O'Malley v. Continental Life Ins. Co.

• Decision Date: 19 November 1938
• Parties: R. Emmet O'Malley, Superintendent of the Insurance Department of the State, Appellant, v. Continental Life Insurance Company, Defendant, Frank Pace, Intervener-Respondent
• Court: Missouri Supreme Court

121 S.W.2d 850

343 Mo. 410

R. Emmet O'Malley, Superintendent of the Insurance Department of the State, Appellant, v. Continental Life Insurance Company, Defendant, Frank Pace, Intervener-Respondent

Supreme Court of Missouri

November 19, 1938

Reported at 343 Mo. 410 at 412.

Original Opinion of November 19, 1938, Reported at 343 Mo. 410.

OPINION

Hyde C.

On Motion for Rehearing.

The motion filed herein states:

"There should be a rehearing of this case because:

"(a) The maladministration of Mr. Mays alone would properly and probably have been met by his removal;

"(b) His misconduct did not have any tendency to show the company to be insolvent, or to show that its contrary contention was advanced mala fide;

"(c) Indignation, howsoever well founded, at the things he had done, should not serve to obscure the real issue, which was and is whether the defense of the action which he caused to be made was based on an honest belief that the company was solvent; and

"(d) Finally, the finding of the trial judge, who heard both the original trial and these applications, on that precise issue should be given the weight that settled rules of decision demand."

We did not hold in this case, or in the Rassieur case, No. 34921 343 Mo. 382, 121 S.W.2d 834, decided concurrently herewith in which we stated the facts applicable to both cases, that a preferred allowance must be refused for the defense of the dissolution suit merely because Mays was guilty of misconduct which was ground for his removal. Neither did we hold that such allowance must be denied merely because the court found that the company was actually insolvent. (The trial court did so find and so do we.) What we did hold was not only that it was insolvent but also that no one, knowing everything that Mays and his directors knew about the Insurance Company and what they had done with it and to it, could have had reasonable grounds to believe that it was solvent. We reached this conclusion because we found that there was no reasonable basis for belief that anything but a reorganization with actual new cash invested could have saved the Insurance Company, or either of the banks interlocked with it, from liquidation and dissolution, and that Mays and his directors knew they did not have this necessary money; and also because we further found that there was no reasonable grounds for belief that they could get it, having already sucked dry...