Traders Mut. Fire Ins. Co. v. Leggett

• Decision Date: 12 December 1955
• Docket Number: No. 44367,No. 2,44367,2
• Citation: 284 S.W.2d 586
• Parties: TRADERS MUTUAL FIRE INSURANCE COMPANY, a Corporation, Respondent, v. C. Lawrence LEGGETT, Superintendent of the Division of Insurance of Missouri, and John M. Dalton, Attorney General of Missouri, Appellants
• Court: Missouri Supreme Court

Page 586

284 S.W.2d 586

TRADERS MUTUAL FIRE INSURANCE COMPANY, a Corporation, Respondent, v. C. Lawrence LEGGETT, Superintendent of the Division of Insurance of Missouri, and John M. Dalton Attorney General of Missouri, Appellants.

No. 44367.

Supreme Court of Missouri, Division No. 2.

Dec. 12, 1955.

John M. Dalton, Atty. Gen., Julian L. O'Malley, Asst. Atty. Gen., for appellants.

Johnson, Lucas, Bush & Gibson, Hilary A. Bush, Floyd R. Gibson, Fred A. Murdock, William A. Cameron, Kansas City, for respondent.

BARRETT, Commissioner.

This is an action by the Traders Mutual Fire Insurance Company for a declaratory judgment. The defendant-appellants are the Superintendent of the Division of Insurance and the Attorney General of Missouri. The Traders Mutual Fire Insurance Company is a town mutual insurance company, V.A.M.S. Secs. 380.280-380.450, organized in 1923. The precise type of business the company engaged in throughout the years, or the success of its operations, does not plainly appear from the rcord. But apparently the company, more or less intermittently, conducted the traditional business of a town mutual insurance company, insuring houses and personal property against loss by fire, lightning and tornado at Independence. We say the company operated 'intermittently' for the reason that in some years its charter was suspended or forfeited. But by 1933 its charter had been reinstated and the office of the company moved to Kansas City. It does not plainly appear, except from some general statements and the allegations of its petition, in what years, in addition to its traditional business, the company actually wrote insurance on automobiles, particularly that type of automobile insurance known as 'comprehensive coverage.' In any event, by 1951 the company claimed or asserted the right, in addition to tis other business, to insure automobiles. In July 1953 the Superintendent of the Division of Insurance ordered the company to cease writing 'physical property damage automobile insurance,' asserting that the company has no power or authority to do so. Thereupon the company instituted this action for a declaratory judgment and to restrain the superintendent from enforcing his order. The superintendent and the attorney general prosecute this appeal from a judgment declaring that the company was authorized to write automobile insurance.

By reason of the general nature of the action and to precisely delimit the decision upon this appeal to the record and the single issue involved, certain other facts and some omissions from the record should be noted as not within the scope of this opinion. There were some conferences or negotiations between officers of the company and the insurance department concerning the company's writing automobile insurance. There were examinations of the company by the department and annual applications by the company for licenses and some of the applications were for 'fire and allied lines' and some for 'fire and extended coverage automobile physical damage insurance.' There is in the record an excerpt from the minutes of an October 1953 board meeting relating to the classes of insurance the company wrote, 'fire, extended coverage, automobile physical damage, including fire, theft, collision and comprehensive.' But the company and its officers have not in point of fact amended or attempted to amend the constitution and by-laws in this respect. In 1945 the company secretary presented to the board of directors what the called 'a plan' for writing automobile insurance, but it does not appear just what plan was adopted. There are no specimen policies in the record and the record does not reveal how or by what methods the company proposes to charge premiums, establish reserves, or in what territory it proposes to do business, or, in short, write comprehensive coverage on members' automobiles. As indicated, these matters were not in point of fact involved upon the trial of the cause and they are not involved upon this appeal.

It is claimed, by reason of its annual reports and the department's examinations that the department long had knowledge of the fact that the company was writing automobile insurance and that the department's knowledge and actions in these respects constituted an administrative construction of the statutes and the company's charter and should be given some weight indicative of the company's power to write that class of insurance. But aside from the meagerness of the record and the inconclusiveness of the facts shown, the knowledge or tacit consent of the department would not make the company's act of writing automobile insurance lawful if in point of fact the writing of such insurance was unauthorized and unlawful. State ex rel. Richards v. Manufacturers' Mutual Fire Ass'n, 50 Ohio St. 145, 151, 33 N.E. 401, 24 L.R.A. 252. Compare: Banker's Mutual Casualty Co. v. First Nat. Bank of Council Bluffs, 131 Iowa 456, 108 N.W. 1046.

According to its constitution and by-laws the company was organized under the provisions of Article XVIII, Sections 6469-6486, relating to 'Town Mutual Insurance Companies', Chapter 50, R.S.1919, for the declared purpose, 'To insure houses, tenements, merchandise, and all other property, real and personal, against loss or damage by fire, lightning, windstorm, tornado or cyclone, or otherwise, and to carry on the ordinary business of fire insurance in all its branches.' Section 6204 of Article VI, Chapter 50, R.S.1919, relating to 'Insurance Other Than Life', provided that, 'All insurance companies authorized to transact fire insurance business in this state may, in addition to the business which they are now authorized by law to do, * * * also * * * make all kinds of insurance on automobiles, and all other cars and vehicles, including fire, theft, transportation, collision and property damage: * * *.' Seizing upon the phrase 'or otherwise' in its charter and the provisions of Section 6204 the company contends, as a part of its original charter, which the state may not abridge, V.A.M.S. Sec. 380.280, that it was authorized and empowered to write comprehensive coverage on automobiles in addition to writing the types or classes of insurance traditionally written by town mutual insurance companies. Thus the precise question for determination is presented. Relying upon the rule that a company's charter consists of the applicable statutes under which it was organized, 7 Fletcher, Cyclopedia of Corporations, Sec. 3635, p. 759, and certain auxiliary rules of statutory construction, the company claims that it was plainly empowered in 1923 by section 6204 to write automobile insurance. It will be noted that the statute says 'All insurance companies authorized to transact fire insurance business in this state may, in addition to the business which they are now authorized by law to do, * * * also to make all kinds of insurance on automobiles.' The Traders Mutual Fire Insurance Company being, it is said, a fire insurance company and there being no legislative intent to the contrary, it was authorized, under this general statute to write automobile insurance, then and now. A casual consideration of the statutes would seem to sustain the company's contention, but the general rules relating to corporate charters and the auxiliary rules of statutory construction do not, upon closer analysis, so plainly resolve the question presented.

Contrasted with other insurance companies in general, particularly fire insurance companies, town, county and farm mutual insurance companies have occupied a rather unique, specialized position. Generally they have differed in basic theory, they were not organized for profit, conducted their business in very limited geographical areas upon the assessment plan, and traditionally have insured the real and personal property of their members only against the hazards of loss by fire, lightning and windstorm. Whitehead v. Farmers' Fire & Lightning Mut. Ins. Co., 227 Mo.App. 891, 898, 60 S.W.2d 65, 69; State ex rel. Richards v. Manufacturers' Mut. Fire Ass'n, 50 Ohio St. 145, 33 N.E. 401. In this connection, the history of the insurance statutes and the history of the chartering of strictly mutual insurance companies is of some significance. Prior to 1869 town mutual insurance companies, as was the case with all corporate charters were chartered by special acts of the legislature and those acts, of course, constituted the company's charter. From a large number of instances, two examples are sufficient for the purpose of illustration. Laws Mo. 1864-1865, pp. 190, 196. Prior to 1869 there had been some statutes relating to insurance but in 1869, for the first time, the insurance department was created, Laws 1869, p. 23, and detailed statutes were enacted relating to life insurance, Laws 1869, p. 26, and to insurance other than life. Laws 1869, p. 45. The latter statute specifically provided for and governed stock and mutual companies, but there were no provisions in those acts relating to town, county and farm mutual companies. Sections one and two of the act became and are not substantially different from sections 6203 and 6204, R.S.1919, or, for that matter, from sections 379.010 and 379.015 of the present statutes. It is not readily apparent how or under what authority town mutual insurance companies were organized between 1869 and 1899. There were statutes relating to 'local insurance companies'--county mutuals, Laws Mo.1874, p. 90, and to voluntary associations engaged exclusively in the business of insuring the property of farmers, Whitehead v. Farmers' Fire & Lightning Mut. Ins. Co., 227 Mo.App., loc. cit. 896, 60 S.W.2d, loc. cit. 68, but there were no statutes specifically applicable to town mutual insurance companies.

There appeared for the first time in the Revised Statutes of 1899 a new article, Article XI, consisting of seventeen sections, sections 8084-8101, relating to town mutual insurance companies. That article ...