Court Opinion

ID: 7136165
Source: CourtListenerOpinion
Date Created: 2022-07-24 15:24:08.71865+00
Date Added: 2024-06-11T16:14:38.073823
License: Public Domain

Opinion by
Judge Payntek.
The Mutual Life Insurance Company, a corporation created under the laws of this Commonwealth, was engaged in the life insurance business. Appellee Illinois Life Insurance Company is also a corporation organized under the laws -of the State of Illinois and engaged in the life insurance business. Under 'the laws of this State it was necessary for the Mutual Life Insurance Company to deposit with the Treasurer of the State $100,000 in solvent securities for the purpose ' of protecting its policy holders. The statutory law requires all domestic life insurance companies to make such deposits with the State Treasurer. Such company may deposit a greater sum than that, although it is not required to do so. Section 648, Ky. St. 1903. The Mutual Life Insurance Company deposited bonds, etc., of the value of $211,000. In the year 1902 the Mutual Life Insurance Company concluded that it was best for itself and the policy holders that the latter should be reinsured by some other insurance company, and pursuant to section 645 of Kentucky Statutes of 1903 it was authorized to have those holding policies reinsured in another company. The Insurance Commissioner gave his consent that such an arrangement should be made. The Mutual Life Insurance Company entered into an arrangement *40with, the Illinois Life Insurance’ Company by which the latter assumed the risks on the policies issued by the former and issued certificates to its policy holders to that effect, to which arrangement the policy holders also gave their consent. From the averments of the petition it appears that the Mutual Life Insurance Company is not bound on a single policy which it issued, it having been relieved of responsibility by all persons holding its policies on their lives. It is not indebted to' any one. The funds which áre on deposit with the State Treasurer under the law were transferred to the Illinois Life Insurance Company, and the consideration therefor was the assumption of the risks which it made under the arrangement stated. The Illinois Life Insurance Company has deposited in the State of Illinois bonds, etc. of the value of $550,000 for the protection of its policy holders, among whom are the persons who hold policies in the Mutual Life Insurance Company, who had consented to. the transfer and the assumption of. liability by the former. In view of the facts above recited, the Illinois Life Insurance Company instituted this proceeding, and sought by mandamus to compel the delivery of the securities on deposit with the State Treasurer. The question here is whether it is the duty of the Insurance Commissioner to order, and the Treasurer to make, delivery of the securities mentioned.
Foreign life insurance companies are not required under the law to deposit money or bonds with the Treasurer.of the State for the protection of its policy holders. The law of the State where the company is organized is supposed to require life insurance companies to do such things as are necessary for the protection of its policy holders. The Commissioner of Insurance determines whether an insurance company shall be permitted to do business in the State, and it is presumed when he allowed such company to enter *41this territory with a view of permitting it to conduct its business, that he has made all necessary investigations to satisfy himself that those who become policy holders in the company are protected. The purpose of deposit of securities with the Treasurer, as we have said, was for the protection of policy holders. If they no longer have claims against the company, and no liability can arise from any of its contracts with it, the purpose of the law has been fulfilled. It has ceased to do business, and therefore, no new liability can be incurred by it. If the Mutual Life Insurance Company was entitled to the securities which are being held by the State Treasurer, then its assignee is likewise entitled to them. Why should the State be permitted to hold bonds simply because at one time they might have been needed for the purpose of protecting the policy holders? No new liability can arise now. Then if the necessity for holding the bonds does not exist, and there being no law requiring that the State should do so, it seems that ■the securities should be surrendered to the parties to whom they should go. Section 650, Ky. St. 1903, expressly provides that the Insurance Commissioner and Treasurer may deliver to the insurance companies such securities held by the Treasurer in virtue of the law, when satisfied that all deeds and liabilities of every kind are paid and extinguished that are due, and which may become due upon any contract or agreement with any citizen of the United States. It is admitted in the record, as we have said, that the Mutual Life Insurance Company does not owe any debts to any one, and that none of its obligations of any kind whatsoever exist or are outstanding. Under such circumstances, it is our opinion that a fair interpretation of the statute requires that we should hold that the law imposes the duty upon the Commissioner and Treasurer to surrender the securities in question.
*42It is urged that the court did not have jurisdiction to determine the question as to whether the Commissioner and Treasurer should surrender the securities in question, because i't is in effect an action against the State of Kentucky, and therefore, under section 231 of the Constitution it was necessary to obtain legislative consent that the State might be sued. This is not a question to recover anything from the State, nor can the result of the action affect the State in any way whatever. The State Treasurer by virtue of his office is the custodian of certain securities of the insurance company. He is merely an agency provided by law for the protection of persons who may have, business with an insurance company organized under the laws of this State. If the Auditor draws his warrant upon the treasurer of the State and he refuses. to pay it, he can be compelled by mandamus to do so. If it is the duty of the Auditor under the law to issue his warrant upon the treasurer, and he refuses to do it he can be compelled to do so by mandamus. Such actions are not actions against the State, but actions against the officers of the State, requiring them to perform duties imposed upon them by law. This court has repeatedly sustained such proceedings. Baldwin v. Shine, 84 Ky. 8 Ky. L. R. 496, 502, 2 S. W. 164; Baldwin v. Hewitt, 88 Ky. 673, 11 Ky. L. R. 199, 11 S. W. 803; German Security Bank v. Coulter, Auditor, 112 Ky. 577, 23 Ky. L. R. 1888, 66 S. W. 425; Louisville City National Bank v. Coulter, 112 Ky. 584, 23 Ky. L. R. 1883, 66 S. W. 425; Traynor v. Beckham, Governor, 116 Ky. 13, 74 S. W. 1105, 25 Ky. Law Rep. 283. This court recognized the right in Herr v. Central Kentucky Lunatic Asylum, 97 Ky. 458, 17 Ky. L. R. 320, 30 S. W. 971, 28 L. R. A. 394, 53 Am. St. Rep. 414, and in Hauns v. Same, 103 Ky. 575, 20 Ky. L. R. 246, 45 S. W. 890, and in Gross v. World’s Pair Commission, 105 Ky. 842, 20 Ky. L. R. 1418, 49 S. W. 458, 43 L. R. A. 703, that agencies of the State in the nature of corpo*43rations, performing functions of the State government, could be sued, and that such actions are not to be treated as actions against the State.
Section 200 of the Constitution of this State reads as follows: “If any railroad, telegraph, express, or ether corporation, organized under the laws of this Commonwealth, shall consolidate by sale or otherwise, with any railroad, telegraph, express, or other corporation organized under the laws of any other State, the same shall not thereby become a foreign corporation, but the courts of the Commonwealth shall retain jurisdiction over that part of the corporate property within the limits of the State in all matters which may arise, as if said consolidation had not taken place." It is suggested that the Mutual Life Insurance Company has consolidated with the Illinois Life Insurance Company, and hence did not thereby become a foreign corporation. There was no consolidation of the two companies by sale or otherwise. The two companies simply entered into a contract by’which one company assumed certain risks for which the other was liable. The purpose of this section quoted was to prevent the domestic corporation from becoming a foreign corporation, and thus wrest from the courts uf this State jurisdiction over the corporate property within the limits of the State in all matters which might arise. If it did apply to the transactions in this action then it would seem to confer jurisdiction upon the court in this case, because the domestic corporation is appealing to the courts of this State to adjudicate the question here involved. It is not only not claiming to be a foreign corporation, but it retains its character as a domestic corporation, and is appealing to the State courts for adjudication of the question at issue.
It is our opinion that the Illinois Life Insurance Company is entitled to the possession of the bonds in question, and that it is the duty of the Commissioner *44and the Treasurer to surrender them, and that the mandamus ought to go.
The court below adjudged that the Illinois Life Insurance Company was entitled to the bonds and other securities in excess of $100,000, but denied its right to the balance of them. The appellee prosecuted a cross-appeal, because the court denied its right to the possession of the bonds to the value of $100,000.
The judgment is affirmed on the original and reversed on the cross-appeal, and cause is remanded for proceedings consistent with this opinion.