Farmers Automobile Inter-Insurance Exchange v. MacDonald

• Decision Date: 31 August 1943
• Docket Number: 2252
• Parties: FARMERS AUTOMOBILE INTER-INSURANCE EXCHANGE and FARMERS UNDERWRITERS ASSOCIATION, a Corporation, Attorney-in-fact for Farmers Automobile Inter-Insurance Exchange, Plaintiffs and Respondents, v. ALEX MacDONALD, as Insurance Commissioner of the State of Wyoming, Defendant and Appellant
• Court: Wyoming Supreme Court

140 P.2d 905

59 Wyo. 352

FARMERS AUTOMOBILE INTER-INSURANCE EXCHANGE and FARMERS UNDERWRITERS ASSOCIATION, a Corporation, Attorney-in-fact for Farmers Automobile Inter-Insurance Exchange, Plaintiffs and Respondents, v. ALEX MacDONALD, as Insurance Commissioner of the State of Wyoming, Defendant and Appellant

No. 2252

Supreme Court of Wyoming

August 31, 1943

Appeal from District Court, Laramie County; Sam M. Thompson, Judge.

Action by Farmers Automobile Inter-Insurance Exchange and Farmers Underwriters Association, attorney-in-fact for Farmers Automobile Inter-Insurance Exchange against Alex MacDonald as Insurance Commissioner, for a declaratory judgment that plaintiff exchange is a foreign unincorporated insurance association having necessary capital and otherwise authorized to do business in Wyoming. Judgment for plaintiffs, and defendant appeals.

Reversed.

For the defendant and appellant there was a brief by Ewing T. Kerr Attorney General; Harold I. Bacheller, Deputy Attorney General; and Arthur Kline, Assistant Attorney General of Cheyenne, and oral argument by Mr. Kline.

POINTS OF COUNSEL FOR APPELLANT

At the time Section 57-424 was enacted, the legislature could not have had in mind this kind of an organization. An insurance corporation is well known to our law. It is managed by a board of directors and it must have actual paid-in capital of $ 200,000.00 before it is eligible to transact business in Wyoming. The plaintiff is not a corporation, and has no paid-in capital. The pledge of $ 200,000.00 with the Insurance Commissioner of California does not meet the requirements. The Insurance Exchange might elect to leave the sum deposited indefinitely, but if the sum might be withdrawn, then it can not be said that it could possibly satisfy the "capital" requirement of the statute. We are dealing with a question of statutory construction and the meaning of the words "association" and "capital" as used in said Section 57-424. The legislature in 1941 placed its own construction upon this statute. California and Colorado permit subscribers to a reciprocal to exchange contracts of insurance in that state. The plaintiff in 1941 having been denied permission to enter Wyoming, presented to the Wyoming Legislature a bill to make their business lawful. It failed to pass. The action of the Senate in refusing to pass this bill can only be construed to the effect that this legislative body did not approve the entry into this state of a so-called inter-insurance exchange. On the question of legislative construction, see Lamont v. Intermountain Realty Company, 48 Wyo. 56 at page 71; Equitable Life Assurance Society v. Thulemeyer, 49 Wyo. 63, at page 95; Baldwin, State Treasurer, v. Roby, 54 Wyo. 439, at page 457; State v. Holly Sugar Corporation, 116 P. 2d 847, at page 850.

For the plaintiffs and respondents there was a brief by Ellery and McClintock of Cheyenne, Wyoming, and oral argument by Mr. A. G. McClintock.

POINTS OF COUNSEL FOR RESPONDENTS

No contention is made by plaintiffs that the Exchange has any capital stock as distinguished from "capital". $ 200,000 was deposited with the Insurance Commission of California and could not be withdrawn for distribution while any liabilities remain undischarged. The Exchange has legally and irrevocably dedicated $ 200,000.00 as paid-up capital for the purpose of discharging liabilities. Alabama and Montana have both ruled that this type of insurance organization can do business under general insurance laws; see Hoadby v. Purefoy (Ala.) 18 So. 220; State v. Porter (Mont.) 294 P. 363. By the use of the term "association" in § 57-424 the legislature intended to embrace all forms of insurance organizations. The term "capital" refers to the contribution which the group dedicates to the successful prosecution of the venture. Certain presumptions attach to all acts of the legislature in aid of construction of the statutes: State v. Standard Oil Co. (178 So. 601); In re Phillips Estate, 75 P. 2d 1015. For the judicial interpretation of the word "association", see: Pickering v. Alyea-Nichols Company, 21 F.2d 501; In re Minnesota Underwriters, 36 F.2d 371; Thomas Canning Co. v. Canners' Exch. Subscribers at Warner Inter-Insurance Bureau, 189 N.W. 214 (Mich.); State v. Alley, 51 S. 467 (Miss.); Harris v. United States, 51 F.2d 382 (D. C., Tex.); Casualty Reciprocal Exchange of Kansas City v. Bounds, 88 S.W.2d 836 (Ark.). Capital defined: State v. Porter, 294 P. 363; Union Pacific Life Insurance Company v. Ferguson, 129 P. 529. The doctrine of legislative construction can apply only if two elements are present (a) the terms to be construed must be ambiguous, (b) the legislative construction must be clear and unequivocal: Hodgell v. Wilde, 52 Wyo. 310, 74 P. 2d 336, 339; State ex rel. Murane v. Jack, 52 Wyo. 173, 70 P. 2d 889, 894. The construction being acquiesced in must have been uniform and have continued over a long period of time: In re Farina, 2 N.Y.S.2d 987; Bank of Hawaii v. Wilder (9th C. C. A.) 8 F.2d 845. Legislative action must be limited to a construction of its own acts and not the action of a preceding and far-removed legislature: 25 R. C. L. 1029. Although the meaning of a statute may have been in doubt, an amendment to such statute settling the doubt can have no effect on the interpretation of the statute prior to the amendment: Hood Rubber Company v. Commissioner, 167 N.E. 670. The failure of a legislature to enact an amendment is valueless as an aid to the court in determining intention: City of Vanceburg v. Plummer, 122 S.W.2d 772, 275 Ky. 713 (1938); In re Coburn, 131 P. 352, 165 Cal. 202. A later Act is usually construed in such manner as not to destroy an existing property right: People v. Barnett, 319 Ill. 403, 150 N.E. 290; Murray Hospital v. Angrove, 10 P. 2d 577, 583; 2 Lewis' Sutherland Statutory Construction, page 893 (2d Ed.). The word "exchange" is used to indicate an entity: Mitchell v. Pacific Greyhound Lines, 91 P. 2d 176.

RINER, Justice. KIMBALL, Ch. J., and BLUME, J., concur.

OPINION

RINER, Justice.

In this case the Insurance Commissioner of the State of Wyoming, Alex MacDonald, hereinafter designated as the "Commissioner" or the "defendant" seeks by direct appeal the review of a declaratory judgment of the District Court of Laramie County in favor of Farmers Automobile Inter-Insurance Exchange and Farmers Underwriters Association, a corporation attorney-in-fact for the party last above mentioned. That party will usually be hereinafter referred to as the "Exchange" and the Farmers Underwriters Association as the "Underwriters" or the "Attorney". The Exchange and Underwriters when both are mentioned together may also be designated as the "plaintiffs" as they were aligned in the court below.

The plaintiffs brought this action in the district court aforesaid to obtain a declaratory judgment to the effect, in substance, that the Exchange is a "foreign unincorporated insurance association" within the intent and meaning of the term "Association" as used in Section 57-424 W. R. S. 1931; that said Exchange has the necessary "capital" required by said section and is not lacking any of the qualifications required by the law of this state for the admission of a foreign unincorporated insurance association to transact its insurance business therein; and that the Commissioner should, upon examination of the material submitted with its application therefor, issue to said Exchange a license to transact such business in Wyoming. The Commissioner in his answer, to review his pleading briefly, denies that the Exchange is an "association" and has the necessary "capital" within the scope and meaning of said Section 57-424 W. R. S. 1931 and states that he has rejected plaintiffs' application on the ground that "a reciprocal or inter-insurance Exchange is not authorized to do business in the State of Wyoming under the laws of this state." The answer also alleges in detail that after such rejection by the Commissioner, the Exchange caused Senate File No. 42 to be introduced in the 1941 legislature of this state, "wherein the said plaintiff sought to have amended and re-enacted Section 57-424, Revised Statutes of Wyoming, 1931, which said Bill, if passed by the Twenty-sixth Legislature of the State of Wyoming, and if approved by the Governor, would have authorized said plaintiff to carry on and transact business in the State of Wyoming," with the result that the said Senate File was on third reading rejected by that body thereby construing said Section 57-424 as not to permit the Exchange to do business in Wyoming; further, it is averred by the defendant that any company, association, or partnership organized for the purpose of transacting and carrying on in this state the business of insurance must have and possess the sum of "not less than $ 200,000 actual paid up capital exclusive of any other assets which said company, association or partnership may have; that said plaintiff does not have any capital stock in any sum whatsoever."

The District Court of Laramie County declared by its judgment that the Exchange is included within the meaning and intent of the term "Association" in the said Section 57-424, has the "capital" required by that section and that said Exchange "does not lack any of the qualifications imposed by the statutes of Wyoming as a condition precedent to the admission of a foreign unincorporated insurance association to the State of Wyoming for the purpose of transacting therein its insurance business."

The pertinent portion of Section 57-424, supra, reads:

"It shall not be lawful hereafter for any insurance company association or partnership organized or associated for any of the purposes specified in this article, incorporated by or organized...