Nuger v. State Insurance Commissioner

OppBnhbimer, J., delivered the opinion of the Court. This is an appeal from a judgment of the Superior Court of Baltimore City affirming an administrative decision of the State Insurance Commissioner which revoked the qualifications of the appellants to engage in the insurance business in Maryland. The appellants contend that the Commissioner’s decision was unsupported by substantial evidence and against the weight of the evidence; that, as to two of the five charges made by the Commissioner, there was no hearing as provided by law; and that the Commissioner’s action was in excess of his statutory authority and jurisdiction. Three hearings were held by the Commissioner.

The first two took place on April 24, 1962 on separate charges against two of the appellants, Caswell G. Nuger and Lillian S. Nuger. The third hearing, on May 11, 1962, was on charges against the Nugers and AA Insurance Agency, Inc. (the AA Agency), the third appellant, of which Mrs. Nuger was President and Mr. Nuger, Secretary-Treasurer. On June 1, 1962, the Commissioner rendered a consolidated decision, under five counts. His conclusion was as follows: “After considering all of the facts and testimony involved, it is my conclusion that Lillian Nuger, President, and Caswell G. Nuger, Secretary-Treasurer of AA Insurance Agency, Inc. have not observed the Laws of Maryland in conducting the affairs of this ⁶⁰ brokerage firm, and that it is not in the public interest to permit Lillian Nuger, as President of A A Insurance Agency, Inc. and/or in her capacity as an individual; Caswell G. Nuger as Secretary-Treasurer of AA Insurance Agency, Inc. and/or in his capacity as an individual; or AA Insurance Agency, Inc., a corporate entity, to be again licensed to engage in the insurance business in the State of Maryland.

It is further ordered that the qualifications of Lillian Nuger and Caswell G. Nuger to engage in the insurance business in the State of Maryland in any capacity are hereby revoked.” The appellants appealed from this decision, and the Commissioner’s motion to dismiss the appeal was granted by the lower court on October 14, 1962, on the ground that it was not filed within thirty days from the order. On appeal, we reversed the judgment and remanded the case for further proceedings. Nuger v. State Ins. Comm'r, 231 Md. 543 , 191 A. 2d 222 (1963).

On March 30, 1964, the case was tried before Judge Sodaro, without a jury; at this hearing, additional testimony was offered by the appellants and admitted over objection. On April 3, 1964, Judge Sodaro wrote the parties that, upon consideration of the transcript of testimony before the Commissioner, the exhibits, and the testimony given at the court hearing, he had concluded to affirm the Commissioner’s decision. Article 48A of the Code (1957), (the old law) as in effect when the charges were filed against the appellants by the Commissioner and the hearings held before him, in 1962, was repealed, effective December 31, 1963, by Chapter 553, Acts of 1963, and was replaced by the Maryland “Insurance Code”, Article 48A (Code, 1964 Replacement Volume), (the new law). If the Commissioner’s decision was proper under the old law, the repeal and reenactment of the statute did not release or extinguish any penalty of forfeiture incurred thereunder.

Code (1957), Article 1, Section 3. See Brooks v. State Board, 233 Md. 98 , 195 A. 2d 728 (1963). A question is presented as to whether the procedure in the hearing on the appeal in the lower court was governed by the provisions of the old law, under which the Administrative Pro ⁶¹ cedure Act (Code, 1957), Article 41, Sections 255 (e) and (g) was applicable, or by Article 48A, Sections 40 (4) and (5) of the new law. The pertinent provisions of both the new and old laws are the same, except that Section 255 (e) of the Administrative Procedure Act provides for the taking of additional evidence by the court on appeal only under certain circumstances, and that Section 40 (4) of the new law provides that the court shall hear the matter de novo and shall consider the evidence before the Commissioner, together with such additional evidence as may be offered by any party to the appeal.

The appellants contend that the procedural provisions of the new law prevail and that, under the section quoted, the burden is on the Commissioner to sustain the action taken by him. We do not agree with this interpretation of the new law. Section 40 (5) of that law provides, in the same language as that of the corresponding section of the Administrative Procedure Act, that the court may affirm the decision or remand the case, or reverse and modify, if the substantial rights of the petitioners may have been prejudiced for any of the reasons set forth. The ■history of the Administrative Procedure Act as well as its language, shows that the purpose of judicial review of administrative action in contested cases was to review that action under the criteria set forth, not to have a de novo judicial hearing which would take the place of the administrative process. 1, Davis, Administrative Law- Treatise §1.04.

Both the new and old laws, in our opinion, place the burden on the petitioners to show that the administrative proceedings prejudiced any of their substantial rights. The only difference we find in the two laws in respect of the procedure on appeal is that under the old law additional evidence could be offered in the judicial proceedings on the appeal only if the court were satisfied that the evidence was material and that there were good reasons for failure to present it in the administrative proceedings, whereas under the new law any party to the appeal may offer additional evidence as a matter of right. Taking Sections 40 (4) and (5) together, as we must, it is clear that this is the only meaning of “de novo” in Section 40 (4). In this case, all the additional evidence proffered by the appellants was admitted by the trial judge so that, in our view, it is immaterial which law was applicable to the appeal procedure. ⁶² The issues raised on this appeal can best be determined by a consideration of the administrative proceedings in chronological order.

These proceedings were all under Section 111 of the old law. Section 111 read as follows : “Whenever the Commissioner shall be satisfied that any insurance broker, broker’s solicitor, agent or solicitor, licensed or registered by this State, has wilfully violated any of the insurance laws of this State, or has wilfully misrepresented any policies of insurance, or has dealt unjustly with or wilfully deceived, or dealt fraudulently with any insurance company or with any citizen of this State in regard to any insurance policy, or has failed or refused to pay over to the company or to his principal or other person whom he represents or has represented, or by or for whom he is employed or acts, any money or property in the hands of said agent, solicitor, broker or broker’s solicitor belonging to said company, firm, broker, principal or person when demanded to do so, or has violated any ruling of the Insurance Department which he is by law authorized to malee, or upon conviction of any infamous crime under the laws of this or any other state, or of the United States, or has been guilty of twisting or attempting to twist by misrepresentation any policy of insurance or has made any false statement, answer or declaration in his application for license, then and in any such case, the Commissioner may, and it shall be his duty to suspend or revoke the license of such broker or broker’s solicitor, or suspend or revoke the license of any agent or solicitor for all companies which he represents in this State for such length of time as the Commissioner may think proper; provided, however, that before the Commissioner shall suspend or revoke said license he shall give ten days’ notice of the charges in writing, to be served upon said broker, agent or solicitor in person or by registered letter to his last known address, or by copy of the charges left at his last known address, and provided an opportunity shall ⁶³ be given the said broker, broker’s solicitor, agent, or solicitor to be heard upon said charges, and the said broker, broker’s solicitor, agent or solicitor shall have the right to have such suspension or revocation of license reviewed by the Superior Court of Baltimore City, when said offense occurred in Baltimore City, or by the circuit court of any of the counties of the State wherein such offense or offenses complained of occurred.” At the time of the hearings on April 24 and May 11, 1962, Mr. Nuger was licensed as an insurance agent, solicitor, and broker, and Mrs. Nuger was licensed as a broker. The AA Agency was licensed as a broker from May 1, 1960, to May 1, 1962, but its license had expired at the time of the hearing on May 11, 1962, and the record does not show that any application for a renewal of its license was then pending. The Getlan Complaint The first hearing on April 24, 1962 was on a complaint filed with the Commissioner by Benjamin Getlan against Caswell G. Nuger.

Mr. Getlan testified before the Commissioner that on August 17, 1961, he applied for a policy of automobile liability insurance through Mr. Groupp, of the Groupp Insurance Agency, and Mr. Groupp applied to Mr. Nuger for coverage for Mr. Getlan. This application, Mr. Getlan testified, was made by telephone in Mr. Getlan’s presence. Mr. Groupp then gave Mr. Getlan a “UCJ 1” form indicating that Mr. Getlan was insured by National Mutual Insurance Company. In August, 1961, Mr. Getlan was involved in an automobile accident; he turned over the UCJ 1 form to the Department of Motor Vehicles.

A short time later, he completed an accident report which he obtained from Mr. Groupp’s office; Mr. Groupp was not then present but Mr. Nuger was. Mr. Nuger, according to Mr. Getlan, took the executed forms and stated he would have them completed and forwarded directly to the Department of Motor Vehicles. During the next several weeks, Mr. Getlan testified, he called Mr. Nuger almost every day and visited his office on numerous occasions in an effort to obtain a copy of his policy. Mr. Nuger repeatedly assured him that his policy would arrive ⁶⁴ shortly from Washington.

Mr. Getlan’s son, an attorney, called the National Mutual Insurance Company in Washington and was informed that that company had no record of such a policy or an application for a policy. Mr. Getlan then went to the Department of Motor Vehicles and was informed that the accident report which he said he had given Mr. Nuger to file had not in fact been filed. Mr. Nuger stated, according to Mr. Getlan, that he had given the insurance application to another agent, who had failed to place the policy, and suggested that Mr. Getlan allow him to sue the other agent and the National Mutual Insurance Company. He also offered, according to Mr. Getlan, to pay for a financial responsibility bond and to obtain witnesses.

Mr. Getlan rejected the offer. Mr. Getlan’s son testified that, on his father’s behalf, he had called Mr. Nuger several times and was told by him that the policy from National Mutual was slow in coming over. Mr. Nuger denied telling Mr. Getlan that he was insured by National Mutual and asserted that he had told Mr. Getlan’s son his father was not insured and never was. He denied issuing or signing the UCJ 1 form or any connection therewith.

He admitted, however, that he had received the Department of Motor Vehicle accident report and had sent it in for Mr. Getlan, although, evidently, it was not received. At the hearing before the lower court on appeal, Mr. Groupp, who had not appeared before the Commissioner, testified that he never gave the UCJ 1 form to Mr. Getlan and could not verify the signature which appeared on the back of the form. He testified further that he had not instructed anyone to issue the form to Mr. Getlan. On cross-examination, Mr. Groupp admitted that at the time referred to, he was not a solicitor or agent for National Mutual Insurance Company and that his insurance license had been revoked in November, 1962.

The credibility of the witnesses was originally for the Commissioner to determine. There was ample relevant testimony which, if believed by the Commissioner, as it evidently was, supported his finding that Mr. Nuger deliberately misrepresented to Mr. Getlan and his son that he was covered by a policy of automobile liability insurance with the National Mutual Insurance Company. As we have pointed out, the provisions in re ⁶⁵ spect of the judicial review set forth in the Administrative Procedure Act are applicable in this case, whether the old law is applicable, or whether the similar provisions in the new law apply. “While it appears that the scope of judicial review by a trial court of the findings, inferences, conclusions and decisions of administrative agencies under the statute has been broadened to some extent, it is clear that the statute [the Administrative Procedure Act] did not intend that the court should substitute its judgment for the expertise of those persons who constitute the administrative agency from which the appeal is taken (Citations omitted).” Bernstein v. Real Estate Comm., 221 Md. 221, 230 , 156 A. 2d 657 (1959), appeal dismissed 363 U. S. 419 (1960) ; State Board v. Ruth, 223 Md. 428, 436 , 165 A. 2d 145 (1960). It was for the lower court to decide the credibility and weight of the additional testimony before it.

There was ample ground for the court to find, even in the light of the additional testimony, that the finding of the Commissioner that the Act had been wilfully violated was supported by competent, material and substantial evidence, in view of the entire record, and was not against the weight of the evidence. The Utz Complaint The facts in respect of the charge brought against Mrs. Nuger alone in connection with this matter are virtually undisputed. Richard Leslie Utz, a minor, went to the AA Agency’s office to obtain a JR 11 certificate. This is a Maryland Minor’s Financial Responsibility Certificate to be filed with the Department of Motor Vehicles, which states that the minor has been issued a policy of liability insurance for the purpose of complying with the Maryland Automobile Financial Responsibility Act.

Utz testified he was given the certificate in the Nuger’s office. The certificate was executed over the signature of Mrs. Nuger as an authorized representative of Southern General Insurance Company and stated that Utz was insured by that company. Mrs. Nuger denied that the signature was hers. She admitted the certificate was signed in her office but stated that the signature of her name was by an employee who had signed the form without her authority.

Mrs. Nuger testified that the ⁶⁶ certificate is issued when the application is taken and immediately thereafter the application is sent to the office of Leonard R. Shope, general agent for the Southern General Insurance Company. Ordinarily, the policy of insurance on the application is issued after seven or eight days. The company generally issues the policy promptly but, if the credit report and other reports are unfavorable, it subsequently cancels the policy. In this case, the Southern General Insurance Company informed the Department of Motor Vehicles that Mrs. Nuger was not an agent for the insurance company and that there was no policy in effect insuring Utz.

The A A Agency, which was the Nugers’ brokerage firm, had been doing business with Mr. Shope for more than a year. Mr. Shope testified that he had furnished the Nugers with policy numbers and signed applications and had authorized the firm to fill out the JR 11 form with