Retail Store Emp. Union, Local 1001 Chartered By Retail Clerks Intern. Ass'n, AFL-CIO v. Washington Surveying and Rating Bureau, Washington Bureau
Decision Date | 23 December 1976 |
Docket Number | Nos. 44090,44091,AFL-CIO,s. 44090 |
Citation | 87 Wn.2d 887,558 P.2d 215 |
Parties | RETAIL STORE EMPLOYEES UNION, LOCAL 1001 CHARTERED BY RETAIL CLERKS INTERNATIONAL ASSOCIATION,, et al., Respondents, and Karl Herrman, Insurance Commissioner of the State of Washington, Respondent, v. WASHINGTON SURVEYING AND RATING BUREAU, WASHINGTON BUREAU, et al., Appellants. |
Court | Washington Supreme Court |
Clarke & Bovingdon, George H. Bovingdon, Seattle, for appellants.
Slade Gorton, Atty. Gen., Ernest M. Furnia, Asst. Atty. Gen., Olympia, James H. Webster, Durning, Smith & Brucker, Marvin Durning, Seattle, for respondents.
Defendants appeal a summary judgment ordering removal of the trustees holding all the stock of the Washington Bureau (a corporation) and appointing substitute trustees to manage the unincorporated and separate business of the Washington Surveying and Rating Bureau (Bureau). We reverse.
The defendant Bureau is an unincorporated insurance rating organization. Its present manager is defendant Robert Pederson. The Bureau rates geographical areas and individual structures for the purpose of filing proposed rates on behalf of insurance company subscribers to its services with the Insurance Commissioner for standard form fire insurance policies. 1 It is the only such rating organization licensed to operate in the state, and approximately 200 insurance companies subscribe to the Bureau's services.
The Washington Committee (Committee) is a group of representatives of the major insurance companies which subscribe to the Bureau. In 1926, J. K. Woolley, the owner and operator of the Bureau, agreed to sell the Bureau to the Committee. The purchase was made with the proceeds of assessments levied against the Bureau's subscribers.
The Washington Bureau (Corporation), a holding corporation, was also formed in 1926 by Fred G. Clarke and Joseph Oakland. Title to the assets of the Bureau was conveyed by the Committee to Clarke and Oakland for the benefit of the Bureau's subscribers. Clarke and Oakland conveyed these assets to the Corporation in full payment of its capital stock.
In 1944, the United States Supreme Court held that the antitrust laws apply to the business of insurance as interstate commerce. United States v. Soth-Eastern Underwriters Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944). This decision made it imperative to the insurance industry that rating bureaus, through which insurance companies pool their experience and set their rates in combination with other companies, be legalized. The alternative of an individual company pricing system was considered 'impossible' in view of the nature of the insurance business and its dependence upon past statistics for estimating future costs. W. Rodda, Fire and Property Insurance 539--40 (1956). The solution came from Congress in 1945 with the McCarran Act. 15 U.S.C. §§ 1011--15 (1970). Congress relied upon the holdiong in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943) ( ), and suspended until 1948 the application of the antitrust laws to the insurance business in order to give the states the opportunity to enact statutes regulating combinations of insurance companies for the purpose of setting rates.
Washington had long had a statute regulating rating bureaus. Laws of 1911, ch. 49, § 74, p. 210. This statute declared the business of conducting a rating bureau to be 'public service in character', and required each rating bureau to be conducted on a nonprofit basis and to make its services equally available to all insurance companies, agents, brokers and property owners.
In 1947, Washington enacted an entirely new regulatory act governing rating bureaus. RCW 48.19. This new statutory scheme is more comprehensive and detailed than its predecessor. For example, the prior statute made no requirement concerning how a rating bureau is to be organized. RCW 48.19.170(2) required the ownership of the bureau to be vested in trustees for all its subscribers under a trust agreement approved by the Commissioner.
To enable the Bureau to qualify for a license as a rating bureau under RCW 48.19, all shares of the stock of the Corporation were placed in trust by the Corporation's shareholders pursuant to a September 22, 1947 trust declaration for the use and benefit of the insurance company subscribers to the Bureau. The trust declaration named the trustees of the stock and provided a method for designating their sucessors but contained no specification of trust powers. This declaration of trust was approved by the then Insurance Commissioner on September 26, 1947. After intervening changes, the Corporation's stock is now held by three defendant trustees for all the insurance company subscribers, W. M. Hemion, George W. Clarke, and Fred G. Clarke, Jr.
The Retail Store Employees Union, Local 1001, and 15 individual members of the union brought suit on December 20, 1974, against the Bureau, its manager, the Corporation, the three trustees, and the Committee and its members. Named in the complaint but not served are the approximately 200 insurance company subscribers to the Bureau's services.
The complaint alleges defendants are in violation of RCW 48.19.170 and the declaration of trust, as follows: (1) the trustees permit the subscriber insurance companies to direct the affairs of the Bureau, thereby violating their obligation to see the Bureau is operated independently of any insurers except to the extent the insurers are subscribers to the Bureau; (2) the Committee has usurped the responsibilities of the trustees, and in fact directs the operations of the Bureau; (3) the manager of the Bureau takes directions from the Committee and not the trustees; and (4) the insurers maintain direct control over the Committee by selecting and directing its members, and thereby maintain direct control over the Bureau. The complaint also alleges that as a direct result of the conduct of defendants, the Bureau has failed to properly rate numerous buildings and structures within Washington, resulting in improperly high fire insurance premiums to the detriment of the plaintiffs. Plaintiffs prayed for removal of the trustees, appointment of independent trustees, the interim appointment of a receiver, and the enjoining of the other defendants from improperly directing the operations of the Bureau.
In September 1975, the Insurance Commissioner conducted a hearing concerning the Bureau. 2 Subsequently the Commissioner was permitted to intervene in this action, and his complaint makes allegations and seeks relief substantially identical to that sought by the other plaintiffs. 3 For convenience, references hereinafter to plaintiffs may be treated as including the Commissioner unless the context otherwise requires.
On November 17, 1975, plaintiffs successfully moved for summary judgment generally based on claims of violation of trust duties, conflict of interests and committee and subscriber illegal control of the Bureau. In its written order of summary judgment the trial court ordered defendants W. M. Hemion, George W. Clarke, and Fred G. Clarke, Jr., be removed as trustees of the Bureau and as officers and trustees of the Corporation. The judgment also orders the appointment of three new trustees and sets forth their duties as follows:
The Trustees are hereby empowered and directed to conduct the (Bureau) and (Corporation) pursuant to RCW 48.19.170(2) as a non-profit public service institution which shall not be connected with any insurer or group of insurers except to the extent that any such insurer may be a subscriber to its services. The Trustees are further authorized and empowered to do all things necessary and proper to the lawful operation of the Bureau.
The summary judgment was appealed by the Bureau, the Corporation, the removed trustees, and the manager of the Bureau. On motion to this court the judgment was stayed pending appeal. Plaintiffs moved to dismiss the appeal claiming the removed defendant trustees and the Bureau's manager were not 'aggrieved parties' (ROA I--14), having no direct, personal interest affected by the judgment, and because the Bureau had not authorized the appeal. This motion was passed to the merits.
It is not denied defendants authorized this appeal on behalf of each respectively. The controlling question, however, on whether defendants' appeal should be dismissed is whether the removed trustees are aggrieved parties so as to have standing to appeal. We hold they have such standing on either of two grounds and deny the motion.
A trustee, in his fiduciary or representative capacity, is aggrieved by a judgment which threatens the continuance of the trust in the form directed by the trustor, whether or not the beneficiaries appeal. He is more than a mere stakeholder. Estate of Ferrall, 33 Cal.2d 202, 200 P.2d 1 (1948); Toledo Trust Co. v. Farmer, 165 Ohio St. 378, 135 N.E.2d 356 (1956).
This rule is applicable to determining the trustees' standing in the instant case. The purpose of the rating bureau trust, as stated in the trust declaration, is to qualify the Bureau under RCW 48.19.170 for a license to operate as a rating organization. To qualify, the rating organization may not be 'connected with any insurer or insurers except to the extent that any such insurer may be a subscriber to its services.' RCW 48.19.170(2)(c). As next appears, if effect be given to both the terms of the trust and the trial court's judgment, the Bureau is placed in the position of violating this statutory requirement and the express purpose of the trust is thereby defeated. The trial court held the trustees of the stock of the Corporation must themselves administer the affairs of the Bureau, while the trust declaration states in a provision approved by the then Insurance Commissioner and not voided by the...
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