Liberty Mutual Ins. Co. v. Jones, No. 36137.

• Court: United States State Supreme Court of Missouri
• Writing for the Court: Ellison
• Citation: 130 S.W.2d 945
• Docket Number: No. 36137.
• Decision Date: 05 July 1939
• Parties: LIBERTY MUTUAL INSURANCE COMPANY, a Corporation; AMERICAN MUTUAL LIABILITY INSURANCE COMPANY, a Corporation; LUMBERMEN'S MUTUAL CASUALTY COMPANY, a Corporation; HARDWARE MUTUAL CASUALTY COMPANY, a Corporation; EMPLOYERS' MUTUAL INDEMNITY CORPORATION, a Corporation; PAUL C. KINSEY, ARNOLD M. STEPHENSON, FRANCIS S. MULHOLLAND, JOHN M. SIEBERT and GLEN E. KOHL, Appellants, v. E.W. JONES, General Chairman of Bar Committees of the State, and JOHN C. GROVER, GROVER C. SIBLEY, FIELDING P. STAPLETON and H.E. SHEPHERD, Members of the Advisory Committee to the General Chairman of Bar Committees of the State.

130 S.W.2d 945 LIBERTY MUTUAL INSURANCE COMPANY, a Corporation; AMERICAN MUTUAL LIABILITY INSURANCE COMPANY, a Corporation; LUMBERMEN'S MUTUAL CASUALTY COMPANY, a Corporation; HARDWARE MUTUAL CASUALTY COMPANY, a Corporation; EMPLOYERS' MUTUAL INDEMNITY CORPORATION, a Corporation; PAUL C. KINSEY, ARNOLD M. STEPHENSON, FRANCIS S. MULHOLLAND, JOHN M. SIEBERT and GLEN E. KOHL, Appellants,
v.
E.W. JONES, General Chairman of Bar Committees of the State, and JOHN C. GROVER, GROVER C. SIBLEY, FIELDING P. STAPLETON and H.E. SHEPHERD, Members of the Advisory Committee to the General Chairman of Bar Committees of the State. No. 36137. Supreme Court of Missouri. Court en Banc, July 5, 1939.

[130 S.W.2d 947]

Appeal from Boone Circuit Court. — Hon. W.M. Dinwiddie, Presiding Judge, and Hon. Eldridge M. Dearing and Hon. J.W. McAfee, Associate Judges.

JUDGMENT OF TRIAL COURT REVERSED; PRAYER OF CROSS-BILL DENIED; INJUNCTION GRANTED BY TRIAL COURT DISSOLVED; RIGHTS OF APPELLANTS ARE DECREED AS STATED.

Hogsett, Murray, Trippe & Depping for appellants;

[130 S.W.2d 948]

Woodward & Evans and Mosman, Rogers, Bell & Buzard for Liberty Mutual Insurance Company; Leahy, Walther, Hecker & Ely for American Mutual Liability Insurance Company; Stringfellow & Garvey for Lumbermen's Mutual Casualty Company; Grover C. James, for Hardware Mutual Casualty Company; James R. Sullivan for Employers' Mutual Indemnity Company and Employers' Mutual Liability Insurance Company.

(1) Uncontroverted legal propositions which have a bearing upon the issues for decision here. (a) The plaintiff companies have the express power and authority to transact casualty insurance business in the State of Missouri, and the implied power to do all things necessarily incident to that business. Secs. 5844, 5854, R.S. 1929; Breeden v. Frankfort Marine, Acc. & Plate Glass Ins. Co., 220 Mo. 327; Heman Const. Co. v. St. Louis, 256 Mo. 337; Gould v. Brock, 69 Atl. 1122; Rollins v. Bayview Auto Parts Co., 132 N.E. 179; Attleboro Mfg. Co. v. Frankford Ins. Co., 240 Fed. 581; Employers' Liability Assur. Corp. v. Kelly, 195 Ill. App. 634; Trenton Passenger Ry. Co. v. Guarantor's Lia. Indemnity Co., 37 Atl. 609; In re Aldrich, 86 Atl. 801; Aetna Life Ins. Co. v. Weck, 173 S.W. 317; 11 C.J., pp. 250-251; McCombs v. Fid. & Cas. Co., 89 S.W. (2d) 114; State ex inf. Gentry v. Long-Bell Lbr. Co., 12 S.W. (2d) 82; State ex inf. Harvey v. Mo. Athletic Club, 261 Mo. 599; State ex rel. Barrett v. First Natl. Bank, 297 Mo. 403; Sylvester Realty Co. v. Amer. Surety Co., 238 S.W. 498. (b) The investigation and settlement of claims arising under casualty insurance policies, the taking of releases from claimants, and all other activities of plaintiff companies' employees disclosed by the evidence, are necessary incidents of the plaintiff companies' casualty insurance business. Childs v. Smeltzer, 315 Pa. 9, 171 Atl. 885; State ex rel. v. Barlow, 268 N.W. 96; Cain v. Merchant's Natl. Bank & Trust Co., 268 N.W. 723; People v. Title Guar. & Trust Co., 227 N.Y. 366, 125 N.E. 667; Wollitzer v. Natl. Title Guar. Co., 266 N.Y. Supp. 188; People v. Title Guar. & Trust Co., 181 N.Y. Supp. 53. (c) The plaintiff companies, being corporations, must necessarily transact their casualty insurance business and perform all acts incident thereto through human agency. State ex rel. v. Barlow, 268 N.W. 96; State ex rel. v. Mo. Pac. Ry. Co., 149 Mo. 111; Buffalo Trust Co. v. Producers Exchange, 224 Mo. App. 205; Travers v. Kansas Pacific Ry., 63 Mo. 424; People ex rel. v. Denver Clearing House, 59 Pac. (2d) 469; Sellent-Repent v. Queens Borough Gas Co., 290 N.Y. Supp. 889; Sealy Oil Mill & Mfg. Co. v. Bishop, 235 S.W. 853; Kull v. Dierks Lbr. Co., 292 S.W. 696; Ullman v. Adler, 196 Pac. 159; American Soda Fountain Co. v. Stolzenbach, 75 N.J. Law 721, 68 Atl. 1078; Central Iron & Coal Co. v. Wright, 101 So. 824; New Jersey Photo Engraving Co. v. Schonert, 122 Atl. 307. (d) Every claim covered by a casualty insurance policy is a claim directly against the casualty insurer itself. Secs. 3325, 5898, R.S. 1929. (e) The Bar Committee is claiming a monopoly for lawyers in fields of activity long recognized hertofore as within the province of laymen. This claim of monopoly runs counter to the fundamental rule that monopolies are abhorrent to the law. State ex rel. McAllister v. Power Co., 283 Mo. 143; Standard Oil Co. v. United States, 221 U.S. 1; Monopolies Case, 11 Coke, 85, 77 Eng. Rep. 1260; 41 C.J. 85; Stein v. Bienville Water Supply, 34 Fed. 145, affirmed 141 U.S. 67; Omaha Horse Railroad Co. v. Cable Tramway Co., 30 Fed. 324; 41 C.J. 97. (2) The scope and far reaching effect of the circuit court's judgment. If the circuit court's judgment should be sustained, a casualty company in Missouri could not handle claims of any kind, no matter how simple the work of handling them might be, except through lawyers. The field of operation left open to laymen by the circuit court's judgment is so restricted as to make it utterly impossible as a practical matter to operate a claim department without lawyers filling every position. The principles upon which the decision of the lower court is based would logically and necessarily apply to every person, firm, association and corporation carrying on business through employees; and the scope of the application of these principles would therefore be practically coextensive with all business activity. (3) The acts of the lay employees of plaintiff companies in the handling of claims are not acts performed in a representative capacity for clients, but are acts performed by employees as a routine incident of their employers' business; and such acts therefore do not constitute the practice of law or the doing of law business. In respect to each and every activity here in issue the lay employees of plaintiff companies do not act in a representative capacity within the meaning of the statutory definition of the "practice of law" and "law business," and they are not engaged in the business of acting in a representative capacity for clients within this court's definition of the "practice of law;" and they act merely as employees in the performance of routine duties incident to their employers' business; and therefore none of said activities here in issue constitutes the "practice of law" or the doing of "law business." Clark v. Austin, 340 Mo. 477, 101 S.W. (2d) 982; State ex rel. McKittrick v. Dudley & Co., 340 Mo. 858, 102 S.W. (2d) 899; Sec. 11692, R.S. 1929. Before a person can be held to be engaged in the practice of law or law business he must be engaged in the business of performing the acts specified in the statute (i.e., advocacy, drawing contracts, giving legal advice and the like) in a representative capacity for clients. Clark v. Austin, 340 Mo. 478, 101 S.W. (2d) 982; State ex rel. McKittrick v. Dudley & Co., 340 Mo. 858, 102 S.W. (2d) 899. The lay employee of the insurer does not act for the insurer or insured "in a representative capacity," within either the statutory or judicial definition of the "practice of law." The insurer does not act for the insured "in a representative capacity," within either the statutory or judicial definition of the practice of law. Neither the insurer nor the insured can reasonably be said to be a "client" of the adjuster. There is a clear distinction between the relationship of insurer and insured, and the relationship of attorney and client; and the insured cannot reasonably be said to be a "client" of the insurer. The provisions of Section 11693, Revised Statutes 1929, preclude the notion that the insured is a "client" of the insurer. In determining what is the "practice of law" the courts must look to custom and usage, and by long custom and usage the insurer's lay employees have not been regarded as engaged in the "practice of law" or "law business." Donnell v. Wright, 199 Mo. 317, 97 S.W. 928; Venable v. Wab. Railroad Co., 112 Mo. 125; Spencer v. Bruner, 126 Mo. App. 102; State ex rel. Gass v. Gordon, 266 Mo. 412; Westerman v. Supreme Lodge, 196 Mo. 709; Ross v. K.C., St. J. & Council Bluffs Railroad Co., 111 Mo. 27; State ex rel. Hanlon v. Maplewood, 99 S.W. (2d) 143.

Mark Eagleton, Clif Langsdale, Roberts P. Elam, Harry Gershenson, Chet D. Vance, Staunton E. Boudreau, Frank Brockus, Charles V. Garnett, W.F. Woodruff, Roy D. Williams, Stepen K. Owen, J.R. Baker, Ben Neale, Franklin E. Reagan and William H. Becker for respondents; Clark, Boggs, Peterson & Becker and E.W. Jones of counsel.

(1) Plaintiffs' petition for declaratory judgment was properly dismissed because: (a) There is no agreement that the plaintiffs shall successfully maintain their petition for declaratory judgment. Smith v. Ry. Co., 151 Mo. 391, 52 S.W. 402, 48 L.R.A. 368; 53 C.J. 343; Fleischauer v. Dittenhoefer, 49 N.Y. Super. 311; Hammond v. Cline, 170 Ind. 452, 84 N.E. 827; Goodnough v. Gatch, 37 Ore. 5, 60 Pac. 382; Art. VI, Sec. 2, Mo. Const. (b) Jurisdiction to entertain an action for declaratory judgment cannot be conferred by consent. Garden City News v. Hurst, 129 Kan. 365, 282 Pac. 720; Taylor v. Haverford Twp., 299 Pa. 402, 149 Atl. 639; Heller v. Shapiro, 208 Wis. 310, 242 N.W. 174, 87 A.L.R. 1201. (c) Propriety of the action for declaratory judgment is raised by the answer. (d) Rendition of a declaratory judgment rests in the sound discretion of the court. Kariher's Petition, 284 Pa. 455, 131 Atl. 265; 12 A.L.R. 52, 66; 19 A.L.R. 1124, 1127; 50 A.L.R. 42, 45; 68 A.L.R. 110, 116; 87 A.L.R. 1205, 1212; Miller v. Currie, 208; Wis. 199, 242 N.W. 570; Borchard, Declaratory Judgments (1934), 99-114. (e) The question of jurisdiction or availability of the remedy in an action for declaratory judgment may be raised by the court. Taylor v. Haverford Twp., 299 Pa. 402, 149 Atl. 639; Heller v. Schapiro, 208 Wis. 310, 242 N.W. 174, 87 A.L.R. 1201; Garden City News v. Hurst, 129 Kan. 365, 282 Pac. 720. (f) The Attorney General is a necessary party and is...