest such purely judicial function in such agency. Neither has the Legislature attempted to deprive the courts of such judicial function and confer it upon the Insurance Department, nor does the Department pretend to any authority to exercise such judicial function.

,It is true that in the instant case the Department exercised the authority to order appellee to make reparation to appellant for a portion of the excess premiums which appellee had collected from appellant prior to the correction made in rate-application on November 22, 1934. But this order that appellee 'make such partial reparation was but incidental to its exercise of authority to make the correction of the error in rate-application, and to making such correction effective and complete within the limits .of the Department’s administrative function. As we have seen, the limits which the Department has set as fixing the scope within which to exercise its administrative function on insurance policies, is the period between their anniversary dates, one year. Its authority to prescribe the limits within which it deems it expedient to exercise its administrative function will be liberally construed. However, the legpl rights of insunmce companies and of policy holders do themselves necessarily fix limits to the authority which the Department may exercise. In the present instance the Department could in the exercise of its administrative function, require appellee to make reparation to appellant for the excess premium which it had collected covering the period between November 22, 1934 (when the correction was made), and the policies’ preceding anniversary date, because to do so did not deprive appellee of any legal right. That is, appellee had no right not to make reparation to appellant for the entire period between the date such correction was made and the effective dates of the policies; because as we have seen, the rate applied by way of correction by the Department on November 22, 1934, was in force during all the time the policies were in effect. Such rate was the lawfully prescribed rate for the risk in question, as the Department then found. It therefore follows that in collecting premiums based on the higher rate, appellee collected, and appellant paid, more than the lawful rate. And appellant did not derive its right to recover reparation, nor did appellee derive its obligation to make reparation, from the order of the Department requiring appellee to make reparation from November 22, 1934, to the policies’ anniversary date, May 2, 1934, but, to the contrary, the Department could exercise the authority to make such order only because, independ*543ently of such order, the appellant possessed the legal' right to reparation and appel-lee was under the legal obligation to make reparation. If the Department should deem it expedient, in the exercise of its control over insurance matters, not to order any reparation made when it corrects an error in rate application, -the one in whose favor the error had operated would still be under the legal obligation to make reparation, and the one against whom it had operated will still possess the legal right to recover reparation. And the Department can at any time it should deem it good policy to do so cease ordering reparations made, even during the period between anniversary dates of policies. But such change in policy on the part of the Department could not abolish the right to recover, and the obligation to make, reparation consequent upon correcting a rate-application, nor deprive the courts of jurisdiction over the action to recover such reparation.

It follows from what has been said that the refusal of the Department to order appellee to make reparation for the period prior to the anniversary date of the policies, preceding the date the correction was made, could not possibly relieve appellee of its legal obligation to make, nor deprive appellant of its legal right to exact, such reparation (for the period May 2, 1933, to May 2, 1934). Indeed, the refusal of the Department to order reparation made on, what it designates as, the “expired” portion of the policies, is obviously referable to its unwillingness to exceed the bounds fixed to the scope within which it will exercise its administrative function, namely, the period between the current anniversary dates. Had the Department, however, not merely refused to order reparation made for the period from May 2, 1933, to May 2, 1934, but had gone further and undertaken to exercise the judicial function and rule that appellant should have no right to recover reparation during such period, such order would have been absolutely null and void. Neither could the Department through the exercise of its unquestioned legislative function have deprived appellant of the right to the corrected rate (inclusive of the right to repa.-ration during the period it was not applied), because it is as much the exercise of the legislative function of rate-making to repeal a rate which is in effect, as it is to make a new one. It would therefore have been as unconstitutional for the Department on November 22, 1934, to undertake to repeal a rate retroactively for the period between May 2, 1933, and May 2, 1934, as it would have been to order a new rate into effect retroactively for such period. The rate applied by way of correction on November 22, 1934, having been in full force during May 2, 1933, to May 2, 1934, appellant could not, as already stated, be denied the right to reparation for such period by the Department. But the refusal of the Department to order such reparation could only, have the effect, and no doubt was intended to have only the effect of, leaving appellant to its legal remedy in court to recover reparation from appellee for the excess premiums collected on the policies from May 2, 1933 to May 2, 1934.

It would be the pedantry of citation to refer to authorities in support of the elementary law hereinabove applied.

From authorities cited by appellee we infer that it considers that the courts are required to give to the orders of the insurance department the same conclusive and binding effect which Art. 6452 gives to the rates, etc., of the Railroad Commission in actions between railroads and shippers, unless and until found invalid or unreasonable in an action brought directly against the Railroad Commission for that purpose. However binding arid conclusive the orders of the Department may or may not be in general, we are here concerned only with the effect in court of the Department’s correction order of November 22, 1934. Of this order we said in our original opinion: “Now, while the finding of the Commissioner, to the effect that ap-pellee was collecting a premium rate from appellant in excess of what appellant’s true experience record indicated, is conclusive cmd binding in the state of the record before us * * *” Thus we there ruled that, at least for the time being in this action, the correction order of November 22, 1934, was conclusive and binding. We were then of the opinion and still believe (but it is now not necessary to rule on the point) that it might be legally permissible for appellee to take steps to attack said finding of November 22, 1934, if the cause were remanded for a new trial; and, as we had found the case had been tried on the wrong theory, upon reversing the judgment of the trial court, we ordered the cause remanded. Upon- consideration of the motions for rehearing, *544by both parties, upon our judgment remanding the cause, we found that under no possible theory, supported by the record could the trial court do other than render the judgment, in case of a new trial, which we rendered on said rehearing. We therefore considered that it was error for us to remand the cause on the theory that, peradventure, the appellee might thereupon form the desire to attack the Department’s finding of November 22, 1934, which finding it had not merely acquiesced in, but had accepted by making partial restitution thereon. Article 1856 provides: “When the judgment or decree of the court below shall be reversed the court [of Civil Appeals] shall proceed to render such judgment or decree as the court below should have rendered, except when it is necessary that some matter of fact be ascertained or the damage to be assessed or the matter to be decreed is uncertain, in either of which cases the cause shall be remanded for a new trial.” As the record disclosed that appellee had accepted the Department’s finding of error in rate-application of November 22, 1934, and its correction thereof, and, as the damage to be assessed under such correction was certain, we were required by force of Art. 1856 to render the judgment which the trial court should have rendered, and not to remand for a new trial.

Appellee’s motion for rehearing, which was filed after the granting of appellant’s motion, is now: refused.