Opinion
July 8, 1941. Rehearing Denied, October 30, 1941. Motion to Transfer to Banc Overruled, December 12, 1941.
1. COURTS: Insurance: Jurisdiction: Independent Suit to Recover Void Payments. The Circuit Court of Cole County entered a void order directing compensation to be paid to respondent out of impounded insurance premium money. The Circuit Court of Cole County does not have exclusive jurisdiction, and the Circuit Court of Osage County had jurisdiction over an independent action to recover the amount of the compensation illegally paid.
2. INSURANCE: Excess Premiums: Return of Compensation Illegally Paid. The Supreme Court having held that the Circuit Court of Cole County had no power to appoint respondent as attorney or allow him compensation, respondent can be compelled to return the compensation which he has already received.
3. INSURANCE: Excess Premiums: Applicable Statute. Section 5985, Revised Statutes 1939, is a procedural statute, and applies to the administration of excess premiums from its effective date, though a portion of said premiums may have been collected prior thereto.
4. INSURANCE: Excess Premiums: Interest. The administration of interest on excess premiums is governed by the same statute applying to excess premiums. The same applies to a judgment for an additional amount to cover possible errors and omissions.
5. INSURANCE: Excess Premiums: Services of Attorney. The fact that respondent rendered valuable services to the policyholders will not permit retention of compensation paid him in violation of the statute.
Appeal from Osage Circuit Court. — Hon. R.A. Breuer, Judge.
REVERSED AND REMANDED ( with directions).
Roy McKittrick, Attorney General, Covell R. Hewitt and Harry H. Kay, Assistant Attorneys General, for appellant; Charles L. Henson of counsel.
(1) The Circuit Court of Osage County had original jurisdiction of this cause. 2 R.C.L. 297; Aetna Ins. Co. v. Hyde, 34 S.W.2d 85, 327 Mo. 115; Ex parte Morris Johnson, 9 Wall. 605, 19 L.Ed. 799; Nodaway County v. Kidder, 129 S.W.2d 857, 344 Mo. 795; Third Natl. Bank v. St. Charles Savs. Bank, 149 S.W. 495, 244 Mo. 554. (2) The money sought to be recovered by this action is money which was illegally collected from policyholders by certain fire insurance companies. Aetna Ins. Co. v. Hyde, 285 S.W. 65, 315 Mo. 113; Aetna Ins. Co. v. Hyde, 48 Sup. Ct. 174; Aetna Ins. Co. v. O'Malley, 118 S.W.2d 3, 342 Mo. 800. (3) The plaintiff, Superintendent of Insurance, is the legal custodian of the money herein sued for and is trustee of same for the policyholders. Sec. 5874, R.S. 1929; State ex rel. Lucas v. Blair, 346 Mo. 1017; State ex rel. Abeille Fire Ins. Co. v. Sevier, 73 S.W.2d 361, 335 Mo. 269; State ex rel. Carwood Realty Co. v. Dinwiddie, 122 S.W.2d 912, 343 Mo. 592. (4). As trustee of an express trust, plaintiff has the right to maintain this action. Sec. 699, R.S. 1929; Bogert, Trusts Trustees, sec. 954; State ex rel. Abeille Fire Ins. Co. v. Sevier, 73 S.W.2d 361, 335 Mo. 269; Restatement of the Law, Trusts, sec. 280. (5) The money sued for in the case at bar is money which was paid to defendant Lamb, respondent herein, upon void orders of the Circuit Court of Cole County out of policyholders' funds accumulated in the rate review litigation. Aetna Ins. Co. v. O'Malley, 118 S.W.2d 3, 342 Mo. 800. (6) The orders by virtue of which defendant Lamb received the money sued for herein having been void, the defendant acquired no right or title to said money and thus now holds same illegally. 34 C.J. 509; Freeman, Judgments (4 Ed.), sec. 117; State ex rel. Abeille Fire Ins. Co. v. Sevier, 73 S.W.2d 361, 335 Mo. 269; Ralph v. Annuity Realty Co., 28 S.W.2d 662, 325 Mo. 410; West St. Louis Trust Co. v. Brokaw, 102 S.W.2d 792, 232 Mo. App. 209. (7) Plaintiff being legally entitled to the money which defendant received, and defendant having shown no equal or better title than plaintiff's, the judgment should have been for plaintiff. Johnson-Brinkman Co. v. Central Bank, 116 Mo. 558, 22 S.W. 813; Pile v. Bank, 187 Mo. App. 61, 173 S.W. 50; Bisesi v. Farm Home S. L. Assn., 78 S.W.2d 871, 231 Mo. App. 897; Bank v. Investment Co., 160 Mo. App. 369, 140 S.W. 921. (8) Plaintiff is entitled to interest on the money sued for from the date of its receipt by defendant. (a) Where one receives money which rightfully belongs to another, the law implies a promise on the part of the receiver to repay it and thus creates a debt. Bisesi v. Farm Home S. L. Assn., 78 S.W.2d 871, 231 Mo. App. 897; Cotton Co. v. Dry Goods Co., 217 S.W. 323, 203 Mo. App. 25; Harrington v. Gilchrist, 99 N.W. 909; 33 C.J. 203. (b) Interest is owed by debtor upon all sums after they become due and payable. Sec. 2839, R.S. 1929; Jefferson City Savs. Assn. v. Morrison, 48 Mo. 273; Great Northern Ry. Co. v. Erie Ry. Co., 58 F.2d 414. (9) The court should reverse and remand the case with directions to lower court to enter judgment for plaintiff on each count of the petition. (a) Defendant's equitable answer praying affirmative relief converted the case into an equity case. Liberty Mut. Ins. Co. v. Jones, 130 S.W.2d 945, 344 Mo. 932. (b) Where the trial court's finding and decree, in an equity case, is not sustained by law and the evidence, the Supreme Court will proceed to make its own findings and enter such judgment as equity and justice require. Smith v. Holdoway Const. Co., 129 S.W.2d 894, 344 Mo. 862.
Gilbert Lamb, pro se.
(1) The review suit of Aetna v. Hyde was an equity case. State ex inf. v. Old Colony Ins. Co., 80 S.W.2d 876. The restitution proceeding, under the motion and judgment thereon, was in equity. Atlantic Coast Line v. Florida, 295 U.S. 301. The plea to the jurisdiction was properly pleaded as a part of the answer. Little v. Harrington, 71 Mo. 390. Jurisdiction of the trial court over the subject matter of the action may be raised for the first time in the appellate court or on its own motion. State ex rel. v. Vories, 62 S.W.2d 457. The Circuit Court of Osage County did not have original jurisdiction over the subject matter involved in the case at bar. Gregory v. Bank, 50 N.E. 520; In re Antigo Screen Door Co., 123 F. 249; Carbitt v. Bank, 114 F. 602; Barry v. Rood, 209 Mo. 662; State ex rel. v. Reynolds, 209 Mo. 161; State ex rel. v. Foard, 268 Mo. 300; State ex rel. v. Landis, 173 Mo. App. 198; State v. Davis, 190 S.W. 964; Railroad v. Herndon, 33 S.W. 377. This court and even if the parties were the same, will not piece out the record in a case before it by referring to the record of a previously decided case. Rigely v. Prior, 233 S.W. 831; Banks v. Burnans, 61 Mo. 76; Sparlock v. Ry. Co., 76 Mo. 67; Sheets v. Railroad, 152 Mo. App. 376; Domer v. Board, etc., Commissioners, 278 Ill. 189; Huchins v. George, 101 A. 108; Oliver v. Euriquez, 117 P. 884; Pacific, etc., Works v. Goerig, 104 P. 151; Allison v. Ins. Co., 104 N.W. 753. In action for money had and received no surprises can be sprung on defendant. 37 Cyc. 880 -G-2; Bank v. Scott, 1 Mo. 744. (2) As construed by this court in State ex inf. v. Old Colony Ins. Co., 80 S.W.2d 876; American Const. Fire Assur. Co. v. O'Malley, 133 S.W.2d 795; State ex rel. Robertson v. Sevier, 115 S.W.2d 810; State ex rel. v. Dinwiddie, 122 S.W.2d 912, and Aetna Ins. Co. v. O'Malley, 118 S.W.2d 3, Section 5874 is void in that it is sought by such decisions to invest the superintendent with final judicial power over said fund and thereby denying due process and equal protection of the law. Mo. Const., Art. 6, Sec. 1; Sec. 1, 14th Amendment, U.S. Constitution. The superintendent is not a court. State ex inf. v. Old Colony Ins. Co., 80 S.W.2d 876. (3) The Circuit Court of Cole County had jurisdiction to make the class of appointments he made in Aetna Ins. Co. v. O'Malley, and he had the same jurisdiction to be wrong as right. His act could, at most, be error. 1 Pomeroy's Eq. Juris., sec. 129. Estoppel is an outgrowth of equity to mitigate the rigors of the law and is to be administered alone by courts of equity. Penn Oil Co. v. Calf Creek, etc., Co., 140 F. 507, 514. The superintendent was and is estopped to question the validity of the appointments of Cook, Lauf and respondent. Randolph v. Hunting Clubs, 15 S.W.2d 834, affirmed by this court in Randolph v. Fricke, 35 S.W.2d 912. Moreover, respondent was entitled to compensation. Dissenting opinion and cases cited in Aetna Ins. Co. v. O'Malley, 118 S.W.2d 13. (4) Sec. 5874 controlled the impoundment of premiums from its effective date only, to-wit, June 25, 1923. Aetna Ins. Co. v. O'Malley, 118 S.W.2d 3. Therefore the excess premiums collected from Nov. 15, 1922, to June 25, 1923, in the sum of $268,342.41 (249) paid Cook and Lauf was not subject to the provisions of Section 5874, and the money sued for was and is, in equity, entitled to be charged against said sum. Laws 1923, pp. 234, 235; Bobb v. Taylor, 184 S.W. 1028. (5) If the appointments of Cook, Lauf and respondent were void, which we deny, then likewise the payments by the companies to Cook and Lauf, under the same order, were void; did not discharge their judgment obligations and, in equity, the appellant should be required to compel payment by the companies of the monies sued for herein. 21 C.J. 172, 193, sec. 179; 1 Pomeroy's Eq. Juris., sec. 687; Schradski v. Albright, 93 Mo. 42; Romer Const. Co. v. Aurora, 81 Mo. App. 572. (6) $200,000 of the monies paid Cook and Lauf by the companies, under the final judgment, was not a part of and did not represent unrefunded excess premium collections and therefore was not subject to the provisions of Section 5874 (72). The superintendent is not entitled to possession of same and said sum was entitled to be administered by the Circuit Court of Cole County, through Cook and Lauf and the moneys paid respondent were entitled to be paid out of or, in equity, charged to said sum, otherwise respondent would be denied due process and equal protection of the law. Sec. 5874, R.S. 1929; Sec. 1, 14th Amendment, U.S. Constitution. The superintendent acts only by virtue of the statutes. State ex rel. v. Dinwiddie, 122 S.W.2d 914; State ex rel. v. Hall, 52 S.W.2d 174. (7) This court has strictly construed Section 5874. The $857,688.09 interest paid Cook and Lauf under the final judgment (71) is not provided for nor required to be paid the superintendent, and by him paid out, under the terms of Section 5874. That sum came in as the result of a general judgment against the companies and, in equity, is subject to be charged with the amounts paid respondent. To hold otherwise would be read into the statute and final decree what is not there; violate the equitable rights of respondent and deny him due process and equal protection of the law. Sec. 5874, R.S. 1929; Sec. 1, 14th Amendment, U.S. Constitution. The superintendent has no powers except those authorized by statute. State ex rel. v. Dinwiddie, 122 S.W.2d 914; State ex rel. v. Hall, 52 S.W.2d 174. (8) The evidence shows there is in the possession of appellant approximately $2,000,000 that cannot be returned to the policyholders and that a judgment against respondent would only augment that amount. (a) The controlling case in the United States holds that such residue cannot go to the State of Missouri on the "lost money" theory. Illinois Bell Tel. Co. v. Slattery, 102 F.2d 58. (b) If the companies be entitled to the residue, they are making no claim to the fund as against payment out for services rendered and, anyway, they would be estopped to make such claim. (c) Respondent was entitled, on the question of good faith, to rely on the decisions of this court in the cases of Aetna Ins. Co. v. Hyde, 327 Mo. 115, and State ex inf. v. Ins. Co., 80 S.W.2d 876, 892, and the denial of the petition for prohibition filed July 31, 1936, against Circuit Judge Sevier, attacking the authority of Cook and Lauf, all holding jurisdiction to distribute refunds to be in the Circuit Court of Cole County. (d) He who seeks equity must do equity. The restituted fund was enriched about $100,000 and policyholders were paid $100,000, all due, in part, to the services of respondent. 21 C.J., p. 172, sec. 151-2; Sparks v. Jasper County, 213 Mo. 218; Chapman v. Douglas County, 107 U.S. 357. These benefits are held by appellant and kept by the policyholders. If the same cannot be tendered respondent, which was not done, then appellant does not have a cause of action. Daheer v. Mestrell, 224 Mo. App. 815; 21 C.J., p. 179, sec. 160. (e) The monies in the custody of appellant is not a trust fund. The relation of debtor (appellant) and creditor (policyholders) exists as to the fund. (f) Appellant was not a trustee, but a statutory custodian. (g) The burden was on appellant to prove that in equity and good conscience he was entitled to possession of the money sued for. Reynolds v. Rogers, 63 Mo. 17; St. Louis Sanitary Co. v. Reed, 179 Mo. App. 164; Shupe v. Realty Co., 29 S.W.2d 230; 37 Cyc. 854, 874. (h) The form as to law and equity actions have been blended but the applicable principles are unchanged. 17 Wall. 253, 21 L.Ed. 576; MacGuire v. Tyler, 47 Mo. 115. (i) Whether the case is law or equity, it is controlled by equitable principles. Casey v. Curtis, 3 How. 246; Chapman v. Douglas County, 107 U.S. 375; DeWeese v. Reinhard, 165 U.S. 386; Holland, etc., v. Holland, 317 Mo. 951; Bank v. Bank, 244 Mo. 554. (j) According to every principle of equity, good conscience, justice and common honesty, the judgment of the trial court on the merits was right, otherwise respondent would be denied due process and equal protection of the law. Cases cited under points (1) to (8), inclusive; 14th Amendment, U.S. Constitution; 15 Words and Phrases, pp. 5, 71; In re Lessig's Est., 6 N.Y.2d 720; City, etc., v. Benoit, 128 Me. 240; Bank v. Investment Co., 160 Mo. App. 369; 41 C.J. 59, sec. 60.
This case grows out of insurance litigation which has engaged the attention of courts of this State for nearly twenty years. There are two branches of this litigation commonly known as the 10 per cent cases and the 16 2/3 per cent cases. The instant case was brought in the circuit court of Osage County by the present Superintendent of Insurance to recover the sum of $14,510, paid to defendant under orders of the circuit court of Cole County in one of the 10 per cent cases. Judgment was for defendant and plaintiff has appealed.
The facts are not disputed and, in brief, are as follows: in 1922 the then Superintendent of Insurance made an order for a ten per cent reduction in insurance rates. Certain companies resisted this order in the circuit court and on appeal in this court where the reduction order was finally upheld in 1926 in Aetna Ins. Co. v. Hyde, 315 Mo. 113, 285 S.W. 65, and later by the Supreme Court of the United States in 275 U.S. 440, 48 Sup. Ct. 174.
The companies collected the old rates until August 8, 1929; after which they made partial refunds to policyholders. In 1930 the Superintendent filed a motion in this court, claiming that the companies had not made complete restitution and asking this court to compel restitution and collect and administer the fund. We denied the motion. [ 327 Mo. 115, 34 S.W.2d 85.] The Superintendent then filed a similar motion in the circuit court which was sustained in 1933. Some of the companies then filed suit in this court asking us to prohibit the circuit court from proceeding further. We held that the circuit court had jurisdiction to compel restitution and to appoint not to exceed three referees, but that the court had exceeded its jurisdiction in certain particulars. [State ex rel. Abeille v. Sevier, 335 Mo. 269, 73 S.W.2d 361.] Thereafter the circuit court appointed L.H. Cook and H.P. Lauf as referees to conduct hearings and to collect and administer the fund. Later the court appointed Mr. Lamb (respondent in the instant case) as attorney for the referees and, from time to time, made orders for the deposit of the fund in a bank, for certain disbursements, and for monthly compensation to the referees and attorney. On March 3, 1936, the court allowed additional compensation to the referees and allowed Mr. Lamb the additional sum of $20,000. The Superintendent appealed from this order. We held the order void; that the court did not have jurisdiction to administer the fund, but same should be delivered to the Superintendent for distribution to the policyholders as provided by Section 5874, Revised Statutes 1929, Mo. Stat. Ann., sec. 5874, p. 4482; that the court had jurisdiction to appoint Cook and Lauf as referees, but not as custodians of the fund; that the compensation of the referees should have been taxed as costs of litigation; and that the court was without power to appoint an attorney for the referees or to pay such attorney out of the fund. [Aetna Ins. Co. v. O'Malley, 342 Mo. 800, 118 S.W.2d 3.]
In the present suit the Superintendent seeks to recover the aggregate amount of monthly payments received by respondent as attorney for the referees under the orders above mentioned.
On this appeal both parties contend that equitable defenses set up in respondent's answer have converted this action into a case in equity. Whether or not this is so is immaterial, for the facts are undisputed and only questions of law are presented.
Respondent contends that the circuit court of Osage County was without jurisdiction to entertain the cause; that if the Superintendent is entitled to recover he must do so by motion in the original case in the circuit court of Cole County. On this point respondent cites a number of cases, only one of which is discussed in the argument portion of his brief, to-wit: Gregory v. Bank (Mass.), 50 N.E. 520. There money had been deposited in a national bank under orders of a Federal Court. The Supreme Court of Massachusetts held that such money could not be recovered in an independent action in a state court. The decision is based entirely on certain statutes of the United States and furnishes no precedent for the instant case. Likewise the other cases cited by respondent are not in point. We concede that when a court has [637] jurisdiction to administer a fund, such jurisdiction is exclusive. Also where money has wrongfully been paid out by order of a court, the same may be recovered from those who are unjustly enriched thereby by appropriate proceedings in the same court, but it does not follow that recovery may be had in that court only. Suppose a case where the person from whom recovery is sought is beyond the territorial jurisdiction of the court which ordered the disbursement. Would it be held that recovery could not be had by an independent action in the proper court? The Supreme Court of the United States answered that question in Ex parte Morris, 9 Wallace, 605, 19 L.Ed. 799, saying: "McCrosky being beyond the reach of the court, no order can be made in relation to him. He will be amenable to a suit at law wherever he may be found."
We have heretofore held that the circuit court of Cole County was without jurisdiction to administer this fund or to order disbursements therefrom. We have also held that the Superintendent of Insurance is the lawful custodian of the fund and the unexpended portion thereof is now in his possession. It seems clear, and we so hold, that the circuit court of Osage County had jurisdiction of the instant suit. [2 R.C.L. 297, and cases above mentioned.]
By the majority opinion in Aetna Ins. Co. v. O'Malley, 342 Mo. 800, 118 S.W.2d 3, this court held that the circuit court of Cole County had no power to appoint respondent as attorney or allow him compensation. It would seem to follow that respondent can be compelled to return the compensation which he has already received. Respondent says that we should overrule our opinion in that case, but the reasons given by him now were considered by this court then. Respondent's contention that the Superintendent should be estopped, by reason of having received the benefit of respondent's services, was denied by both the majority and minority opinions in the case last mentioned.
Respondent says that a certain portion of the excess premiums was collected by the insurance companies prior to June 25, 1923, the effective date of Section 5874, Revised Statutes 1929, and that as to the portion so collected that statute does not apply.
In the case last mentioned we held that this section is a procedural statute and governs the administration of the fund from its effective date. The fund in question did not come into existence until many years after the effective date of the statute. At the time Messrs. Cook and Lauf were appointed the statute was in full force and provided for the distribution of the fund by the Superintendent and not by custodians appointed by the court.
The record shows that more than $800,000 was collected by Cook and Lauf as interest on the excess premiums for the time such excess was retained by the companies; also that Cook and Lauf collected from the companies the sum of $200,000 over and above the amount of excess premiums and interest found to be due from them. Respondent says that a proper construction of Section 5874, supra, did not require that this interest and this additional sum be turned over to the Superintendent and that the administration of such portions of the fund was within the court's jurisdiction and chargeable with respondent's compensation.
Of course, the interest collected is governed by the same principles that apply to the excess premiums refunded by the companies. All this money was collected for the benefit of the policyholders and, if the Superintendent is the lawful custodian of the principal sum, he is also the custodian of the interest. That also applies to the additional sum of $200,000, judgment for which was rendered to cover possible errors and omissions in the amounts found to be due from the companies.
In principle, every point made by respondent has been decided adversely to his contention in Aetna Ins. Co. v. O'Malley, 342 Mo. 800, 118 S.W.2d 3, and many later cases. [See also State ex rel. Robertson v. Sevier, 345 Mo. 274, 132 S.W.2d 961.] Unless we overrule or modify those decisions, which we decline to do, we are compelled to reverse the judgment in favor of respondent in the instant case.
The record shows that respondent rendered diligent and valuable services, and incurred expense; that his efforts contributed to the collection of a much larger sum for the benefit of the policyholders, or of the State, than might otherwise have been recovered. However, for the reasons stated, we are unable to permit him to retain compensation out of the fund collected. If, as contended by respondent, the State shall become the ultimate beneficiary of a [638] part of this fund, the question of respondent's reimbursement may be addressed to the General Assembly.
Accordingly, the judgment is hereby reversed and the cause remanded with directions to the trial court to enter a judgment in favor of appellant and against respondent for the amount sued for, with simple interest at six per cent per annum from the date of the institution of the suit and for costs. All concur.