PACIFIC MUT LIFE INS CO OF CALIFORNIA v. MALONEY

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District Court of Appeal, First District, Division 2, California.

PACIFIC MUT. LIFE INS. CO. OF CALIFORNIA et al.* v. MALONEY et al.

Civ. 15977.

Decided: May 14, 1954

Joseph L. Lewinson, Henry W. Low, Los Angeles, for appellants. C. Ray Robinson, William B. Boone, Merced, amici curiae for appellants. O'Melveny & Myers, Paul Fussell, Homer I. Mitchell, James E. Cross, Los Angeles, George B. Gose, Frank P. Doherty, Los Angeles, of counsel, for respondent Pacific Mut. Life Ins. Co. Guy Knupp, Peery Price, Los Angeles, for Insurance Commissioner. Lloyd W. Dinkelspiel, Heller, Ehrman, White & McAuliffe, San Francisco, amicicuriae for respondents.

This is an appeal from a judgment of the Superior Court, which denied a peremptory writ of mandate, and discharged an alternative writ previously issued.

The peremptory writ was sought under the provisions of section 1094.5 of the Code of Civil Procedure to rescind an order of the Insurance Commissioner approving a plan to mutualize Pacific Mutual Life Insurance Company, a California corporation (referred to hereinafter as ‘New Company’).

The alternative writ discharged by the judgment included an order staying the execution of the Plan of Mutualization. By stipulation a stay order was made by the District Court of Appeal, Second Appellant District, Division Three, prior to the expiration of the stay order made by the Superior Court. The stay order made by such appellate court is now in force.

The Plan of Mutualization was submitted to Honorable Wallace K. Downey as Insurance Commissioner in his character as an administrative officer, purportedly in pursuance to the provisions of subdivision (c) of section 11526 of the Insurance Code (relating to the mutualization of non-delinquent stock companies), which provides that such a Plan of Mutualization must be approved by the board of directors of a company and its stockholders, and the Insurance Commissioner.

Order approving the plan was made after a hearing under section 11527 of the Insurance Code, which provides:

‘The commissioner shall examine the plans submitted to him under the provisions of subdivision (c) of section 11526. He shall not approve such plan unless in his opinion the rights and interests of the insurer, its policyholders and shareholders are protected not unless he is satisfied that the plan will be fair and equitable in its operation.’

After the conclusion of the hearing Mr. Downey, as commissioner, made affirmative findings in accordance with the provisions of the section, and approved the Plan of Mutualization.

The petition for mandate alleges that the order of the Insurance Commissioner was made without jurisdiction and was not justified by the evidence.

Appellants, who were petitioners below (sometimes referred to herein as petitioners), are The Pacific Mutual Life Insurance Company of California, a California corporation, (referred to hereinafter as ‘Old Company’), and Samuel K. Rindge, and others, who are stockholders in the Old Company, and the members of Pacific Mutual Shareholders Protective Committee.

In the receivership proceedings Honorable Samuel L. Carpenter, Jr., Insurance Commissioner of the State of California, first acted as conservator and then as liquidator of the Old Company, and several successors as Insurance Commissioners, including Honorable John R. Maloney, have acted as liquidator and Mr. Maloney now acts as liquidator.

Respondents below and here are the New Company and Mr. Maloney, as Insurance Commissioner of the State of California and as liquidator of the Old Company.

The order approving the Plan of Mutualization was made by Mr. Downey on September 22, 1950, at the time he was Insurance Commissioner of California and liquidator of the Old Company. He was named in the petition for mandate as a respondent, both in his character as Insurance Commissioner and as liquidator; but during the pendency of the proceeding in mandate, Mr. Downey was succeeded in both capacities by Mr. Maloney, and Mr. Maloney was accordingly substituted for Mr. Downey and the cause proceeded against Mr. Maloney in both capacities.

In 1936 The Pacific Mutual Life Insurance Company of California was in the possession of the Insurance Commissioner as conservator by reason of its insolvency. On December 4, 1936, by order of the court in the proceedings for the conservatorship of Old Company, title to all of the outstanding capital stock of New Company was vested in the Insurance Commissioner, as conservator of Old Company, subject to an option in favor on the participating life policyholders of New Company, giving them the right, after the expiration of approximately 10 years, to institute mutualization proceedings, that is, proceedings to cause New Company to purchase its capital stock for the purpose of converting the company from a stock company to a mutual company. Such option was contained in the rehabilitation and reinsurance agreement under the terms of which the business of Old Company was rehabilitated by organizing a new and solvent company, which acquired most of the assets and assumed most of the liabilities of Old Company. The rehabilitation and reinsurance agreement is the source and basis of appellants' claim to the equitable interest in the proceeds of any sale of New Company stock that might be made by the Insurance Commissioner as liquidator (formerly conservator) of Old Company.

The rehabilitation and reinsurance agreement is also the source and basis of the right of the participating life policyholders of New Company to cause the company to acquire its stock (and thus accomplish its mutualization) at such price and upon such terms as might be fixed by a price determination committee, to be selected by the President of Stanford University, the Provost of the University of California at Los Angeles, and the President of the Association of Life Insurance Presidents (the name of which was later changed to Life Insurance Association of America). That agreement, including the option in favor of the participating life policyholders of New Company, was, with the approval of Judge Henry M. Willis, after a hearing in the proceedings for the conservatorship of Old Company, executed by the conservator and by New Company. Judge Willis' order of approval, dated December 4, 1936, adjudged that the rehabilitation and reinsurance agreement was valid. Appeals were taken and the judgment was affirmed. Carpenter v. Pacific Mut. Life Ins. Co., 10 Cal.2d 307, 74 P.2d 761; Neblett v. Carpenter, 305 U.S. 297, 59 S.Ct. 170, 83 L.Ed. 182.

In 1946, upon request of the requisite number of life policyholders, a price determination committee was appointed, and thereafter such committee determined that mutualization was practicable of accomplishment, promulgated a Plan of Mutualization, and fixed the price and terms of payment at which the life policyholders of New Company should have the right to acquire the stock of New Company from the liquidator (who had by that time become successor of the conservator) of Old Company.

On September 22, 1950, the Insurance Commissioner, after a lengthy hearing, found that the Plan of Mutualization was fair and equitable to the stockholder, as well as to all other interested parties, and approved the plan.

In response to the petition for a writ of mandamus filed by appellants for the purpose of inquiring into validity of the Insurance Commissioner's approval of the Plan of Mutualization there were presented to the Superior Court the questions of whether the Insurance Commissioner proceeded without or in excess of his jurisdiction, and whether the commissioner accorded a fair trial to those opposing the plan, and whether the commissioner committed any prejudicial abuse of discretion, particularly whether the commissioner proceeded in the manner required by law, and whether his approval of the plan was supported by substantial evidence in the light of the whole record. After a hearing, the judge of said court filed a carefully prepared opinion, in which he held that the Insurance Commissioner had not acted without or in excess of his jurisdiction, had accorded a fair trial to those opposing the plan, and had not abused his discretion in approving the plan.

Since appellants raise questions as to whether the rehabilitation and reinsurance agreement dated December 4, 1936, is valid in respect of the option to mutualize granted to the participating life policyholders; whether the validity of such agreement is res judicata; whether New Company, which has been carrying on a nationwide insurance business since 1936, should now be treated as insolvent for the purposes of mutualization; whether the requisite statutory steps were taken for mutualization of New Company, and whether the price determination committee acted in good faith in fixing the price and terms of payment for the stock of New Company, it is essential to present in some detail what preceded the Insurance Commissioner's hearing as well as what took place at the hearing.

Old Company was engaged in the business of writing both participating and non-participating life insurance and accident and health insurance. The report of the regular Triennial Convention examination of Old Company made as of December 31, 1935, showed that Old Company was insolvent. The insolvency arose out of the fact that the premium rates charged by Old Company to the holders of noncancellable accident and health policies (hereinafter referred to as ‘non-can policies') were inadequate. The result was that the reserves for non-can policies were inadequate and Old Company was insolvent by at least $17,000,000. Said report was filed with the Insurance Commissioner on July 21, 1936. On July 22, 1936, pursuant to the provisions of section 1011 of the Insurance Code, the Insurance Commissioner filed with the Superior Court in Los Angeles an application for an order appointing him conservator of Old Company and vesting in him title to all of the assets of that company. We shall hereafter refer to such proceeding as ‘conservatorship proceeding.’

Said application was presented to Judge Douglas L. Edmonds, then presiding judge of said court, and Judge Edmonds on July 22, 1936, signed the order applied for. Pursuant to said order and pursuant to section 1013 of the Insurance Code, which authorized seizure without notice or court order, the Insurance Commissioner took possession of all of the assets of Old Company. Carpenter v. Pacific Mut. Life Ins. Co., supra, 10 Cal.2d 307, 314–317, 74 P.2d 761.

On July 22, 1936, Judge Edmonds also signed ‘Order Permitting, Approving and Authorizing Rehabilitation Sale and Transfer of Assets and Reinsurance Plan and Agreement of The Pacific Mutual Life Insurance Company of California’ pursuant to the provisions of section 1043 of the Insurance Code. Said order, among other things, authorized the organization of New Company with a capital and surplus of $3,000,000, to be provided from the funds of the participating life division of the life department of Old Company. In addition thereto, the participating life division of the life department of Old Company was to furnish to New Company the sum of $1,792,118.97 as a reserve for the non-can policies which were to be partially assumed by New Company under the rehabilitation agreement approved by Judge Edmonds. Said rehabilitation agreement further provided that the stock of New Company should be held by the Insurance Commissioner as conservator, subject to the right of New Company to become mutualized ‘as soon as legally possible.’

In accordance with Judge Edmonds' order, the Insurance Commissioner organized New Company and the participating life policyholders contributed to New Company the total sum of $4,792,118.97, $3,000,000 of which constituted the capital and surplus of New Company, and $1,792,118.97 of which constituted a reserve for non-can policies which were to be partially assumed by New Company.

Said sum contributed by the participating life policyholders constituted all but $423,136.26 of the surplus of the participating life division of the life department of Old Company. Said sum had been earmarked for and was owned by the participating life policyholders of Old Company, because Old Company had conducted its participating life division as if it were a separate mutual life insurance company. A separate set of books had been maintained for the participating life division; specific expenses had been charged to said division, separate surplus had been maintained for said division; separate annual statements had been prepared for said division, and the so-called ‘dividends' or returns of premium made to participating life policyholders had been charged against the funds of said division.

After the organization of New Company the commissioner, as conservator, in accordance with Judge Edmonds' order, transferred to New Company substantially all of the assets of Old Company. As consideration for such assets, New Company delivered to the conservator all of the capital stock of New Company, which he was to hold, subject to the provisions of the rehabilitation agreement approved by Judge Edmonds. On July 23, 1936, New Company intervened and became a party to the conservatorship proceeding. Shortly thereafter it was found that Justice Edmonds was the owner of a policy of life insurance issued by Old Company, and that he was, therefore, disqualified. It was ultimately held that his orders were void, Carpenter v. Pacific Mut. Life Ins. Co., supra, 10 Cal.2d 307, 323, 74 P.2d 761.

Upon discovery of Judge Edmonds' disalification, the application of the Insurance Commissioner for appointment as conservator of Old Company was assigned to and heard by Judge Henry M. Willis, and on August 11, 1936, Judge Willis made a new order appointing the Insurance Commissioner as conservator and ratifying an appointment theretofore made by Judge Edmonds. It was held that notwithstanding the invalidity of Judge Edmonds' orders, the conservator's seizure of the assets of Old Company was lawful, Carpenter v. Pacific Mutual, supra, 10 Cal.2d 324, 74 P.2d 772. However, Judge Willis did not, on August 11, 1936, make any order with respect to the rehabilitation agreement theretofore approved by Judge Edmonds or with respect to the transfer of Old Company's assets to New Company and the issuance of New Company's stock to the conservator. Nevertheless, New Company held the assets of Old Company and the conservator held all of the capital stock of New Company. In view of the fact that the rehabilitation of the business of an insolvent insurer and the transfer of assets of such an insurer can be made only with court approval, Insurance Code sections 1043 and 1037(d), the invalidity of Judge Edmonds' orders left the permanent status of the assets and the stock in suspense until Judge Willis's order of December 4, 1936, which will hereinafter be referred to.

During the period between July 22, 1936, and December 4, 1936, New Company acted as a corporate agent of the Insurance Commissioner to assist him in carrying on the business of the Old Company.

As was stated by the Supreme Court in the Carpenter case, supra: It was obvious that if the agency organization were to be preserved pending court approval of the rehabilitation plan, the business of the Old Company had to be continued. Faced with these facts, the commissioner determined to organize a New Company to continue the business pending the approval of a rehabilitation plan. And it was pending the approval of a rehabilitation plan that New Company acted as a corporate agent of the Insurance Commissioner. Carpenter v. Pacific Mut. Life Ins. Co., supra, 10 Cal.2d 307, 325, 74 P.2d 761.

On August 29, 1936, Judge Willis ordered all interested parties to show cause why they should not approve the rehabilitation agreement which Judge Edmonds had theretofore purported to approve. Numerous parties, including individual stockholders and the Pacific Mutual Stockholders Protective Committee, filed objections to such rehabilitation agreement. Carpenter v. Pacific Mut. Life Ins. Co., supra, 10 Cal.2d 319, 74 P.2d 769.

On September 25, 1936, the Insurance Commissioner filed a ‘Petition for Approval of the Rehabilitation and Reinsurance Agreement’, attached to which was the rehabilitation and reinsurance agreement which constitutes the basis of the rights of the conservator and his successors as owners of all of the stock of the company, and the basis of the rights of appellants herein, who claim an equitable interest in the stock of New Company, and the basis of the rights of the participating life policyholders under the option contained therein to cause New Company to be mutualized. Said petition prayed for an order ratifying, confirming and approving the acts of the commissioner as conservator and causing to be formed, forming and subscribing to and purchasing the capital stock of New Company, and ratifying, confirming and approving the transfer and conveyance therefore made of the assets of Old Company to New Company. Said petition further prayed that the rehabilitation and reinsurance agreement be approved and that the conservator be authorized and directed to execute said agreement and to carry out its provisions.

On the same date, the court issued an order requiring Old Company, New Company, and all persons interested or claiming to be interested, either as policyholders or stockholders of Old Company, or otherwise, to show cause why the court should not make orders in accordance with the conservator's petition.

After a protracted hearing pursuant to said order to show cause, in which Pacific Mutual Stockholders Protective Committee, numerous individual stockholders and others were heard, Judge Willis made his order of December 4, 1936, in which he ratified, confirmed and approved the acts of the conservator in organizing and subscribing to and acquiring the capital stock of New Company, and in transferring to New Company the sum of $3,000,000 out of the assets in his hands as a conservator, and ratifying, confirming and approving the transfer and conveyance theretofore made of the assets of Old Company to New Company.

Said order approved ‘each and all of the terms and conditions' of the rehabilitation and reinsurance agreement and authorized and directed the conservator to enter into said agreement, and authorized him ‘without further order of this court, fully and faithfully to perform, carry out, and discharge each and all of the obligations, terms, conditions, and covenants on his part required to be performed under the terms of said Rehabilitation and Reinsurance Agreement,’ and ‘forever barred and enjoined [all persons] from making hereafter any complaint in respect of the said Rehabilitation and Reinsurance Agreement, or any provision or provisions thereof, except as in said agreement, specifically permitted or by appeal from this Order; the prosecution by any person, firm, or corporation of any proceeding or proceedings of whatever kind or nature, for the purpose of attacking this Order, or any conveyance or transfer made pursuant hereto, (other than as permitted by said Rehabilitation and Reinsurance Agreement or by appeal from this Order).’

The Rehabilitation and Reinsurance Agreement provided for the transfer to New Company of substantially all of the assets of Old Company and for the reinsurance and assumption by New Company, at the election of the respective policyholders, of all policies of insurance other than non-can policies, and on reduced rates of benefit, for reinsurance and assumption by New Company at the election of the policyholders of all non-can policies of insurance. It provided that New Company should establish a participating department, whose assets should be held and whose business should be carried on in the same manner as if it constituted a separate mutual life insurance company. It further provided that New Company should establish a separate department for its Non-Participating Life Insurance, and a separate department for its Accident and Health Insurance, and that any surplus existing in said departments might be used for general corporate purposes subject to limitations contained in Paragraph 14 of said agreement.

In Paragraph 14 it was provided that a special fund should be established from funds available for general corporate purposes for the purpose of completely restoring the non-can benefits which had been reinsured and assumed on reduced basis. It was further provided that there should be transferred to such fund such amounts as the Board of Directors should in its discretion determine to be not reasonably required for the reasonable, proper and profitable conduct of the operations of New Company as a going concern. It was further provided that at the time of any examination of New Company by the Insurance Commissioner, the commissioner might require the transfer of additional funds to such special fund, to the extent that such additional funds available for general corporate purposes were, in his opinion, available without interfering with the proper and profitable conduct of the business of New Company as a going concern.

These provisions with respect to restoration of non-can benefits were made ‘to the end that the benefits originally provided in said Non-Can Policies as written may eventually be fully paid, including eventual full payment of benefits becoming due prior to the time of such restoration, with interest on deferred restoration payments of such benefits at the rate of three and one-half percent (3 1/212%) per annum.’

The Rehabilitation Agreement provided for the transfer to New Company from the participating division of the life department of Old Company of the sum of $3,000,000 as capital and surplus and of the sum of $1,792,118.97 as a reserve for the Accident and Health Department, and further provided for the transfer to New Company, for its general corporate purposes, of not to exceed 10% of the net profits on participating policies reinsured pursuant to said agreement. Profits from participating policies thereafter written were not to be affected thereby and were to be held in the walled-off participating department of New Company.

Paragraph 20(a) of the Rehabilitation and Reinsurance Agreement created an option in favor of the participating life policyholders to cause the company to be mutualized under the conditions specified therein. Said right of the participating life policyholders was referred to in Paragraph 20 as ‘an option to mutualize.’ It was provided therein that after a period of approximately 10 years, 10% of the participating life policyholders could request the creation of an appointing committee to exercise duties in respect of a mutualization of New Company for the benefits of the departments of New Company designated by such policyholders; that the appointing committee should designate a price determination committee; that the price determination committee should determine whether, in its opinion, mutualization of New Company was then practicable and that, if it determined that mutualization was then practicable it should determine the proper price to be paid for the stock of New Company upon such mutualization and appropriate terms of payment. Said agreement provided further, in order that said option might be an effective option, binding upon the stockholder of New Company and all others claiming through such stockholder, that the conservator, as sole stockholder, for himself and for any successors in ownership of said stock, agreed to consent and consented to such Plan of Mutualization as might be promulgated by the price determination committee and to dispose of such stock at the price and upon the terms of payment provided for in such Plan of Mutualization.

Various provisions of the Rehabilitation and Reinsurance Agreement show that the agreement contemplated that the price determination committee could promulgate a Plan of Mutualization and fix the price and terms of payment for the stock prior to the full restoration of non-can benefits; and that in such case payment for the stock would be postponed until after restoration of non-can benefits had been completed. Inherent in the fact that the agreement contemplated such postponement of payment, is a further fact that the agreement contemplated that the Plan of Mutualization should not obligate New Company unconditionally to make the postponed payment.

Appeals were taken from Judge Willis's order of December 4, 1936, adjudicating the validity of the Rehabilitation and Reinsurance Agreement and the Supreme Court of California and the Supreme Court of the United States affirmed the order. Carpenter v. Pacific Mutual, etc., supra.

The result of Judge Willis's order of December 4, 1936, was that New Company acquired valid title to substantially all of the assets of Old Company and the conservator acquired valid title to all of the capital stock of New Company, subject, however, to an option to the participating life policyholders of New Company, through mutualization proceedings initiated after approximately 10 years, to cause New Company to acquire such stock at the price and upon the terms fixed by a duly appointed price determination committee, in the event that such committee should determine that in its opinion mutualization was practicable. The option required that the mutualization proceedings should be conducted in accordance with the laws of the State of California.

On February 2, 1937, the court, in the conservatorship proceedings, ordered the liquidation of Old Company and appointed the Insurance Commissioner to liquidate it. The validity of this order was upheld on appeal. Carpenter v. Pacific Mut. Life Ins. Co., 13 Cal.2d 306, 89 P.2d 637.

Thus, the liquidator succeeded the conservator, as the owner of the stock of New Company, subject to the option in favor of the participating policyholders to cause the company to be mutualized.

On April 4, 1938, the liquidator transferred title to the capital stock of the New Company to voting trustees. This was done pursuant to the provisions of section 1037(e) of the Insurance Code. The validity of this transfer under the voting trust was upheld upon appeal. Caminetti v. Pacific Mutual Life Ins. Co., 22 Cal.2d 344, 139 P.2d 908.

Under the provisions of the voting trust, the trustees were given full legal title to the stock in order that they might exercise the rights of stockholders in the control of the corporation, and they were expressly obligated to carry out all of the provisions of the Rehabilitation and Reinsurance Agreement, including the covenant of the conservator, for himself and his successors in the ownership of the stock, to consent to any Plan of Mutualization promulgated by a duly appointed price determination committee.

Thus, the voting trustees held the stock of New Company subject to the option to mutualize contained in the Rehabilitation and Reinsurance Agreement. The voting trust provided that it should terminate upon adoption of a Plan of Mutualization in accordance with the laws of the State of California.

In 1946, approximately 10 years after the organization of New Company, the requisite percentage of participating life policyholders requested the creation of an appointing committee to exercise the duties and functions provided for in the Rehabilitation and Reinsurance Agreement in respect of a proposed mutualization of New Company. The participating life policyholders, as permitted by the agreement, specified that the mutualization should be for the benefit of both participating and non-participating life policyholders. As of January 31, 1947, in accordance with the terms of said agreement, George Willard Smith, President of the Life Insurance Association of America (formerly the Association of Life Insurance Presidents), Doctor Donald B. Tresidder, President of Stanford University, and Doctor Clarence A. Dykstra, Provost of the University of California at Los Angeles, appointed a price determination committee consisting of Alva J. McAndless, Ray D. Murphy, Horace R. Bassford, and Albert J. Hettinger. Mr. McAndless was the President of Lincoln National Life Insurance Company of Fort Wayne, Indiana, a stock company, and the tenth largest life insurance company in the United States. He was a graduate of the University of Michigan and an actuary by profession. He was a past President of the American Institute of Actuaries (now called the Society of Actuaries) and a past President of the American Life Convention. He had been connected with Lincoln National Life Insurance Company since 1919 and had risen through the ranks, holding various positions and offices until he became President in 1939 He had had extensive experience in evaluating other life insurance companies through the acquisition of stock companies, either by way of acquiring their stock or their assets. Among the acquisitions with which he was familiar or in which he personally participated were acquisitions which Lincoln National Life Insurance Company made of Michigan State Life Insurance Company, Pioneer Life Insurance Company, Merchants Life Insurance Company, Globe Life Insurance, American Life Insurance Company, Reinsurance Life Insurance Company, Old Line Life Insurance Company, Northern States Life Insurance Company, and Royal Union Life Insurance Company. In addition thereto, he had handled negotiations for the purchase of Illinois Life Insurance Company and Missouri State Life Insurance Company, but in those instances Lincoln National Life Insurance Company did not become the purchaser.

Mr. Murphy was the Vice President and Chief Actuary of the Equitable Life Assurance Society of the United States, one of the five largest life insurance companies in the country. He is a graduate of Harvard University and an actuary by profession. He had been with Equitable Life since 1913. He was a past President of the Actuarial Society of America. Since 1936 he had been responsible at Equitable Life for all valuations of life and accident and health contingencies, including noncancellable accident and health contracts. He was responsible at Equitable Life for mortality and morbidity investigations and for analysis of all sources of profits and losses, and for distribution of surplus based upon such analysis. His duty caused him to be involved in many studies and estimates of projected future profits and losses and the effect of future contingencies upon the operations of Equitable Life.

Mr. Bassford was Vice President and Chief Actuary of Metropolitan Life Insurance Company, the largest life insurance company in the United States. He was a graduate of Trinity College and had been associated with Metropolitan Life since 1915. He was a Vice President of the Actuarial Society of America. He had participated in the acquisition by Metropolitan Life of several life insurance companies, including Pittsburg Life and Trust Company, Niagara Life Insurance Company, and Golden Seal Association, in connection with which it was necessary for him to evaluate said companies.

Mr. Hettinger was a partner in the investment banking firm of Lazard Freres & Company. He was a graduate of Stanford University and received the degree of Doctor of Philosophy in Business Economics at Harvard University, where he served for a number of years as Professor of Business Economics in the Harvard Graduate School of Business Administration. As a member of the Harvard Faculty he had supervised research work in the valuation of life insurance stocks, and during the same period acted as economist to the Governor of the Federal Reserve Bank of Boston. He became engaged in business in the investment field in 1926 and became a partner in Lazard Freres & Company in 1943. During his business life he had made a particular study of life insurance stocks and their values.

Following their appointment on January 31, 1947, the members of the price determination committee undertook to perform the duties and responsibilities entrusted to them. They employed as their actuary Joseph A. Christman, Associate Actuary of the Metropolitan Life Insurance Company of New York. He was a Fellow of the Actuarial Society of America and had served in the Actuarial Division of Metropolitan Life since 1926. In the performance of his duties for Metropolitan Life, approximately 600 employees worked under his supervision. Associated with him in the duties which he performed for the price determination committee were D. J. van Keuren and F. H. Byron, both employees of Metropolitan Life and Fellows of the Actuarial Society of America. Mr. Christman and his colleagues had the assistance of numerous trained supervisory and clerical employes borrowed from Metropolitan Life and Equitable Life.

Commencing in 1947, the members of the price determination committee, with the assistance of Mr. Christman and his associates, undertook a study of the past and anticipated future earnings of New Company, of the amount which would be required completely to restore non-can benefits, of the length of time which would be required to accomplish such restoration, and of the value of the stock of that company. Their study occupied a period of approximately three years and consumed approximately 10,000 hours of work. Mr. McAndless testified that the committee made ‘one of the most complete investigations of earning power that has ever been made for any life insurance company.’

On April 4, 1950, the price determination committee rendered its report, stating that in its opinion mutualization of New Company was then practicable, determined the value of the stock as of December 31, 1948, and fixed the price to be paid for the stock of New Company at $3,000,000 plus interest on $3,000,000, from December 31, 1948, to date of payment, with certain provisions for its augmentation, and fixed the terms of payment.

The Plan of Mutualization provides for a special surplus fund to be accumulated from 5% of the net profits of the participating department on policies issued subsequent to July 22, 1936, and for a payment of the purchase price from this fund and from capital in general corporate surplus. The Plan of Mutualization filed by the committee as part of its report, provided that upon adoption of the plan, the Voting Trust Agreement of April 4, 1938, should terminate in accordance with the provisions of said voting trust and that the liquidator to whom the voting trustees were obligated to transfer the stock should immediately dispose of the stock of New Company by transferring it to trustees under a new voting trust, in accordance with the provisions of Insurance Code section 11529.5. It was expressly provided that nothing contained in the plan should affect the right of the non-can policyholders to have applied to restoration of non-can benefits all of the corporate earnings of the company not reasonably required for the reasonable, proper and profitable conduct of the operations of New Company as a going concern, as provided in Paragraph 14 of the Rehabilitation and Reinsurance Agreement.

The plan further provided that in accordance with such agreement New Company should submit the plan to the policyholders entitled to vote thereon and that if 10% of such policyholders should so request New Company should submit the plan for approval in accordance with the laws of the State of California.

The plan was submitted to the life policyholders and the requisite percentage requested its submission for approval in accordance with the laws of the State of California. In accordance with section 11526 of the Insurance Code, New Company submitted the plan for the required approvals; on May 5, 1950, the Board of Directors of New Company adopted the Plan of Mutualization. Thereafter, a majority of the voting trustees under the Voting Trust Agreement of April 4, 1938, as owners and holders of the stock of New Company, and in accordance with the provisions of said Voting Trust Agreement, approved the Plan of Mutualization by executing their written consent thereto. Under the provisions of the Voting Trust Agreement the action of a majority of the trustees constituted action of all of the trustees.

On or about June 16, 1950, New Company submitted the Plan of Mutualization to the Insurance Commissioner and petitioned for the approval thereof. The Insurance Commissioner gave notice by publication and by mail that a hearing would be held on August 1, 1950, for the purpose of determining whether the Insurance Commissioner should approve the plan. Notice of the hearing was mailed, among others, to Old Company and to the Pacific Mutual Stockholders Protective Committee. On August 1, 1950, the hearing commenced, and continued from day to day until and including August 18, 1950. All persons desiring to be heard were heard, including the Pacific Mutual Stockholders Protective Committee. Old Company did not avail itself of the opportunity to be heard. Evidence both oral and documentary was received, and was incorporated in a reporter's transcript of over 500 pages.

On September 22, 1950, the Insurance Commissioner issued a 22 page decision, in which he found that the Plan of Mutualization protected the rights and interests of New Company, its policyholders and its shareholders, and that the plan would be fair and equitable in its operation, and in which he issued his approval, thus permitting the plan to become effective if it should be approved by a majority vote of the life policyholders and should thereafter be filed in the office of the Insurance Commissioner. Insurance Code section 11526.

The life policyholders of New Company thereafter approved the Plan of Mutualization in accordance with section 11526(d) of said Code.

On or about November 9, 1950, before the plan was filed in the office of the Insurance Commissioner, after having been adopted by a vote of the directors of New Company, and after having been approved by the written consent of the shareholders of New Company and by the Insurance Commissioner (but before its approval by the life policyholders of New Company) appellants filed their petition for writ of mandamus and obtained an order staying the operation of the Insurance Commissioner's approval of September 22, 1950, expressly permitting, however, a vote of the life policyholders in accordance with section 11526(d) of the Insurance Code.

In accordance with the provisions of the Code of Civil Procedure, section 1094.5, a hearing was held by the court below. All of the record of the proceedings before the Insurance Commissioner was filed with the court. Appellants, respondent Insurance Commissioner, and respondent New Company each filed lengthy briefs and lengthy arguments were made, which are reported in the Reporter's Transcript on Appeal. No evidence was received other than stipulations and the record before the Insurance Commissioner, consisting of the Reporter's Daily Transcript, the exhibits and the Insurance Commissioner's decision. On March 24, 1952, the Judge of the Court filed his Memorandum of Decision, and on June 2, 1952, he filed his Findings of Fact, Conclusions of Law and Judgment, which are the subject matter of the appeal herein.

We will now proceed to a consideration of the law of the case. As above indicated, the principal points raised by appellants are two:

(1) The order made by the Insurance Commissioner was not justified by the evidence; and

(2) The order was made without jurisdiction.

We think neither claim is tenable and that the judgment of the lower court must be affirmed.

Point (1) may be rather quickly disposed of. After notice to all interested parties, a hearing, which took 13 days to complete, was had by the commissioner. Much evidence, both oral and documentary, was received by him. It is manifestly impossible to here set it forth at length. Suffice it to say we have examined it in detail, all of the volumes of the daily transcript of the evidence and the exhibits introduced, and we are not prepared to say that such evidence then taken and received was insufficient to justify the commissioner's ultimate conclusion that the plan was fair and equitable to, and protected the rights and interests of, all interested parties, including the stockholder, in whose right the appellants sue.

On the contrary, much of the evidence was based upon thousands of hours of study and investigation by persons who appear to have been well qualified experts, and we are well satisfied the commissioner acted upon adequate evidence. Two members of the Price Determination Committee and one of the actuaries employed by the Price Determination Committee testified at length as to the manner in which, and the basis upon which, the committee arrived at the price to be paid by New Company for its stock when it consummated the proposed Plan of Mutualization. In substance they testified that they had, by long and exhaustive actuarial studies, determined the amount necessary to fully but gradually restore the benefits of the non-can policyholders; that they had then discounted these amounts at 3% interest to their present value, and found that the present value of the amounts necessary for restoration was $22,000,000; that by similar studies they had established the probable earnings of New Company for each year, commencing with the year 1949 and extending to the year 2000; that by discounting the earnings for the years 1949 to 1974, both inclusive, at 3% (only a portion of the earnings for the last year were so discounted), they determined that the company would be able to complete restoration of non-can benefits in the year 1974; that after the completion of restoration the stockholders of Old Company would be entitled to its earnings, and that the present value of these earnings from 1974 to perpetuity, discounted at 10%, was $2,614,000; that by reason of the terms of the rehabilitation agreement it was necessary to add $500,000 to this amount, but that if certain risk elements had been disregarded, they thought it proper to deduct the sum of approximately $100,000, giving a present value to the stock of $3,000,000; that the calculated earnings upon which their estimate of the time within which to complete restoration of non-can benefits could be made, and upon which they base the present value of future earnings, were net earnings, after provision for contingency reserves.

They also testified that in their opinion a buyer could be found who would be willing to presently pay $3,000,000 for the stock of New Company and await the right to participate in the earnings of New Company for 25 years; that the stock of large life insurance companies currently had sold at 4.3 to 7.8 times of their estimated earnings after the deduction of voluntary reserves; that if the estimated earnings of New Company from 1948 to perpetuity were discounted to their present value at 10%, that value would be less than the amounts necessary for full restoration, and there would be nothing left for the stockholders; that if the present value of the stock were fixed by giving a value to the non-participating life insurance in force at $20 per thousand, the value of the stock would be less than the amount necessary for restoration, and that, in their considered opinion, the price of $3,000,000 was a fair one to be paid to the stockholders.

They also testified that because the payment of the present value of the stock as determined by them was not to be made immediately, but was to be deferred, that they had provided for the payment of interest upon the $3,000,000, and instead of fixing a rate of interest had used the basis of the highest coupon rate paid on long term Government bonds, as they thought that would be equal to the amount New Company could earn upon the deferred payment from year to year; that they recognized that if restoration was completed sooner than they estimated, that is, prior to 1974, this would give an added value to the stock and that they believed $250,000 for each year by which the date of restoration preceded 1974, was a fair estimate of the increased value.

There was introduced into evidence the report of the actuaries who had made the studies upon which the cost of restoration of future earnings were based, and in which the method and the data used are set forth in detail; and much other direct and pertinent evidence.

Some point is made of the fact that some evidence available was not spread upon the record. In view of the foregoing, such is of no consequence. And, in any event, there is nothing in section 1094.5, Code of Civil Procedure, or any other law we know of in proceedings such as this, which requires the spreading of detailed facts upon the record. Popcorn Equipment Co. v. Page, 92 Cal.App.2d 448, 451, 207 P.2d 647; In re Atlas Pipeline Corporation, D.C., 39 F.Supp. 846, 848. All that is required is that the commissioner's approval be supported by substantial evidence in the light of the whole record, and if such be the case, as we now hold it was, the court below and this court are bound thereby. Thompson v. City of Long Beach, 41 Cal.2d 235, 239–240, 259 P.2d 649; Rible v. Hughes, 24 Cal.2d 437, 445, 150 P.2d 455, 154 A.L.R. 137; Housman v. Board of Medical Examiners, 84 Cal.App.2d 308, 315, 190 P.2d 653, 192 P.2d 45; Republic Aviation Corp. v. N.L.R.B., 324 U.S. 793, 800, 65 S.Ct. 982, 89 L.Ed. 1372, 1377.

Point (2). We shall now proceed to a consideration of the question of jurisdiction and related matters. We think it proper to first consider the issue of res judicata. In this respect the appellants contend that the order of December 4, 1936, approving the Rehabilitation and Reinsurance Agreement is not res judicata as to such agreement, nor is it res judicata as to the Plan of Mutualization.

As to the first contention, we are foreclosed from considering it for the Supreme Court has already decided the point contrary to appellants' claim. In Carpenter v. Pacific Mut. Life Ins. Co., 13 Cal.2d 306, 309, 89 P.2d 637, 639, the court said: ‘The legality of the seizure and the lawfulness and propriety of the plan of rehabilitation have already been upheld by this Court. Carpenter v. Pacific Mut. Life Ins. Co., 10 Cal.2d 307, 74 P.2d 761, affirmed with opinion, Neblett v. Carpenter, 305 U.S. 297, 59 S.Ct. 170, 83 L.Ed. 182.’

The California courts have quite uniformly held that when the validity of an agreement is adjudged in a prior proceeding, that issue is res judicata, even though a litigant in a later proceeding may urge some reason for its alleged invalidity which was not urged in the prior proceeding. Price v. Sixth District Agricultural Ass'n, 201 Cal. 502, 509, 258 P. 387; De Hart v. Allen, 26 Cal.2d 829, 831, 161 P.2d 453.

In proceedings in which attacks have been made upon the validity of similar plans of rehabilitation after an adjudication of the validity of such plans, the courts have held the issue of validity to be res judicata as to all parties represented in the proceedings for the approval of such rehabilitation plan, as to persons in privity with such parties, and as to parties represented by them through class representation. Thrower v. Kistler, D.C., 14 F.Supp. 217, 219, 221; National Surety Corporation v. Nantz, 262 Ky. 413, 90 S.W.2d 385, 388.

The fact that a series of orders were contemplated does not change the rule. One of a series of orders in a proceeding becomes res judicata if the order is appealable and not appealed from or if an appeal is taken and is affirmed on appeal. In re Estate of Nolan, 145 Cal. 559, 561, 79 P. 428; Baldwin v. Stewart, 218 Cal. 364, 367–368, 23 P.2d 283.

The issue of the Rehabilitation and Reinsurance Agreement was fully litigated in an adversary proceeding, and not by default. We have examined the authorities cited by appellants in support of their contention in this regard and find that they are not, in our opinion, authority for that which we are now investigating.

Appellants urge that before approving the Plan of Mutualization as fair and equitable the Insurance Commissioner was in duty bound to determine the value of the New Company as a going concern by ascertaining its earning capacity and capitalizing the same at an appropriate rate on the basis of economic surveys and special studies of the relevant criteria. In this case it was not necessary, as a matter of law, to employ any one method of determining the value of the stock. Such stock could be evaluated either on the basis of the market value, capitalization (so-called going concern and investment value), or on the basis of the usual method of evaluating all the stock of an insurance company. California Annual Conference of M. E. Church v. Seitz, 74 Cal. 287, 296, 15 P. 839; Rives-Strong Bldg., Inc., v. Bank of America, etc., 50 Cal.App.2d 810, 816, 123 P.2d 942; Bewick v. Mecham, 26 Cal.2d 92, 94–98, 156 P.2d 757, 157 A.L.R. 1277. At any rate, the Price Determination Committee did determine the investment value (or going concern value) of the stock, on the basis of a capitalization of corporate earnings applicable to the stockholders' equity.

In estimating future earnings there appears to be no specific criteria to go by. As the U. S. Supreme Court has said: ‘The extent and method of inquiry necessary for a valuation based on earning capacity are necessarily dependent on the facts of each case.’ Consolidated Rock Products Co. v. Du Bois, 312 U.S. 510, 527, 61 S.Ct. 675, 685, 85 L.Ed. 982, 994. The pattern of future earnings of the New Company having been fixed by the committee, upon sufficient evidence, we can see no objection to the plan adopted for capitalization. Akron, Canton and Youngstown Ry. Co. v. Hagenbuch, 6 Cir., 128 F.2d 932, 939.

The next point urged is that the Insurance Commissioner made no pretense of determining investment value in the manner required by law or otherwise; his order approving a Plan of Mutualization, therefore, was due to a mistake of law and must be reversed as arbitrary and constructively fraudulent. One answer to this is that the power and duty to determine the value and price of the stock was lodged in the Price Determination Committee and not in the Insurance Commissioner, by the Rehabilitation and Reinsurance Agreement, and this committee was thereby empowered to determine the price to be paid for the stock on any reasonable basis. The determination of value was made by the committee after considering several conventional and approved methods, and we are unable to hold, from the record, that the conclusion it arrived at was unreasonable.

Appellants complain that $3,000,000 was arbitrarily taken away from the stockholders by adding $3,000,000 to the estimated cost of restoration. We find this item to be fully explained in the Christman Report and in his testimony and we can find nothing arbitrary in his calculations. It is based on detailed study by actuaries.

In answer to appellants' contention to the contrary, we find it could well have been found, upon the evidence, that the Mutualization Plan did adequately protect the rights and interests of shareholders.

Appellants next contend that by approving Paragraph 20(f) of the Rehabilitation and Reinsurance Agreement, the court thereby reserved the jurisdiction to determine, at a future time, whether the provisions as to mutualization in Paragraph 20 were contrary to law or illegal or void. We can see no merit in the contention. If the court had intended to reserve such power it would have said so. There is nothing in the order to that effect, and we should not and cannot read something into it that is not there. It is further urged that Paragraph 16 of Judge Willis's order of December 4, 1936, shows that the order is not res judicata as to the Rehabilitation and Reinsurance Agreement. The fact that the court therein reserved jurisdiction to make further orders in the premises, does not stultify, or set at naught, the order already made. This paragraph was obviously intended to permit the court to thereafter make whatever order it deemed proper, if any, to carry the order then being made along to fruition. Cason v. Glass Bottle Blowers Ass'n, 37 Cal.2d 134, 231 P.2d 6, 21 A.L.R.2d 1387.

Passing now to the next contention of appellants, that the order of December 4, 1936, is not res judicata as to the Mutualization Plan proposed, we must, of course, agree, since the court could not then approved a plan which was not before it, nor, indeed, had it then been formulated; but what it did do was to approve the agreement in all of its details, and one of those details was to give the participating life policyholders the right or option to mutualize thereafter. The decreeing of this right is, therefore, res judicata. We are satisfied that the order we have been discussing has become res judicata as to all the matters determined therein.

We now pass to another point urged by appellants, and that is that sections 1043–1052 of the Insurance Code, and not sections 11526–11533, are applicable to the mutualization of the New Company.

In the first place, the rehabilitation agreement above referred to unquestionably makes section 11525, etc., applicable to the mutualization of the New Company, and this agreement has been approved by the court, thus becoming res judicata. In the second place, these sections, 11526–11533, would have been applicable in any event, because the New Company is a solvent insurer and not one that has been seized by the commissioner. Paragraph 20(a) of the agreement approved by the court, provides machinery for the formation of a ‘voluntary mutualization of the New Company, in accordance with the laws of the State of California.’ Under such law a voluntary mutualization can be accomplished only under the provisions of section 11525, etc., of the Insurance Code and not under the provisions of section 1043, etc., thereof. This being the case, it would seem unnecessary to consider the other points raised by counsel in this regard, since to do so would merely be reconsidering something that has already been decided by the Supreme Court.

The contention is made that the court must disregard the corporate entity of the New Company and treat it as though it were the Old Company. This matter has already been decided contrary to such claim. Garrison v. Pacific Mutual Life Ins. Co., 83 Cal.App.2d 1, 9, 187 P.2d 893.

There is nothing in the Carpenter case, 10 Cal.2d 307, 74 P.2d 761, supra, indicative of a thought that the two companies were one and the same, at least after December 4, 1936. The entity of a corporation cannot be disregarded unless it be alleged and proved that the organization thereof was fraudulent or prompted by dishonesty and that injustice would be done if the corporate entity were not disregarded, and that there has been a cessation of the individuality and separateness of the corporation and the owners of its stock. Judelson v. American Metal Bearing Co., 89 Cal.App.2d 256, 262–263, 200 P.2d 836, and cases therein cited. Nothing of such a nature herein appears. The New Company was not an agency of the Insurance Commissioner subsequent to December 4, 1936, but even if it was, obviously such would not make the New Company the same as the Old Company.

Next we consider the claim of appellants that the directors of the New Company had no knowledge of the data on which the Plan of Mutualization was based, and in purporting to adopt the plan, acted as rubber stamps. Section 11525 of the Insurance Code provides that a Plan for Mutualization of a solvent insurance company may be carried out ‘by complying with the requirements of this chapter.’ One requirement is that the plan shall be ‘Adopted by a vote of a majority of the directors.’ Section 11526. It is conceded that this was done on May 5, 1950. No authority is cited for the proposition that directors' action, once taken, can be attacked on the ground of insufficient information, and there probably is none, for obvious reasons. In fact, the law is, no doubt, to the contrary. 6 Fletcher, Cyclopedia of Corporations, p. 296. Furthermore, there is no merit in the statement that the directors were not adequately informed. Prior to April 13, 1950, each director had received a copy of the report of the Price Determination Committee and of the Plan of Mutualization. Furthermore, at its meeting on May 5, the Board received reports, heard the testimony of informed witnesses, all to the effect that the plan could be practically accomplished, having due regard to the interests of all persons interested in the New Company, that it was based on sound principles, was fair, just, equitable, financially feasible, and that the price to be paid and the terms of payment were reasonable and fair; all of which seems to be a complete answer to this point raised by appellants.

We now take up the claim that no valid approval of the Plan of Mutualization has ever been given on behalf of the stockholders, the consent purportedly given by the conservator in the Rehabilitation Agreement did not constitute a valid approval of the present Plan of Mutualization, and the liquidator or conservator could not delegate his power to the Price Determination Committee. The facts of this case take it out of the general rules of law enunciated in the authorities cited by appellants. Here, the validity of the rehabilitation agreement, wherein the conservator, for himself and his successors in interest, as shareholder of the New Company, consented and agreed to consent to such Plan of Mutualization as might be promulgated by a duly appointed Price Determination Committee, is, as is all other parts of said agreement, res judicata.

Thus, the proposition is not where a trustee, having certain duties to perform, on his own initiative delegates his authority or duties to another; rather is it a case where he is bound, both by contract and decree, to consent to what another may do. He could not have refused to give his consent, had he wanted to, under the facts in this case.

We in no way intend to detract from the force of the foregoing conclusion in adding that agreements in which obligations depend on fact determinations thereafter to be made by third persons are valid and not unusual. There are many cases so holding. Illustrative thereof are: Bewick v. Mecham, 26 Cal.2d 92, 97, 156 P.2d 757, 157 A.L.R. 1277; American-Hawaiian Engineering, etc., Co. v. Butler, 165 Cal. 467, 513, 133 P. 280; Roberts v. Security Trust & Savings Bank, 196 Cal. 557, 568, 238 P. 673; Silva v. Mercier, 33 Cal.2d 704, 708–709, 204 P.2d 609; Market Street Ry. Co. v. Hellman, 109 Cal. 571, 42 P. 225; 3 Williston on Contracts, p. 2247, section 800.

Another contention of the appellants is that the conservator or liquidator could not give his approval as trustee for the shareholders until after the adoption of the Plan of Mutualization by a vote of a majority of the Board of Directors, they specifically saying that the steps required to mutualize a solvent or delinquent corporation must be taken in the order enumerated in section 11526. We cannot agree. The section could easily have so provided, but it does not, except in subdivision (e) thereof, and we are not permitted to judicially legislate.

Also, if there could be any question about it, the fact that the language appearing in subdivision (e) is not made to apply to subdivisions (a), (b), (c), or (d) is strongly persuasive that the Legislature did not intend that such provisions should apply to these other subdivisions. Market Street Ry. Co. v. Hellman, 109 Cal. 571, 587, 42 P. 225; In re Estate of Bull, 153 Cal. 715, 717, 96 P. 366; In re Sekuguchi, 123 Cal.App. 537, 538, 11 P.2d 655; 23 Cal.Jur. 762. At any rate, if the liquidator was the stockholder whose consent was required, his consent will be deemed to have been given at the proper time, because being bound by the conservator's agreement to consent, equity will regard that as done which should have been done. Civil Code sec. 3529; Poultry Producers, etc., v. Nilsson, 197 Cal. 245, 254, 239 P. 1086. It is wholly proper that substance should prevail over mere form.

Appellants complain that the Insurance Commissioner, prior to approving the Plan of Mutualization did not conduct the type of hearing required by section 11527 of the Insurance Code. This is based principally upon the claim that the Insurance Commissioner did not have, or receive, proper evidence to justify his conclusion which approved the Mutualization Plan. The basic problem for the commissioner to determine was whether or not the price and terms of payment for the New Company stock were fixed in accordance with the rehabilitation agreement, for if they were, the Plan of Mutualization is fair and equitable because it gives the stockholder the price and terms he agreed to take.

The point is made that some of the witnesses who testified before the commissioner were interested witnesses. Such claim could go only to the weight of the evidence and not its admissibility. It does not appear here, in any event, that any evidence received by him was not trustworthy, nor that any committeeman or valuer or any witness was guilty of partiality, bad faith, or misconduct in their appraisals or testimony. Therefore, the point cannot be upheld. Cecil v. Bank of America, etc., 107 Cal.App.2d 38, 236 P.2d 408; Riccomini v. Pierucci, 54 Cal.App. 606, 608, 202 P. 344.

Another point raised by the appellants is that they have been deprived of substantive due process because the stock of the New Company was valued as of the present, that the time of payment was fixed long in the future, payment was conditional, there was no provision for reasonable interest, and the price paid was grossly inadequate. On this question of due process we should never lose sight of the fact that the commissioner's approval of the Plan of Mutualization did not have the effect of taking appellants' property, since it was nothing more or less than a permit and did not compel the life policyholders to approve the plan, nor the stockholder to dispose of the stock as therein provided, or the New Company to adopt the plan. Even after the commissioner's approval the life policyholders could have rejected the plan, had they so desired. The stockholder could have rejected the plan but for the Rehabilitation and Reinsurance Agreement, which obligated the stockholder to dispose of the stock at the price and upon the terms fixed by the Price Determination Committee. The compulsion upon the stockholder flows from the obligations of the Rehabilitation and Reinsurance Agreement and not from the commissioner's approval of the plan. Even if this were not so, we do not believe the point raised is sound. As we read the evidence it does not necessarily lead to that conclusion; in fact, it could well lead to a contrary conclusion, the one that was adopted by the Insurance Commissioner and upheld by the lower court, to wit, that the plan was fair and equitable.

This already lengthy opinion must come to a conclusion. We have carefully read the briefs of all parties and each point raised by the appellants. Those not hereinabove discussed, we find to be without substantial merit.

The record shows that the commissioner's order approving the Mutualization Plan was not improper, on the evidence submitted. As above indicated, the liquidator was bound by the rehabilitation agreement to dispose of the stock of the New Company on the terms fixed by the committee. Petitioners were parties to the proceeding in which the rehabilitation agreement was proposed, and their representatives participated in seeking that approval. They may not now complain of its terms.

The evidence before the commissioner was fully documented with respect to all factual data, the witnesses who testified appear to be outstanding in their fields, and their expert judgment on questions of valuation and valuation methods, interest rates and trends, and all other matters within the province of expert opinion, could not be disregarded on the basis of ‘mere unsupported suggestions and opinions as counsel.’ In that situation the commissioner could clearly have come to the conclusion that the plan should be approved.

We have studied this case diligently in an effort to ascertain if there was error committed in the court below. We can find none of any consequence.

The oral argument of this case was regularly set for hearing by this court for February 10, 1954. On February 1, 1954, the parties hereto signed, and on February 8, 1954, filed herein a stipulation waiving oral argument and agreeing that the case ‘may be submitted for decision upon the briefs and record on file.’ On February 10, 1954, appellants appeared before the court and made an ex parte application to have the court consider a purported agreement between Old Company and one Clint W. Murchison, wherein the latter agreed, subject to a number of highly important contingencies, to pay $17,000,000 for stock in Old Company.

Various briefs have been filed herein, mostly by amici curiae, respectively approving and opposing such application. We have concluded we may not give consideration to such agreement. Redsted v. Weiss, 71 Cal.App.2d 660, 666, 163 P.2d 105; Bassett v. Johnson, 94 Cal.App.2d 807, 812, 211 P.2d 939.

If we were to give full consideration to the offer, as made, we would be in no position to hold that the Insurance Commissioner erred in his conclusions, since such evidence could, at the most, be merely cumulative. Katenkamp v. Union Realty Co., 36 Cal.App.2d 602, 621–622, 98 P.2d 239.

And, in any event, such additional evidence obviously would not be ‘so conclusive that it compels the direction of a judgment in favor of appellant,’ nor would its effect upon this appeal be ‘decisive’. Bassett v. Johnson, supra [94 Cal.App.2d 807, 211 P.2d 942].

While the last 18 years history of this company is no proof thereof, nevertheless, it is a well recognized principle that all litigation must some time come to an end.

The judgment of the lower court must be, and is, affirmed.

GIBSON, Justice pro tem.

DOOLING and KAUFMAN, JJ., concur.

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