State ex rel. City of Missoula v. Holmes

• Decision Date: 27 June 1935
• Docket Number: 7443.
• Citation: 47 P.2d 624,100 Mont. 256
• Parties: STATE ex rel. CITY OF MISSOULA et al. v. HOLMES, State Auditor, etc.
• Court: Montana Supreme Court

47 P.2d 624

100 Mont. 256

STATE ex rel. CITY OF MISSOULA et al. v. HOLMES, State Auditor, etc.

No. 7443.

Supreme Court of Montana

June 27, 1935

Original proceeding by the State of Montana, on the relation of the City of Missoula and others, against John J. Holmes, as State Auditor and ex officio Commissioner of Insurance of the State of Montana, to enjoin respondent from expending money under and enforcing an act providing for state insurance of public property.

Order in accordance with opinion.

Howard Toole, Donovan Worden, Ralph L. Arnold, George F. Higgins and W. T. Boone, all of Missoula, for relators.

Raymond T. Nagle, Atty. Gen., and Jeremiah J. Lynch, Asst. Atty Gen., for respondent.

S. C Ford and Glen T. Flint, both of Helena, Merle C. Groene, of Lewistown, and Sam D. Goza, Jr., of Helena, amici curiae.

ANDERSON Justice.

The city of Missoula and its duly elected commissioners as relators brought this action in this court against the respondent John J. Holmes, as state auditor and ex officio commissioner of insurance, seeking to enjoin the expenditure of money under, and the enforcement of, the provisions of chapter 179, Laws 1935. It is asserted in the complaint that the provisions of this act are violative of numerous constitutional provisions, and, furthermore, that the act is void for uncertainty.

Section 1 of the act provides "that all public buildings of this state and of each and every political subdivision thereof" and the contents thereof, "except as hereinafter provided, shall be insured by the state against all direct loss by fire, lightning, tornado, windstorm, cyclone, hail, explosion, flood and water damage," as provided for in the act. The officers and authorities having charge of public buildings and their contents by virtue of a proviso are permitted to insure against earthquakes and other perils not enumerated in the section.

The state auditor and ex officio commissioner of insurance is by section 2 made the administrative officer for the purpose of enforcing the act, authorized to prepare blank forms "for the reports of valuation and relative hazard" of property insured, for losses sustained, "and for all other purposes necessary, proper and incidental to the effective operation and enforcement" of the act. He is likewise authorized to make rules and regulations not inconsistent with the act, "as he may from time to time find practicable, necessary and beneficial" for the conduct of the department.

Section 3 requires that the valuation of schoolhouses and contents of school districts shall be made by the school trustees; the valuation of county high school buildings and contents by the county high school board; the valuation of other public buildings owned by the counties, by the board of county commissioners; the valuation of public buildings, including libraries, owned by cities, by the mayor and aldermen; and the valuation of buildings owned by the state, and all other public buildings not otherwise enumerated in the act, by the state board of examiners.

The provisions of section 4 relate to administrative details which are unimportant here.

Section 5 provides that "there shall be paid into the State Treasury by the respective boards and officers having charge of the property insured under this Act, out of the funds from which insurance premiums have heretofore been paid," at the time specified in the act, "the amount of the premium for three years' insurance at the prevailing and commonly accepted insurance rate, as determined" by the respondent, who may adjust the rates upon report of the fire marshal "of any change in perils and exposures or error in classification." The insurance is to be written for three years. Cancellation of insurance may be allowed for reasonable cause upon the advice of the fire marshal, and shall be adjusted pro rata. All policies under the act are to be serially numbered.

Section 6 commands the respondent to pay from the insurance fund on the first of each month into the fire marshal's fund 1 per cent. of the receipts during the preceding month.

Section 7 directs the respondent to set aside 3 per cent. of the total moneys collected from cities and towns having a fireman's disability fund, and at the end of each year to distribute the funds so set aside among all such cities and towns "in accordance with the same method of division now provided by Chapter 127 of the Session Acts of Montana of 1933."

Sections 8 and 9 provide as follows: "When the fund is found to exceed One Million Dollars ($1,000,000.00), then no more premiums shall be assessed until it becomes depleted to less than Seven Hundred Thousand Dollars ($700,000.00); whereupon assessment premiums, beginning after the last numbered policy paid, shall be levied in serial order until the fund again exceeds One Million Dollars ($1,000,000.00). The State Board of Examiners must reinsure or purchase excess insurance in a reliable insurance company or companies such portion of their insurance liability as is commensurated with the principles of safe underwriting, and shall prescribe such rules and regulations as may be necessary in placing and handling this reinsurance and/or excess insurance. The cost of the reinsurance is to be paid out of the state insurance fund."

Section 10 directs the mailing of notices of premiums to the proper officers and their payment within 30 days from the date of the levy and assessments, and provides "such assessment premiums to be levied only when needed to replenish and maintain such insurance fund and to be paid as hereinbefore provided."

Section 11 commands the state treasurer to receive the moneys paid under the act and place the same to the credit of the "State Insurance Fund" to be paid out on warrants drawn by the respondent. This fund "shall be invested and administered as a part of the Montana trust and legacy fund under the provisions of Chapter Seventy (70) of the 1929 Session Laws of the State of Montana." Interest and earnings on the fund are to be credited to it by the state treasurer.

Sections 12, 13, and 14 are not under attack, and relate to the proof and payment of losses.

By the provisions of section 15 the state fire marshal is directed to investigate "the cause *** and circumstances of each fire" and determine "whether the fire or other loss to public property insured *** was the result of carelessness or design." Before any insurance is written, the fire marshal is required to inspect the buildings and report "all unnecessary and avoidable fire hazards" which shall be corrected and eliminated by the responsible board or officers, and a sworn statement thereof filed with the respondent before the insurance becomes operative. It is also provided in this section that: "The State Auditor and Ex-officio Commissioner of Insurance may on such report exclude such buildings from the provisions of insurance and shall collect no fees therefor."

Section 16 declares it to be "unlawful for any public officer mentioned in this Act and having charge of any public building or other public property to cause same or its contents to be insured in any other manner than that provided for in this Act." Upon the expiration of existing insurance all such property shall become subject to the provisions of the act. The act becomes operative on June 1, 1935.

Section 18 makes it the duty of all public officers to perform the duties imposed on them without additional compensation.

Section 19 declares a violation of this act to be a misdemeanor and fixes penalties.

Section 20 declares that if any clause, sentence, paragraph, subdivision, section, or part shall be adjudged to be invalid or unconstitutional, the judgment shall not affect, impair, invalidate, or nullify the remainder of this act.

Relators by their complaint allege, and the respondent by answer made on his behalf by the Attorney General admits, the corporate capacity of the city of Missoula; the election and qualifications of its commissioners; that it maintains and operates a fire department; that the city owns, maintains and operates buildings, contents and personal property, namely, a city hall, a city fire department, ware-houses, road and street equipment, and other personal property in excess of $40,000 in value; that the buildings and personal property are of such a character as to be destructible in case of fire; that relators and their predecessors have carried and are carrying a sufficient amount of fire insurance in fire insurance companies and corporations qualified to do business within the state of Montana, which has adequately protected and now does adequately protect the city against loss or damage to any of its property by fire and water; that chapter 179 was enacted and approved on March 14, 1935; it alleges the official capacity of the respondent and the duties imposed upon him by the terms of the act, and that pursuant to the terms thereof the respondent has made certain expenditures under and is proceeding to the enforcement of, the act, and will continue to expend funds for the carrying out of its provisions; that there are single units of property belonging to the state or its subdivisions which have an insurable value equal to or greater than the full maximum reserve provided for in section 7 of the act; that school district No. 1 of Missoula county and other school districts, counties, and cities within the state have and will have public buildings in process of construction; that the total value of public properties within the state subject to the provisions of the act is approximately $45,000,000. The other allegations of the complaint are denied by the answer. Many of these allegations relate to the alleged unconstitutionality and uncertainty of this...