Supreme Court of Missouri, 1938

State Ex Rel. Carwood Realty Co. v. Dinwiddie

Supreme Court of Missouri · Decided December 20, 1938 · Tipton

122 S.W.2d 912; 343 Mo. 592; 1938 Mo. LEXIS 463 (South Western Reporter, Second Series)

Counsel

Cobbs, Logan, Roos Armstrong for relators. (1) Attorneys employed by the Superintendent of Insurance of the State of Missouri and who rendered services during the course of the "impound litigation" have no claim to, interest in, or liens upon the funds impounded. Aetna Ins. Co. v. O'Malley, Supt. of the Insurance Dept., Nos. 35,568, 35,569 of this Court (not yet reported). These attorneys should be compensated if entitled thereto by the Insurance Department as an expense of that department in the manner provided by statute. Secs. 5679, 5686, 5688, R.S. 1929. (2) The impounded funds may not be charged with the costs and expenses of distribution and should be returned without reduction therefor to the policyholders. (a) The expense of distribution is an expense of administering the insurance laws of the State of Missouri and should be paid, as provided by statute, as an expense of the Insurance Department. State ex rel. Mo. State Life Ins. Co. v. Hall, 330 Mo. 1107 , 52 S.W.2d 174 ; State ex rel. St. Louis Mut. Life Ins. Co. v. Mulloy, 330 Mo. 951 , 52 S.W.2d 469 ; Aetna Life Insurance Co. v. O'Malley et al., Causes Nos. 35,568 and 35,569 of this Court (not yet reported); Secs. 5679, 5686, 5688, R.S. 1929. (b) Equity requires that this court rule that the cost of distributing this fund is an expense of the Insurance Department within the contemplation of the Insurance Code. These funds were impounded without warrant or authority of law and in violation of law and hence the cost of restitution should be borne by the Insurance Department. State ex inf. McKittrick v. American Colony Ins. Co., 80 S.W.2d 876 ; State ex rel. Thompson v. Sevier, 80 S.W.2d 893 ; American Constitution Fire Ins. Co. v. O'Malley, 113 S.W.2d 795 ; State ex rel. Robertson v. Sevier, 115 S.W.2d 810 . (c) The impounded fund may not be charged with the costs of distribution under the principles of common law. The collection and impounding of said fund amounted to a common-law conversion of the policyholders' money. Allen v. McMonagle, 77 Mo. 478 ; Williams v. Wall, 60 Mo. 318 ; State v. Berning, 74 Mo. 87 ; Milne Lbr. Co. v. Michigan Cent. Ry. Co., 57 S.W.2d 732. The impounding of said funds was nonetheless a conversion because the acts were performed by a public official. Burk v. Baxter, 3 Mo. 207 ; State ex rel. Sproleder v. Staed, 65 Mo. App. 487 ; State ex rel. Webb v. King, 73 S.W.2d 460; 65 C.J., sec. 42, p. 33. A converter may not charge the cost of restoring to the true owner the property converted. (3) No principle of equity sustains the jurisdiction of the circuit court of Boone County in the suit here sought to be prohibited. (a) The bill below may not be sustained upon any of the following grounds: As a petition of a fiduciary for directions. As an action quia timet up the principles of interpleader, or to quiet title to personal property, as there is no adverse claim or dispute relating to the same fund, debt, duty or thing. Haydens, Executor, v. Marmaduke, 19 Mo. 403 ; State ex rel. St. Louis Cooperage Co. v. Green, 92 S.W.2d 930; Little v. St. Louis Union Trust Co., 197 Mo. 281 ; Board of Supervisors of Saratoga County v. Deyoe, 77 N.Y. 219 . (b) To summon all claimants into the Circuit Court of Boone County, either individually or by class representation, would constitute a misjoinder of parties defendant. Sec. 701, R.S. 1929; Tucker v. Tucker, 29 Mo. 350 ; Lewis v. Hargadine-McKittrick D.G. Co., 305 Mo. 396 , 274 S.W. 1041 ; Fulton v. Fisher, 239 Mo. 116 ; Repetto v. Walton, 314 Mo. 182 , 281 S.W. 411 ; State ex rel. Songer v. Fid. Dep. Co., 53 S.W.2d 1036. (c) The bill below may not be sustained on the ground that it will avoid circuity of action or multiplicity of suits. Ballew Lbr. Hardware Co. v. Mo. Pac. Ry. Co., 288 Mo. 473 , 232 S.W. 1015 ; Tribette v. Ill. Cent., 70 Miss. 182 , 12 So. 32; Southern Michigan Lbr. Co. v. McDonald, 57 Mich. 292 , 24 N.W. 87. (d) The bill below may not be sustained as an action for a declaratory judgment. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227 , 81 L.Ed. 617. Roy McKittrick, Attorney General, Drake Watson, Harry Kay, J.E. Taylor and J.W. Buffington Assistant Attorneys General, Charles L. Henson, Walker Pierce and William G. Chorn for Superintendent of Insurance Department, amici curiae . (1) The Attorney General under the Constitution and statutes of this State, and under the common law, is the only person authorized to institute a suit on behalf of the Superintendent of the Insurance Department. (2) The Superintendent of the Insurance Department is the statutory custodian of the impounded funds mentioned in his petition. (3) The circuit court has no jurisdiction over the Superintendent of Insurance in the distribution of the impounded funds. (4) The Superintendent of Insurance has no express or implied authority to bring the action now pending in this court. (5) This court has no authority to direct or authorize payment of any part of the expenses of the Insurance Department of the impounded funds. (6) No justifiable controversy is stated in the petition, but the petition is merely a request for advice from this court as to how to carry out certain duties.

Opinion of the Court

*595 TIPTON, C. J.

Prohibition. Relators seek to prohibit the re-, spondent, judge of the Circuit Court .of Boone. County, Missouri, from acting upon a petition filed in that court by George A. S... Robertson, Superintendent of the Insurance Department of - this State, wherein he seeks the aid and directions of that. court in .the distribution to the policyholders of funds created during the pendency of the case of American Constitution Fire Assurance Co. et al. v. O’Malley, commonly known in this State as the 16, 2/3 per cent increase rate, case. This case is reported in 342 Mo. 139, 113 S. W. (2d) 795, and there a history of this litigation may be found. We held in that case that “. . . the judgment should be-and is affirmed, and cause remanded, with directions to the trial court to immediately return said funds from the registry of the court to the Superintendent of Insurance, the lawful custodian thereof, for distribution by him to the policyholders.”

When the mandate in that case reached the circuit court, it entered a judgment turning over the funds to the Superintendent of the Insurance Department but retained jurisdiction of the cause for the purpose of passing upon all claims made against the. funds and to control and supervise the distribution of the funds. As the result of such judgment, the case of State ex rel. Robertson, Superintendent of Insurance Department, v. Sevier, 342 Mo. 346, 115 S. W. (2d) 810, was brought, and in that case-we held that that court did not have jurisdiction to enter -such judgment, but only had jurisdiction to dismiss the plaintiff’s, cause and to turn over to .the Superintendent of the Insurance Department the impounded funds to be returned by him to the policyholders.

Briefly, the petition in question asks the Circuit Court of Boone County to aid the Superintendent of Insurance in distributing to the policyholders these impounded funds by passing upon all claims *596 made against the funds, and to supervise their distribution. If the Circuit Court of Cole County was without jurisdiction to pass upon all claims made against the funds and to supervise the distribution, it seems to the writer of this opinion that the Circuit Court of Boone County would be without jurisdiction to do the same thing.

In the case of State ex rel. Missouri State Life Ins. Co. v. Hall, 330 Mo. 1107, 52 S. W. (2d) 174, l. c. 177, we said:

“The original Code and amendments thereto indicate an intention to regulate the business from beginning to end, thereby protecting individual and public interests. The enactment of this comprehensive Code made the State a real party in interest. The Superintendent of Insurance is the administrative officer in charge of that interest, and courts - are without authority to interfere with his administration of the Code.”

Since the Superintendent of Insurance has no power to act except where authorized by statute, it necessarily follows that when we directed the funds to be turned over to him for distribution to the policyholders he must distribute, them according to the Insurance. Code of Missouri. ’ •. . .

Section 5874, Revised Statutes 1929, dealing with funds created during the -pendency of a rate litigation, among other things, directs the Superintendent of Insurance that “in the event his orders and directions shall be sustained, then such funds shall be turned over to the policyholders pro rata.”

Section 5670, Revised Statutes 1929, provides that the Insurance Department is charged with the. execution of the insurance laws. A comprehensive method is provided to defray the expenses of enforcing the insurance laws. [Secs. 5679, 5686 and 5688, R. S. 1929.] Although these funds were illegally, collected, nevertheless, they were accumulated-while- the Superintendent of Insurance was resisting a rate increase. In other words, while he was enforcing the insurance laws of this State, the funds were created. Therefore, the expense of distributing these funds’should be paid as any other clerical expense of the department, and not paid out of the funds in question. Each policyholder is entitled to his. pro rata share of these funds.

The petition in question also asks the court to determine if certain lawyers have -a lien on these funds for services rendered the superintendent in resisting the rate increase. Section 5678, Revised Statutes 1929, provides that the superintendent may, with the approval of the Governor, employ counsel for the purpose of enforcing the insurance laws, except in criminal prosecutions, but he is not given authority to pay counsel out of any funds belonging to the policyholders. He must pay counsel in the same way -as any other expense of *597 the Insurance Department is paid. [Aetna Insurance Co. v. O'Malley, Nos. 35568 and 35569, 343 Mo. 1232, 124 S. W. (2d) 1164.]

The statutes above referred to explicitly define the duties of the Superintendent of Insurance in reference to these funds. The question arises: Has he a right to go into a court of equity to get direction as to how he should distribute these funds when his duties are outlined by the Insurance Code? We think not.

In the ease of Shurtleff et al. v. Schoenleber et al., 184 N. W. 814, l. c. 816, the Supreme Court of Nebraska said:

“The appellants seek to invoke the-rule that when the meaning of a will, deed, contract or other instrument which relates to or creates a trust is doubtful, so that by reason thereof the trustee is embarrassed or exposed to dangers - in the execution of his -trust, a court of equity will construe the instrument, declare-its legal force and effect, and give advice and instruction 'in regard to' carrying out of said trust. ... To follow such ‘ a rule in this ease would be the discharging by the court of the duties imposed upon appellants by law and relieve them from responsibility in the liquidation of the affairs of the- corporation. This the court will not do. The appellants are, by statute, made trustees of the dissolved corporation. Their duties are specifically pointed out, fixed and determined by law, and they are not entitled to apply to the court for instructions. To instruct them would be to direct that they follow the plain and explicit direction of the statute.” ' ’ •

We have held that “courts are without authority to interfere with his (Superintendent of Insurance) administration of the Code.” [State ex rel. Missouri State Life Ins. Co. v. Hall, supra.] It follows that the respondent was without jurisdiction to entertain the petition of the Superintendent of Insurance. Our writ heretofore issued is made absolute.

All concur.

Case-law data current through December 31, 2025. Source: CourtListener bulk data.