State Ex Inf. McKittrick v. American Ins. Co.

140 S.W.2d 36, 346 Mo. 269, 1940 Mo. LEXIS 528
CourtSupreme Court of Missouri
DecidedMay 7, 1940
StatusPublished
Cited by5 cases

This text of 140 S.W.2d 36 (State Ex Inf. McKittrick v. American Ins. Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Ex Inf. McKittrick v. American Ins. Co., 140 S.W.2d 36, 346 Mo. 269, 1940 Mo. LEXIS 528 (Mo. 1940).

Opinion

*272 PER CURIAM:

This is an original proceeding in the nature of quo warranto on information of the Attorney General. The question now to be decided is whether this court has any jurisdiction of the subject matter of this information.

. Respondents, in separate pleas to the jurisdiction, asserted that “the District Court of the United States for the Western District of Missouri, Central Division, has sole and exclusive jurisdiction of the subject matter of this proceeding and the issues with respect thereto.” This court, on September 5, 1939, appointed Hon. Samuel A. Dew as Special Commissioner “to take evidence upon the plea to the jurisdiction,” and “to report the evidence taken, together with his findings of fact and conclusions of law on the issue of the plea to the jurisdiction. ’ ’ . The pleadings herein, evidence taken by the Special Commissioner, and his report, shows the following material facts on the issue of jurisdiction now involved. On October 9, 1922, Superintendent of Insurance, Ben C. Hyde, ordered a 10 per cent reduction of rates on fire, lightning, hail and .windstorm insurance, effective November 15, 1922. Litigation over the validity of this order lasted into 1929. [See Aetna Life Insurance Co. v. Hyde, 315 Mo. 113, 285 S. W. 65; Id., 273 U. S. 681, 47 Sup. Ct. 113, 71 L. Ed. 837; Id., 275 U. S. 440, 48 Sup. Ct. 174, 72 L. Ed. 357; Aetna Life Insurance Co. v. Hyde (D. C.), 34 Fed. (2d) 185; National Fire Insurance Co. v. Thompson, 281 U. S. 331, 50 Sup. Ct. 288, 74 L. Ed. 881.] On August 8, 1929, after this order had been upheld, a reduction of rates to apply as of February 1, 1928, in accordance with the original 1922 order, was filed under protest by respondents. Superintendent of Insurance Joseph B. Thompson (appointed in 1929) acknowledged this filing to be under protest but notified respondents that premiums collected in excess of the 1922 order must be refunded. Thereafter, on December 30, 1929, respondents notified Superintendent Thompson that rates would be increased 16% per cent, effective February 1, 1930, and requested his approval. On May 28, 1930, - Superintendent Thompson made an order denying this increase, and, earlier on the same day, respondents filed in the U. S. District Court separate bills in equity against the Superintendent of Insurance and the Attorney General on grounds of inadequacy and confiscatory effect of rates and. unconstitutionality of statutes authorizing their enforcement. Respondents obtained interlocutory injunctions authorizing them to collect the increased rates but requiring impounding with the court. Reference of these cases to a master then was made. On May 18, 1935, while these cases were pending in-the U. S. District- Court on exceptions to the master’s report, Superintendent of Insurance, R. E. O’Malley (appointed in 1933) entered into an agreement for settle *273 ment with respondents’ agent C. R. Street. This agreement provided that Superintendent O’Malley would make an order, “-retrospective to June 1, 1930-,” setting aside the refusal order of-. May 28, 1930, and approving four-fifths of the 16% per cent rate increase ; that one-fifth of the impounded funds should be refunded to policyholders; and that the remaining four-fifths should , go to respondents or for outlays and expenses in connection with the litigation. After this settlement, and pursuant to it, new rates were filed and approved, effective November 11, 1935. This agreement and the order made pursuant thereto was later held void by this court. [American Constitution Fire Assurance Co. v. O’Malley, 342 Mo. 139, 113 S. W. (2d) 795; see also State ex rel. Robertson v. Sevier, 342 Mo. 346, 115 S. W. (2d) 810.] However, the U. S. District Court; on. February 1, 1936, entered a decree providing for the distribution of the .impounded funds in accordance with the agreement for settlement; but the court retained jurisdiction over all parties.

Under this decree, out -of the impounded funds, (amounting to $9,893,321.08) there was disbursed direct to respondents the total sum of $4,488,193.84, and to their trustees (foi expenses, etc.) the sum of $2,702,789.15. On May 29, 1939, Superintendent of Insurance Ray B. Lucas (appointed in 1939, as successor to G. A. S. Robertson, appointed in 1937) filed a motion for citation to respondents to show cause why the decree of February 1, 1936, should not be set aside and the money disbursed to them and their trustees be paid back for distribution to policyholders. The grounds for this motion were ‘ ‘ that said suits had been instituted through combination and common design on the part of the companies, with the intent ultimately to procure unlawfully the return to1 them of. the invalid increase of rates collected; that experiences under said impounding order had demonstrated the adequacy of the rates as applied to the plaintiffs (respondents) when the suits were brought; that after five years of said impounding, plaintiffs .(respondents), without the knowledge of their counsel, set about by means of a bribe to O’Malley, to obtain a return to them of the said funds; that they had agreed to contribute 5 per cent of said funds to pay one or more persons to influence an alleged settlement of said , cases whereby plaintiff companies would procure a substantial portion of said fund; $440,500 had been so collected from said plaintiff companies with their knowledge that same was to be paid to the person or-persons who could and would influence and procure such a settlement, or with such knowledge on their part as would have put them on inquiry which would disclose that the said purpose was either to bribe said O ’Malley or to corrupt T. J. Pendergast, who had enough power and influence over said O ’Malley to induce him to agree to said full settlement; that all but $500 of said amount had been collected and delivered-to Charles' R. *274 Street, agent of plaintiff companies at various times, and to A. L. McCormick, and that the latter promptly delivered same to T. J. Pendergast, who retained $315,000 thereof and paid $125,000 thereof to said McCormick with instructions to pay one-half thereof to R. E. O ’Malley as a bribe; that by reason of said bribery and influence said O’Malley did enter into said agreement and signed the rate, approval order mentioned.” An order to show cause was made, and respondents filed answers thereto denying any part in or knowledge of the Street, McCormick, Pendergast and O’Malley bribery transactions, disaffirming all advantage arising from the settlement and decree, agreeing to restore the amounts paid to or for them, but reaffirming their claim to the fund and their right to prevail upon the merits. Respondents, prior to August 31, 1939, did repay to the U. S. District Court’s custodian, $7,190,982.99, in accordance with its order of restitution. Superintendent Lucas filed motions to strike respondents’ answers and the matter is still pending in the U. S. District Court upon reference to a Special Master.

Our Special Commissioner made the following finding as to the issues in the Federal Equity Cases and in this quo warranto proceeding:

A.. — Classification of Issues in Federal Equity Cases.

“The material issues in said Federal cases are divisible into two classifications:

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Bluebook (online)
140 S.W.2d 36, 346 Mo. 269, 1940 Mo. LEXIS 528, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-inf-mckittrick-v-american-ins-co-mo-1940.