Leggett v. Missouri State Life Ins. Co.
| Decision Date | 14 November 1960 |
| Docket Number | 47156,47157B,Nos. 46686,s. 46686 |
| Citation | 342 S.W.2d 833 |
| Parties | C. Lawrence LEGGETT, Superintendent of the Division of Insurance in the Department of Business and Administration of the State of Missouri, Respondent, v. MISSOURI STATE LIFE INSURANCE COMPANY, a corporation (now dissolved), Defendant, General American Life Insurance Company, a corporation, Respondent, Joseph F. McAlister et al., on their own behalf and on behalf of all other stockholders of Missouri State Life Insurance Company (now dissolved) similarly situated, Intervenors-Appellants, James F. Ladd and Samuel E. Mitcheil, Intervenors-Appellant, Matthew F. Morse et al., Intervenors-Respondents. |
| Court | Missouri Supreme Court |
Jacob M. Lashly, St. Louis, Special counsel for C. Lawrence Leggett, Superintendent of Div. of Ins. in Dept. of Business and Administration. Lashly, Lashly & Miller, Paul R. Moody, St. Louis, of counsel.
Robert J. Keefe, Kenneth Teasdale, Paul G. Ochterbeck, Robert F. Schlafly, St. Louis, for respondent General American Life Ins. Co., Frank P. Aschemeyer, St. Louis, of counsel.
James C. Jones, Jr., Lon Hocker, Jr., Frank Y. Gladney, Joseph H. Grand, George Roudebush, Orville Richardson, St. Louis, for intervening Stockholders McAlister and others. Hullverson, Richardson & Hullverson, St. Louis, of counsel.
Charles E. Gray, St. Louis, Bradley & Noble, Kennett, for intervening policyholders James F. Ladd and others.
STOCKARD and HOUSER, Commissioners.
These are three appeals from six orders and judgments of the Circuit Court of the City of St. Louis. After separate argument of the three appeals in this Court they have been consolidated for the purpose of the preparation of one opinion.
The consolidated appeal relates to the following six orders and judgments:
(1) The judgment, order and decree dated August 19, 1957 (a) overruling certain exceptions to the Final Accounting of General American Life Insurance Company (hereafter referred to as 'General American' or 'New Company') of its administration of the business and assets of the now dissolved Missouri State Life Insurance Company (hereafter referred to as 'Missouri State Life' or 'Old Company'), which exceptions were filed by intervenors, the former Stockholders of Missouri State Life, and (b) sustaining certain Set-Offs claimed by General American in the Final Accounting. 1
(2) The order and judgment dated August 13, 1958 allowing $110,000 for services rendered by the attorneys for intervenors, the former Stockholders of Missouri State Life.
(3) The order and judgment dated June 24, 1958 allowing the attorney for the Superintendent of Insurance of the State of Missouri (hereafter referred to as 'the Supermintendent') $175,000 in attorneys' fees and $909.87 as expenses, for services rendered and expenses incurred in this proceeding from February 10, 1948 to April 26, 1957.
(4) The order and judgment dated June 24, 1958 allowing $70,000 in appraisers' fees and $2,169.58 as expenses, for services rendered and expenses incurred in this proceeding.
(5) The order and judgment dated August 13, 1958 allowing the special actuary employed by the Superintendent $32,000 in actuarial fees and $3,574.58 in expenses, for services rendered and expenses incurred in this proceeding.
(6) The order and judgment dated August 13, 1958 allowing General American $161,908.19 for certain expenditures made by General American in the course of proceedings relating to the closing of the business and disposition of the assets of Missouri State Life.
General Factual Background
An examination of the liabilities and assets of Missouri State Life revealed a substantial impairment, and the Superintendent, on August 26, 1933, filed a petition against Missouri State Life in the Circuit Court of the City of St. Louis under §§ 5941-5954, RSMo 1929, Sections 375.560-375.600 RSMo 1949, V.A.M.S., alleging the insolvency of the latter and that its condition was such as to render its further proceeding hazardous to the public and to those holding its policies. The Superintendent prayed that Missouri State Life be enjoined from further prosecution of its business; that it be dissolved and that an agent be appointed to take charge of its property and assets. Missouri State Life filed an answer admitting the allegations of the petition. On August 28, 1933, following a hearing, the court entered a decree of insolvency, finding the facts as alleged in the petition, ordering the assets of Missouri State Life vested in the Superintendent and in his successors in office, in fee simple and absolutely, and ordering him to take possession of the assets, dispose of and sell them, settle all claims and settle and wind up the affairs of the Company.
On September 5, 1933, the Superintendent filed a Report of Condition, pursuant to § 5953, RSMo 1929, Section 375.730 RSMo 1949, V.A.M.S., showing that the liabilities of the Company exceeded its admitted assets by $29,000,001.17, and also a petition for instructions and directions as to the sale of assets, alleging that the most valued assets were the agency organization, good will and other intangible assets of that nature; that these were fast deteriorating and becoming of no value; that to preserve and conserve these assets and prevent irreparable injury, loss and damage to the policyholders, creditors and stockholders it was imperative that all of the assets be sold as speedily as possible; that he had a proposal from General American to purchase all of the assets; that the stated consideration would be sufficient to pay all preferred claimants 100% and all unsecured creditors 50%; that a liquidation of the assets in the usual method would not pay claimants, creditors and stockholders as much as each would receive under the terms of the proposal; that the proposal was just, fair and equitable as far as policyholders and other claimants and creditors were concerned and that an immediate sale should be made for the payment of claims for policyholders and creditors, provided such a sale legally could be made.
After a hearing the court found that the assets at the time of the judgment of insolvency were less than 75% of the necessary amount and that the Superintendent could sell the assets at private sale upon terms to be decreed by the court, without complying with § 5953, RSMo 1929, i. e., without a public offering for reinsurance; that an immediate sale of the assets should be made; and that by the purchase of the assets by General American under its proposed Purchase Agreement the policyholders and other creditors would receive more than if such a sale were not effected. The court approved and confirmed the Purchase Agreement, empowered and directed the Superintendent to execute and perform the same; approved 'the sale of the assets'; vested title and ownership of the assets in General American; and reserved jurisdiction of the cause for the purpose of carrying out the decree and the Purchase Agreement.
The Purchase Agreement
Although specific provisions of the Purchase Agreement 2 must be set forth verbatim subsequently, we shall now set forth its provisions generally to present the overall plan for rehabilitation of the insurance business of Missouri State Life.
Article I, 'Purchase and Sale of Assets.' New Company agreed to purchase from the Superintendent, and the Superintendent agreed to sell to New Company, all of the assets formerly owned by Old Company, for a consideration of $100,000. 3 It agreed to pay all taxes and debts due by Old Company to federal and state governments, death losses and matured policy claims against Old Company matured or due on or before August 28, 1933, wages and salaries due Old Company employees for services rendered prior to that date, all valid claims of secured creditors, 50% of all other valid claims, and all expenses of closing the business and disposing of the assets of Old Company.
Article II, 'Policyholders.' New Company assumed all of the outstanding insurance and annuity policies theretofore issued, assumed or reinsured by Old Company and in force on August 28, 1933, 'so as to carry out in manner and form all of the obligations of Old Company as contained in said policies and contracts, according to the true intent and tenor thereof,' subject to the subsequent provisions of the Purchase Agreement. Inasmuch as the then appraised value of the assets was 'less than the required reserves,' a lien equal to 50% of the terminal reserve on each life and annuity policy 'as such reserve has been established in the accounts of Old Company, computed as of September 1, 1933, to the date to which premiums on such policies have been paid,' was established and placed against each such policy. Liens were to bear interest at 5% per annum from September 1, 1933 to September 1, 1948, and 4% thereafter, and were to be treated as policy loan indebtedness, and carried as an asset by New Company. The amount of the lien was to be deducted from any payment or settlement under policy provisions, except that liens would be waived upon death claims occurring before September 1, 1948. The cost of such lien waivers was to be 'provided out of the net earnings of the business of the Old Company,' but if the net earnings were insufficient to provide such mortality cost, then New Company was obliged to provide therefor 'out of its own surplus,' but neither in the New or Old Company account was New Company obliged to maintain any reserve to insure the waiving of liens. The lien provision was made inapplicable to policies of group life, group accident and health and commercial accident and health insurance, 'inasmuch as no substantial or accumulative reserves are carried against such policies.' Policy loans and cash surrenders were deferred for a period of two years.
Article III, 'Claimants.' It was provided that claims for deaths occurring before ...
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