Whether the Attorney General is required to act in behalf of the liquidator of a defunct insurance company is a question vital to the decision in the instant case. Still, it is subordinate to the question of substantive law involved in the liquidation of insolvent insurance companies. The majority opinion of this court concedes that the business of insurance is so charged with public interest that it is a proper subject of statutory regulation, but it holds what I think no other court has ever held, certainly not within the present generation, that the liquidation of such a company is not a part of the business of insurance, and "is in reality the adjustment of the private rights of the company and parties dealing with it and so a private matter in which the State is not interested and for which public funds should not be expended." This declaration marks a retrogressive movement in administrative regulation of insurance business. It is a complete departure from the progressive legislation of the last quarter of a century relative to insurance business.
The history of the development of insurance regulations by the States is both interesting and instructive. The evolution of insurance law is quite similar in a number of States, including Illinois. The business of insurance has long been recognized as one affected with a public interest, and therefore a proper subject for the exercise of the police power of the State. There is no room to doubt the legislative power to enact laws concerning the right of persons or corporations to engage in the business of insurance; to provide rules for the organization and incorporation of *Page 537 companies; to define, within reasonable limits, the methods by which the business may be conducted; to impose license fees; to regulate insurance agents and brokers; to prescribe a standard form of policy; to prevent discrimination in rates; to regulate foreign corporations; to require the making and publication of reports; to authorize retaliatory measures; to revoke charters; to voluntarily or involuntarily liquidate the business, and, finally, to dissolve the corporation itself. The whole field of insurance business being so indelibly impressed with a public interest is subjected to reasonable regulations under the police powers of the State.
The first regulatory laws of a comprehensive nature enacted by the General Assembly in Illinois placed the chief supervisory authority in the Auditor of Public Accounts. Some statutory duties were also imposed upon the Attorney General. The legislature in 1893 created the office of insurance superintendent and divested the Auditor of all of his powers and duties relative to insurance regulation and supervision. The legislature had an undoubted right to create a separate department of insurance. Prior to 1925 the method of liquidating and dissolving an insolvent insurance company was prescribed by sections 5 and 6 of an act in regard to the dissolution of insurance companies, approved February 17, 1874. This method required the appointment of a receiver by a court of equity upon the application of the insurance superintendent, stockholder or creditor. The receiver had full power to collect and distribute the assets of the company and his compensation was fixed by the court. The receiver was in every sense an officer of the court.
The policy of the law in reference to liquidation and dissolution of delinquent companies was radically changed by the act of 1925, and the administration of the affairs of defunct and delinquent companies became vested in an executive officer of the State rather than in a receiver appointed *Page 538 by the court. The duties which theretofore devolved upon a receiver in collecting and disbursing the assets of a defunct company were imposed upon an official of the executive department, subject, however, to a limited supervision by a court of equity. The director of the Department of Trade and Commerce became liquidator of all insolvent companies. His power and authority arose out of the statute and not by virtue of an appointment of the court. The court cannot remove him or control his acts contrary to the statute. Section 2 of the Liquidation act gives the court no right to appoint a receiver but compels it to recognize and accept the director of the Department of Trade and Commerce as the official liquidator. He is entitled to no compensation but is required to perform his duties cum onere.
Illinois was not the first among the States to take the liquidation of delinquent and insolvent insurance companies from the jurisdiction of a court of equity and make of it an administrative function. In the year 1909 Governor Charles Evans Hughes, of the State of New York, who prior to his election as Governor had been chief counsel of a legislative committee appointed to investigate the conduct of certain large insurance companies doing business in that State, and being thoroughly familiar with many of the evils surrounding the business of such companies, sent a message, while Governor, to the General Assembly, in which he said: "Serious delays and enormous wastes connected with receiverships both of banking and insurance corporations has directed attention to the advisability of providing suitable means for economical and speedy liquidation through the agency of the respective State departments. Last year the Banking law was amended so that it provided for the liquidation of banking corporations by a business-like method, and the wisdom of the provision has already been demonstrated by experience. Similar exigencies arise in connection with insurance corporations and *Page 539 should be dealt with in a similar way." Responsive to the Governor's message the General Assembly enacted a law (Insurance law, sec. 63, subdiv. 3, Consol. Laws, chap. 28,) by which the power to wind up the affairs of an insolvent insurance company was taken away from the courts and made an administrative or departmental function to be exercised by the superintendent of insurance. It was enacted that "such liquidation shall be made by and under the direction of such superintendent and his successors in office, who may deal with the property and business of such corporation in their own names as superintendents or in the name of the corporation, as the court may direct." A suit involving the liquidation of an insolvent insurance company under that act was before the New York Court of Appeals in In re Casualty Co. of America, (Rubin claim,) 244 N.Y. 443, and Mr. Justice Cardozo, then chief justice of that court, said: "The liquidation of insurance companies in this State is governed by a statute adopted, in its main features, in 1909. The system of liquidation by receivers specially appointed had proved to be dilatory and wasteful. The legislature substituted administration by a department of government. Upon the application of the superintendent of insurance an order may be made * * * for the liquidation of the business. The work is to be done by the superintendent and his deputy but under the supervision of the court and subject to its direction." Illinois, with similar experiences as to liquidations by receivers, virtually re-enacted the statute of New York. Section 8 of our act of 1925 is almost a repetition of section 63, subdivision 6, of the New York act. The only noticeable difference is that in New York the liquidator is authorized to incur expenses for attorneys' fees, while in Illinois the statute contains no such provision.
Under the Illinois law of 1925 liquidation of an insolvent insurance company is a departmental act. The Director of Trade and Commerce, as liquidator, functions as *Page 540 an executive or administrative officer and not as a judicial officer, although certain of his acts are subject to the approval of a court of equity. The interest of the public in the liquidation of an insurance company is the general interest the public has in the management and control of insurance business. I am unable to perceive the division line which the majority of this court attempts to point out in defining when insurance business is impressed with a public interest and when it is not. It is conceded that when an insurance company has become insolvent the public interest requires the services of the Attorney General to file a petition for liquidation in a court of equity and that when the liquidation is complete he must file a bill for the dissolution of the corporation, but it is held that the public interest in the liquidation ceases when the liquidator is directed to take charge of the property and begins again when proceedings are started to dissolve the corporation. It seems to me that if the public interest demands the institution of proceedings for liquidation it should have no less interest in the administration of the liquidation, which is the vital and substantial object of the proceedings. The interest of the State in collecting, possessing, controlling and distributing the assets of an insolvent insurance company is of the same character as other matters pertaining to the business of insurance. That interest cannot be segregated from the public's general interest in the business. It is direct and continues throughout the period of liquidation.
The opinion of the majority of this court declares the business of liquidating a defunct insurance company is not impressed with a public interest because the State has no direct, substantial and monetary interest in the subject matter as distinguished from a purely nominal interest. A number of cases are cited in support of this contention. Among them arePeople v. Continental Beneficial Ass'n, 280 Ill. 113, Hodge v.People, 96 id. 423, Hitchcock v. Greene, 252 id. 519, andPeople v. Mitchell, 317 id. 439. *Page 541 These cases do not have the slightest relationship to this question. They deal exclusively with the construction of section 118 of the Practice act, concerning direct appeals to the Supreme Court when the State is interested as a party or otherwise.
The majority opinion says that "the State has no more interest in collecting the assets of an insurance company and distributing them to its creditors than it has in settling any other private controversy." No reported case and no text book is cited in support of this holding, and, indeed, I think none can be found to support the doctrine that the liquidation of an insolvent insurance company is not impressed with a public interest and cannot be made the subject of legislative regulation and control. The old theory of exclusive judicial control has been abandoned because of its inherent vices. A new and more enlightened method of departmental control has been substituted in its place. Lord Chief Justice Hale said that "when private property is affected with a public interest it ceases to be juris privati only, and it becomes clothed with public interest when used in a manner to make it a public consequence and affect the community at large." Munn v.Illinois, 94 U.S. 113.
Public regulations of the insurance business exhibit it to be the conception of the law-making bodies of the country, without exception, that the business of insurance so far affects the public welfare as to invoke and require governmental regulation. A conception so general cannot be without cause. The universal sense of a people cannot be accidental. (German Alliance Ins. Co. v. Lewis, 233 U.S. 389.) Because of the public interest the liquidation of insolvent insurance companies and of insolvent banks, when carried on under express statutory provisions, has been declared to be an administrative act, with only the power of limited supervision by the courts. In Greenfield Savings Bank v. Commonwealth, 211 Mass. 207, the Supreme Judicial Court of Massachusetts held: "The commissioner is *Page 542 an executive or administrative officer. He exercises visitorial powers, is charged with the duties of rigid inspection, and, when circumstances exist, * * * may take and retain possession of the property and business of the bank for the purpose of liquidation of its affairs in accordance with the statute. He acts in all these particulars as a public officer and not as a receiver appointed by the court. While he possesses some powers commonly conferred upon a receiver and in many respects is subject to the directions of the court, he nevertheless carries out directly, and in his own official capacity, a legislative policy. His chart is the legislative mandate as declared by the statute."
Section 4 of the Illinois act expressly provides that the liquidation shall be made by and under the direction of such director, who shall be vested, by operation of law, with title to all of the property, contracts and rights of action of such company. The title to the property and the authority to dispose of it in liquidation and settlement of all claims are vested in him by the statute and not by a judicial decree. The majority opinion in this case virtually nullifies the statute and destroys the line of demarcation between departmental liquidation and judicial liquidation of insurance companies, which to my mind is a result vastly more serious in its consequences than the payment of counsel fees out of the State treasury. I am unable to discern a semblance of excuse for the appointment of a liquidator under the statute except to wind up the affairs of an insolvent company. The doctrine upon which our legislation is predicated has only one basis, and that is the protection of policyholders and creditors. It constitutes the very substance of the public interest and attaches itself when the relationship of policyholder arises. It ceases only when settlement is made, either according to the terms of the policy or by liquidation of the claim against the insolvent company. It is therefore obviously illogical to say that "the State has no more interest in collecting the assets of an insurance company and distributing *Page 543 them to its creditors than it has in settling any other private controversy." Furthermore, by what authority can the judicial department compel the Director of Trade and Commerce, an officer of the executive branch of the government, to perform a duty of a judicial officer, such as is required of a court receiver? It is an unwarranted invasion of one branch of government by another. If the Director of Trade and Commerce is permitted to wind up the affairs of an insolvent insurance company in the manner directed by the statute there is no infringement by one branch of government upon another.
The case In re Casualty Co. of America, (Rubin claim,) supra, is cited in the majority opinion as being persuasive upon the question of whether or not the actual liquidation is an administrative function or a judicial function. According to my view the case affords no support for the contention that it is not a purely administrative function. It clearly announces that the liquidation of insurance companies is no longer a judicial function in the State of New York but has become an administrative activity through legislative enactment. So far as the question of the allowance of attorney's fees is concerned, all that case decides is that the liquidator is not a final arbiter of the amount to be allowed for such services, but that his action in fixing the amount of fees and charges of administration, including solicitor's fees, is reviewable by a court. I submit that the question of whether liquidation is a judicial or an administrative function cannot be determined from the purse out of which lawyer's fees are to be paid.
The State of Missouri by its insurance code provided a method for the liquidation of insolvent insurance companies. The departmental officer charged with the duty of liquidation is the superintendent of insurance. A petition was filed in the circuit court of the city of St. Louis by one Duggan against the Missouri State Life Insurance *Page 544 Company and others, alleging that the company was mismanaged, fraudulently conducted and insolvent. The court entered an order appointing receivers. Thereafter the insurance company filed an original petition in prohibition in the Supreme Court of Missouri against the judge who had entered the order and the receivers appointed by him, on the ground that the liquidation of insurance companies is an administrative act and that the court exceeded its jurisdiction in the appointment of the receivers. That case brought up the precise question whether or not, under a statute like ours, liquidation of an insurance company is judicial or administrative. The opinion of the Supreme Court of Missouri in Missouri State Life Ins. Co. v.Hall, 52 S.W.2d 174, held: "The legislative power to authorize, supervise, regulate and liquidate insurance companies rests on the interests of the public in the insurance business. * * * The State may through legislative officers supervise and regulate insurance companies in aid of solvency. If so, it has the power to protect those interested, in the event of insolvency. It is a valid exercise of the police power through administrative officers. * * * The original code, and amendments thereto, indicate an intention to regulate the business from beginning to end." So in Illinois, as well as in Massachusetts, New York and Missouri, the intention to include liquidation of insolvent insurance companies within the dominion of administrative control is apparent from the context of the legislative enactments. The correct conclusion seems to be that liquidating an insolvent insurance company is an inseparable part of the general subject matter of insurance, and the interest of the public is not to be determined by any distinction between a going concern and an insolvent one.
There may be some reasonable ground for holding that the insolvent's estate should be compelled to pay the fees of the attorney for the liquidator, but none appears upon the *Page 545 theory that the director of the Department of Trade and Commerce, as liquidator, is acting as a judicial officer and not as an administrative officer. Therefore I cannot concur in the majority opinion of the court.