State ex rel. North British & Mercantile Ins. Co. v. Thompson

• Citation: 52 S.W.2d 472,330 Mo. 1146
• Parties: State of Missouri ex rel. North British & Mercantile Insurance Company, Ltd., a Corporation, Relator, v. Joseph B. Thompson, Superintendent of the Insurance Department of the State of Missouri
• Decision Date: 05 August 1932
• Court: Missouri Supreme Court

52 S.W.2d 472

330 Mo. 1146

State of Missouri ex rel. North British & Mercantile Insurance Company, Ltd., a Corporation, Relator, v. Joseph B. Thompson, Superintendent of the Insurance Department of the State of Missouri

Supreme Court of Missouri

August 5, 1932

Alternative writ quashed.

R J. Folonie and E. R. Morrison for relator.

(1) The respondent, Superintendent of Insurance, has not complied with Section 5874. Farmers & Traders Bank v Harrison, 12 S.W.2d 755; Barnes v. Ludington, 51 Ill.App. 91. (2) The deposits of the impounded funds by the respondent constitute general deposits only. Special Road District v. Cantley, 233 Mo.App. 89, 8 S.W.2d 944; Cook County Natl. Bank v. United States, 107 U.S 445; In re Nichols, 166 F. 603; McMillan v. West Chicago Park Commissioners, 99 F. 900; Multnomah County v. Oregon Natl. Bank, 61 F. 912; Glynn County v. Brunswick Terminal Co., 101 Ga. 244; Brown v. Sheldon State Bank, 149 Iowa 83; 3 R. C. L. 18, sec. 182; Paul v. Draper, 158 Mo. 197; Fletcher v. Sharpe, 108 Ind. 276; Butcher v. Butler, 134 Mo.App. 61; Gray v. Elliott. 36 Wyo. 361, 255 P. 593; Pethybridge v. First State Bank, 75 Mont. 173, 243 P. 569; American & English Annotated Cases. 1913D, p. 391. (3) Pledge of assets by the various depositories is wholly void. Farmers & Traders Bank v. Harrison, 12 S.W.2d 755; Divide County v. Baird, 55 N.D. 45, 212 N.W. 236, 51 A. L. R. 296; Commercial Bank & Trust Co. v. Citizens Trust & Guaranty Co., 153 Ky. 566, 156 S.W. 160, 45 L. R. A. 950; Farmers & Merchants State Bank v. Consolidated School District No. 3, 174 Minn. 286, 219 N.W. 163; Farmers State Bank v. County of Marshal, 175 Minn. 363, 221 N.W. 242; Porter v. Canyon Farmers Mut. Fire Ins. Co., 45 Ida. 522, 263 P. 632; Arkansas-Louisiana Highway Improvement District v. Taylor. 177 Ark. 440, 6 S.W.2d 533; Bliss v. Pathfinder Irrigation District, 240 N.W. 291; Maryland Casualty Co. v. Board of Commissioners, 128 Okla. 58, 51 A. L. R. 313, 65 A. L. R. 1412; Smith v. Railroad Co., 48 F.2d 861; Parks v. Knapp, 29 F.2d 547. (4) Mandamus will lie to compel the performance of a ministerial duty by a public officer. State ex rel. v. Meier, 143 Mo. 447; State ex rel. v. Oliver, 116 Mo. 188. (5) Relator has no other adequate remedy. State ex rel. v. Homer, 249 Mo. 58; 38 C. J. 693; 38 C. J. 567.

Stratton Shartel, Attorney-General, for respondent; G. C. Weatherby of counsel.

(1) The Legislature having provided for the impounding of excess premiums pending the review of an order of the Superintendent of Insurance reducing rates, or denying an increase thereof, and having required the deposit of the impounded fund in banks with security therefor, thereby fixed the public policy of the State insofar as it may pertain to the right of banks to so secure such deposit, and placed said funds in the class with public funds as regards the right of banks to pledge their assets to secure them. Banks may pledge assets to secure deposits of public money. Sec. 5874, R. S. 1929; Consolidated School Dist. v. Bank, 223 Mo.App. l. c. 592; First American Bank v. Palm Beach, 96 Fla. 247, 117 So. 900; U. S. F. & G. Co. v. Bassfield, 148 Miss. 109, 114 So. 26; Cameron v. Christy, 286 Pa. St. 405, 133 A. 551; Ainsworth v. Kruger, 80 Mont. 468, 260 P. 1055; Williams v. Hall, 30 Ariz. 581, 249 P. 755; Williams v. Earhart, 34 Ariz. 565, 273 P. 728; McFerson v. Surety Co., 72 Colo. 482, 212 P. 489; Richards v. Bank, 79 Iowa 707, 45 N.W. 294; Andrew v. Bank, 203 Iowa 1335, 214 N.W. 559; Page Trust Co. v. Rose, 192 N.C. 673; County v. Trust Co., 195 N.C. 545, 142 S.E. 786; Portland v. Bank, 107 Ore. 267, 214 P. 813; Grigsby v. Bank, 158 Tenn. 182, 11 S.W.2d 673; Pixton v. Perry, 72 Utah 129, 269 P. 144; Merrill v. Bank, 173 U.S. 131; Wylie v. Bank, 41 S.E. 504. (2) The deposits made in this case were mere loans to the depositories which in turn had full authority to pledge their assets as security therefor. 1 Morse on Banks and Banking (6 Ed.) 1929; Auten v. U.S. Natl. Bank, 174 U.S. 125; Grigsby v. Bank, supra; Trust Co. v. Rose, supra; Williams v. Hall, supra; Williams v. Earhart, supra; Cantley, Commr. v. Little River Dr. Dist., 2 S.W.2d 607. (3) Banks of Missouri are not prohibited by statute from pledging their assets to secure deposits whether of public or private funds. French, Commr. v. School Dist. No. 20, 7 S.W.2d 415; Consolidated School Dist. v. Bank, 223 Mo.App. 953.

OPINION

White, J.

The petition of relator, a stock fire insurance company, states that in December, 1929, relator made a change in its rates for fire and wind storm insurance through the medium of the Missouri Inspection Burean increasing the level of said rates 16-2/3 per cent, and immediately after filed such increase with the respondent, Superintendent of Insurance. The effective date of said increase was extended by the superintendent from time to time to June 1, 1930. In May, 1930, the increase was denied by the respondent, Superintendent of Insurance. The relator and other stock fire insurance companies, affected likewise by the order denying the increase, filed a petition for review in the Circuit Court of Cole County. Pending the action pursuant to the order of the Circuit Court of Cole County, relator impounded with the respondent, Superintendent of Insurance, the difference between the said increased rate and the former rate. This it is claimed is in accordance with the provisions of Section 5874, Revised Statutes 1929.

The petition then states that the requirement of Section 5874 has been violated by the Superintendent of Insurance; that he instead of requiring good and sufficient surety bonds has accepted from the banks in which said sums are deposited paper executed solely by the respective banks and said banks have respectively made a pretended pledge of certain government bonds and State bonds as security for the protection and safeguarding of the money without authority to give any preference to such deposit over any other deposit in said banks, and therefore the supposed pledge does not make the said bonds good or sufficient bonds as the statute required. The petition then prays that this court award a writ of mandamus commanding and requiring Joseph B. Thompson, Superintendent of the Insurance Department of the State of Missouri, to deposit said funds in responsible banks and to require banks in which said funds are deposited to give good and sufficient bonds in a penal sum not less than the full amout of said deposits in said banks, respectively, with good and sufficient surety or sureties for the safe-guarding and proper accounting of said funds so deposited in bank, and commanding and requiring that said funds be withdrawn from any bank or banks failing to give good and sufficient security.

The petition attaches as an exhibit a motion filed in the Circuit Court of Cole County, praying the court to set aside an order made by said court March 5, 1931, providing for the impounding and securing of funds in the manner complained of. A copy of the order of court attached shows this motion was overruled.

Section 5874, Revised Statutes 1929, provides that the orders of the Superintendent of Insurance shall be reviewable by the courts and the entire matter treated de novo, but the burden of proof as to the unreasonableness or injustice of any order made by the Superintendent of Insurance shall rest upon the party appealing from such order. The court has authority to sustain or set aside, such order. The section then goes on to provide that during a review by the courts as to reduction of rates, insurance companies shall deposit with the Superintendent of Insurance "an amount equal to the difference between the rates fixed by the superintendent in his order and those in effect prior thereto, such funds to be held by the superintendent of insurance to await the result of such review, . . . The superintendent shall deposit all such funds so held by him in responsible banks and shall require good and sufficient bond for safekeeping and proper accounting."

The respondent filed his return to the alternative writ of mandamus and the relator filed in this court his motion for judgment on the pleadings, therefore the matter will be determined by the facts admitted and affirmatively stated in the respondent's return. The return admits the facts in relation to the petition for the increase of rates and the action of the superintendent in denying the increase and the pendency of the action in the circuit court and impounding the increase in rates. It alleges that the impounded money is being held in responsible banks, and avers that it has at all times complied strictly with the letter of the statute in the handling of such funds. The return then sets out the order made by the judge of the circuit court June 5, 1930, ordering the deposit of the 16-2/3 per cent increase with the Insurance Department, with the specific report in detail of the policies of insurance affecting the amount of premium, etc., of such policies. On October 6, 1930, the order was modified. The order of modification is not important and need not be set out.

On March 5, 1931, the respondent filed a petition asking a further modification of the original order, so that depositories in lieu of surety bonds might accept United States government bonds and bonds of the State of Missouri. The court sustained the petition in an order which recites as follows: "And it appearing to the court that in some instances it is practically impossible for said depositories to procure surety bonds as in said order required, and that great delay frequently arises before said surety bonds may be procured, and that in the meantime large sums of money are in the hands of petitioner awaiting deposit but that cannot be deposited until...