Gen. Ins. Co. of Am. v. State Ins. Bd.
| Decision Date | 21 October 1941 |
| Docket Number | Case Number: 29991 |
| Citation | 118 P.2d 392,1941 OK 333,189 Okla. 524 |
| Parties | GENERAL INSURANCE CO. OF AMERICA v. STATE INSURANCE BOARD et al. |
| Court | Oklahoma Supreme Court |
¶0 1. INSURANCE--Payment by fire insurance company of dividends to all policyholders based on amount of premium paid held not violative of statutes prohibiting rebates and discriminations.
Where a fire insurance company files a schedule of rates in compliance with section 10537, O. S. 1931, 36 O. S. A. § 135, and charges and collects such rates on all policies of insurance issued by it in this state, the payment, out of its distributable surplus, of dividends to all its policyholders in Oklahoma in amounts based upon the amount of premium paid by each policy holder, is not a remission or refund of a portion of the rate prohibited by section 10537, nor is it a rebate or discrimination in violation of section 10540, O. S. 1931, 36 O. S. A. § 138.
2. SAME--State Insurance Board not authorized to regulate declaration of dividends out of distributable earnings to policyholders.
The right given the State Insurance Board to approve or disapprove rate schedules filed by fire insurance companies does not include the right to regulate the declaration of dividends, out of distributable earnings, to the policyholders.
3. SAME--State Insurance Board after issuing license to each of two foreign companies not permitted to collaterally attack and disregard corporate entities and prevent the two front issuing different kinds of policies, one participating and one nonparticipating.
Where the State Insurance Board issues a license to each of two foreign fire insurance companies to do business in this state, and thereby recognizes the separate corporate entity of each, it cannot, under its power to regulate the kind of policies that they may issue, collaterally attack and disregard the corporate entities of the two companies, treat them as one company, and prevent the two from issuing different kinds of policies, one a participating policy and one a nonparticipating policy.
Petition by the General Insurance Company to review an order of the State Insurance Board. Order vacated.
J. Berry King and George J. Fagin, both of Oklahoma City, for petitioner.
Mac Q. Williamson, Atty. Gen., Fred Hansen, Asst. Atty. Gen., and Embry' Johnson, Crowe & Tolbert, of Oklahoma City, for respondents.
Hayes, Richardson, Shartel & Gilliland (S. W. Hayes, of Oklahoma City, and Chase M. Smith, Henry S. Moser, and 1. E. Ferguson, all of Chicago, Ill., of counsel), amici curiae.
¶1 This is an appeal from an order of the State Insurance Board, entered on August 3, 1940, directing appellant, General Insurance Company of America, a foreign stock insurance company licensed to do business in this state, to discontinue writing a participating fire insurance policy, which it had been writing in this state since September 1, 1937, under authority granted by the Insurance Board.
¶2 The material facts are these: The General Insurance Company of America is a fire insurance company organized under the laws of the State of Washington. It is affiliated with three other corporations in the following manner: General America Corporation of Seattle, Wash., is a holding company, and owns all the stock of appellant. First National Insurance Company of America is a stock fire insurance company, and General America Corporation and General Insurance Company each owns one-half its stock. General Casualty Company of America is a stock casualty insurance company, and General Insurance Company owns all its stock. The same persons occupy the executive offices, and the same persons constitute the board of directors, of all four companies. The separate corporate identity of each is maintained.
¶3 General Insurance Company operates in 46 states. In 18 of the states it writes participating insurance, and in 28 it writes nonparticipating insurance. It does not write both kinds in any state. First National writes only nonparticipating insurance in Oklahoma. Generally, the same agents represent both companies, as well as other companies not connected with the four named companies. First National pays larger commissions than General Insurance Company, and will write Oklahoma risks that General will not write. The agents determine what company the policies shall be placed with. It is not here contended that the financial condition and structure of appellant is unsound. The provision for dividends in appellant's policy, on which the order appealed from was predicated, is as follows:
"The Board of Directors, in accordance with Paragraph 7 of Article III, of the Company's Articles of Incorporation, may from time to time distribute equitably to the holders of the participating policies issued by said Company such sums out of its earnings as in its judgment is proper."
¶4 The record discloses that, under this provision, appellant had distributed to all its policyholders in Oklahoma 20 per cent of the gross premiums paid during the three years it operated in Oklahoma under said policy provision, and that, with few exceptions, it has in the past paid a 20 per cent annual dividend on participating policies issued in the other states. Appellant has filed a schedule of its rates as required by law, which is the same as those fixed by the Oklahoma Inspection Bureau. The dividends are paid out of net earnings that would otherwise go to the stockholders. Part of its earnings are from sources other than premiums on policies it issues.
¶5 The State Insurance Board makes three contentions: (1) That the payment of the dividend violates sections 10537 and 10551, O. S. 1931, 36 O. S. A. §§ 135 and 149, in that it constitutes a rebate of part of the premiums; (2) that the payment of such dividend as the board of directors may determine invades the province of the State Insurance Board in its right to regulate rates as provided in sections 10533, 10534, and 10536, O. S. 1931, 36 O. S. A. §§ 131, 132, and 134; and (3) that the method of operation constitutes an unlawful discrimination between the policyholders of the General Insurance Company and those of the First National, in violation of section 10540, O. S. 1931, 36 O. S. A. § 138. We will dispose of these contentions in the order stated.
¶6 1. In support of the first proposition the State Insurance Board contends that the payment of dividends...
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