State Ex Rel. Abeille Fire Insurance v. Sevier , 335 Mo. 269 ( 1934 )

ON MOTION FOR REHEARING. Relators contend that respondent did not have jurisdiction to render judgment against them without according them an opportunity to be heard in defense; [11] that the refusal to accord relators the right to present their defense was a denial of due process of law in violation of the Fourteenth Amendment to the Constitution of the United States.

This contention is based on the following excerpts from the record:

"Thereupon relators stated that they desired to produce witnesses and had them in the court room, who would testify that, and show to the court that relators had no money, property or anything of value in their possession or control, and that the respective relators had never acquired or received anything pursuant to said judgment so the subject of supposed restitution: whereupon, the respondent stated that he would not hear said evidence but that he would appoint commissioners or masters to hear evidence and relators could then be heard. Relators objected and duly excepted to respondent's said ruling, and respondent stated that he had had in contemplation that the merits and objections to the jurisdiction should all be heard together, and that he would not hear relators further or permit the introduction of such evidence. Relators thereupon stated that witnesses were in court prepared to testify that relators had nothing whatever subject to restitution, and respondent said that he accepted counsel's statement that such witnesses were present but he would not hear them."

The record relied upon does not support the contention made. In the first place, the offer of proof was qualified and evasive. It was not an offer to prove that relators did not have in their possession or control any of the ten per cent excess premiums which they collected pending the final determination of the review suit. Whether or not relators had in their possession or control any money or property acquired pursuant to the erroneous judgment in the review suit, and whether or not they had money or property in their possession subject to restitution was a question of law to be determined by the court, and not by the opinion of any witness. Respondent would have been well within the law if he had rejected the offer for the reasons stated. However, the real answer to relator's contention is that they were not denied the opportunity of being heard in their defense. The record upon which relators rely to support the contention that they were denied a hearing clearly shows that respondent stated to them that he would not hear the proffered testimony, but that he would appoint commissioners or masters and that relators could then be heard. Other parts of the record to which relators do not call attention in their motion for rehearing, show the same thing.

In the finding of facts immediately preceding the judgment, the court found, among other things, the following:

"It further appears to the court upon the evidence and record in this cause that plaintiffs have refunded certain sums of money, the exact amount unknown, to certain policyholders, but that there still remains a vast amount of money, the exact amount unknown in the possession of plaintiffs, which does not belong to them, but which belongs to the policyholders of Missouri; that said plaintiffs have not paid back or refunded any interest to such policyholders, and that such plaintiffs still retain the entire interest on all of the moneys collected."

After the finding of facts, the court's judgment concludes in the following language:

"NOW, THEREFORE, IT IS ORDERED, ADJUDGED AND DECREED That the defendant's motion for restitution upon behalf of the policyholders of Missouri, be sustained; that the plaintiffs make full and complete restitution; that judgment is hereby rendered against each one of the plaintiffs herein for the amount of the principal and interest due from them as set out in this decree; that the aggregate amount of the principal due is $13,087,609.48; that the aggregate amount of the interest due from the date of illegal collections at the rate of 6% per annum is $5,586,177.57, making a total of premiums wrongfully collected and interest of $18,673,787.05, to be paid by each of the plaintiffs depositing in this court such sum of money as adjudged to be due from them, together with such interest thereon; that a master or masters will be appointed by the court in order that such plaintiffs may show what refunds or other allowable credits, if any, they have made or are entitled to and for which they will receive credit and judgment will be accordingly rendered; that such master or masters will allow such plaintiffs to have a hearing on all of the issues regarding the amount of money due from them at this time and that such master or masters will conduct such hearings and make such investigation as directed by this court; that when each and every plaintiff has fully complied with this judgment and the other orders to be made by this court it will be fully and completely discharged from any and all liability to any one whatsoever regarding restitution; that this court will retain jurisdiction of this case to make any and all further orders which it deems necessary."

This judgment provides, in express terms, "that a master or masters will be appointed by the court in order that such plaintiffs may show what refunds or other allowable credits, if any, they have made or are entitled to and for which they will receive credit and judgment will be rendered accordingly; that such master or masters will allow such plaintiffs to have a hearing on all of the issues regarding the amount of money due from them at this time. . . ."

It appears from a reading of the judgment that the court not only did not refuse plaintiffs a hearing, but made express provisions that they should have a hearing, and should be permitted to show what refunds they had made, and would be given credit with such refunds and judgment would be rendered accordingly.

[12] Relators make the further contention that the judgment shows on its face that an accounting was necessary to determine the liability of any of the respective relators, and the court was therefore without jurisdiction to enter the judgment which it did enter before an accounting was had.

This contention proceeds upon the theory that the judgment rendered was a final judgment. We do not so regard it. It is true the judgment recites that "it is ordered adjudged and decreed that defendant's motion for restitution upon behalf of the policyholders of Missouri be sustained; that the plaintiffs make full and complete restitution, and that judgment is hereby rendered against each one of the plaintiffs herein for the amount of the principal and interest due from them as set out in this decree." If the court had stopped with this adjudication, no doubt it would have been a final judgment, but it proceeded to take from the judgment every element of finality by adjudging that masters "be appointed by the court in order that such plaintiffs may show what refunds or other allowable credits, if any, they have made or are entitled to and for which they will receive credit and judgment will be rendered accordingly; that such master or masters will allow such plaintiffs to have a hearing on all of the issues regarding the amount of money due from them at this time and that such master or masters will conduct such hearings and make such investigations as directed by this court."

A similar question was before this court en banc in State ex rel. v. Klein, 140 Mo. 502, 41 S.W. 895. We there said:

"It is perfectly manifest that the plaintiff was given no final judgment in this case. The court finds and declares the right of plaintiff to have returned to it the difference between the amount which had been paid to defendant Clark on the award of the commissioners and the amount of his compensation as found by the jury. It is declared ``that plaintiff is entitled to a return of the sum of $39,610,' without interest, from said Clark, and the court doth order and direct the said defendant Clark to repay to plaintiff, or into court for the plaintiff, the said sum.

"It is unnecessary to say whether, if the court had stopped at this direction, it would have constituted a final judgment, for the court proceeded to shear the declaration of all the statutory incidents of a final judgment by declaring that the amount so found due plaintiff shall not bear interest, that execution shall not issue thereon, and that no lien therefor shall attach to the real estate of defendant. Taking the whole record entry together there is no final judgment and none was intended."

This court has quoted approvingly from recognized textwriters the rule for determining whether a judgment is interlocutory or final. In State ex rel. v. Klein, supra, we said:

"A judgment, though upon the merits, or determining some substantial right, which leaves necessary further judicial action before the rights of the parties are settled, is not final."

Again in State ex rel. v. Riley, 219 Mo. 667, 691, 118 S.W. 647, we said:

"The difficulty appears to arise in relation to those decrees which, while settling the general equities of the cause, leave something for future action or determination. And the true rule seems to be that, if that which remains to be done or decided will require the action or consideration of the court before the rights involved in the cause can be fully and finally disposed of, the decree is interlocutory."

Viewing the judgment in this case from its four corners, and in the light of applicable rules of construction, it clearly appears that the court intended to determine the total amount of excess premiums collected by each company, with interest, then in later hearings determine the credits to which each company was entitled for refunds made, if any, before rendering final judgment for the amount actually due. This being true, the judgment was interlocutory for the reason that further judicial action was necessary in order to fully and finally settle the rights of the parties.

[13] Further contention is made that when this court reversed the judgment of the circuit court in the review suit, no mandate was sent to the circuit court directing any action on its part.

We are satisfied with our disposition of this question in the original opinion. However, we will say that whether we were right or wrong in our conclusion that the certified copy of our judgment which was sent to the circuit court was a mandate, cuts no figure in this case. As said in Fleming v. Riddick's Exr., 50 Am. Dec. 119, "The power of a court to repair the injury occasioned by its own wrongful adjudication, is not derived from a mandate of the appellate forum." In the instant case, the circuit court having occasioned the wrong by its own erroneous judgment, upon the reversal of that judgment, it had inherent and summary jurisdiction to right the wrong by awarding restitution, either with or without a mandate from this court directing it so to do. [Aetna Insurance Company v. Hyde, 327 Mo. 115, 34 S.W.2d 85.]

[14] It is contended that the only thing the Superintendent of Insurance lost by reason of the erroneous judgment was his rate reduction order, and as that order was restored to him by our reversal of the erroneous judgment, restitution was complete.

We adhere to what we held in the original opinion on this question. However, as relators insist that appellant lost nothing by reason of the erroneous judgment, we will discuss the question from that angle.

In reversing the judgment of the circuit court, this court adjudged "that plaintiff be restored to all things which he lost by reason of said erroneous judgment." Relators argue that under the terms of our judgment nothing can be restored except that which was lost by reason of the erroneous judgment of the circuit court, and as the excess premiums were not collected by reason of the erroneous judgment, they were not lost by reason thereof, and are therefore not subject to restitution. It is true, the excess premiums were collected by reason of the stipulation of the parties and a court order made pursuant thereto, but neither the stipulation nor the court order determined the title to the excess premiums collected. Under the terms of both the stipulation and the court order that question was to be determined by the judgment of the court in the review suit. That is, if the judgment of the court sustained the rate reduction order, then relators were to refund the excess premiums collected. Otherwise not. The erroneous judgment of the circuit court canceled and set aside the rate reduction order. The effect of that judgment was to permit relators to keep the excess premiums collected. A judgment could not permit relators to keep the excess premiums collected, without at the same time causing the policyholders to lose such premiums. The effect of the stipulation and court order was to give relators temporary custody of the excess premiums, the title to which was to be determined in accordance with the judgment of the court in the review suit. We, therefore, hold that the policyholders lost title to the excess premiums by reason of the erroneous judgment of the circuit court in the review suit, and neither they nor the Superintendent of Insurance, their lawful representative in this suit, could maintain proceedings, either by motion for restitution or otherwise, but for the fact that we reversed the erroneous judgment of the circuit court. Independent of what we have just said, relators could be compelled to refund because they agreed to do so in event the rate reduction order was sustained.

Another view of the question. When the erroneous judgment of the circuit court deprived the Superintendent of Insurance of the rate reduction order, it necessarily took from him the right to enforce the collection of the reduced rates. Our restoration of the rate reduction order by reversing the erroneous judgment of the circuit court, necessarily restored to the Superintendent of Insurance the right to enforce the order. The remaining question is the manner of enforcement. The original opinion holds that the Superintendent of Insurance as representative of the policyholders, may enforce the reduction order by motion for restitution in the original case. We adhere to that ruling for the reasons stated in the original opinion.

Relators contend that the opinion is in error in holding that the stipulation and court order made pursuant thereto were void so far as the provisions apply against the Superintendent of Insurance, but are valid as against the insurance companies on the ground of estoppel.

The argument made concerning the question of estoppel is that estoppel to be valid must be mutual; that in order to be binding on either party it must be binding on both.

We adhere to what we said on that question in the original opinion, but in order to show that the opinion does not run counter to relators' contention, we will discuss the matter more in detail.

The opinion holds that the part of the court order which authorized relators to collect the excess premiums pending the review suit was void and non-enforceable when made, because in violation of Section 6284, Revised Statutes 1929, which provides that pending a suit to review a rate reduction order, the insurer shall not charge any rate of premium in excess of that fixed by the Superintendent of Insurance. The opinion also holds that as the insurance companies obtained the fruits of the invalid order by collecting, pending the review suit, the rates in force prior to the making of the rate-reduction order, they are estopped from asserting the invalidity of the order. It is clear from a reading of the opinion, that in the above holding we were dealing with that part of the order which authorized the collection of the excess premiums pending the review suit, because the opinion expressly so states. The stipulation pursuant to which the court order was made provided that relators would refund the excess premiums collected in event the rate-reduction order was sustained. When that stipulation was before the Federal District Court, 34 F.2d 185, that court said:

"The claim that the superintendent had no power to agree to collection and retention of the excess pending the stipulated review is beside the mark because the companies have received the entire benefit of that provision which is fully executed."

The opinion in that case further says:

"But the facts remain that the stipulation required repayment of the excess collections if a particular stipulated proceeding resulted adversely to complainants; that such result occurred; that every benefit to complainants from the stipulation has been received by them; that those benefits are very substantial and they refuse to refund. Unless they do so, they will rob the other parties to the stipulation of every possible benefit therefrom, although such parties have fully performed the stipulation on their part. Such action by the complainants is highly unconscionable and should not be allowed by a court of equity."

If, as held in the cited case, relators are estopped to assert the invalidity of the stipulation which provides that, pending the outcome of the review suit, they might collect the old rate of premium, it logically follows that they are likewise estopped from asserting the invalidity of that part of the court order which provides the same thing. The question of mutuality of estoppel has no application to this branch of the case because neither party is asserting the invalidity of that part of the stipulation or that part of the court order which authorized relators to collect the excess rates pending the review suit.

[15] This brings us to the remaining part of the court order which attempted to provide the manner in which refunds should be made. In the original opinion we held that this part of the order was void on its face, for the reason, among others, that it conditioned the policyholders right to a refund, upon their making written demand therefor within ninety days from the date the insurance companies mailed them a written notice of refund. Such an order is in the teeth of the statute which provides the time limit in which claims or causes of action are barred. The order being in violation of the statute, it is against the public policy of the State and, therefore, void on its face. Such an order cannot be the basis of an estoppel. [Nichols v. Bank,55 Mo. App. 81, 91; Sursa v. Cash, 171 Mo. App. 396, 409, 156 S.W. 779; Smith v. Smith Bros., 62 Mo. App. 596, 601-2; Wood v. Kansas City, 162 Mo. 303, 311, 62 S.W. 433.] The order being void, both parties are presumed to have known it, and there can be no estoppel where both parties have equal knowledge of the facts. [Laughlin v. Wells, 314 Mo. 474, 283 S.W. 990, 992.] This part of the order being void on its face because contrary to statute, neither party had a right to rely upon it, and neither party is estopped from asserting its invalidity. In answer to the superintendent's motion for restitution relators pleaded that they relied upon the court order and in reliance thereon expended large sums of money and was put to great trouble, inconvenience and expense in attempting to make refunds in the manner provided in the court order and in the bond given pursuant thereto; that the Superintendent of Insurance knew they were doing so, and permitted them to pursue such course without objection on his part, and for that reason he is estopped to assert the invalidity of the court order.

The trouble with this contention is that the part of the court order which attempted to detail the manner in which refunds should be made was illegal and void because contrary to statute, and relators are presumed to have known that fact, and therefore, had no right to rely or act upon a void order. If they did, they must suffer the consequences of their own imprudence. Where, as here, the Superintendent of Insurance received nothing by reason of the illegal and void order, and did not by fraud or otherwise induce relators to change their position to their detriment, his mere silence would not breathe life into the void order or estop him from asserting its invalidity. [Sursa v. Cash,171 Mo. App. 396, 409, 156 S.W. 799.] Relators do make the contention that attorneys representing the Superintendent of Insurance approved the order and consented to its making. Even so, that would furnish no ground for estoppel. The mere making or approval of an illegal and non-enforceable contract or order, without more, does not estop either party from asserting its invalidity. If the law were otherwise, every illegal and void contract could be enforced at the option or whim of either party thereto.

Relators further contend that where a party claims rights under an instrument he must accept all of its terms and is bound thereby. The theory of this contention is that the superintendent is bound by all the terms of the court order and is, therefore, estopped from asking that restitution be made in any manner other than that provided in the court order.

The trouble with this contention is that the superintendent's right to compel restitution does not depend upon this court order. He could compel restitution if this court order had never been made. The stipulation which is now binding on relators would compel them to make restitution. [Aetna Insurance Co. v. Hyde,34 F.2d 185, 191.] Furthermore, if the stipulation had not been entered into, and if the court order had not been made, still relators could be compelled to restore the excess premiums collected pending the outcome of the suit to review the rate reduction order. This is so because at the time the reduction was sustained by this court, relators had in their possession excess premiums that belonged to the policyholders, which a court of equity would compel them to restore. Moreover, as held in the original opinion, the court order in question was not made a part of the judgment in the review suit. It was not a final determination of the rights of the parties, but was a mere order of the court which remained under its control, subject to be recalled or set aside at any time before the case was finally disposed of. [Sec. 1072, R.S. 1929; Leavenworth Terminal Ry. B. Co. v. Atchison, 137 Mo. 218, 37 S.W. 913.] The court did refuse to follow this order in awarding restitution, the effect of which was to recall the order, a thing it had a lawful right to do, because the order, not being a part of the judgment, was not a final determination of the rights of the parties. Since the court refused to follow the order in awarding restitution, it cannot be successfully argued that the order is still binding on the Superintendent of Insurance. In fact, the order had nothing whatever to do with the question of restitution.

It is contended that the judgment below unlawfully imposes such insuperable obstacles to an appeal as to deprive relators of their lawful right to review the judgment on appeal.

The claim is that the amount of the appeal bond required by the judgment would be $37,000,000, and that it is not practical to secure bonds in such sums. It is argued that the impossibility of an appeal is created entirely by the oppressive, unusual and unconstitutional provisions of the order which is essentially one for an accounting, but couples such accounting order with a money judgment of over $18,000,000. We have heretofore pointed out in this opinion that the judgment in question is interlocutory. As no appeal lies from an interlocutory judgment, the contention made necessarily drops out of the case.

Other contentions are made but they do not merit further attention than that given them in the original opinion.

We did err in holding that relators' right to challenge the authority of the Superintendent of Insurance to maintain the action was waived by failing to demur to the motion for restitution. To that extent, the original opinion is modified, and the motion for rehearing is overruled. All concur, exceptLeedy, J., not sitting, and Ellison, J., absent.