Professional Adjusters, Inc. v. Tandon ( 1982 )

HUNTER, Justice,

dissenting.

I must respectfully dissent from the majority opinion. The majority recognizes the contract at issue is unenforceable; it is not necessary to reach the question of the statute’s constitutionality and it is our duty to so refrain. Furthermore, the legislatively-created occupation of “Public Adjuster” does not constitute “the practice of law”; consequently, it is not within our province constitutionally to abolish the occupation by rendering the statutory package void. If, however, the rationale of the majority is valid, then other occupations created by our legislature also constitute “the practice of law.”

The validity of this latter proposition is revealed within the confines of the majority opinion, where it is acknowledged that, traditionally, insurance companies have long employed adjusters “who acted in full authority to bind the company in settling with its insured.” (Emphasis added.) Indeed, our legislature has expressly granted insurance “administrators” (Ind.Code § 27-1-25-1 [Burns 1975]) or “designated claim representatives” (Ind.Code § 27-8-4-10 [Burns 1975]) statutory authority to “settle” claims.

In terms of “the practice of law,” there is no valid distinction between the public adjuster and the person who settles claims on behalf of an insurance company. The fact that an “administrator” or “designated claim representative” acts with full authority from an insurance company is not significant for, as the majority points out, only “natural persons” can engage in the practice of law. Majority Opinion, supra, quoting Groninger v. Fletcher Trust Co., (1942) 220 Ind. 202, 207, 41 N.E.2d 140, 141. While the insurance company agent may practice the art of settlement with the blessing of his employer, he or she, nonetheless, is engaged in the practice of law, as the majority defines it; to settle a claim, the agent must interpret the contract of insurance, assess the claim of damages, and negotiate the settlement, all with full authority to bind his insurance company. These very considerations are the basis for the majority’s conclusion that the public adjuster who exercises his authority under Ind.Code § 27-1-24-1 et seq. (Burns 1975) engages in “the practice of law.”

This Court confronted a similar question in State v. Indiana Real Estate Association, (1963) 244 Ind. 214, 191 N.E.2d 711, where it was argued that real estate brokers’ and salespersons’ completion and use of legal forms constituted the practice of law. There, this Court expressly refused to reduce the question to a semantic struggle over what constitutes “the practice of law,” stating:

“In some of the briefs, an attempt is made to make the issue turn upon definitions of ‘the practice of law’. In any event, we believe that the real question here at issue is whether the selection, completion, and use of the standardized forms by brokers, in connection with real estate transactions for their clients, and here sought to be enjoined, is prohibited to them, as being the practice of law. Although the practice of law is one of the oldest and most honored professions, the law itself is by no means an absolute science, the practice of which can be accurately and unequivocally defined. For example, under the early English law, some instruments were prepared by scriveners, who were neither barristers nor solicitors, although the preparation of such instruments is now universally considered to constitute the practice of law. On the other hand, persons not admitted ■ to the practice of law are now permitted to represent clients before tax courts, etc., where formerly only attorneys were authorized to appear. These changes have come about because of the exigencies of the particular situation. So it is today with regard to the practice of law. There is a twilight zone between the area of activity which is clearly permitted to the layman, and that which is denied him.

* * * * * *

“Thus, the question which this court must determine is where, within this ‘twilight zone’ it is proper to draw the line between those acts which are and are not permissible to persons who are not lawyers. Obviously, the drawing of such line must be, in some respects, arbitrary, as is true of a law which fixes the permissible age at which a person may drive an automobile, or speed at which it may be driven within a particular zone, or specified time of day.” Id., 244 Ind. at 219-21, 191 N.E.2d at 714-5.

Likewise, the question at issue here rests within that “twilight zone,” for the public adjuster is statutorily vested to do only that which has traditionally and routinely been done by insurance company adjusters, administrators, and designated claim representatives.

As in this Court’s decision in State v. Indiana Real Estate Association, supra, it is appropriate to examine the underlying considerations concerning the question before us. Before declaring the entire statutory package invalid, it is advisable for this Court to examine its parameters, the limitations which are imposed on “public adjusters,” and the ramifications the statute holds for the public interest.

As recognized by the majority, public adjusters are regulated by the Commissioner of Insurance. To act in the capacity of a public adjuster, a license is required; to obtain a license, an applicant is required to submit to a written examination over at least six different subject-matters:

“(1) The Indiana Insurance Code,

(2) Inventory and appraisal procedures,

(3) Building construction,

(4) Standard fire policy,

(5) Insurance contracts related to claims on real or personal property,

(6) Insurance coverage questions regarding business interruption, improvements and betterments, replacement cost coverage, concurrent and noncurrent apportionment, coinsurance and contribution.”

Ind.Code § 27-l-24-5(a), supra.

In addition to testing an applicant’s knowledge and competency to act as a public adjuster, the Commissioner is required to assess the applicant’s trustworthiness to act in the public’s behalf. Ind.Code § 27-1-24-3, 4, and 5(b), supra. And once a license is issued, it is constantly subject to potential probation, suspension, or revocation if the licensee has committed any of the following:

“(1) violated any provision of this chapter; or

(2) made a material misstatement in the application for such certificate; or

(3) justified a finding of his, or its, incompetency or untrustworthiness to act as a public adjuster; or

(4) committed any acts against the interests of the public or his assured client.”

Ind.Code § 27-l-24-6(a), supra (emphasis added).

There is no evidence the Commissioner of insurance is unable to insure the competency or trustworthiness of those licensed as public adjusters. Furthermore, all doubts regarding the constitutionality of a statute are to be resolved so as to perpetuate the presumption of constitutionality which clothes all legislative acts. Dague v. Piper Aircraft Corp., (1981) Ind., 418 N.E.2d 207; Johnson v. St. Vincent Hospital, Inc., (1980) Ind., 404 N.E.2d 585. We must assume the Commissioner is insuring the trustworthiness and competency of public adjusters and thereby protecting the interests of the public, as well as the assured clients.

Not discussed by the majority are the significant statutory limitations placed on the role of the public adjuster. In Ind..Code § 27-l-24-l(a), supra, the legislature prohibited public adjusters from acting “in relation to claims for personal injury or automobile property damage.” Our General Assembly also expressly prohibited public adjusters from the practice of law by its passage of Section 8:

“27-1-24-8 Practice of law prohibited

“Sec. 8. A public adjuster may not deal directly with any claimant represented by an attorney-at-law without the consent of the attorney, nor may he advise a claimant to refrain from seeking legal advice, advise against the retention of counsel to protect his interests, or, in the case where legal counsel is desired by claimants, advise the retention of specific attorneys or law firms.” Ind.Code § 27-1-24-8, supra.

The statute thus limits the public adjuster’s ability to act to those claims in which the opposing party is also represented by an adjuster not licensed to practice law. The remaining portions of Section 8 prohibit the public adjuster from dispensing recommendations regarding legal courses of action; that limitation is consistent with the sole statutory function of the public adjuster, which is to assess the assured’s real property loss and attempt to negotiate and settle the claim with the insurer.

Nobody would argue that the act of examining the damaged property and assessing the pecuniary loss constitutes the practice of law. Nor can it be said that the act of negotiating and settling disputes is the practice of law; that art is practiced in various forms by virtually every citizen from our playgrounds to our centers of trade. It is, then, the public adjuster’s examination of the assured’s contractual terms which carries him into “the practice of law,” according to the majority.

That supposition was implicitly rejected by this Court in State v. Indiana Real Estate Association, supra, where it was held that real estate brokers and salespersons may utilize legal forms in the contract formation process. The public interest, this Court reasoned, is served by the expeditious handling of some transactions:

“We judicially know that both the rela-tors and respondents are sensitive to the normal needs of the business society. It cannot be urged, with reason, that a lawyer must preside over every transaction where written legal forms must be selected and used by an agent acting for one of the parties. Such a restriction would so paralyze business activities that very few transactions could be expeditiously consummated.” Id., 244 Ind. at 221-2, 191 N.E.2d at 715.

Similarly, it should be recognized a public adjuster’s assistance in adjusting a claim with the insurer’s designated claim representative may well facilitate the expeditous settlement of the dispute, to the benefit of both parties and the public interest. In addition, the availability of trustworthy and competent settlement experts serves the public interest by placing assureds on the same footing as insurance companies, who have always enjoyed the benefits of such services. This latter public policy consideration no doubt prompted the legislature’s passage of Ind.Code § 27-1-24-1 et seq., supra, and should not be ignored by this Court.

Certainly “the practice of law” is a profession which, in the public interest, must be jealously guarded. As this Court reasoned in State v. Indiana Real Estate Association, supra, however:

“The Bar Association, in its brief, has expressed great concern as to the consequences of permitting the filling in of blanks in legal forms by persons not members of the bar. The possibility of an occasional improvident act in the use of such forms may not, with reason, be made the basis for denying the right to perform the same act in a thousand instances where the public convenience and necessity would seem to require it. Lawyers, themselves, on rare occasions have been known to make errors in the drafting of such forms.” Id., 244 Ind. at 222, 191 N.E.2d at 715.

Likewise here, where the public interest is both protected and perpetuated by the statutory office of public adjuster, the public should not be deprived of the same nonlegal assistance in the matter of out-of-court settlements which insurers enjoy.

It is noted that although “public adjusters” are commonplace throughout this nation’s jurisdictions, no other jurisdiction has held its statute unconstitutionally void as ratifying the unauthorized practice of law. See, e.g., Ala.Code § 27-9-1 et seq. (1975); Colo.Rev.Stat. § 10-2-101 et seq. (1973); Fla.Stat.Ann. § 626.854 (1972); Md.Code Ann. art. 48A § 181 (1957); Minn Stat.Ann. § 72B.01 et seq. (1981 Supp.); Nev.Rev. Stat. § 684A.010 (1979); N.Y.Ins.Law § 123 (McKinney 1966); Ohio Rev.Code Ann. § 3951.01 et seq. (1971); Pa.Stat. tit. 40, § 301 et seq. (1971). See also, Larson, State Treas. v. Lesser, (Fla.1958) 106 So.2d 188.

It is well settled that even where the question of the constitutionality of a statute is presented for our determination, the statute will not be nullified on constitutional grounds unless the resolution of the constitutional question is absolutely necessary to decide the case on its merits. Indiana Ed. Employment Bd. v. Benton Community Sch., (1977) 266 Ind. 491, 365 N.E.2d 752; Board of Comm’rs of Howard Co. v. Kokomo Plan Commission, (1975) 263 Ind. 282, 330 N.E.2d 92; State v. Pearson Construction Co., (1957) 236 Ind. 602, 141 N.E.2d 448; Shutt v. State, (1954) 233 Ind. 120, 117 N.E.2d 268; Sarlls v. State, (1929) 201 Ind. 88, 166 N.E. 270. The majority expressly recognizes in its opinion that the contract at issue was unenforceable for the reason it was unilaterally binding. That the issue was not raised below is not significant, for we may sustain the decision of a trial court on any applicable legal theory. Cain v. State, (1973) 261 Ind. 41, 300 N.E.2d 89. Here, it was our duty to employ the fact the contract was unenforceable and dispose of the case on that basis. Indiana Ed. Employment Bd. v. Benton Community Sch., supra; Board of Comm’rs of Howard Co. v. Kokomo Plan Commission, supra.

I dissent. The judgment of the trial court should be affirmed on the basis the contract is unenforceable. Absent a disposition on that basis, the trial court should be reversed on its determination that the statute is unconstitutional and the cause should be reinstated for trial.

PRENTICE, J., concurs in part with opinion.