Caminetti v. National Guaranty Life Co.

DRAPEAU, J. pro tem. On this appeal the points and discussed are identical with those in A. Caminetti, Jr., Insurance Commissioner of the State of California v. State Mutual Life Insurance Company, Civil No. 13165, ante, p. 321 [126 P. (2d) 165]. Therefore, it is unnecessary to again repeat what has been said in that ease.

The same individual who was executive vice-president of the mutual insurance company in the case of Civil No. 13165 was president of the mutual insurance company in this case. He secured and controlled the proxies in the corporation in the same manner. By his direction, the board of directors voted him a salary of $30,000 a year. This was over 7 per cent of the net premium income of the company and over 6 per cent of its income from all sources. It was the payment of this salary which the Insurance Commissioner asserts as the principal reason for the take-over of the company.

In this case appears a clear illustration of a practice followed by the president of this company of buying and selling the right to control and manage mutual insurance companies. This right to manage was dealt with as men deal with chattels, real or personal.

“Q. (Under cross-examination): Did you find out who had control during that day, or any part of the next, and before you actually agreed to go into the company?

“A. (By Charles W. Harrison, president): No. I was told that Mr. B. D. Malone was the controlling factor. It seems that he and W. D. Dilbeek were working together. . . . Well, I was waiting for the board of directors to meet; they were supposed to meet at a certain time, and I asked Mr. Malone what was causing the delay of the meeting, and he told me that he had run into a snag, or some similar remark like that. . . . He said that Mr. Baillie, who had been working on some plan with him regarding the National Guaranty Life, had agreed for his fee in the matter to be less on his general agency contract, but Mr. Malone had now told him since he was getting- other people into the picture to try to rehabilitate the company, that Mr. Baillie didn’t feel like stepping out of the picture until he was reimbursed for his trouble.

‘ ‘ Q. Mr. Baillie, as I understood your testimony yesterday, was the attorney for the company ?

[837]“A. No. He was an. attorney. I didn’t even know at that time that Baillie was an attorney.