Millers National Ins. Co. v. Iowa Kemper Mutual Ins. Co.
| Decision Date | 25 March 1969 |
| Docket Number | No. 19265.,19265. |
| Citation | 408 F.2d 534 |
| Parties | MILLERS NATIONAL INSURANCE COMPANY et al., Appellants, v. IOWA KEMPER MUTUAL INSURANCE COMPANY, Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
L. R. Voigts, Des Moines, Iowa, for appellants, D. J. Goode, Des Moines, Iowa, on the briefs.
Herschel G. Langdon, Des Moines, Iowa, for appellee, David W. Belin, Des Moines, Iowa, on the brief.
Before VAN OOSTERHOUT, Chief Judge, and MEHAFFY and HEANEY, Circuit Judges.
VAN OOSTERHOUT, Chief Judge.
This is an appeal by defendants from a declaratory judgment determining plaintiff Iowa Kemper Mutual Insurance Company (Iowa Kemper) is a member of the Association of Mill and Elevator Mutual Insurance Companies (Association). Defendant Association is a voluntary unincorporated association writing and handling certain large scale insurance and other matters for its members under an elaborate written agreement entered into by its members. Provision is made for membership participation in profits and losses and for voluntary and involuntary termination of membership.
The eight named defendant mutual insurance corporations are members of Association. Mill Owners Mutual Insurance Company (Mill Owners) was the ninth member of the Association at least until January 1, 1966.
Jurisdiction, based upon diversity of citizenship, is established.
Defendants1 filed answer and motion for judgment on the pleadings which was treated as a motion for summary judgment. The motion raised the issue that Mill Owners had ceased to exist by reason of its consolidation with Iowa Hardware, effective on or about January 1, 1966, and that Iowa Kemper as the successor corporation obtained no right to membership in Association under the governing articles of association.
Iowa Kemper filed a resistance to defendants' motion for judgment on the pleadings and moved for a summary judgment in its favor, submitting therewith a number of supporting affidavits and documents. Defendants filed a resistance to plaintiff's motion, supported by various documents, and at the hearing each party introduced portions of a deposition previously taken.
All parties contended the controversy should be decided on the basis of the record before the court and no assertion was made in the trial court or here that the case was not ripe for determination by summary judgment on the record made.
It is undisputed that Mill Owners and Iowa Hardware were united in one corporation. Defendants contend such unification was accomplished by consolidation in the strict and legal sense, and that Iowa Kemper is a new corporation which received the assets and assumed the liabilities of the two previously existing corporations, and that as a consequence Mill Owners and Iowa Hardware ceased to exist as corporate entities. Iowa Kemper contends that the unification of the two companies was accomplished by merger and that Mill Owners is the surviving corporation.
Upon the crucial issue of whether the unification occurred as the result of a merger or a technical consolidation, the court determined, "It is the view of the Court that upon full consideration of the record herein it has not been established that a consolidation was effected so as to terminate the membership of Mill Owners and its successor, Iowa Kemper, in the Association." Such determination is somewhat weakened by the language immediately preceding it, reading:
Upon the record before us, the issue of whether the transaction resulting in the unification would fall within the technical classification of a consolidation or a merger turns upon the interpretation of § 521.12 of the Iowa Code and the interpretation of the agreements entered into between the corporations and of the official certificates issued. It would appear that the interpretation of the statute and the various instruments presents questions of law for determination by the court rather than fact issues.
We agree with defendants' contention that there can be no common law merger or consolidation of corporations and that statutory authority is a pre-requisite to either a consolidation or a merger of corporations. Rath v. Rath Packing Co., 257 Iowa 1277, 136 N.W.2d 410, 415; 19 Am.Jur.2d, Corporations, § 1494; 19 C.J.S. Corporations § 1607. The parties agree that the only statutory provision for unification of the mutual insurance companies here involved is found in § 521.12 of the Iowa Code which reads:
"When any company or companies not named in section 521.2 desire to consolidate or reinsure, it shall only be necessary for such company or companies to submit the plan of consolidation or reinsurance with any other information that may be required, to the commissioner of insurance and the attorney general and have the same by them approved."
It is agreed that the unification was accomplished under the section just cited. The plan was approved by both the Commissioner of Insurance and the Attorney General. The controversy centers on whether unification was accomplished by consolidation or merger.
Section 521.12 provides for corporation consolidation but makes no specific provision for merger. Courts and text writers have frequently used the term "consolidation" in a broad sense to include transactions which are technically mergers. See Irving Trust Co. v. United States, 30 F.Supp. 696, 699, 90 Ct.Cl. 310; 19 Am.Jur.2d, Corporations, §§ 1491-1492. Defendants do not dispute that the word "consolidation" has been used frequently to encompass both a technical consolidation and a merger.
Section 521.12 was enacted in 1904. It contains no definition of consolidation. Section 491.101, a part of the chapter relating to business corporations, which was enacted in 1947 accurately sets out the technical distinctions between a merger and a consolidation as follows:
State ex rel. v. American Bonding & Casualty Co., 213 Iowa 200, 238 N.W. 726, involves a consolidation of an Iowa mutual insurance company with an Illinois insurance company. The court approved a finding by the referee that the new corporation was a continuation of the American Bonding & Casualty Co. which would appear to categorize the transaction as a merger. Section 521.12 is cited as authority for the unification.
It is our view that the Iowa court would construe the word "consolidation" contained in § 521.12, enacted over sixty years ago, in its broad sense so as to include a merger. Consequently, we hold that the statute authorizes a merger as well as a technical consolidation.
The issue then arises as to whether the parties by their contracts and actions have effected a merger. We hold that a merger was consummated.
If the trial court held as we believe it did that the transaction resulted in a merger with Mill Owners the surviving corporation, such determination finds ample support in the record. If the trial court made no definite finding on the issue of merger, it is our view that the record establishes a merger as a matter of law. The resolution of the issue turns upon written agreements of the parties and the record certificates issued by the Commissioner of Insurance and the Secretary of State. Each party moved for summary disposition of the case and no one now asserts that any dispute exists as to any material fact. The consolidation approved by the directors and policy holders of each company, as well as by the Attorney General and the Commissioner of Insurance as required by § 521.12, reads:
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Iowa Ass'n of the Blind v. Nemmers, 2-69030
...the merger takes place. Iowa law does not permit a merger without statutory authority. See Millers National Insurance Co. v. Iowa Kemper Mutual Insurance Co., 408 F.2d 534, 536 (8th Cir.1969) (Iowa Code chapter 521 provides for corporation consolidation but makes no specific provision for m......