Opinion
11-1-1956
August Maurlce NARDONI, Brazell Nardonl, Frank Earl Alexander and Charles August Archambault, Appellants, v. F. Britton McCONNELL, Insurance Commissioner of the State of California, Successor to John R. Maloney, Respondent.* Civ. 21267.
Bernard C. Brennan, William E. Cornell, and Blase A. Bonpane, Los Angeles, for appellant. Edmund G. Brown, Atty. Gen., Lee B. Stanton, Deputy Atty. Gen., for respondent.
August Maurlce NARDONI, Brazell Nardonl, Frank Earl Alexander and Charles August Archambault, Appellants,
v.
F. Britton McCONNELL, Insurance Commissioner of the State of California, Successor to John R. Maloney, Respondent.*
Nov. 1, 1956.
Rehearing Denied Nov. 27, 1956.
Hearing Granted Dec. 24, 1956.
Bernard C. Brennan, William E. Cornell, and Blase A. Bonpane, Los Angeles, for appellant.
Edmund G. Brown, Atty. Gen., Lee B. Stanton, Deputy Atty. Gen., for respondent.
SHINN, Presiding Justice.
August M. Nardoni was a duly licensed bail agent, insurance agent, insurance broker and life agent under the rules and regulations of the Insurance Code and insurance laws of the state. Brazell Nardoni was a licensed bail agent and insurance agent. Thw two were partners in the bail bond business in Los Angeles; August conducted a separate business as insurance agent, insurance broker and life agent and Brazell conducted a separate business as insurance agent only. Frank E. Alexander and Charles A. Archambault were licensed as bail agents and were employees of the Nardonis. Separate accusations were filed against the four charging separate violations of the Insurance Code and the California Administrative Code. The accused answered; the four proceedings were consolidated for hearing and a hearing was duly had before the Department of Insurance and evidence was taken before a hearing officer; the matter was submitted; the hearing officer issued his proposed decision; it was adopted by the Insurance Commissioner and pursuant thereto all licenses held by August M. Nardoni and all those held by Brazell Nardoni were revoked; the licenses held by Frank E. Alexander and Charles A. Archambault were suspended for three months. The licensees petitioned for reconsideration which was denied and they petitioned the superior court for a writ of mandate; an alternative writ was issued; the Insurance Commissioner answered; trial was had and findings and judgment were entered in favor of the commissioner. The findings of the court were that all the findings of the hearing officer as adopted by the commissioner were justified and supported by the weight of the evidence. The court's findings of violations and the principal code sections are set out in the margin. The conclusions of the court were to the general effect that the facts found justified the order of the commissioner as to each of the petitioners and that they had been accorded in all respects a fair hearing. Judgment was entered denying the petition for peremptory writ of mandate. The petitioners appeal.
The trial court received in evidence the entire record of the proceedings before the Insurance Commissioner which included the testimony of several witnesses in addition to the stipulation. The findings of the court recite that petitioners made a motion and offer to introduce into evidence at the trial oral testimony concerning their general reputation and character and that the motion and offer were denied. Appellants did not testify at any time.
In the hearing before the hearing officer all parties executed a stipulation consisting of 60 pages with 55 exhibits attached. The stipulation read in part 'Where it is stipulated that if called a person would testify to certain facts, such stipulation is in lieu of actual testimony and is to be considered admitted without objection unless an objection on specified grounds is expressly reserved for the particular testimony in writing. * * * All facts recited herein as stipulations are agreed to be true and correct, and may be used in lieu of evidence, and are to be considered proven by competent evidence.' It was also stipulated that exhibits No. 1 through No. 55 were offered in evidence and were to be considered admitted without objection in the absence of a written objection upon some ground other than lack of foundation. When we refer to testimony of the witnesses at the hearing we will be speaking in terms of the stipulation.
The points on appeal are (a) the court should have found that the commissioner's findings were not supported by the weight of the evidence within the meaning of section 1094.5 of the Code of Civil Procedure; (b) the findings of the commissioner are not supported by the evidence; (c) the penalty imposed is excessive; (d) the court erred in refusing to hear oral testimony as to the good character and reputation of petitioners; and (e) as a matter of law the order of the commissioner and the judgment of the court should be vacated and the licenses restored.
The trial court was required to exercise its independent judgment in deciding the factual issues. Code Civ.Proc. § 1094.5, subd. c; Moran v. State Board of Medical Examiners, 32 Cal.2d 301, 196 P.2d 20; Hohreiter v. Garrison, 81 Cal.App.2d 384, 184 P.2d 323; 2 Cal.Jur.2d, § 231, p. 385. It did so, and not only found expressly that the commissioner's findings were supported by the weight of the evidence but made its own findings which conformed in all respects to those of the commissioner.
We consider first appellants' argument as to the insufficiency of the evidence to justify the material findings. It is said 'It is submitted that the most serious finding and decision of respondent and the trial court with reference to the character, integrity and honesty of appellants was based on the so-called 'arrangement' or conspiracy between appellants August Maurice Nardoni and Brazell Nardoni, and a police officer named Frank Vargas.' As previously noted, the court found that the Nardonis had an arrangement with Vargas, a member of the Los Angeles Police Department, under which they were furnished information relative to arrests. In their briefs appellants have not set forth the substance of the evidence tending to prove or disprove the existence of such an arrangement. In the absence of such a statement the court will not consider a claim of insufficiency of the evidence to support a finding. It will not made an independent study of the record to inform itself as to the merits of the objection of insufficiency of the evidence. Goldring v. Goldring, 94 Cal.App.2d 643, 211 P.2d 342. However, we have deemed it necessary to familiarize ourselves with the evidence contained in the stipulation in order to give consideration to the contention that the findings of the court were improperly based upon hearsay evidence.
It is argued by appellants that the testimony of certain witnesses (as set out in the stipulation) which was relied upon as tending to prove the existence of the alleged arrangement with Vargas, and some of the other charges, was hearsay evidence, that it was improperly admitted over the objections of appellants and that their motions to strike the evidence should have been granted. The admission of the evidence over objection is not urged as error which furnishes an independent ground for reversal. It is said in the brief 'It is further submitted that if the objections had been sustained and motions to strike granted as set forth in Exhibit A (the written objections) there would have been no substantial evidence warranting the penalty imposed by respondent.' Although not required to do so, respondent in his brief states a summary of the evidence tending to prove that the Nardonis were receiving from Vargas information respecting arrests which he had made and that they acted upon that information in contacting relatives of the persons arrested and arranging for their release on bail. The facts stipulated leave no room for doubt that the Nardonis and Vargas worked together in this manner on several different occasions. It was a reasonable inference that this was under a prearranged plan.
Appellants say correctly that hearsay evidence alone is insufficient to support the revocation of a license, citing Walker v. City of San Gabriel, 20 Cal.2d 879, 129 P.2d 349, 142 A.L.R. 1383 and Kinney v. Sacramento City Employees' Retirement System, 77 Cal.App.2d 779, 176 P.2d 775. Section 11513(c) of the Government Code provides in part 'Hearsay evidence may be used for the purpose of supplementing or explaining any direct evidence but shall not be sufficient in itself to support a finding unless it would be admissible over objection in civil actions.' But as we have said, appellants make no statement of the direct or the circumstantial evidence bearing on the question of the existence of a forbidden arrangement between the Nardonis and Vargas which was in addition to the claimed hearsay evidence. Nor do they argue the evidence bearing upon the other findings. They say only that such other evidence was unsubstantial. The reason for the omission of the statement of the material evidence is plain. Such a statement would have demonstrated its sufficiency to justify the principal findings of the court. This is true not only with respect to the Nardonis but also with respect to appellants Frank Earl Alexander and Charles August Archambault. The contention that the findings were based substantially upon hearsay evidence is clearly disproved by the record. Facts which were competent, relevant and material were established by the stipulation which, with reasonable inferences deducible therefrom, were sufficient of themselves to justify the court's findings.
We may add that while some of the testimony objected to was of hearsay character it was, in our opinion, properly received. It helped to explain conduct of appellants and the parties with whom they were dealing which constituted circumstantial evidence respecting the manner in which appellants were transacting their business. It consisted of statements of witnesses in the nature of verbal acts contemporaneous with their meetings with appellants and did not purport to establish, by mere assertion, any material fact. Moreover, we are convinced from a study of the record that the findings of the court were based upon sufficient evidence ntirely apart from the evidence to which objection was made.
In the court trial appellants made a motion and offer to introduce oral evidence of their good reputation and character. The motion was denied and the ruling is assigned as error. It is stated by appellants Nardoni that they have been in the bail bond business at Los Angeles for more than 30 years during which they have rendered valuable service to the courts, attorneys and the public and have held a reputation for honesty and trustworthiness in the community. They urged these facts in their petition for reconsideration by which they sought a reduction of the penalty through an order placing them on probation.
We detect no error in the rejection of the offer of proof. Evidence of good reputation is admissible upon the trial of an issue of fact because it may tend to prove that an accused of good character would not have committed the acts with which he is charged. Appellants no doubt realized that such evidence would have no tendency to prove them guiltless of the acts constituting the numerous violations, all of which were admitted by the stipulation. People v. Green, 217 Cal. 176, 183, 17 P.2d 730. Therefore, they urged the claim of good character and reputation only in their petition for reconsideration of the penalty. It would have been a proper matter for the commissioner to consider in determining what the penalty should be. But none of the appellants was accused of being a person of bad character nor of having dealt dishonestly with his clients. The record does not disclose that their character or reputation was assailed or made an issue. And if, as they claim, they had a clear record as licensees that fact would necessarily have been known to the commissioner. In the light of the record, evidence of good character and reputation was not admissible in the court trial for any purpose. It was not the duty of the court to prescribe a penalty nor would the good character and reputation of appellants have furnished justification for the court's interfering with the penalty imposed by the commissioner.
Under section 1094.5(e), Code of Civil Procedure, the court may render judgment annulling orders such as the one before us or may remand the case for further consideration but 'the judgment shall not limit or control in any way the discretion legally vested in the respondent.'
It is settled that where an administrative board has found the commission by a licensee of two or more offenses which would justify disciplinary action, and has made a single order of suspension or revocation for multiple offenses, and the court has determined the finding of guilt as to one or more of the charges to be contrary to the weight of the evidence, the matter will be referred to the board for reconsideration. Cooper v. State Board of Medical Examiners, 35 Cal.2d 242, 217 P.2d 630, 18 A.L.R.2d 593; Stoumen v. Reilly, 37 Cal.2d 713, 234 P.2d 969; Jones v. Maloney, 106 Cal.App.2d 80, 234 P.2d 666; Garfield v. Board of Medical Examiners, 99 Cal.App.2d 219, 221 P.2d 705.
All the accusations related to violations of duty by appellants as bail agents. The stipulated facts established the guilt of appellants of those violations. They tacitly concede as much. All the evidence related to those violations. But as we have seen, the order of the commissioner revoked not only the licenses of the Nardonis to act as bail agents but also the license of August M. Nardoni to act as an Insurance Agent and Broker and a Life Agent and the license of Brazell Nardoni to act as an Insurance Agent.
We have concluded that the revocation of the licenses, other than the bail agent licenses, was unwarranted. The bail bond business is peculiar to itself. It is governed by regulations which cover every small detail of negotiation for and the issuance of bail bonds. These could not have the slightest application to other branches of the insurance business. Of the more serious faults sought to be prevented we mention the forbidden arrangements with police officers and others respecting information as to arrests, the recommendation to arrestees and others of attorneys, and participation in the preparation of petitions for writs of habeas corpus. These, and all the minor irregularities constituting violations found in the Administrative Code quoted above, are not evils to be found in the general insurance business.
Section 1731 of the Insurance Code specifies the grounds for disciplinary action against insurance agents, brokers, solicitors, life agents, surplus line brokers and motor club agents. The commissioner found that the Nardonis were subject to disciplinary action under section 1731(d), (e), (g), (i) and (j) of the Insurance Code.
The court adopted a finding of the commissioner reading: 'That by virtue of the violations of petitioners August Nardoni and Brazell Nardoni as hereinabove determined, the licenses of petitioner August Nardoni to act as an Insurance Agent and Borker and to act as a Life Agent, and the license of petitioner Brazell Nardoni to act as an Insurance Agent are subject to disciplinary action by virtue of the provisions of section 1731 of the Insurance Code.'
There was no finding that either of the Nardonis had engaged in a fraudulent practice or had conducted his business in a dishonest manner. There was no inherent dishonesty in their transgressions as bail agents. They were not shown to have been incompetent or untrustworthy with respect to their clients. At to section 1731 (g) they were guilty of violations of their duties as bail agents but these violations were of duties that could have no connection with the duties of insurance agents. Section 1731 must be given reasonable application. As to paragraph (g) of that section which was applied by the commissioner and the court it is to be noted that the acts and omissions which were relied upon were those particularly set forth as violations of the Administrative Code and not the Insurance Code. With respect to paragraphs (i) and (j) of the section we think they should not be held applicable to acts or omissions of employees of a bail agent with respect to violations of the stringent and technical requirements of the Administrative Code applicable to such employees. The violations charged against Alexander and Archambault consisted of the failure to keep proper records as to the identity op persons with whom they negotiated for bail bonds and as to Archambault that he negotiated for bonds with persons who had not been authorized in writing by the arrestees to negotiate. These acts were not in violation of the Insurance Code.
Our conclusion is that there was no proof and no finding of facts which would justify the revocation of the licenses of the Nardonis other than their licenses as bail agents.
The order of the commissioner must be reversed insofar as it revokes the licenses of August M. Nardoni to act as Insurance Agent and Broker and as Life Agent, and the license of Brazell Nardoni to act as Insurance Agent. We think it should also be reversed insofar as it revokes the licenses of the Nardonis as bail agents, but as to the penalty only.
We are convinced from the severity of the order of the commissioner that there was a belief, the equivalent of an implied finding, that the Nardonis are of such evil character as to be unqualified to engage in any branch of the insurance business, however far it may be removed from the bail bond business. And we do not doubt that the assumed total lack of qualifications to act as Insurance Agent, Broker or Life Agent must have influenced the commissioner to impose the maximum penalty of revocation. As to the Nardonis there should be a reconsideration of the penalty to be imposed for their violations of duty as bail agents.
Some expression of commendation is due appellants and their counsel for the manner in which they expedited the proceedings before the hearing officer. By stipulating the facts and admitting the mistakes of appellants, what would have been a long drawn out series of sessions was avoided. Appellants stated that they threw themselves on the mercy of the commissioner. They asked only for leniency. The penalty meted out to the Nardonis could not have been greater if they had been guilty of dishonesty. It seems to us that the ends of justice would have been better served by suspending their licenses as bail agents and placing them on probation.
The judgment is reversed with directions that a writ issue commanding the commissioner to vacate his order of revocation of the licenses of the Nardonis and to proceed further only as to the penalty to be imposed for their violations as bail agents, as heretofore found by the commissioner and the court. As to appellants Alexander and Archambault, the judgment is affirmed. Each party shall bear his own costs on appeal.
PARKER WOOD and VALLEE, JJ., concur. --------------- * Opinion vacated 310 P.2d 644. 1 'That the respondent Insurance Commissioner rightfully and properly found and determined, and the court now finds: '(A) That petitioner August Nardoni has violated the following provisions of Title 10 of the California Administrative Code: '(1) Section 2077, in that he recommended attorneys at law to various persons; '(2) Section 2078, in that he indirectly assisted in the preparation of a petition for and the securing of writs of habeas corpus by furnishing facilities to attorneys in his bailbond office for the preparation of such documents; '(3) Section 2079, in that he solicited and negotiated for bail with persons whom the arrestee had not specifically authorized and designated in writing; '(4) Section 2091, in that he had some arrangement with one Frank E. Vargas, a member of the Los Angeles Police Department, to furnish information relative to the arrest or incarceration of any person in jail; '(5) Section 2101, in that he failed to set forth on his records the correct information as to the source from which notice or knowledge leading to the solicitation or negotiation of bail was received: '(6) Section 2073, in that he permitted persons to solicit or negotiate with respect to execution of bail at a time when he knew such persons were not licensed by the Department of Insurance to transact bail; '(7) Section 2100, in that undertakings of bail were issued prior to obtaining a full and complete written application therefor; '(8) Sections 2086 and 2087, in that he failed to file with the Department of Insurance a complete listing of all persons in his employ, setting forth the residence address, date of employment, the duties, basis of compensation, and the date and reason for termination of such employment. '(B) That petitioner Brazell Nardoni has violated the provisions of Title 10 of the California Administrative Code: '(1) Section 2077, in that he recommended attorneys at law to various persons; '(2) Section 2078, in that he indirectly assisted in the preparation of a petition for and the securing of writs of habeas corpus by furnishing facilities to attorneys in his bail bond office for the preparation of such documents; '(3) Section 2079, in that he solicited and negotiated for bail with persons whom the arrestee had not specifically authorized and designated in writing; '(4) Section 2091, in that he had some arrangement with one Frank E. Vargas, a member of the Los Angeles Police Department, to furnish information relative to the arrest or incarceration of any person in jail; '(5) Section 2101, in that he failed to set forth on his records the correct information as to the source from which notice of knowledge leading to the solicitation or negotiation of bail was received; '(6) Section 2073, in that he permitted persons to solicit or negotiate with respect to execution of bail at a time when he knew such persons were not licensed by the Department of Insurance to transact bail; '(7) Section 2100, in that undertakings of bail were issued prior to obtaining a full and complete written application therefor; '(8) Sections 2086 and 2087, in that he failed to file with the Department of Insurance a complete listing of all persons in his employ, setting forth the residence address, date of employment, the duties, basis of compensation, and the date and reason for termination of such employment. '(c) That petitioner Frank Earl Alexander has violated the provisions of Title 10 of the California Administrative Code as follows: 'Section 2101, in that he failed to set forth on his records the correct information as to the source from which notice or knowledge leading to the solicitation or negotiation of bail was received. '(D) That petitioner Charles August Archambault has violated the following provisions of Title 10 of the California Administrative Code: '(1) Section 2079, in that he solicited and negotiated for bail with persons whom the arrestee had not specifically authorized and designated in writing; '(2) Section 2101, in that he failed to set forth on his records the correct information as to the source from which notice or knowledge leading to the solicitation or negotiation of bail was received.' 2 'California Administrative Code--Title 10 '2073. No bail agent or bail permittee shall directly or indirectly permit any person on his behalf to solicit or negotiate in respect to execution or delivery of a bail bond or to execute or deliver a bail bond unless such person be licensed as provided in Article 1, Chapter 7, Part 2, Division 1 of the Insurance Code of the State of California. The fact that services are rendered gratuitously or otherwise shall not affect the application of this rule. '2077. No bail agent, bail permittee, or bail solicitor shall in any manner directly or indirectly suggest to any person the name of, or recommend, any attorney or attorneys at law. Nothing contained in this rule shall prevent a bail licensee from following any procedure prescribed by the local Bar Association or the State Bar of California. '2078. No bail agent, bail permittee, or bail solicitator, shall prepare or make a petition for a writ of habeas corpus for, or on behalf of, an arrestee or in any manner directly or indirectly assist in the preparation of a petition for, or otherwise aid in the securing of a writ of habeas corpus. Nothing contained in this rule shall prevent the posting of bail in connection with a writ of habeas corpus when done by a licensed agent or licensed permittee. '2079. No bail agent, bail permittee, or bail solicitor shall solicit or negotiate for a bail bond except with: (a) The arrestee. (b) The arrestee's attorney at law. (c) An adult member of the arrestee's family at the arrestee's residence address. (d) Such other person as the arrestee shall specifically authorize and designate in writing. '2091. No bail agent, bail permittee, or bail solicitor shall for any purpose, directly or indirectly, enter into an arrangement of any kind with a law enforcement officer, newspaper employee, messenger service or any of its employees, a trusty in a jail, any other person incarcerated in a jail, or with any other persons to inform or notify any licensee directly or indirectly of the fact of an arrest, or the arrest of any person, his name or address, his personal or legal representative, his friend or relative, or any other information relating thereto. '2100. No bail bond shall be issued except upon a full and complete written application therefor. '2101. Every application for a bail bond shall be signed by the licensee accepting same and shall have endorsed thereon or attached thereto a statement, in a form approved by the Department of Insurance, setting forth full information as to the source from which notice or knowledge leading to the solicitation or negotiation of bail was received. Full information shall include: (a) Full name of the person supplying the information. (b) The address of such person. (c) Connection or relation of such person to the arrestee. (d) Where the application is received direct from the arrestee a statement of the manner in which the arrestee communicated with the bondsman. (e) Where the arrestee is one who has been previously bailed, a statement of the date, the charge, the bond number covering the previous arrest. (f) The date and the time at which the application or information leading to the application was received.' 3 '(d) Such person has engaged in a fraudulent practice or act or conducted his business in a dishonest manner. '(e) Such person has shown incompetency or untrustworthiness in the conduct of his business or has by commission of a wrongful act or practice in the course of his business exposed the public or those dealing with him to the danger of loss. * * * '(g) Such person has failed to perform a duty expressly enjoined upon him by a provision of this code, or has committed an act expressly forbidden by such a provision. * * * '(i) Such person has aided or abetted any person in an act or omission which would constitute grounds for suspension, revocation, or refusal of license to the person aided or abetted. '(j) Such person has permitted any person in his employ to violate any provision of this code.'