Memorial Trusts, Inc. v. Beery
| Decision Date | 14 November 1960 |
| Docket Number | No. 19360,19360 |
| Citation | 356 P.2d 884,144 Colo. 448 |
| Parties | MEMORIAL TRUSTS, INC., Plaintiff in Error, v. Sam N. BEERY, Commissioner of Insurance of the State of Colorado, Defendant in Error. |
| Court | Colorado Supreme Court |
Rothgerber, Appel & Powers, Ira C. Rothgerber, Jr., William P. Johnson, Denver, for plaintiff in error.
Duke W. Dunbar, Atty. Gen., Frank E. Hickey, Deputy Atty. Gen., John W. Patterson, Asst. Atty. Gen., Robert G. Pierce, Asst. Atty. Gen., for defendant in error.
Tull, Hays & Thompson, Denver, amici curiae.
Plaintiff in error, Memorial Trusts, Inc., to whom we will refer as Memorial, commenced this declaratory judgment action against defendant in error, hereinafter referred to as the commissioner. The complaint sought a decree invalidating, upon constitutional grounds, C.R.S.1953, 72-17-1 et seq., and an adjudication that a rule adopted by the commissioner purporting to regulate the business of Memorial is of no legal force or effect.
The commissioner joined in the prayer for declaratory judgment; alleged that the statute was constitutional and that the regulation was a valid exercise of rule-making power by the commissioner conferred upon him by statute. He further sought an injunction and 'liquidation' against Memorial under the provisions of C.R.S.1953, 72-17-6.
The trial court held the statute to be constitutional; upheld the regulation in dispute; found that Memorial had been violating the act and granted the injunctive relief prayed for by the commissioner.
For a full comprehension of the questions presented by the record in this case, one should read the statute in its entirety (C.R.S.1953, 72-17-1 to 72-17-7). Generally it deals with the subject of prearranged funerals or so-called 'Burial Insurance.' Pertinent provisions of the act to which we direct attention are the following:
'The insurance department of the state of Colorado may supervise, examine and audit the funds derived by any person, partnership, association, company or corporation, either residing in or doing business within this state, from prepaid or prearranged funeral arrangements or contracts * * *.
'* * * All funds received from contracts or arrangements covered by this article shall be invested, until properly expendable, in securities or trust companies approved by the insurance department.
* * *
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'* * * Any and all funds received and invested as stipulated in this article, shall be as a trust and shall not be liable to attachment * * * to pay any debt or liability of the person * * * or corporation issuing such * * * contract.
'The insurance commissioner may promulgate such rules and regulations as may be necessary for the enforcement of the provisions of this article.'
Section 6 of the act generally provides for the granting of injunctive relief against those who do not obey the statute, and for 'liquidation' of assets. Violation of the act is made a misdemeanor and is punishable by fine or imprisonment, or both.
The commissioner, on July 28, 1958, placed in effect a regulation which was given the form of 'Bulletin No. 30' as follows:
'To: All mortuaries Holding Prepaid or Prearranged Funeral Contracts or Arrangements
'From: Sam N. Beery, Commissioner of Insurance
'Whereas, It has come to the attention of the Department of Insurance that certain irregularities are being proposed if not actually practiced in the handling of funds received from prepaid or prearranged funeral contracts or arrangements and
'Whereas, Article 17, Chapter 72 CRS 1953, provides that the funds derived from contracts or arrangements may be supervised by this office and
'Whereas, The aforesaid laws refer to such funds being a trust and
'Whereas, 72-17-4, C.R.S. 1953, provides that the Insurance Commissioner may promulgate such rules and regulations as may be necessary for the enforcement of the said Article 17, Chapter 72, CRS 1953, and 'Whereas, The Insurance Commissioner does believe the following regulations are needed in order to help accomplish the purposes enunciated by the laws aforesaid;
'Now, Therefore, it is hereby ordered:
'1. That all moneys received for prepaid or prearranged funeral arrangements or contracts be placed in trust for the benefit of contract holders and held separtate from all other assets until the funeral contemplated has been performed, or refund has been made in full of all moneys thus received.
'2. That a representative copy of all such contracts or arrangements, at all times, be kept available at the mortuary's regularly established place of business for inspection by the Insurance Commissioner or his duly authorized representative.
'3. That a representative copy of all trust instruments affecting such funds, at all times be kept available at the mortuary's established place of business for inspection by the Insurance Commissioner or his duly authorized representative.
'4. That trust assets received from such arrangements or contracts may be invested only in the type securities referred to in Chapter 72, CRS 1953, relating to investments of domestic insurance companies.
'5. That upon complaint of any interested person, and which is not answered to the satisfaction of the Commissioner of Insurance within thirty days of the date of mailing of notice thereof to such mortuary, an independent auditor may be forthwith dispatched, the cost of which will be paid by the mortuary as provided by law.
'6. That semi-annual reports are hereby required on forms prescribed by the Commissioner of Insurance in compliance with 72-17-5, CRS 1953, and must reflect all transactions as of June 30 and December 31 of each year and must be received by this office not later than thirty days after such dates. If there is nothing to report under any space provided by such reports, the word 'none' must be placed therein.
There is no disagreement in the evidence. It appears without dispute that Memorial is engaged in the business of entering into written agreements with various residents of Colorado, by which Memorial promises to arrange for Moore Mortuary in Denver to provide a casket selected by the contract purchaser and services incident to funerals, as set forth in the written contract. For the specified merchandise and specified services, the contract purchaser agrees to pay a certain price, not subject to escalation. The contract provides that 25 per cent of the purchase price is to be retained by Memorial as compensation for its sales, collection and administrative expenses. After the first 25 per cent of the purchase price is paid by the purchaser, the remaining 75 per cent is put in an irrevocable trust in the First National Bank of Denver, to be paid out...
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