Caminetti v. Superior Court

108 P.2d 911, 16 Cal. 2d 838, 1941 Cal. LEXIS 237
California Supreme Court·Decided January 6, 1941·No. S. F. 16479·Published·Cited by 24 cases

Opinions

THE COURT.

In this original proceeding in prohibition the petitioner, as Insurance Commissioner of the state, seeks to restrain the respondent Superior Court in and for the City and County of San Francisco from proceeding with the hearing and determination of a cause now pending before it.

An alternative writ of prohibition was issued by this court upon a petition alleging that on August 15, 1940, the petitioner, as Insurance Commissioner, caused to be filed with the respondent Superior Court, pursuant to section 1011 of the Insurance Code, an application for order appointing him conservator of the Mount Moriah Life Insurance Company, a California corporation having its principal office and place of business in San Francisco; that on the same day, and pursuant to such request, the respondent court made its order appointing petitioner conservator, vesting in him as such title to all of the assets of the company and directing him to take possession of its books, records and property with a view to conducting the business until the further order of the court, to the exclusion of the officers and agents of the company, who were thus precluded from interfering with his activities as conservator; that thereupon petitioner immediately took possession of the company’s assets and records as conservator and on the same day removed the principal office of the company to the city of Los Angeles, under the provisions of section 1040 of the Insurance Code; that on the following [841]*841day, petitioner made application, under that section, for an order transferring the conservatorship proceeding to the Superior Court in and for Los Angeles County; that respondent Superior Court refused to make such order of transfer but instead, and upon the application of the company, purported to restrain petitioner from removing the principal office of the company from San Francisco to Los Angeles; that respondent thereupon purported to assume jurisdiction and to proceed with the hearing of the company’s petition, under section 1012 of the Insurance Code, to terminate the conservatorship proceeding even though it is without jurisdiction other than to transfer the conservatorship proceeding to Los Angeles County.

In defense of its action, the respondent court sets forth in its return and brief in support thereof the contention that it cannot lawfully transfer the conservatorship proceeding to Los Angeles or refrain from hearing the application to terminate the same. The validity of this defense depends upon the proper interpretation of several sections of the Insurance Code.

Section 1011 provides that “The Superior Court of the county in which is located the principal office of such person [includes corporation, sec. 19] in this State shall, upon the filing by the commissioner of the verified application showing any of the following conditions hereinafter enumerated to exist, issue its order vesting title to all of the assets of such [corporation], wheresoever situated, in the commissioner . . . and direct the commissioner forthwith to take possession of all its books, records, property, real and personal, and assets, and to conduct, as conservator, the business of said [corporation], or so much thereof as to the commissioner may seem appropriate, and enjoining said [corporation] and its officers, . . . from the transaction of its business or disposition of its property until the further order of said court: . . . [then follow ten enumerated grounds warranting an order of conservatorship].”

Section 1012 provides that “Said order shall continue in force and effect until, on the application either of the commissioner or of such [corporation], it shall, after a full hearing, appear to said court that the ground for said order directing the commissioner to take title and possession does not exist or has been removed and that said [corporation] can properly [842]*842resume title and possession of its property and the conduct of its business”.

Section 1040 provides that “At any time after an order is made under sections 1011 [conservatorship] or 1016 [liquidation], the commissioner may remove the principal office of the [corporation] proceeded against to the city and county of San Francisco or to the city of Los Angeles. In event of such removal, the court wherein the proceeding was commenced shall, upon the application of the commissioner, direct its clerk to transmit all of the papers filed therein with such clerk to the clerk of the City and County of San Francisco or of the county of Los Angeles as the case may require. The proceeding shall thereafter be conducted in the same manner as though it had been commenced in the county to which it had been transferred. ’ ’

The issues in this ease reduce themselves to one of statutory construction. In enacting the Insurance Code the legislature exercised its power to regulate a business peculiarly charged with a public interest. (Carpenter v. Pacific Mutual L. Ins. Co., 10 Cal. (2d) 307, 329 [74 Pac. (2d) 761] ; German Alliance Ins. Co. v. Hale, 219 U. S. 307, 316 [31 Sup. Ct. 246, 55 L. Ed. 229]; In re Bean, 207 App. Div. 276 [201 N. Y. Supp. 827, 828].) In this light the several sections in question must be considered together and not as unrelated provisions.

The respondent court urges that the commissioner, as conservator, having invoked section 1040, must conform thereto in every particular. That section states that the commissioner, once he is appointed conservator, “may remove the principal office” of the company proceeded against to San Francisco or Los Angeles, in which event the court where the proceeding was begun “shall” upon application of the conservator order a transfer of the proceeding and papers to the city chosen. Section 16 of the Insurance Code declares that as used therein the word “shall” is mandatory unless otherwise apparent from the context. There is nothing in the context of section 1040 to indicate that the word “shall” therein is other than mandatory. Upon removal of the principal office of the company to either city, the court wherein the proceeding was commenced must accordingly transfer the proceeding upon application therefor.

[843]*843In the view of the respondent court the section “clearly contemplates ... an actual or substantial removal of the principal office of the insurer proceeded against; . . . the word ‘remove’ in connection with the principal office of an insurance company contemplates the moving or removing of substantially all the physical things and equipment, especially the business records of the company and also the business activities theretofore conducted thereat”. Whatever the meaning of the word “remove” in other situations, such a construction falls wide of the legislative intent with respect to conservatorship proceedings. Not only does it confuse the phrase “principal office” with that of “principal place of business”, between which there is often a clear distinction (Watters v. Hamilton Gas Co., 10 Fed. Supp. 323, 326; Peters v. Detroit & C. Nav. Co., 24 Fed. (2d) 454, 455; Wicecarver v. Mercantile T. M. Ins. Co., 137 Mo. App. 247 [117 S. W. 698, 700] ; Mason & Hanger Co. v. Sharon, 231 Fed. 861, 863 [146 C. C. A. 57] ; Fletcher, Cyclopedia Corporations, secs. 4373 and 4651) but it runs counter to the very purpose of a conservatorship proceeding.

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Caminetti v. Superior Court, 108 P.2d 911, 16 Cal. 2d 838, 1941 Cal. LEXIS 237 (Cal. 1941).

108 P.2d 911 (Caminetti v. Superior Court) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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Caminetti v. Superior Court
108 P.2d 911 (California Supreme Court, 1941)