must afford aggrieved persons a reasonable opportunity to present their grievances, § 910-44.
The Commissioner must, and does, provide rules and statistical plans, in as much form and detail as is necessary. These rules and plans are used by each title insurance company in reporting, on an annual basis, the composition of its business, and the loss and country-wide expense experience of it and its title insurance underwriters. The Commissioner may also require the recording and reporting of expense experience items which are specially applicable to Pennsylvania and not susceptible of determination by prorating country-wide expense experience, § 910-46.
The Commissioner regulates trade practices of the insurance companies as well, 40 Pa. Stat. Ann. §§ 1151-1162. He has authority over misrepresentations and false advertising, boycotts, intimidation, coercion, and other unfair trade practices by title insurance companies.
The statutory frame of reference clearly contemplates uniformity in title insurance company charges and joint action by the companies in connection therewith. Title insurance companies are authorized to form rating associations, which are licensed by the Commonwealth and are themselves subject to thorough regulation. The Commissioner can issue a license to a rating organization on finding that it is competent, trustworthy, and otherwise qualified, and that its constitution or articles, and its by-laws, rules, and regulations conform with the requirements of law. The duration of a license is three years. Rating organizations must furnish the Department with lists of their subscribers. All changes in the above items must be promptly reported to the Department. The association became subscribers to its rating services on a reasonable basis and the refusal to admit a title insurance company to subscriber status may be reviewed by the Commissioner, who has the power to order admission. Section 910-41.
Cooperation among rating organizations and among title insurance companies is specifically authorized by statute, not only in ratemaking, but in other matters within the scope of the title insurance article, § 910-41. Provision is made for interchange of information among Pennsylvania title insurance companies and also with companies in other states, § 910-46. The Commissioner may review the activities and practices of the rating organization and the companies and their cooperation and may order any practice discontinued if it is unfair or unreasonable or otherwise inconsistent with the provisions of the title insurance article, § 910-41.
Rating organizations may make filings of rates and, if they do so, the member title insurance companies need not file individually, § 910-37. Even companies which are not members may avoid the burden of making an individual filing by subscribing to the services of a rating organization. Id. Minority members are protected by a deviation procedure whereby they may file uniformly higher or lower rates, § 910-42. Moreover, minority members may appeal to the Commissioner from any proposed filing by their rating organization, § 910-43.
Finally, the Act provides that "the Commissioner shall have the full power and authority, and it shall be his duty, to enforce and carry out by regulations, orders, or otherwise," each and every provision of the article regulating title insurance to the full intent of that article, § 910-46. His enforcement powers include the authority to levy fines and to suspend licenses, after hearing, for failure to obey an order, § 910-48.
We will next review the background of the seller charge. The factual ingredients of that background were not pleaded in the complaint. We will note the source of the relevant facts and will comment infra on the relationship between these facts and the procedural ramifications of the 12(b) (6) motion before us.
III. History of the Seller Charge
The seller charge of $10 per transaction was first filed with the Department by the Pennsylvania Title Insurance Rating Bureau on December 20, 1966. The filing was approved on January 18, 1967, and became effective on February 1, 1967. On February 8 the Department withdrew its approval and wrote to the rating bureau that the seller charge was not a statutorily defined "fee" and therefore need not be filed with the Department. On March 20, 1967, the Department amended and approved (after amendment) the wording of a release by the Rating Bureau to real estate agents and other interested persons announcing the continuation of the seller charge and the Department's ruling that it was not a "fee."
Three years later the Department's position was unchanged. On June 1, 1970, in an order disapproving a proposed rate increase, the Department specifically excluded from its disapproval a proposed $12.50 seller charge on the ground that it was not a fee and "therefore, is not a proper subject of review by this Department . . . ."
As soon as we became familiar with the case, it was obvious to us that the attitude of the Insurance Department in the matter might well be decisive. A new Insurance Commissioner, Herbert S. Denenberg, had replaced former Commissioner George F. Reed following a change of administration in Harrisburg, and we did not wish to be in the position of deciding the issue before us in ignorance of the present Commissioner's position; for instance, a contemporaneous exercise of regulation over the seller charge might place the matter in a new and different light. Accordingly, we formally advised the Department of the pendency of the litigation and invited a statement of its present position on the regulatory status of the seller charge. The Department's counsel appeared at oral argument on the motion to dismiss. He followed his appearance with a statement of present position.
The Department still does not regard the seller charge as a "fee" within the definition in 40 Pa. Stat. Ann. § 910-1(5). But it has now overruled the unstated minor premise of its earlier position: its submission to this Court takes the position that material to be filed for Departmental approval is not limited to "fees." The Department further informed the Court that it planned to require that the seller charge be formally filed for approval.
In seeking to regulate the seller charge, the Department relies for support upon a number of statutory provisions. Section 910-37(a) provides:
Every title insurance company shall file with the commissioner every manual of classifications, rules, plans, schedules of fees, commissions payable to applicants for title insurance and every modification of any of the foregoing relating to the rates which it proposes to use. . . .
Section 910-37(c) provides:
The commissioner shall make such review of the filings as may be necessary to carry out the provisions of this article.