People ex rel. New York Fire Insurance Exchange v. Phillips

Hinman, J.: This is certiorari to review respectively the determinations of the State Superintendent of Insurance (1) in ordering the New York Fire Insurance Exchange to remove an unfair discrimination in rates against buildings equipped with a fire prevention device known as the Conran sprinkler head, and (2) in refusing, after hearings and a determination that such discrimination existed, to reopen the proceeding, on the ground that he was without power to reopen it when once determined and on the further ground that certiorari was pending at the instance of the said exchange, ordering him to return all proceedings to the court for review. The New York Fire Insurance Exchange is a rate-making association maintaining an office in New York city, which has been authorized under the Insurance Law to make rates to be used by fire insurance underwriters. To correct discrimination in the fixing of such rates by such associations, the Insurance Law, section 141, provides suitable power in the Superintendent of Insurance to entertain complaints and after a full hearing to order its removal. The important part of section 141 of the Insurance Law, so far as the question of discrimination is concerned, is that no such rate-making association shall fix any fire insurance rate “ which discriminates unfairly between risks in the application of like charges or credits or which discriminates unfairly between risks of essentially the same hazards and having substantially the same degree of protection against fire. Whenever it is made to appear to the satisfaction of the Superintendent of Insurance that such discrimination [15] exists, he may, after a full hearing * * * order such discrimination removed.” (Insurance Law, § 141, added by Laws of 1911, chap. 460, as amd. by Laws of 1912, chap. 175, and Laws of 1913, chap. 26; since amd. by Laws of 1922, chap. 660.) The relator has a testing agency known as its “ Chicago Laboratories ” where tests are made of fire protection devices for the purpose of assisting it in fixing rates without unfairly discriminating between various devices. Application was made to the relator for credit in the rating of certain risks equipped with the so-called “ Conran Sprinkler Head,” an invention of the intervenor. It was claimed that the Conran device was just as effective as the sprinkler systems for which the relator allowed a reduced rate. The relator refused to grant this reduced rating on the ground that the Conran sprinkler had not been submitted to or approved by the “ Chicago Laboratories.” The intervenor, having had his apparatus subjected to extensive tests and approved by the board of standards and appeals of the city o§ New York, the body which approves the installation of all fire apparatus in buildings within that city, and by others, complained to the Superintendent of Insurance that a discrimination against his device existed in the fixing of rates. The matter was finally brought to hearing and determination, the Superintendent of Insurance holding, in effect, that the determining issue was whether or not the Conran device was just as effective as the sprinkler systems for which the exchange had allowed a reduced rate. He found that it was and ordered the removal of the discrimination. It is the contention of the relator that the Superintendent of Insurance misconstrued the statute and usurped a power not given him by law; that the real issue before him under the statute was not whether the Conran device was just as effective as the systems recognized by the relator but whether the relator had acted unfairly; and that there was no evidence that the exchange was guilty of any unfair discrimination in insisting upon its uniform rule that any applicant for a reduced rate must submit his device to be tested for the enlightenment of the judgment of the relator. We cannot agree with the relator as to its interpretation of the statute. The jurisdiction conferred upon the Superintendent of Insurance to act in such a case does not involve a determination as to the fairness of the relator’s rules for the government of its own conduct or the wisdom of enlightening its own judgment by utilizing a competent laboratory. While a rate-maldng association may make rules governing the making of its own determinations, the statute does not condition the jurisdiction of the Superintendent of Insurance to determine the existence of a discrimination upon [16] a showing of unfair discrimination by the rate-making association in its manner of handling an application made to it. It is not a question of discriminatory conduct in methods of procedure before the rate-making association which is to be passed upon by the Superintendent of Insurance. It is not the rate-making association that is on trial before such Superintendent, but it is the device itself. It is a question of result and not .of procedure. The question before the Superintendent is whether there is substantially the same fire hazard with this particular device used to equip a building as compared with the use of the other devices that have been recognized by the association in fixing the rate. The Superintendent of Insurance is not made a reviewing officer to review the proceeding had before the Fire Insurance Exchange involving this particular device, but he is given jurisdiction to hear the application de novo and to determine for himself whether the rate'fixed in its relation to certain devices is in fact discriminatory as against the device in question, whatever may have been the reason for the denial of the same rate to the latter by the rate-making association. The relator was notified by the Superintendent of Insurance of the complaint of discrimination six months before the hearing and was asked to state its position. He also requested information from numerous sources, including various officials dealing with fire control and of the National Board of Fire Underwriters. The relator had ample notice of the hearings and was there represented, with full knowledge of the issue as conceived by the Superintendent of Insurance and with full opportunity to present proofs such as it is now seeking to present upon a rehearing or to request such adjournment as would permit it to make the tests required by its own rules. Upon the record produced, we cannot say that the Superintendent of Insurance committed any error or that his determination should be set aside as against the weight of evidence. The remaining question is as to whether or not the Superintendent of Insurance had power to reopen the proceeding and grant a rehearing, particularly in view of the pendency of the certiorari proceeding to review his determination and under which he had been required to' return all proceedings in relation to such determination to the court for review. The Insurance Law does not expressly grant a power to rehear but we think it must be implied from the nature of the power granted and the grave consequences that might follow if a decision once made were to be considered beyond recall even though experience and the advances of science should demonstrate that discrimination had not in fact existed or that relative values had changed so as to create a new discrimination by virtue of the Superintendent’s own order, We cannot [17] believe that the Legislature intended any such rigid or discriminatory result. The intention was to make the Superintendent a regulating officer, clothed with power to make and change his decisions and orders whenever it is made to appear to his satisfaction that discrimination exists. We have held that the power thus conferred was a power to compare one device with another for the purpose of preventing actual discrimination in result. The purpose of the statute is clear and it should be liberally interpreted to accomplish that purpose. So interpreted it is inconceivable that the Superintendent should be deemed powerless to act when it appears to his satisfaction that his own decision has created the very kind of discrimination sought to be avoided by the statute. Our attention has not been called to any decision or statute preventing the Superintendent from entertaining an application for a rehearing during the pendency of a certiorari proceeding to review his determination. Such matters are susceptible of adjustment if the Superintendent is willing to grant the rehearing. The proceeding can be quashed by consent of the parties at any time and it is not reasonable to expect the relator to destroy its existing right to a review before it has had assurances that a rehearing will be granted. The Superintendent had a right to refuse a rehearing until after the decision in certiorari but he did not determine against a rehearing on that ground. He refused to act solely upon an assumed lack of power. In this he was in error. The determination of the Superintendent in the first proceeding should be confirmed but in the second proceeding his determination should be annulled, without costs to either party in either proceeding. In the first proceeding: All concur, except Cochkane, P. J,, not voting, and Kiley, J., dissenting, with an opinion. In the second proceeding: H. T. Kellogg and Van Kikk, JJ., concur; Kiley, J., concurs in result, with an opinion; Cochkane, P. J., not voting.