State v. Harty

Decision Date25 January 1919
Citation208 S.W. 835,276 Mo. 583
PartiesSTATE ex rel. UNITED STATES FIDELITY & GUARANTY CO. v. HARTY, Superintendent of Insurance.
CourtMissouri Supreme Court

Joseph A. Wright and John M. Wood, both of St. Louis, for relator.

Frank W. McAllister, Atty. Gen., and John T. Gose, Asst. Atty. Gen. (Charles G. Revelle, of Jefferson City, of counsel), for respondent.

WALKER, J.

Prohibition to prevent respondent, the Superintendent of the Insurance Department, from revoking the license of relator, the Fidelity & Guaranty Company, to do business in this state, unless it complies with an order made by respondent requiring it to pay certain disputed amounts alleged in said order to be due by it to the International Insurance Company.

We are not concerned with whatever merit may inhere in the claims of the International Insurance Company against relator further than the facts in regard to same, as disclosed by the pleadings, may prove illustrative of the power of the respondent to enter and enforce the order herein complained of. State ex rel. Am. B. Ins. Co. v. McQuillin, 260 Mo. loc. cit. 173, 168 S. W. 924; Willow Spgs. Co. v. Mt. Grove, etc., Co., 197 S. W. (App.) 916. This order was based upon a complaint filed by the International Insurance Company with the respondent, as Superintendent of Insurance, to compel the relator to pay what are alleged to be just and past-due claims arising out of a contract between the insurance company and relator, aggregating the sum of $25,000, which the latter upon demand had refused to pay. The pertinent portions of this complaint are as follows:

After formal allegations as to the corporate capacity of complainant and its authority to do business in this state as an insurance company, as well as that of the relator as a fidelity and casualty company, it is alleged that complainant deposited in a certain bank cash aggregating $25,000 for the times therein stated; that a contract foe the payment when due of said sums, aggregating said amount, was made between the International Insurance Company and the bank, and that relator obligated itself, as by law it was authorized to do, as a fidelity and guaranty company, to secure the payment of same; that after said deposits were made, and before any part of same was withdrawn, and while said contract was in full three and effect, said bank wherein said deposits had been made became insolvent and was placed in charge of the State Banking Department for liquidation; that default has been made in the payment of the sums there deposited, the payment of which was guaranteed by relator; that notice of such default has been given to relator, and that complainant has in all other respects complied with the terms of the contract under which said deposits were made and upon which relator became a guarantor; that it became the duty of relator upon such default to pay to complainant the amounts of said deposits; that demand, therefor has been made upon relator, which has wrongfully refused to comply therewith or to perform any part of its obligations under said contract.

The jurisdiction of the respondent is sought to be invoked by the International Insurance Company in this behalf in the following language:

"Complainant further states and offers to show that the course of said United States Fidelity & Guaranty Company in relation to the above deposits and the above contracts and obligations is of such a character, and its repudiation of its aforesaid numerous obligations so flagrant, wrongful, and unwarranted, as to make further operations on its part in the state of Missouri hazardous to the public."

To this the complainant appends the following prayer:

"Wherefore complainant prays that said United States Fidelity & Guaranty Company be notified of this complaint, and that the Superintendent of the Insurance Department fix and designate a time and place where it will hear complainant in support and establishment of the above charges, and that after such hearing and investigation the said Superintendent of the Insurance Department make an order directing said United States Fidelity & Guaranty Company to meet and discharge its above obligations, and that failing to do so within ten (10) days thereafter the license and authority of said United States Fidelity & Guaranty Company to transact business in the state of Missouri be revoked."

Upon the filing of this complaint a hearing thereon was ordered by the respondent on May 28, 1918. On this date relator, appearing only for the purpose of challenging the jurisdiction of the respondent to entertain the complaint and execute the order therein prayed for, filed a motion to dismiss the proceeding. Summarized, this motion is as follows: That the allegations of the complaint are insufficient to bring the relator within the purview of the regulative power of article 7, c. 61, Rev. St. 1909, defining the duties and Prescribing the powers of the Superintendent of Insurance; that there is an absence of any averment in said complaint that the relator is insolvent, or in an unsound financial condition, or that it has failed in any particular to comply with the state law regulatory of companies of this character; that, on the contrary, it is not only solvent, and its capital stock in no wise impaired, but it has a large cash surplus; that the purpose is, and effect of said complaint, if granted, Will be, to enforce the payment of the International Insurance Company's claims against the relator, the Fidelity & Guaranty Company, without a judicial determination of same, and thereby deprive the courts of their legitimate and exclusive constitutional and statutory jurisdiction in the matter here involved; that the insurance Deparment has no judicial power, and in its attempted exercise of same it seeks to deprive the relator of its property without due process of law.

The Superintendent of Insurance overuled this motion to dismiss; whereupon the Fidelity & Casualty Company applied to this court for a preliminary rule of prohibition herein. The petition therefor avers the corporate capacity of relator; its compliance with the law authorizing it to do business in this state; that it has filed with the Insurance Department a verified statement of its assets and liabilities, showing its solvent and unimpaired condition; that same is true; that the financial strength of relator as therein disclosed is equal, if not greater, at the present time than when said statement was made; and that said condition is not questioned or denied either by complainant or respondent. Then follows a summary of said financial statement, which is incorporates into and made a part of said petition, and a copy of the complaint heretofore filed with the Insurance Department by said International Insurance Company, and relator's motion to dismiss same, the substance of which has been stated.

The petition further alleges that. on July 9, 1918, the relator submitted to respondent a written offer, set out therein, that in view of the suit brought by the International insurance Company against the relator in the circuit court of the city of St. Louis, involving the same issue as the subject-matter of the controversy herein, relator, not as an admission of liability, but as evidence of good faith, would deposit the sum of $35,900 in the Boatmen's Bank of the City of St. Louis, to be held in trust by said bank as a guaranty of its ability to respond to any judgment rendered in said court in favor of sail insurance company and against relator, such deposit to be made within five days after the, receipt of respondent's approval of same; that respondent has ignored said offer; that respondent has threatened and is now about to revoke relator's right to do business in this state unless it pays, without a judicial determination, the alleged claims of the International Insurance Company against relator, thereby precluding the latter from making any defense it may have thereto in a court of competent jurisdiction; that, in the absence of the issuance of this writ, relator is without remedy.

Further pleading, relator denies the jurisdiction of respondent either under sections 7078 or 7069, Rev. St. 1209, in relation to the powers authorized to be exercised by respondent over insurance companies, specific averments in regard thereto being that no ground authorized by statute is stated in said complaint to authorize respondent's action herein; that the exercise of such power will deprive the courts of their jurisdiction conferred by the Constitution, and, so far as respondent is concerned, such power is prohibited by exclusion under article 3, Coast. Mo.; that the Legislature by section 7068, Rev. St. 1909, has provided a complete and adequate remedy against relator in the event of its vexatious refusal to pay any just claim; that neither under the state nor national Constitutions (citing same) can relator be deprived of its property in the manner herein attempted; that no statutory authority exists for same, and, if respondent proceeds as he now threatens to do, that no appeal, writ of error, or other means of review or redress remains for relator; that the exercise of the attempted power threatened by respondent will work irreparable damage to relator's reputation, standing, and business; and that no relief is available except through the intervention of the Supreme Court, by its writ of prohibition, which power relator invokes.

Wherefore relator, being otherwise remediless, prays the court to issue its said writ herein to prevent respondent from the further hearing of said complaint of the International Insurance Company and from revoking relator's license upon the evidence submitted; that respondent's...

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