Montana Attorney General Opinion 17-166

Opinion No. 166. Insurance-Countersigning Policies- Full Commission to Be Paid Local Agents - Contracts Conflicting Invalid. HELD: 1. Montana agents must be paid the same commission for counter- signing foreign insurance policies as for the same business written in their own plant. 2. Contracts or stipulations entered into prior to the enactment of Chapter 95, Laws of 1937, are invalid if con- flicting with the terms of that act. September 22, 1937. Honorable John J. Holmes State Auditor The Capitol My Dear Mr. Holmes: You have requested an opInIOn rela- tive to the meaning of "full commis- sion," as used in Paragraph 2 of Sec- tion I, Chapter 95, Laws of 1937. The paragraph reads as follows: "A resident agent shaH counter- sign all policies, bonds or contracts of indemnity so issued, and shaH re- ceive the full commission on all such policies, bonds or contracts of insur- ance on indemnity, when the premium is paid, to the end that the State may receive the tax required by law to be paid on the premiums collected for insurance on all persons, property or other insurable risks resident, situated or located within this State; provided that nothing in this act shall be con- strued to prevent any insurance com- pany or association from issuing policies, bonds or contracts at its principal or department offices, cover- ing property or persons or other in- surable or indemnity risks resident, situated or located in this State; provided, however, such policies are issued upon application procured and submitted to such company or asso- ciation by a resident agent, who shall keep a record of all such policies, bonds or contracts of indemnity so issued, and countersign the same, and that said resident agent or agents shall receive the full commission on all policies when premium is paid. It shall be unlawful for any such resident agent to rebate or divicle such commission, with intent to evade the provisions of this act; and any violation of this provision shall be punished as provided in Sections 6123 and 6124. Revised Codes of Montana, 1935. Provided, however, that the signature of a resident agent on an application for a life insurance policy shall be deemed a countersigning of the policy if a copy of such applica- tion is attached to the policy." In any interpretation of a legislative act, it is elementary that the sole object is to ascertain the meaning and inten- tion of the legislature. If the language of the statute is plain and free from ambiguity and expresses a single, def- inite and sensible meaning, that mean- ing is conclusively presumed to be the meaning the legislature intended to convey. In other words, the statute must be interpreted literally. Black on Interpretation of Laws 33. "Words and phrases used in the Codes and other statutes of Montana are construed according to the con- text and approved usage of the language. * * *" Section IS, R. C. M. 1935. Applying this rule to the phrase "full commission" we find that "full" means, as defined by Webster's Dictionary, "complete, entire, without abatement, mature and perfect," a definition that has been approved in Quinn v. Dono- van, 85 Ill. 194-195. "Commission" 194 OPINIONS OF THE ATTORNEY GENERAL means, "percentage or allowance made to a factor or agent for transacting business for another," Therefore, "full commission" must mean the complete, entire allowance paid to the agent for transacting the business of the com- pany, The whole of it. Then it is clearly apparent that the legislature intended that the resident Montana agent should receive the same commis- sion for countersigning an insurance contract as he would receive from the same business if he secured it himself. "When an act is expressed in clear and concise terms and the sense is manifest, there can be no reason not to accept the sense which it naturally presents, to go elsewhere in search of conjectures in order to find a dif- ferent meaning is not so much to interpret the statute as to elude it." People v. N. Y. Central R. R., 13 N. Y. 78. The history of the act, the motives of the legislature, the contemporaneous circumstances and the public policy of the state all point in the same direc- tion. The countersigning agent is to get the whole premium just the same as if the policy had been written in his own plant. It is true that the State Auditor has no jurisdiction over rates as such, but he does h<ive jurisdiction over the commission paid if they violate the provisions of this act. As I interpret the law, the insurance corporations can contract for any commission they see fit, providing that the commission on countersigning and the commission on other business are the same. If the insurance corporation pays a commis- sion of 40% to the agent for new busi- ness, it must pay a commission of 40% for business countersigned. By Section 6162 it is the duty of the State Auditor to inspect the books of insurance companies when notice of a violation of the act is received. If he finds that a different amount has been paid to the resident agent for countersigning a policy than for a policy written locally, then he must prosecute to enforce the penalties pre- scribed. For your department a verbis non est recedendum. and this must be enforced even though there is a present existing contract between an insurance corporation and the agent providing for some other arrangement for counter- signing policies. It is contended that Chapter 95 of the 1937 Session Laws, in its applica- tion to insurance contracts existing at the time of its enactment, is uncon- stitutional insofar as the provisions of Article III of the State Constitution are concerned, as said chapter may alter or modify said contracts. The busines of insurance is quasi public in character and subject to the police powers of the State, and the right to engage in it is a franchise and the State may regulate the busi- ness and all the persons in it, and may prescribe the terms and conditions on which the business may be conducted. While contracts cannot be impaired or abridged, and their sanctity is recog- nized as inviolate by the Federal and State Constitutions, yet by reason of the quasi public character of a con- tract of insurance, such contract is executed subject to and in contem- plation of legislative enactment such as is provided for in said Chapter 95. A contract cannot be created which would exclude the State from its regu- latory powers, both police and revenue, and to do so would eventually remove many future restrictions and regula- tions upon insurance companies. Chap- ter 95 thus has become a part of any existing contract, and the existing con- tract was created with that implication, and it necessarily follows that no modification of an existing contract has been made, and, therefore, the conten- tion of impairment of contract is in- applicable. The statute in question is a revenue measure and was passed "to the end that the State may receive the tax re- quired by law to be paid on the premi- ums collected for insurance on all per- sons, property or other insurable risks resident, situated or located within the State." A contract between individuals cannot have the effect of depriving the State of any power of taxation belong- ing to it. 12 Corpus Juris, 993; Forbes v. Mid-northern Oil Co., 100 Mont. 10, 12. Therefore, it is my op1l11On that the State Auditor must insist that full com- mission, in accordance with the defini- tion herein, be paid countersigning agents in all cases; prior stipulations or contracts between the company and the local agent notwithstanding.