Opinion
No. WD56252
OPINION FILED: June 22, 1999
APPEAL FROM THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI, HONORABLE JOHN I. MORAN, JUDGE.
John C. Craft, Kansas City, MO, attorney for respondent.
Gregory P. Forney, Kansas City, MO, attorney for appellant.
Before Spinden, P.J., and Smith and Riederer, JJ.
Danielson Holding Corporation (DHC) appeals from the circuit court's judgment approving the allowance of interest, at the statutory rate of nine percent per annum under § 408.020, on claims under a plan of distribution of the assets of the Mission Reinsurance Corporation Trust (MRCT), which is in receivership under the supervision of the Missouri Department of Insurance (the Department).
All statutory references to § 375.700 are to RSMo Supp. 1996. All other statutory references are to RSMo 1994, unless otherwise indicated.
In its sole point on appeal, DHC claims that the trial court erred in allowing interest on the claims against the MRCT. Specifically, it claims that the trial court lacked jurisdiction to award interest in that the court's jurisdiction in an insurance receivership proceeding is limited to the exclusive provisions of the Insurance Code (the code), Chapter 375, which does not provide for the recovery of interest on claims for distribution of receivership assets.
We reverse and remand.
Facts
DHC, formerly Mission Insurance Group, Inc., had its headquarters in California and held five insurance subsidiaries. After DHC and its subsidiaries were, by court order, placed in receivership in California in 1985 and after it initiated Chapter 11 bankruptcy, Missouri's Department of Insurance instituted receivership proceedings against the three DHC insurance subsidiaries which were connected to Missouri: Mission Reinsurance Corporation, Holland-America Insurance Company, and Missouri Insurance Company. On March 6, 1987, the circuit court declared the companies to be insolvent.
In an agreement between the California and Missouri courts in 1990, the assets and liabilities of the five DHC insurance subsidiaries were transferred to five separate trusts, and the trusts were substituted as parties for the subsidiaries in the state liquidation proceedings. In an order on April 19, 1990, the trial court reaffirmed its jurisdiction as the domiciliary receivership court of the MRCT and Holland-America Insurance Company Trust (HICT).
On December 6, 1996, Jay Angoff, then director of the Department of Insurance and the court-appointed receiver of the companies (the Director), asked the trial court to approve his plan for distributing assets of the MRCT. He asked permission to assess statutory interest, pursuant to § 408.020, on claims allowed against the trust from March 6, 1987, the date of liquidation, through the date of payment of each claim. He contended that § 375.700.1(5) authorized interest on such claims by virtue of its authorizing payment of "other debts." He estimated that claims would total $20 million and that interest would be $17.7 million. At that time, the trust assets had a market value of slightly less than $46.5 million. Of the $46.5 million, approximately $14 million represented property of the estate of the HICT, which was being held by the MRCT for its benefit. Thus, after that amount was transferred to the HICT in 1997, the MRCT was left with assets of approximately $32 million, which exceeded the principal amount of allowed claims against it, plus interest, by $12 million.
Jay Angoff resigned as Director of the Department of Insurance effective October 31, 1998. A.W. McPherson became the acting director of the department, as well as the domiciliary receiver and trustee of the MRCT and the HICT. In accordance with Rule 52.13(d), McPherson was sua sponte substituted for Angoff as a party to this lawsuit.
These estimates were in the Director's report of projected claims and assets dated December 10, 1996.
As of December 23, 1998, the Director had paid allowed claims against the MRCT in the amount of approximately $20 million, representing amounts of principal due on those claims only.
On April 3, 1997, the trial court approved the requested interest payments, and DHC appealed from that order to this court. On appeal, in the case of Angoff v. Holland-America Co. Trust , 969 S.W.2d 351 (Mo. App. 1998), this court dismissed DHC's appeal for lack of jurisdiction, finding that the trial court's April 3, 1997, order approving interest payments was not a final judgment from which it could appeal. Id. at 353.
On July 20, 1998, DHC filed a motion to amend the trial court's April 3 order, seeking to have the order properly denominated a judgment from which an appeal could be taken. On July 24, 1998, the trial court amended its April 3 order and denominated it a judgment. On July 24, 1998, DHC filed a motion to set aside the July 24 judgment on the basis that the parties' counsel had not been properly served with notice of the judgment pursuant to Rules 74.03 and 74.06. On August 11, 1998, the trial court re-issued its July 24 judgment.
All rule references are to the Missouri Rules of Civil Procedure, unless otherwise indicated.
This appeal follows.
Standard of Review
The question of whether a trial court has acted outside its jurisdiction is a question of law. Cook v. Polineni , 967 S.W.2d 687, 690 (Mo. App. 1998); Farris v. Boyke , 936 S.W.2d 197, 200 (Mo. App. 1996); Laser Vision Ctrs., Inc. v. Laser Vision Ctrs. Int'l , SpA , 930 S.W.2d 29, 31 (Mo. App. 1996). Hence, review is de novo, with the appellate court independently considering the evidence and reaching its own conclusions. Cook , 967 S.W.2d at 690; Millers Mut. Ins. Ass'n v. Shell Oil Co. , 959 S.W.2d 864, 866 (Mo. App. 1997). As such, no deference is due the trial court's judgment. Millers , 959 S.W.2d at 866-67 .
I.
In its sole point on appeal, DHC claims that the trial court erred in allowing interest on the claims against the MRCT. Specifically, it claims that the trial court lacked jurisdiction to award interest in that the court's jurisdiction in an insurance receivership proceeding is limited to the exclusive provisions of the Insurance Code, Chapter 375, which does not provide for the recovery of interest on claims for distribution of receivership assets. In response, the Director contends that where the General Assembly has not "prescribed an explicit statutory procedure" in the code, the trial court, in an insurance receivership proceeding, is not limited to its exclusive provisions. Thus, he argues, because no explicit statutory procedure is set forth in the code relating to the recovery of interest on claims, the trial court was free to rely on § 408.020, providing for interest where none has been agreed upon by the parties, in permitting the recovery of interest in this case. In the alternative, the Director contends that, even if the trial court's jurisdiction was limited in scope to the exclusive provisions of the code, four provisions thereof, §§ 375.700.1 .3, 375.1182.1(22), and 375.1220.1, authorized the recovery of interest. Thus, the issue presented is whether, in an insolvency proceeding under the code, a trial court exceeds its jurisdiction in approving the payment of statutory interest on claims allowed where the receivership assets exceed the sum necessary to pay the total of the principal amount of all claims due and payable under the code.
Section 408.020 provides:
Creditors shall be allowed to receive interest at the rate of nine percent per annum, when no other rate is agreed upon, for all moneys after they become due and payable, on written contracts, and on accounts after they become due and demand of payment is made; for money recovered for the use of another, and retained without the owner's knowledge of the receipt, and for all other money due or to become due for the forbearance of payment whereof an express promise to pay interest has been made.
We assume that, as a part of this argument, the Director further claims that because these code provisions authorized the trial court to approve the allowance of interest and because the code did not set forth a statutory rate for interest on such claims, then the trial court, after finding authority within the code to allow such interest, could rely on the statutory rate for interest as set forth in § 408.020.
"The statutory scheme for the receivership in liquidation of an insurance company . . . sets up a self-contained and exclusive statutory scheme." State ex rel. ISC Fin. Corp. v. Kinder , 684 S.W.2d 910, 913 (Mo. App. 1985) ( citing O'Malley v. Prudential Cas. Sur. Co. , 80 S.W.2d 896, 897 (Mo. App. 1935)). This statutory scheme is found in the code. Medallion Ins. Co. v. Wartenbee , 568 S.W.2d 599, 601 (Mo. App. 1978). The provisions of the code are summary, special, and complete in themselves. Angoff , 969 S.W.2d at 353 ( citing Melahn v. Continental Sec. Life Ins. Co. , 793 S.W.2d 425, 428 (Mo. App. 1990)). It is a self-contained, exclusive, and comprehensive code, requiring the trial court to administer the insolvent company in accordance with its statutory provisions. William Blair Realty Partners, III v. Transit Cas. Co. ( In re Transit Cas. Co. ), 900 S.W.2d 671, 675 (Mo. App. 1995).
The legislature, in enactment of the insurance laws, now Chapter 375, RSMo., "has evidenced an intention to provide an exclusive code for the insurance business, including the course to be followed in the distribution of the assets of a dissolved company among claimants and others entitled thereto, and excluding the application of statutes which might seem . . . to be in conflict with any section of the Insurance Code."
Wartenbee , 568 S.W.2d at 601 ( quoting O'Malley , 80 S.W.2d at 897 ). The provisions of the code must prevail over any general statutes or common law, as the General Assembly has specifically spelled out the substantive law as well as the procedures to be followed. State ex rel. Melahn v. Romines , 815 S.W.2d 92, 94 (Mo. App. 1991). "It is a valid exercise of the police power [with] intention to regulate the business from beginning to end . . . ." Wartenbee , 568 S.W.2d at 601 ( citing State ex rel. Missouri State Life Ins. Co. v. Hall , 52 S.W.2d 174, 177 (Mo. banc 1932)). When the General Assembly sets up an exclusive statutory scheme, strict compliance with the prescribed procedure by the court is mandatory and jurisdictional. Ross v. Conco Quarry, Inc. , 543 S.W.2d 568, 572 (Mo. App. 1976); Brogoto v. Wiggins , 458 S.W.2d 317, 318-19 (Mo. 1970).
In State ex rel. Melahn v. Romines , the stockholders of three insurance companies, which had been placed in receivership, sought a writ of mandamus seeking access to the books and records of the companies, which the trial court permitted. Romines , 815 S.W.2d at 93 . The appellate court reversed, holding that the trial court lacked the jurisdiction to entertain the stockholders' petition. In so holding, the court relied on the fact that, although the code did not prohibit the relief requested by the stockholders, it did not expressly authorize it. Id. at 94.
In Angoff v. American Financial Security Life Insurance Co. , 869 S.W.2d 90 (Mo. App. 1993), the trial court placed a life insurance company into a statutory rehabilitation for operating in a hazardous condition. Id. at 91. On appeal, the company filed a motion for an award of attorney's fees. Id. at 93. Because there was no provision in the code for the award of attorney's fees on appeal, the appellate court denied the motion. Id. at 94. See also State ex rel. Ellsworth Freight Lines, Inc. v. State Tax Comm'n , 651 S.W.2d 130 (Mo. banc 1983) (holding that § 144.190 specified the exclusive method by which sales tax refund claims could be made against the state and, in the absence of a statute providing for interest on those claims, no interest was allowable).
The holdings in these cases instruct us that, in an insurance receivership proceeding, the trial court's jurisdiction is limited exclusively to the provisions of the code, In re Transit Cas. Co. , 900 S.W.2d at 675 , and it cannot act outside that authority. Conco Quarry, Inc. , 543 S.W.2d at 572 . Hence, the trial court here could not look to § 408.020, which is outside the code, to find authority for its approval of interest on the allowed claims against the MRCT. As such, unless the code specifically provided for interest on the claims against MRCT, the trial court lacked jurisdiction to allow it.
In holding as we do as to the non-application of § 408.020 to insurance receivership proceedings under the code, we are mindful of the holdings in Francka v. Fire Insurance Exchange, 668 S.W.2d 189, 190-91 (Mo. App. 1984) and Keeton v. National Union , 182 S.W. 798, 800-801 (Mo. App. 1916), cited by the respondent for the general proposition that "insurance claimants are entitled to receive statutory interest accruing on contractual obligations that are owed by an insurer." These cases are distinguishable from the case at bar in that they do not involve receiverships under the exclusive provisions of the code, but deal with contractual policy claims against solvent insurance companies. And, while, as a matter of policy, it may seem inequitable to allow statutory interest on contractual policy claims against solvent insurers, while denying the same against insolvent insurers who are in liquidation under the code, it is not for us to question the wisdom of that which the legislature intended. See Batek v. Curators of the Univ. of Mo. , 920 S.W.2d 895, 899 (Mo. banc 1996) (holding that it "is not the Court's province to question the wisdom, social desirability or economic policy underlying a statute as these are matters for the legislature's determination").
We next address the contention of the Director that the code specifically authorized the award of interest on claims allowed. The Director singles out four provisions of the code, §§ 375.700.1 .3, 375.1182.1(22), and 375.1220.1, which he contends authorized the trial court to award interest pursuant to § 408.020 on the claims allowed against the MRCT. Section 375.700.1 provides:
Unless reinsurance of a dissolved insurer is effected and its assets conveyed to the reinsuring company as provided by law, and unless such insurer is being rehabilitated under oath provisions of section 375.010 to 375.1246, the receiver, under the direction of the court, shall apply the sums realized from the assets of such insurer in hereafter making any partial or final distribution, in the following order:
(1) To payment of all the expenses of closing the business and disposing of the assets of such insurer;
(2) To the payment of all lawful taxes and debts due the state and the United States and the counties and municipalities of this state;
(3) To the payment of policy claims;
(4) To the payment of debts due the United States;
(5) To the payment of the other debts and claims allowed against such insurer, and the unearned premiums and the surrendered value of its policies, in proportion to their respective amounts.
(Emphasis added.) The Director contends that this section authorizes interest on claims allowed under the code by virtue of the fact that it authorizes the payment of "other debts," necessarily contending that interest allowed pursuant to § 408.020 is such a debt. We disagree with this proposition.
In order to decide the issue presented, we necessarily must interpret the "other debts" language of the section. In interpreting statutes, our purpose is to ascertain the intent of the legislature. Wheeler v. Board of Police Commn'rs , 918 S.W.2d 800, 803 (Mo. App. 1996). In this respect, we look to the language used, giving it its plain and ordinary meaning. State ex rel. Riordan v. Dierker , 956 S.W.2d 258, 260 (Mo. banc 1997). The courts are without authority to read into a statute a legislative intent which is contrary to the intent made evident by the plain and ordinary language employed in the statute. Kearney Special Rd. Dist. v. County of Clay , 863 S.W.2d 841, 842 (Mo. banc 1993). When a word used in a statute is not defined, the plain and ordinary meaning of the word is derived from a dictionary. Missouri Ethics Comm'n v. Wilson , 957 S.W.2d 794, 799 (Mo. App. 1997). Courts can resort to rules of statutory construction only when the intent of the General Assembly cannot be ascertained from the plain language of the statute and it is ambiguous. Bosworth v. Sewell , 918 S.W.2d 773, 777 (Mo. banc 1996); Butler v. Mitchell-Hugeback, Inc. , 895 S.W.2d 15, 19 (Mo. banc 1995).
BLACK'S LAW DICTIONARY 403 (6 th ed. 1990) defines the word "debt" as "[a] sum of money due by certain and express agreement . . . . A fixed and certain obligation to pay money or some other valuable thing or things." "'A debt is understood to be an unconditional promise to pay a fixed sum at some specified time . . . .'" Knowlton v. Ripley County Mem'l Hosp. , 743 S.W.2d 132, 136 (Mo. App. 1988) ( quoting Saleno v. City of Neosho , 30 S.W. 190, 192 (Mo. 1895)). The basic idea of a "debt" is a legal obligation which arises from a statute or a contract, express or implied, entitling the creditor unconditionally to receive from the debtor a certain sum of money which the debtor is under a duty to pay. Owen v. Owen , 642 S.W.2d 410, 417 (Mo. App. 1982); Boyle v. Crimm , 253 S.W.2d 149, 157 (Mo. 1952). As such, giving the language "other debts," as used in § 375.700.1(5), its plain and ordinary meaning, we interpret it to mean that the trial court is authorized to approve claims for payment of such sums that are already due and payable.
Applying the foregoing definition of debt, interest would not qualify as "other debts" under the statute unless it was already legally due and payable. In order for interest on allowed claims in an insurance receivership proceeding to be due and payable as a debt, payment would have had to have been required either by contract or statute. Id. The record here does not reflect such a contract. As to statutory authority, as discussed, supra, that would have to come from the exclusive provisions of the code. And, for the reasons discussed, infra, we find no provision in the code which authorizes the payment of interest on claims in an insurance receivership proceeding. Hence, interest on the claims allowed by the trial court against the MRCT would not qualify as "other debts" payable under § 375.700.1(5).
The Director next contends that § 375.700.3 authorized the trial court to award interest on the allowed claims. This statute provides, in pertinent part, that:
[t]he court shall have authority from time to time upon application of the receiver to make partial distributions upon allowed claims to guaranty associations or other claimants prior to a final distribution from the receivership estate . . . . The court may condition any partial distribution upon such terms or conditions as it believes to be in the best interests of the receivership as a whole.
§ 375.700.3 (emphasis added). We disagree with the Director's interpretation of § 375.700.3.
Although, giving the language of the statute its plain and ordinary meaning, we interpret it to mean that the trial court, in an insurance receivership proceeding, does have the authority to set forth the "terms or conditions" of the payment of claims, § 375.700.3, it does not authorize the actual payment of monies from the estate. The "terms or conditions" language only applies to how such payments, otherwise authorized, are to be made from the receivership trust, but does not authorize them. As such, we find that the Director is in error in asserting that § 375.700.3 authorizes the trial court, in an insurance receivership proceeding, to award interest on allowed claims under a plan of distribution.
The Director also contends that § 375.1182.1(22) gave the trial court the authority to award interest. It provides:
1. The liquidator shall have the power:
. . .
(22) To exercise all powers now held or hereafter conferred upon receivers by the laws of this state not inconsistent with the provisions of sections 375.1150 to 375.1246.
§ 375.1182.1(22). Given the language of the statute referring to the "laws of this state," we interpret the statute to mean that, unless in conflict with the code, the receiver in an insurance receivership proceeding shall have those powers conferred on other receivers by the statutory enactments of the General Assembly. See State ex rel. Young v. City of St. Charles , 977 S.W.2d 503, 505 (Mo. banc 1998); Missouri Gaming Comm'n v. Missouri Veterans' Comm'n , 951 S.W.2d 611, 613 (Mo. banc 1997); Alumax Foils, Inc. v. City of St. Louis , 939 S.W.2d 907, 910 (Mo. banc 1997). The Director does not cite nor can we find any statutes that specifically confer on a receiver the power to distribute receivership assets in payment of interest on allowed receivership claims. Hence, his contention as to § 375.1182.1(22) authorizing the award of interest pursuant to § 408.020 on allowed receivership claims under the code is without merit.
Finally, the Director contends that § 375.1220.1 gave the trial court the authority to permit the recovery of interest on allowed claims against the MRCT. Section 375.1220.1 provides that:
[t]he liquidator shall review all claims duly filed in the liquidation and shall make such further investigation as he shall deem necessary. He may compound, compromise or in any other manner negotiate the amount for which claims will be allowed, under the supervision of the court, except where the liquidator is required by law to accept claims as settled by any person or organization . . . . No claim under a policy of insurance shall be allowed for any amount in excess of the applicable policy limits or without regard to policy deductibles.
(Emphasis added.) The Director contends that the "in any other manner negotiate the amount for which claims will be allowed" language gave the trial court the discretionary authority to award interest on allowed receivership claims. We disagree.
Section 375.1220.1 speaks to the settlement of claims by the receiver. Angoff v. Holland-America Ins. Co. Trust , 937 S.W.2d 213, 215 (Mo. App. 1996). Pursuant to this section, a receiver is authorized only to settle and compromise the claims to the extent that they are legally owed by the insolvent insurance company. Id. As discussed, supra, interest on the receivership claims here was not authorized by contract or statute. As such, interest was not a part of the claims to be compromised or settled as envisioned by the statute. Moreover, it is axiomatic that a receiver can only settle and compromise claims within the limits of the code as to what sums are lawfully owed. In re Transit Cas. Co. , 900 S.W.2d at 675 . This is so in that it would be unreasonable to believe that the General Assembly intended in enacting § 375.1220.1 to allow a receiver to settle claims against an insolvent insurance company for sums over and above that which would be owed under the code. As such, we find that § 375.1220.1 did not give the trial court the authority to award interest on the allowed claims against the MRCT.
Having found that § 408.020 does not apply to allow interest to be awarded on receivership claims under the code and the code does not specifically authorize such interest, we hold that the trial court exceeded its authority and jurisdiction in awarding the same, requiring us to reverse and remand.
Conclusion
The judgment of the circuit court approving the allowance of interest pursuant to § 408.020 on the allowed receivership claims under a plan of distribution of the assets of the MRCT is reversed, and the cause is remanded for the court to enter its judgment otherwise approving the plan except to the extent it provides for interest on the claims allowed.
All concur.