Aetna Ins. Co. v. O'Malley

• Decision Date: 04 April 1939
• Docket Number: 35568,35569
• Parties: Aetna Insurance Company, a Corporation, et al. v. R. E. O'Malley (Substituted for Joseph B. Thompson, who was in turn substituted for Ben C. Hyde), Superintendent of the Insurance Department of the State, Appellant. John T. Barker and Floyd E. Jacobs, Aetna Insurance Company, a Corporation, et al., v. R. E. O'Malley (Substituted for Joseph B. Thompson, who was in turn substituted for Ben C. Hyde), Superintendent of the Insurance Department of the State, Appellant, Glenn C. Weatherby, Respondent
• Court: Missouri Supreme Court

124 S.W.2d 1164

343 Mo. 1232

Aetna Insurance Company, a Corporation, et al. v. R. E. O'Malley (Substituted for Joseph B. Thompson, who was in turn substituted for Ben C. Hyde), Superintendent of the Insurance Department of the State, Appellant. John T. Barker and Floyd E. Jacobs, Aetna Insurance Company, a Corporation, et al., v. R. E. O'Malley (Substituted for Joseph B. Thompson, who was in turn substituted for Ben C. Hyde), Superintendent of the Insurance Department of the State, Appellant, Glenn C. Weatherby, Respondent

Nos. 35568, 35569

Supreme Court of Missouri

April 4, 1939

Rehearing Overruled February 7, 1939.

Motion to Modify Overruled April 4, 1939.

Appeal from Cole Circuit Court; Hon. Nike G. Sevier, Judge.

Reversed.

Roy McKittrick, Attorney General, and Drake Watson Assistant Attorney General, for appellant; Charles L Henson of counsel.

(1) The trial court had no jurisdiction to make the orders of allowance to respondents because they were contrary to the statutes. Sec. 5874, R. S. 1929; State ex rel. Barrett v Boeckeler Lbr. Co., 301 Mo. 445, 256 S.W. 175; State ex rel. Pub. Co. v. Hackmann, 314 Mo. 33, 282 S.W. 1007; Gray v. Clement, 286 Mo. 100, 227 S.W. 111, Id., 296 Mo. 497, 246 S.W. 940; Ex parte Dusenberg, 325 Mo. 881, 30 S.W.2d 94; State ex rel. Dutton v. Sevier, 336 Mo. 1236, 83 S.W.2d 581; McConnell v. Deal, 296 Mo. 275, 246 S.W. 594. (a) The judgments of allowance to respondents were not supported by the pleadings. Charles v. White, 214 Mo. 187, 112 S.W. 545; Congregation B'Nai Abraham v. Arky, 323 Mo. 776, 20 S.W.2d 899. (2) The alleged contract of employment of respondents was illegal. (a) The Attorney General is under the Constitution the legal adviser of the Insurance Department and no authority exists for the employment of or compensation to other attorneys for the Superintendent of Insurance. Sec. 1, Art. V, Mo. Const.; State ex rel. Barrett v. Boeckeler Lbr. Co., 302 Mo. 187, 257 S.W. 453; Fergus v. Russel, 270 Ill. 304; North Am. Ins. Co. v. Yates, 214 Ill. 272; Ex parte Corliss, 114 N.W. 962; State v. Reeves, 44 S.D. 612, 184 N.W. 1007; Commonwealth v. Kozlowsky, 131 N.E. 207; People v. McCollough, Ann. Cases 1913B, 995; Lindell v. McNair, 4 Mo. 381. (b) Neither the Governor nor the Superintendent, nor both of them, had authority to enter into the alleged agreement with respondents. 59 C. J., p. 170, sec. 285, p. 172; sec. 286, p. 173, sec. 287, p. 174, sec. 290; Department of Public Works & Buildings v. Schlich, 194 N.E. 587; State v. Perlstein, 79 S.W.2d 143; Art. III, Mo. Const.; Sec. 48, Art. IV, Mo. Const.; Sec. 6, Art. V, Mo. Const.; State v. Bank of the State of Missouri, 45 Mo. 528; State ex rel. Public Schools v. Crumb, 157 Mo. 545, 57 S.W. 1030; State ex rel. v. Hays, 52 Mo. 578. (c) The statute conferring authority on State officials must be strictly construed. Newark v. Civil Serv. Comm., 115 N. J. L. 26; County Board of Education v. Slaughter, 160 So. 758; State v. Bank of the State of Missouri, 45 Mo. 528. (d) No attorney's fee lien was created against the impounded fund. Sec. 11716, R. S. 1929. (e) A valid contract of employment is essential before an attorney's lien may attach. (f) The agreement is void as an attempt to influence the courts and Legislature. And invalidity may be raised at any time. (g) The agreement with respondent Weatherby and the State officials was void because at the time it was entered into he was an officer of the State and required to give his full time to the duties of his office. State ex inf. v. Bode, 113 S.W.2d 805; Julian v. State, 23 N.E. 690; Sec. 11277, R. S. 1929; Attorney General v. Continental Life Ins. Co., 88 N.Y. 571. If respondents Barker and Jacobs had the same contract, then the above authorities apply to them. (3) Respondents cannot be paid a fee from the fund because of the legislatively established policy of the State. Sec. 5679, R. S. 1929; Sec. 43, Art. IV, Mo. Const.; State ex rel. Barrett v. Boeckeler Lbr. Co., 301 Mo. 445, 256 S.W. 175; State ex rel. Pub. Co. v. Hackmann, 314 Mo. 33, 282 S.W. 1007; Central Railroad Co. v. Pettus, 113 U.S. 116, 28 L.Ed. 915; State ex rel. Ins. Co. v. Hall, 330 Mo. 1107, 52 S.W.2d 174.

Hogsett, Murray, Trippe & Depping and Frank Brockus for John T. Barker and Glenn C. Weatherby.

(1) These attorneys, under a contract of employment, recovered a fund of about $ 2,750,000 for the benefit of a class (policyholders), and are entitled to impress a lien upon such fund and be paid therefrom, because such fund was created, preserved and will be distributed to the policyholders, solely through the efforts of such attorneys. Lindheimer v. Illinois Bell Tel. Co., 292 U.S. 151, 54 S.Ct. 658; Haynie, Parks & Westfall v. Camden Gas Corp., 56 S.W.2d 419, 186 Ark. 842; Board of Education of Lonoke County v. Lonoke County, 181 Ark. 1046, 29 S.W.2d 268; State ex rel. Anderson v. Roehrig, 8 S.W.2d 998, 320 Mo. 870; 2 R. C. L., p. 1069; 6 C. J., p. 784; Council of the Village of Bedford v. State ex rel. Thompson, Hine & Flory, 123 Ohio St. 413; Central Railroad v. Pettus, 113 U.S. 116; Johnson v. United Rys., 247 Mo. 350; Hempstead v. Theological School, 286 Pa. 493, 134 A. 103, 49 A. L. R. 1146; Colley v. Wolcott, 187 F. 596; Wait v. Railroad Co., 204 Mo. 502; Hodgman v. Atlantic Refining Co., 8 F.2d 777; Middleton v. Westmoreland, 138 S.E. 855; Schempp v. Davis, 201 Mo.App. 434; 2 R. C. L., sec. 163, p. 1073; Home for Aged v. Insurance Co., 133 N.W. 729; Lamar v. Hall & Wimberly, 129 F. 83; Nolte v. Hudson Nav. Co., 47 F.2d 167; State ex rel. Abeille Ins. Co. v. Sevier, 335 Mo. 269, 73 S.W.2d 361; Wright v. Gas Co., 297 U.S. 537, 56 S.Ct. 578. (2) The learned Attorney General contends that it is his special prerogative to represent all State Departments, including the Insurance Department, and that no such departments have the legal authority to employ special counsel, and that all statutory acts authorizing such appointments are unconstitutional. This is not the law in Missouri, but even if it were, counsel in this case are entitled to be paid, because their services were accepted and their contract has been fully performed. The People v. Straus, 355 Ill. 642; Haynie, Parks & Westfall v. Camden Gas Corp., 56 S.W.2d 418, 186 Ark. 842; Buford v. Cooperative Assn., 42 F.2d 791; Bank of Portland v. Paper Co., 71 P. 972; Ferguson v. Dent, 46 F. 88; Wallace v. Fiske, 107 A. L. R. 748, 80 F.2d 897; Johnson v. Underwood, 324 Mo. 578, 24 S.W.2d 133; Moss Tie Co. v. Allen, 318 Mo. 440, 300 S.W. 486; Macon County Levee Dist. v. Goodson, 14 S.W.2d 561; State of Oklahoma ex rel. v. Natl. City Bank, 267 S.W. 118; Kircher v. Evers, 238 S.W. 1086; Lohmeyer v. Cordage Co., 214 Mo. 685, 113 S.W. 1108; People v. Straus, 355 Ill. 640; State ex rel. Pub. Serv. Comm. v. Roach, 256 Mo. 669; State ex rel. Gass v. Gordon, 266 Mo. 394; State ex inf. McKittrick v. Bode, 113 S.W.2d 805; 7 C. J. Sec., p. 1229; 5 Amer. Juris., p. 235; State v. Finch, 280 P. 210; People v. Marquette Natl. Life Ins. Co., 351 Ill. 516, 184 N.E. 800; State ex rel. Barrett v. Lumber Co., 302 Mo. 187; Follmer v. State, 142 N.W. 908; State v. Amerland & Hagan, 175 N.W. 372; Board of Public Utility Commrs. of New Jersey v. Lehigh Valley Railroad Co., 106 N. J. L. 411. (3) There is no merit to the Attorney General's contention that the allowances to these attorneys should have been made at the time the insurance companies paid such refunds into court, and during the same term; such fees were not costs of litigation to be taxed against the losing party, but were expenses or costs of administration, which are chargeable against the funds ordered paid into court to accomplish restitution. The circuit court had jurisdiction to require payment of the fund into court and had authority to make an allowance for attorneys' fees therefrom. Attorneys' fees are never taxable as costs in Missouri unless expressly provided by statute. Wallace v. Fiske, 107 A. L. R. 748, 80 F.2d 897; Aetna Ins. Co. v. O'Malley, Lauf, Cook and Lamb, 342 Mo. 800; Ex parte Nelson, 253 Mo. 627; Burns v. Ames Realty Co., 31 S.W.2d 275; Johnson v. United Rys., 247 Mo. 326; Albers v. Merchants Exchange Bank, 138 Mo. 159; St. Louis v. Meintz, 107 Mo. 615; State ex rel. Anderson v. Roehrig, 320 Mo. 870, 8 S.W.2d 998; Stephens v. Oberman Mfg. Co., 60 S.W.2d 699; Ford v. Ford, 24 S.W.2d 90.

Charles M. Howell for Floyd E. Jacobs.

(1) The proceeding for the recovery of attorneys' fees being a proceeding in equity for the payment of fees out of a fund created as a result of the services of respondent counsel the court had inherent power as a court of equity to order the payment of reasonable counsel fees out of the fund. Trautz v. Lemp, 334 Mo. 1085, 72 S.W.2d 104; Henderson v. Elam, 232 S.W. 469; St. Louis Trustee for Mullanphy, v. McAllister, 302 Mo. 152, 257 S.W. 425; State ex rel. Anderson v. Roehrig, 320 Mo. 870, 8 S.W.2d 998; United States v. Equitable Trust Co., 283 U.S. 738, 75 L.Ed. 1379; Robinson v. Dundee Land & Inv. Co., 80 Mo.App. 621; Winton v. Amos, 255 U.S. 372, 65 L.Ed. 684; Regan v. Babcock, 196 Minn. 243, 264 N.W. 804; Swift v. Johnson, 175 Mo.App. 660, 158 S.W. 96. (2) The insurance statutes of Missouri do not deprive a court of equity of its power or jurisdiction to adjudge the payment of counsel fees out of trust funds because: (a) Section 5874, Revised Statutes 1929, is a mere procedural statute and is expressly limited, insofar as excess insurance premiums collected are concerned, to fixing the custody of such funds and the distribution of such funds in the Superintendent of Insurance. Insofar as it provides for the custody and distribution of said funds, it provides for the performance by the Superintendent of Insurance of ministerial and not judicial acts. Said section does not expressly, nor by...