Minot Special School District Number One, a Municipal Corporation v. Olsness

• Decision Date: 17 February 1926
• Citation: 208 N.W. 968,53 N.D. 683
• Court: North Dakota Supreme Court

208 N.W. 968

53 N.D. 683

MINOT SPECIAL SCHOOL DISTRICT NUMBER ONE, a Municipal Corporation, and Peter Fugelso, S. J. LaDue, L. H. Piper, Albert Lowe, and H. E. Byorum of the City of Minot, in the County of Ward and State of North Dakota, Individually and as the Board of Education of said School District, Appellants, v. S. A. OLSNESS, as Commissioner of Insurance of the State of North Dakota, Respondent

Supreme Court of North Dakota

February 17, 1926

From a judgment of the District Court of Burleigh County, Jansonius J., plaintiffs appeal.

Affirmed.

L. J Palda, Jr., C. D. Aaker, and C. E. Brace, for appellants.

George F. Shafer, Attorney General, and John Thorpe, Assistant Attorney General, for respondent.

CHRISTIANSON Ch. J. JOHNSON, BIRDZELL, NUESSLE, and BURKE, JJ., concur.

OPINION

CHRISTIANSON, Ch. J.

This is a proceeding to prohibit and enjoin the commissioner of insurance of this state from enforcing the State Fire and Tornado Fund Law (chapter 159, Laws, 1919, as amended by chapter 154, Laws 1925) against the plaintiff school district. Plaintiffs base their right of action solely upon the ground that the State Fire and Tornado Fund Law is unconstitutional. The trial court dismissed the proceeding and the plaintiffs have appealed.

Section 1 of the act reads: "On and after August 1st, 1919, no officer or agent of this State and no person or persons having charge of any public buildings or property of the State shall pay out any public moneys or funds on account of any insurance against loss by fire or tornado or shall in any manner contract for or incur any indebtedness against the State on account of any such insurance upon any of the public buildings, furniture or fixtures or property of any kind whatever belonging to the State except in the manner hereafter provided."

Section 2 requires the various state officers to make reports to the insurance commissioner of state buildings and property and the insurable value thereof.

Section 3 provides that on or between July 1st and August 1st 1919, and annually thereafter, the commissioner of insurance shall provide for the insurance in the state fire and tornado fund of all state property subject to destruction by fire or tornado for an amount not to exceed 90 per cent of the actual value of the property, as such value is determined by the commissioner and the officer or board having control of such property; that the commissioner shall fix the rate of premium which in his opinion is the average rate charged by responsible fire and tornado companies doing business in this state, and issuing policies on property of similar kinds and exposed to risk of fire and tornado in like manner; that the commissioner shall ascertain the amount of insurance on all such property and provide for such additional insurance in the state fire and tornado fund as may be necessary.

Section 4 provides that the commissioner of insurance shall certify to the state auditor the amount of insurance carried upon property belonging to the state, together with a statement of the amount of premium, and requires the state auditor to issue a warrant for the amount of the premium.

Section 5 provides that on August 1st of each year, each county auditor, city auditor, town, village and school district clerk, as the case may be, "shall report to the commissioner of insurance, the sound, depreciated or insurable value of each building or risk and contents therein, and such other information as may be required by the Commissioner of Insurance on forms provided by him."

Section 6 reads as follows: "From and after August 1st, 1919, the insurance on all property of any such county, city, town, village or school district, shall be provided for by the commissioner in the manner provided for the insurance of property of the state except that the amount of insurance and the premiums thereon shall be certified by the commissioner to the clerk or auditor of the town, village, city, county or school district. Upon receipt of such certification, the amount of premium so certified shall, on or before sixty days from the date of such certification, be remitted by the proper officer to the commissioner of insurance to be by him deposited with the state treasurer to the credit of the state fire and tornado fund and which shall be used only for the purposes provided for in this act. In case of failure to pay the same within sixty days from the date of such certification, the town, village, city, county or school district official or officials responsible therefor shall become jointly and severally, as the case may be, personally liable for the same, in an amount equal to double the premium due from such town, village, city, county or school district, and in case of such default it shall be the duty of the state insurance commissioner to notify the attorney general, who shall bring an action in the courts of this state, or shall direct the state's attorney of the county in which such delinquency occurs to bring such action, to recover the amount hereinbefore provided for."

Section 7 provides that the commissioner of insurance shall not cause any insurance policies to be cancelled "which are in effect on August 1st, 1919, but shall provide for the insurance in the state fire and tornado fund of buildings and property as hereinbefore stated, increasing the amount of insurance in the state fire and tornado fund at such times as the policies existing on above date may from time to time require so as to maintain at all times the amount of insurance required by the provisions of this act."

Section 8 provides for the adjustment and payment of losses and it is provided: "If at any time sufficient funds are not available in the state fire and tornado fund to cover any loss or damage sustained by fire or tornado, the person or board under whose supervision or charge such building or property might be, shall submit to the commissioner of insurance a claim for the amount of the adjustment of loss or damage, made by him, which claim, when approved by the commissioner of insurance, shall be by him submitted to the state auditing board, and if the state auditing board shall approve the same it shall make it payable ninety days after the end of the next session of the legislature, it shall bear interest at 5 per cent per annum, and the state auditor shall, on the ninetieth day succeeding the last day of the next session of the legislature, draw a warrant upon the state treasurer, against any fund appropriated by such legislature for the purpose, payable to such person or board, as trustee for the State or political subdivision which they represent, in the amount of such claim with interest. Thereafter, whenever the State Fire and Tornado Fund shall have acquired a surplus sufficient to pay any or all of the claims paid out of such special funds of the state, the commissioner of insurance shall draw his warrants upon the state treasurer against the state fire and tornado fund, and deliver same to the state treasurer, and the amount of said warrants shall be credited to the general fund of the state."

Section 9 relates to the readjustment of rates and provides that when the state fire and tornado fund shall equal 10 per cent of the risks carried, "it shall be the duty of the commissioner of insurance to so adjust the premium to be paid as to reduce the amount to the lowest possible amount consistent with maintaining said Fire and Tornado Fund at said per cent."

Section 10 provides for the arbitration of the amount of loss, when there is a dispute in regard thereto, and provides the procedure where arbitration is had.

Section 11 authorizes the commissioner of insurance to employ the necessary help and places a limitation upon the amount to be expended for this purpose.

Section 12 provides that the provisions of the act shall not apply to property of any town or school district located outside of the incorporated limits of any city or village unless a written application for such insurance is made and the same is approved by the commissioner of insurance.

Section 13 relates to the classification and limitation of risks. In general the section classifies buildings as regards their fire-proof character and limits the amount of insurance which may be carried by the state fire and tornado fund upon any one risk within each of the classes so enumerated. And it empowers the commissioner of insurance to place re-insurance on any risk with some reliable fire and tornado insurance company or companies for the amount of insurance required to be placed upon such risk in excess of the limit authorized to be carried in the state fire and tornado fund.

Section 14 empowers the commissioner of insurance to collect the entire premium for insurance from the State and the various political subdivisions thereof, and provides that he shall deposit the same in the state fire and tornado fund and "draw his warrant upon the State Treasurer against the state fire and tornado fund for the amount of premium due upon that portion of the insurance placed with reliable fire and tornado insurance company or companies."

Section 15 repeals all acts and parts of acts in conflict with the act in question.

Section 16 declares an emergency to exist and provides that the act shall take effect immediately upon its passage and approval.

Appellants assert that the act in question is unconstitutional for the following reasons:

1. That it deprives plaintiffs of the right of freedom of contract, in contravention of the 14th Amendment to the Constitution of the United States, and § 13 of article 1 of the Constitution of North Dakota.

2. That it violates the right of local self-government impliedly guaranteed to the plaintiff school district by the...