Mieyr v. Federal Surety Co. of Davenport, Iowa

• Decision Date: 01 April 1933
• Docket Number: 7074.
• Citation: 23 P.2d 959,94 Mont. 508
• Parties: MIEYR v. FEDERAL SURETY CO. OF DAVENPORT, IOWA, et al.
• Court: Montana Supreme Court

23 P.2d 959

94 Mont. 508

MIEYR v. FEDERAL SURETY CO. OF DAVENPORT, IOWA, et al.

No. 7074.

Supreme Court of Montana

April 1, 1933

Rehearing Denied July 19, 1933.

Appeal from District Court, Cascade County; H. H. Ewing, Judge.

Action by John Mieyr against the Federal Surety Company of Davenport, Iowa, and E. W. Clark, as receiver of the Federal Surety Company of Davenport, Iowa, in which D. A. Crichton was appointed ancillary receiver of defendant first named and in which Harry P. Williard and others, as trustees of the Gordon Campbell-Kevin Syndicate, a common-law trust, and the Gordon Campbell-Kevin Syndicate filed their petition for an order permitting them to levy execution on certain property of the Surety Company, which order was granted. From a decree confirming the appointment of Crichton as ancillary receiver and revoking the order granting permission to petitioners to levy such execution, and from an order denying petitioners' motion to vacate or modify the decree petitioners appeal.

Reversed and remanded.

Rehearing denied; CALLAWAY, C.J., and ANGSTMAN, J., dissenting.

ANGSTMAN J., dissenting.

Louis P. Donovan, of Shelby, and Belden & De Kalb, of Lewistown, for appellants.

Gunn, Rasch, Hall & Gunn, of Helena, Molumby, Busha & Greenan, of Great Falls, and R. B. Cook, of Davenport, Iowa, for respondents.

PER CURIAM.

Defendant Federal Surety Company prior to September 25, 1931, was a corporation organized under the laws of Iowa and authorized to do business in Montana. The district court of Scott county, Iowa, in a proceeding brought by the Attorney General of that state, under statutory authority made an order on September 21, 1931, requiring the surety company to appear on September 25th and show cause why its affairs and business should not be dissolved and a receiver appointed to wind up its affairs and distribute its effects as provided by law. The order was served on the surety company, and it failed to appear. The court thereupon entered a decree "that under and in accordance with the provisions of section 8964 of the Code of 1927 of the state of Iowa, the defendant, Federal Surety Company, shall be dissolved, and its effects distributed." The decree also appointed E. W. Clark commissioner of insurance of the state of Iowa, as receiver, gave him certain directions with respect to the property and the method of ascertaining and determining claims, and expressly retained jurisdiction, upon application of any party in interest, to give further orders, directions, or decrees as may be necessary or proper. Clark duly qualified as receiver by filing bond and oath.

On December 22, 1931, the court, on application of the receiver, made a supplemental order and decree which recites that the court "finds, determines and adjudges: That pursuant to the power conferred by said sections, pursuant to the allegations set forth in the petition filed herein, as amended, and pursuant to good cause shown herein, as in said sections provided, this court did, on September 25, 1931, enter an order and decree in this cause, and thereby dissolved Federal Surety Company and terminated its corporate existence, and thereby appointed E. W. Clark, who was and is commissioner of insurance of the state of Iowa, as the receiver and/or liquidating officer, to take title to all property of the dissolved corporation for the purpose of liquidating and distributing its assets, as by law provided. That by virtue of the statutes hereinbefore referred to, as construed by the court of last resort in the state of Iowa, and by virtue of the proceedings in this cause, the said corporation, Federal Surety Company, ceased to exist upon the entry of the order and decree herein at 4:30 P. M. Central Standard Time, September 25, 1931, and that thereupon all its agencies ended, its employees, including attorneys, were discharged, and it was put, without exception or notice of appeal, beyond all further corporate activity, its existence was put to an end for all purposes whatsoever, so that it can neither make nor take contracts, nor sue or be sued, and so that all debts to or from it became extinguished and all actions by and against it abated, and so that, as after death of a natural person, it can have no interest in the property theretofore by it controlled. That the defendant, Federal Surety Company, is, and since September 25, 1931, has been dissolved, and that its corporate existence is terminated, with the results hereinbefore determined. That E. W. Clark, receiver and/or liquidating officer of Federal Surety Company, is the successor to said corporation and as such holds title to all property owned by Federal Surety Company at the time it so ceased to exist."

On March 25, 1932, this action was commenced by Mieyr against the surety company and the receiver, Clark, in Cascade county, the complaint alleging a debt due plaintiff from the surety company, growing out of a policy of insurance for loss occasioned by reason of the ownership, maintenance, use, and operation of a certain automobile. Mieyr in his complaint pleaded the decree of the Iowa court dissolving the corporation and appointing a receiver, and the Iowa laws authorizing the proceedings taken in the Iowa court. He alleged that the surety company had more than $50,000 worth of property situated in Montana, consisting of cash and a judgment in favor of the surety company; that Clark, the receiver, through agents and representatives in this state, is attempting to compromise, settle, and discount the assets and procure possession thereof and remove them from the state, and that, unless a receiver is appointed in this state to take charge of and preserve the property for the Montana creditors, the same would be dissipated and lost to the creditors; that the funds should be retained in Montana until the proportionate shares of the Montana creditors are ascertained and determined and these paid out of the Montana assets before transferring any of the funds to the Iowa receiver. The complaint asked for the appointment of D. A. Crichton as receiver to take charge of the Montana assets and to hold the same until the further order of the court. It prayed also that plaintiff be decreed to have a valid claim against the surety company.

On the day the complaint was filed, the court appointed Crichton as receiver for the Montana property, the order reciting "that the receiver be vested with all the powers and rights of receivers appointed by this court, and with the power to take possession of all property heretofore belonging to said Federal Surety Company of Davenport, Iowa, and to collect all sums owing said Federal Surety Company of Davenport, Iowa, and to keep and preserve the same, and manage and disburse the same, according to the further order of this court."

Crichton duly qualified as such receiver on March 26th. Clark thereafter moved the court to discharge Crichton as receiver for want of jurisdiction in the court to make the appointment. This motion was denied on May 24, 1932.

On May 20, 1932, Harry P. Williard, W. W. Wheaton, and C. W. Hay, as trustees of Gordon Campbell-Kevin Syndicate, a common-law trust, and Gordon Campbell Syndicate, appellants here, obtained a judgment against the surety company in the Fergus county district court for approximately $15,000 without knowledge of the receivership proceedings in Iowa. This was after a second trial. The first resulted in a nonsuit, which judgment was reversed by this court in 91 Mont. 465, 8 P.2d 633. On May 24th these appellants appeared in this action in Cascade county by petition setting forth that they had discovered assets of the surety company within the state and had executions issued out of the district court of Fergus county upon their judgment, and requested an order permitting them to levy the execution upon such property in Montana. The request was granted with the understanding, announced by the court, that no preference over other Montana creditors was given them. On July 25th Crichton filed his petition to annul the order permitting the levy of execution, and gave notice that it would be heard on August 3d.

On August 3d Clark served and filed an answer and cross-petition in this action. In substance, it set forth his appointment as receiver by the Iowa court, and pleaded the Iowa statutes authorizing the proceedings there taken; that creditors of the surety company reside in different jurisdictions and its assets are located in such jurisdictions; that there were assets in Montana amounting to $50,000; and that certain creditors were threatening suits against such property and issuing attachments; and that an ancillary receiver should be appointed to prevent irreparable damage and preferential treatment of some creditors over others. It prayed for an order confirming title to the assets of the surety company in Clark and confirming the appointment of Crichton as ancillary receiver of the Montana property, with authority to care for and preserve it until the further order of the court. Mieyr filed an instrument admitting the allegations of the answer and cross-petition of Clark, and joining in the request therein made.

On August 25th the court entered an order or decree finding that the corporate existence of Federal Surety Company was terminated by the proceedings in Iowa, and that title to all its property passed to Clark, as receiver, and should be distributed ratably to all creditors "subject to any liens and rights of creditors acquired on or prior to September 25, 1931, in or to specific property." It confirmed the appointment of Crichton as ancillary receiver and directed that he receive proof of claims of all Montana creditors by requiring the claims to be filed with the clerk of court in Cascade...