Eagle Ins Co of Cincinnati v. State of Ohio Kinder

• Decision Date: 14 May 1894
• Docket Number: No. 1051,1051
• Citation: 38 L.Ed. 778,153 U.S. 446,14 S.Ct. 868
• Parties: EAGLE INS. CO. OF CINCINNATI et al. v. STATE OF OHIO ex rel. KINDER, Superintendent of Insurance of the State of Ohio
• Court: U.S. Supreme Court

153 U.S. 446

14 S.Ct. 868

38 L.Ed. 778

EAGLE INS. CO. OF CINCINNATI et al.

v STATE OF OHIO ex rel. KINDER, Superintendent of Insurance of the State of Ohio.

No. 1051.

May 14, 1894.

This was an original application to the supreme court of the state of Ohio, in the name of the state on the relation of W. H. Kinder, superintendent of insurance of the state, for a mandamus against the Eagle Insurance Company of Cincinnati, and John K. Green, its president, and Samuel P. Post, its secretary, to compel them to make a statement of the condition of the company. Upon hearing on demurrer to the answer to the petition, the court awarded a peremptory writ. Defendants brought error.

The insurance company, plaintiff in error, was incorporated on March 22, 1850, by an act of the general assembly of Ohio¹ (48 Ohio Laws, 498). Sections 3654 and 3655 of the Revised Statutes of Ohio read as follows:

'Sec. 3654. The president or vice-president and secretary of each insurance company organized under any law of this state shall, annually, on the first day of January, or within thirty days thereafter, prepare, under oath, and deposit in the office of the superintendent of insurance, a statement of the condition of such company on the thirty-first day of Decem- ber, then next preceding, exhibiting the following facts and items, and in the following form, namely:

'First. The amount of the capital stock of the company, specifying the amount paid and unpaid.

'Second. The property or assets held by the company, specifying:

'1. The value of the real estate owned by such company, where it is situated, and the value of buildings thereon.

'2. The amount of cash on hand and deposited in banks to the credit of the company, specifying in what banks the same is deposited.

'3. The amount of cash in the hands of agents and in course of transmission.

'4. The amount of loans secured by bonds and mortgages, which are the first lien on real estate, and on which there is less than one year's interest due.

'5. The amount of loans on which interest has not been paid within one year.

'6. The amount due the company on which judgments have been obtained, and the cash value thereof.

'7. The amount of stocks in this state, the United States, of any city of this state, and of any other stocks owned by the company, specifying the amount, number of shares, and the par and market value of each kind of stock.

'8. The amount of stock held as collateral security for loans, with the amount loaned on, and the par and market value of each kind of stock.

'9. The amount of unpaid assessments on stock, premium notes, or contingent liabilities.

'10. The amount of interest due and unpaid, and the amount of interest accrued, but not due.

'11. The amount of premium notes or contingent liabilities on which policies are issued.

'12. The number of policies in force.

'13. The amount insured under all policies in force.

'14. The amount of premiums received thereon.

'15. The amount and a description of all other assets.

'Third. The liabilities of the company, specifying:

'1. The amount of losses due and unpaid.

'2. The amount of claims for losses resisted by the company.

'3. The amount of losses incurred during the year, including those claimed and not due, and those reported to the company upon which no action has been taken.

'4. The amount of dividends declared and due, and remaining unpaid.

'5. The amount of dividends, either cash or scrip, declared but not due.

'6. The amount of money borrowed, and the security given for the payment thereof.

'7. The amount required for a re-insurance, being in stock companies a sum equal to fifty per cent. of the whole amount of premiums on unexpired risks and policies, and in mutual companies a sum equal to fifty per cent. of the cash premiums received on unexpired risks and policies.

'8. The amount of all other existing claims against the company.

'Fourth. The income of the company during the preceding year, specifying:

'1. The amount of cash premiums received.

'2. The amount of notes or contingent assets received for premiums.

'3. The amount of interest money received.

'4. The amount of income received from other sources.

'Fifth. The expenditure during the preceding year, specifying:

'1. The amount of losses paid during the year, stating how much of the same accrued prior, and how much subsequent to the date of the preceding statement, and the amount at which losses were estimated in each preceding statement.

'2. The amount of dividends paid during the year.

'3. The amount of expenses paid during the year, including commissions and fees to agents and officers of the company.

'4. The amount paid for taxes.

'5. The amount of all payments and expenditures.

'6. Amount of scrip dividend declared.

'Sec. 3655. The statement of any such company, the capital of which is composed in whole or in part of notes, shall, in addition to the foregoing, exhibit the amount of notes which originally formed the capital, and also what proportion of such notes is still held by the company and considered capital; and every company organized under any law of this state which fails to make and deposit such statement, or to reply to any inquiry of the superintendent with respect to such statement, shall be subject to a penalty of five hundred dollars, and an additional five hundred dollars for every month that it continues thereafter to transact any business of insurance, to be recovered by action in the name of the state, and, on collection, paid into the state treasury for the benefit of the state common school fund; and the attorney general, on the request of the superintendent of insurance, shall institute such action against any company so delinquent, in the court of appropriate jurisdiction in Franklin county, or in the court of appropriate jurisdiction of the county in which said company is located or has its principal place of business, as he prefers.'

Under these sections, proper blanks were furnished to the company by the state superintendent of insurance, and, on its refusal to make the returns required by law, proceedings by mandamus were begun against it. The defense was that the above provisions impaired the obligation of the contract which grew out of its charter. Upon the decision of the supreme court of the state making the writ peremptory, the case was brought here by error.

John F. Follett and Thos. H. Kelley, for plaintiffs in error.

J. K. Richards, Atty. Gen. Ohio, for defendant in error.

Mr. Justice WHITE, after stating the case, delivered the opinion of the court.

The only question presented is whether or not the charter of the plaintiff in error exempted it from obligation to comply with the subsequently established police regulations of the state, contained in sections 3654 and 3655 of the Revised Statutes of Ohio. This subject was fully considered by this court in the case of Insurance Co. v. Needles, 113 U. S. 574, 5 Sup. Ct. 681. There the company had been chartered by the state of Illinois to carry on a life-insurance business, and the question was whether subsequently enacted police regulations of that state for the inspection of such business, and for the liquidation thereof, in the event of insolvency, could be enforced against a corporation working under a prior charter without impairing the obligation of the contract. The statute considered in the Needles Case authorized the auditor, whenever the actual funds of any life-insurance company doing business in the state were not of a net value equal to the net value of its policies, according to the 'combined experience' or 'actuaries" rate of mortality, with interest at 4 per cent., to give notice to such company and its agent to discontinue issuing policies in the state until such time as its funds should become equal to its liabilities, valuing its policies as aforesaid. The law, in addition, required every life-insurance company incorporated in Illinois to transmit to the auditor on or before the 1st day of March in each year a sworn statement of its business, standing, and affairs, in the form prescribed and authorized by law. It also empowered the officer to address inquiries to any company in relation to its 'doings and condition,' and any other matter connected with its transactions, which inquiries, it provided, should be 'promptly answered;' and it imposed upon him the duty of making an examination of the condi- tion and affairs of any company, whenever he deemed it expedient to do so, and had reason to suspect the correctness of any annual statement, or that the company was in an unsound condition. By another statute it was provided that if, upon examination of the affairs of any insurance company, the auditor should conclude that it was insolvent, or that its further continuance in business would be hazardous to the insured or the public, he should apply by petition to the judge of any circuit court for an injunction restraining the company from proceeding with its business until further hearing, &c. Upon the case as thus presented the court said:

'The case upon the merits, so far as they involve any question of which this court may take cognizance, is within a very narrow compass. The main proposition of the counsel is that the obligation of the contract which the company had with the state, in its original and amended charter, will be impaired, if that company be held subject to the operation of subsequent statutes regulating the business of life insurance, and authorizing the courts, in certain contingencies, to suspend, restrain, or prohibit insurance companies incorporated in Illinois from further continuance in business. This position cannot be sustained consistently with the power which the state has, and, upon every ground of public policy, must always have, over corporations of her own creation. Nor is it justified by any reasonable interpretation of the language of the company's charter. The right of the...