State ex inf. McKittrick ex rel. Maloney v. Fidelity Assur. Ass'n

• Decision Date: 03 April 1944
• Docket Number: 38776,38775
• Citation: 179 S.W.2d 67,352 Mo. 725
• Parties: State ex inf. Roy McKittrick, Attorney General of the State of Missouri, at the Relation of Russell Maloney, Commissioner of Securities of the State of Missouri, Plaintiffs-Respondents, v. Fidelity Assurance Association, a Corporation, H. Isaiah Smith and Ross B. Thomas, Receivers of the Fidelity Assurance Association, a Corporation, Defendants-Respondents, Edward L. Scheufler, Superintendent of the Insurance Department of the State of Missouri, Intervenor-Appellant. Edward L. Scheufler, Superintendent of the Insurance Department of the State of Missouri, Plaintiff-Appellant, v. Fidelity Assurance Association, a Corporation; H. Isaiah Smith and Ross B. Thomas, West Virginia State Court Receivers of the Fidelity Assurance Association, a Corporation; Russell Maloney, Commissioner of Securities of the State of Missouri; and Dewey Godfrey, Missouri State Court Receiver, Defendants-Respondents
• Court: Missouri Supreme Court

179 S.W.2d 67

352 Mo. 725

State ex inf. Roy McKittrick, Attorney General of the State of Missouri, at the Relation of Russell Maloney, Commissioner of Securities of the State of Missouri, Plaintiffs-Respondents, v. Fidelity Assurance Association, a Corporation, H. Isaiah Smith and Ross B. Thomas, Receivers of the Fidelity Assurance Association, a Corporation, Defendants-Respondents, Edward L. Scheufler, Superintendent of the Insurance Department of the State of Missouri, Intervenor-Appellant. Edward L. Scheufler, Superintendent of the Insurance Department of the State of Missouri, Plaintiff-Appellant, v. Fidelity Assurance Association, a Corporation; H. Isaiah Smith and Ross B. Thomas, West Virginia State Court Receivers of the Fidelity Assurance Association, a Corporation; Russell Maloney, Commissioner of Securities of the State of Missouri; and Dewey Godfrey, Missouri State Court Receiver, Defendants-Respondents

Nos. 38776, 38775

Supreme Court of Missouri

April 3, 1944

Appeal from Cole Circuit Court; Hon. Frank Hollingsworth Special Judge.

Affirmed.

Barak T. Mattingly, Roberts P. Elam, G. Carroll Stribling, and Walter R. Mayne for appellants; Preston Estep Lawrence Presley, and Fordyce, White, Mayne Williams & Hartman of counsel.

(1) The receivership proceeding in which control over the assets of Fidelity Assurance Association was assumed was void and the receiver appointed in the action was without authority to administer the assets of the Fidelity Assurance Association because Relator Commissioner of Securities and informant Attorney General had no interest in the liquidation of the assets of Fidelity Assurance Association and no authority to institute the receivership action. Ch. 41, R.S. Mo. 1939, Sec. 8258 to 8292, inclusive. (2) The plaintiff's petition failed to state a cause of action and the receivership appointment was void because the appointment of a receiver was the only relief prayed for in the action and the plaintiff's petition, therefore, failed to set forth any enforceable cause of action for final relief to which the appointment of a receiver was or could have been ancillary. United Cemeteries Company v. Strother, 342 Mo. 1155, 119 S.W.2d 762; Laumeier v. Sun-Ray Products Co., 330 Mo. 542, 50 S.W.2d 640; State ex rel. Kopke v. Mulloy, 329 Mo. 1, 43 S.W.2d 806; State ex rel. Merriam v. Ross, 122 Mo. 435. (3) Fidelity Assurance Association was an insurance corporation carrying on an insurance business in the State of Missouri and appellant, Scheufler, as Superintendent of the Insurance Department, was by statute vested with the sole and exclusive authority to administer the assets in controversy for the benefit of Missouri policyholders. Sims v. Fidelity Assur. Assn., 129 F.2d 442, C.C.A. 5th, affirmed on another point in 318 U.S. 608, 87 L.Ed. 725. (4) Sec. 6023, R.S. 1939, expressly provides that no action for the dissolution of an insurance corporation or for the distribution of its assets among its creditors may be maintained by any party other than the Superintendent of the Insurance Department. This section applies to foreign, as well as domestic, insurance companies. R.S. 1939, Sec. 6023; R.S. 1939, Secs. 5781, 6007, 6008, 6009, 6020, 6040, 6051; State ex rel. Missouri State Life Insurance Company v. Hall, 330 Mo. 1107, 52 S.W.2d 174; State ex rel. St. Louis Mut. Life Ins. Co. v. Mulloy, 330 Mo. 951, 52 S.W.2d 469; State ex rel. Phoenix Mut. Life Ins. Co. v. Harris, 343 Mo. 252, 121 S.W.2d 141; Green v. American Life & Acc. Ins. Co., 93 S.W.2d 1119. (5) Prior to the change in Fidelity's business to that of an insurance company on December 30, 1940, Fidelity engaged in business in Missouri as a co-operative company and the securities now held by receiver Godfrey, were securities which Fidelity was required to deposit with the State Treasurer under the statutes relating to co-operative companies. R.S. 1939, Ch. 33, Secs. 5426-35, inclusive. (6) Fidelity Assurance Association was an insurance corporation carrying on an insurance business in the State of Missouri and appellant, Scheufler, as Superintendent of the Insurance Department, was by statute vested with the sole and exclusive authority to administer the assets in controversy for the benefit of Missouri policyholders. Sims v. Fidelity Assur. Assn., 129 F.2d 442, C.C.A. 5th, affirmed on another point in 318 U.S. 608, 87 L.Ed. 725.

Roy McKittrick, Attorney General, Lawrence L. Bradley, Assistant Attorney General, for Russell Maloney, Securities Commissioner; H. P. Lauf, for Dewey S. Godfrey, Receiver; L. H. Cook, for intervenors-respondents, C. W. Marcille and C. L. Owen; Rudolph K. Schurr, of counsel.

(1) The Superintendent of Insurance of the State of Missouri does not have jurisdiction over the receivership of the local assets of a foreign insurance company, and therefore the demurrer was properly sustained. Sec. 6023, R.S. Mo. 1939; Art. X, Ch. 37, R.S. Mo. 1939; Words & Phrases, Vol. 5, p. 1058, defining "but"; Widman v. Amer. Central Ins. Co., 115 Mo.App. 342, 91 S.W. 1007; Secs. 6050, 6051, 6052, R.S. Mo. 1939; Ex Parte Goodwyn, 149 So. 216 (Ala.); State ex rel. Minn. Mutual Life Ins. Co. v. Denton, 229 Mo. 187; Secs. 6043, 6268, R.S. Mo. 1939; Art. IX, Ch. 33, R.S. Mo. 1939; Sims v. Fidelity Assur. Assn., 318 U.S. 608, 87 L.Ed. 725; Relf v. Rundle, 103 U.S. 222, 26 L.Ed. 337; McDonald v. Pacific States Life Ins. Co., 344 Mo. 1, 124 S.W.2d 1157; Sec. 6048, R.S. Mo. 1939; State ex rel. Hyde v. Falkenhainer, 309 Mo. 381, 274 S.W. 722; Secs. 3279, 3329 (1), W.Va. Code 1937; Pensinger v. Pacific States Life Ins. Co., 25 F.Supp. 295; Parsons v. Charter Oak Life Ins. Co., 31 F. 305; State ex rel. Karbe et al. v. Bader, 336 Mo. 259, 78 S.W.2d 835; Senate Journal, Sixty-second Session, respecting S.B. 109; Ex Parte Oppenstein, 289 Mo. 421, 233 S.W. 440; McDonald & Johnson v. Southern Express Co., 134 F. 282; Rea v. Alderman of Everett, 217 Mass. 427; Peoples Gas Light Co. v. Ames, 359 Ill. 152; Lampina v. Williams, 232 U.S. 77, 58 L.Ed. 515; Pennsylvania R. Co. v. International Mining Co., 230 U.S. 184, 57 L.Ed. 1447. (2) After the demurrer was sustained, the Superintendent of Insurance, not having a paramount right to the fund in question, no longer had any standing in the litigation so as to be authorized to challenge the jurisdiction of the Court, or to move the dismissal of the pending action, consequently the trial court properly struck out the Superintendent's motion to dismiss. 47 C.J., p. 118, Sec. 223; Moran v. Bonynge, 155 Cal. 295, 107 P. 312; 47 C.J., p. 107, Sec. 206; 47 C.J., p. 116, Sec. 221; Hunt v. O'Leary, 84 Minn. 200, 87 N.W. 611; 39 Am. Jur., p. 948, Sec. 77; 39 Am. Jur., p. 951, Sec. 59; 53 C.J., p. 62, Sec. 99. (3) The trial court had authority to appoint an ancillary receiver on the petition filed before him. Sec. 2100, R.S. Mo. 1939; Davidson v. Schmidt, 256 Mo. 18, 164 S.W. 577; Buddecke v. Ziegenheim, 122 Mo. 239, 26 S.W. 696; 47 C.J., p. 107, Sec. 206; Secs. 8258, 8268, R.S. Mo. 1939; Section 850, R.S. Mo. 1939; 14a C.J., p. 1341, Sec. 4047; 20 C.J.S., p. 117, Sec. 1890; State ex rel. Amer. Bankers Ins. Co. v. McQuillin, 260 Mo. 164, 168 S.W. 924; 20 C.J.S., p. 118, Sec. 1890, Note 91; 14a C.J., p. 1341, Sec. 4047, Note 84; 53 C.J., p. 405, Sec. 676; Bodge v. Skinner Packing Co., 115 Neb. 41, 211 N.W. 203; 20 C.J.S., p. 118, Sec. 1890.

J. Campbell Palmer, III, for respondents amicus curiae; Koontz & Koontz and B. J. Pettigrew, of counsel.

(1) If the assets are general assets, the law, as cited in the cases and authorities below, is that if there is no reason to presume the domiciliary court will discriminate against the individuals in any one state, all of the assets should be returned to the domiciliary receivers, who will then distribute the assets ratably to every person entitled thereto. Blake v. McClung, 172 U.S. 239, 43 L.Ed. 432, 176 U.S. 59, 44 L.Ed. 371; Sully v. Amer. Natl. Bank, 178 U.S. 289, 44 L.Ed. 1072; Brunner v. York Bridge Co., 78 W.Va. 702, 90 S.E. 233; Carpenter v. Ludlum, 69 F.2d 191; Cert. denied 78 L.Ed. 1028; Torrington Co. v. Sedway-Topliff Co., 70 F.2d 949 C.C.A. 7; Irwin v. Granite State Provident Ass'n, 56 N.J.Eq. 244, 38 A. 680; Crenshaw v. Texokola Pecan Shellers, Inc. (Tenn.), 102 S.W.2d 60; In re Stoddard, 238 N.Y. 147, 144 N.E. 484; In re Standard Oak Veneer Co., 173 F. 103; 1 A.L.R. 648; 92 A.L.R. 590. (2) The dissolution and winding up of a corporation and the distribution of its assets can be performed solely by the state in which its charter was granted and which gave it life. Holloway v. Federal Reserve Life Ins. Co., 21 F.Supp. 516. (3) In any event, with demand made for the securities by the primary Court in West Virginia, the Superintendent of Insurance could never retain possession. Holloway v. Federal Reserve Life Ins. Co., 21 F.Supp. 516. (4) There should be no interference with the present receivers. H. Isaiah Smith et al. v. Central Trust Company, Trustee, decided by the United States Circuit Court of Appeals for the Fourth Circuit, decided Jan. 1, 1944 (not yet reported).

Van Osdol, C. Bradley and Dalton, CC., concur.

OPINION

VAN OSDOL

Consolidated appeals perfected by Edward L. Scheufler, Superintendent of the Insurance Department of the State of Missouri. In Case No. 38776 the appeal is from a judgment rendered on an order overruling intervenor-appellant's amended motion to revoke the appointment of a receiver and to dismiss plaintiff's petition, and on an order sustaining a demurrer to intervenor's petition, intervenor-appellant having failed to further plead. In Case No. 38775 the appeal is from a judgment entered upon an order sustaining a demurrer to the petition, the plaintiff-appellant having failed to further plead.

The questions involved pertain to the duties of appel...