Lucas v. Manufacturing Lumbermen's Underwriters

• Decision Date: 28 July 1942
• Docket Number: 37666
• Citation: 166 S.W.2d 537
• Parties: LUCAS, Superintendent of Insurance Department, v. MANUFACTURING LUMBERMEN'S UNDERWRITERS et al
• Court: Missouri Supreme Court

166 S.W.2d 537

LUCAS, Superintendent of Insurance Department, v. MANUFACTURING LUMBERMEN'S UNDERWRITERS et al

No. 37666

Supreme Court of Missouri, Second Division

July 28, 1942

Rehearing Denied December 28, 1942.

I. J Ringolsky, Harry L. Jacobs, and William G. Boatright, all of Kansas City, for appellants.

Clark Boggs, Peterson & Becker, Howard B. Lang, Jr., and William L Nelson, Jr., all of Columbia, for respondent.

OPINION

WESTHUES, Commissioner.

Respondent's attorneys in their brief have made a statement of this case which we deem adequate for a general understanding of the issues involved. It reads:

'This is an appeal by James P. Aylward, George V. Aylward and Terence M. O'Brien from an order of the Circuit Court of Jackson County, Missouri, allowing to them the sum of twenty thousand dollars ($ 20,000.00) as full compensation for legal services rendered by them to R. E. O'Malley, Superintendent of Insurance, as agent in charge of Manufacturing Lumbermen's Underwriters, a reciprocal insurance exchange, in liquidation. The allowance of twenty thousand dollars ($ 20,000.00) was made to the appellants as fees for their services rendered in representing the Commissioner of Insurance in the matter of the liquidation of Manufacturing Lumbermen's Underwriters, a reciprocal insurance exchange, over a period from November 12, 1936, to October 20, 1937. George A. S. Robertson qualified and assumed the duties of Insurance Commissioner on October 20, 1937, and O'Malley's connection with the affairs of the department terminated on that date, although Robertson was not substituted as a party in the suit until November 8, 1937.

'The record shows that O'Malley employed appellants to represent him with respect to the matter of Manufacturing Lumbermen's Underwriters. On November 12, 1936, appellants filed a petition praying that the Superintendent of Insurance be temporarily placed in charge of the business of the defendant insurance exchange. An order placing the Superintendent of Insurance in charge was made upon the same day. The insurance exchange remained in the hands of the Superintendent of Insurance under the temporary order of November 12, 1936, until April 1, 1937, when a final order vesting the assets of the exchange in the Commissioner was made. On December 1, 1936, a voluntary petition in bankruptcy was filed in the federal court in which there was an immediate ex parte adjudication and appointment of a receiver. On December 2, 1936, upon the recommendation of appellants, the Superintendent of Insurance employed Messrs. Ringolsky, Boatright and Jacobs, attorneys specializing in bankruptcy practice, to assist appellants in resisting the bankruptcy proceedings and in procuring a dissolution of the orders made. This action was successfully resisted. Thereafter, on February 27, 1937, an involuntary petition in bankruptcy was filed. Messrs. Ringolsky, Boatright and Jacobs continued their services to the Superintendent of Insurance in this action and it was dismissed on July 7, 1937. Both firms of attorneys participated in those actions.

'The matters with reference to these two bankruptcy proceedings were fully presented to this Court in the case of George A. S. Robertson, Superintendent of Insurance Department of State of Missouri, Respondent, v. Manufacturing Lumbermen's Underwriters, a reciprocal insurance exchange et al., Defendants, I. J. Ringolsky, William G. Boatright and Harry L. Jacobs, Appellants, decided by this Court at the September Term, 1940, and reported in, 346 Mo. 1103, 145 S.W.2d 134, and therefore will not be restated here.

'After the institution of the action by the Superintendent of Insurance to take charge of the exchange, Rankin-Benedict Underwriting Company filed an application for change of venue. Before this application was passed upon Vincent B. Coates filed a motion to be substituted as party defendant in place of Rankin-Benedict Underwriting Company. The Circuit Court then refused to pass upon the application for change of venue and mandamus was sought by the Rankin-Benedict Underwriting Company in this court. Thereafter, on March 2, 1937, the appellants filed an amended petition seeking the dissolution of the insurance exchange, and on March 3, 1937, on behalf of the Superintendent prepared and filed an application for change of venue. A second mandamus action was filed in order to coerce the sustaining of this application. On March 31, 1937, a hearing was had on this amended petition which was completed on April 1, 1937, and a final order made placing the company in the hands of the Superintendent of Insurance. On August 14, 1937, a motion was filed to liquidate the insurance exchange which was sustained and the order of liquidation made on August 16, 1937.

'On October 19, 1937, O'Malley ceased to be Superintendent of Insurance and George A. S. Robertson qualified and assumed the duties of Superintendent of Insurance and on November 8, 1937, was substituted as party plaintiff in the action. At the time that Robertson became Superintendent of Insurance Mr. Julian O'Malley, assistant counsel for the insurance department, requested appellants to continue their employment and to represent Superintendent Robertson. Appellants, learning that there would probably be a conflict between Superintendent Robertson and O'Malley, declined the employment, stating that they would have to continue to represent O'Malley. On that date appellants' employment by the Superintendent of Insurance terminated.

'At that time the appeal pending upon the dismissal of the involuntary bankruptcy proceeding had not been briefed or argued. No meeting of general creditors had been held. No actions had been instituted to make collections of any accounts due the exchange.

'There had been no final agreement or adjudication of the respective rights of the Canadian and American creditors. Appellants had gone to Canada with reference to three 'winding up proceedings' filed in Canada and after investigation and consultation with the Canadian attorneys had abandoned the resisting of the winding up order. The Canadian liquidator had just been appointed when Robertson became Superintendent of Insurance and the entry made with reference to the actual liquidation of the Canadian affairs was still pending. The actual dissolution and distribution of the company, assembling of its assets, disposition of all disputed claims, entering of all money judgments and the distribution of dividends, payments of loss claims and the return of premium claims was accomplished after the termination of appellants' employment.

'In addition to the services rendered in the bankruptcy actions and the preparation of the pleadings, orders and appearances in court made on behalf of Superintendent O'Malley hereinbefore referred to, appellants in their general representation of him consulted and advised with him on legal matters presented to them by him.

'After the termination of O'Malley's appointment as Superintendent of Insurance they represented him in the preparation and hearing upon his final accounting. The final account filed by O'Malley was found by the Court to be inadequate and he was ordered to file an amended and full account of his administration of the affairs of the insurance exchange. The Circuit Court surcharged O'Malley $ 85,264.44 upon his final accounting, which sum the Court found had been spent by O'Malley without authority and unlawfully. Judgment was entered for said sum against O'Malley and the surety on his bond who, upon application, had become a party to the suit. An appeal from this judgment was taken, and is pending in this court, 163 S.W.2d 750.

'On October 2, 1937, and prior to the appointment of Robertson as Superintendent of Insurance, appellants and the firm of Messrs. Ringolsky, Boatright and Jacobs filed a joint motion for partial allowance of attorney's fees for services rendered in the bankruptcy action. The application was made for a partial allowance because the appeal from the dismissal of the involuntary bankruptcy proceedings had not been passed upon. This motion was not ruled upon until the 23rd of July 1938, after the...