Hertz v. Lion Bonding & Surety Co.

• Decision Date: 28 April 1922
• Docket Number: 5950.
• Citation: 280 F. 540
• Parties: HERTZ et al. v. LION BONDING & SURETY CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

280 F. 540

HERTZ et al. v. LION BONDING & SURETY CO. et al.

No. 5950.

United States Court of Appeals, Eighth Circuit.

April 28, 1922

Appeal from the District Court of the United States for the District of Nebraska; Joseph W. Woodrough, Judge.

Suit by A. J. Hertz and others, as receivers, against Lion Bonding &amp Surety Company and others, to compel the delivery of all assets of the defendant corporation to the receivers. From a decree dismissing the suit, complainants appeal. Reversed with directions to reinstate the bill, and issue the injunction as prayed.

Courts 493(3)-- Receivers entitled to property of insurance company as against state department having temporary possession.

The receivers appointed by the United States District Court for Minnesota, for an insurance company organized under the laws of Nebraska, have exclusive right to the possession of all the assets of the corporation, notwithstanding a prior order by a Nebraska court temporarily vesting possession of such assets in the state department of trade and commerce, to conduct the affairs of the corporation until it can show the court it is again proper to permit the corporation to conduct its own business, under the well-settled rule that the court first obtaining jurisdiction in a proceeding to administer the property of an insolvent corporation has priority over other courts attempting to take such possession thereafter.

Bruce W. Sanborn, of St. Paul, Minn (Sanborn, Graves & Ordway, of St. Paul, Minn., on the brief), for appellants.

Halleck F. Rose, of Omaha, Neb. (Amos Thomas and George W. Pratt both of Omaha, Neb., and Clarence A. Davis, Atty. Gen., on the brief), for appellees.

Before STONE, Circuit Judge, and TRIEBER and MUNGER, District Judges.

TRIEBER District Judge.

This cause arose out of the proceedings in No. 5902, Lion Bonding & Surety Co. v. A. H. Karatz, 280 F. 532, in which the opinion is filed this day. After the refusal of this court to disapprove the appointment of the receivers, and the denial by the District Court for the District of Minnesota of the defendant's motion to dismiss the complaint in that action, the appellants, hereafter referred to as the plaintiffs, in pursuance of the authority granted to them by the court, which appointed them, filed this action in the court below, praying that it be adjudged by the decree of the court that, as against the defendants in this cause, the plaintiffs, receivers appointed by the District Court of Minnesota, have priority of right and the exclusive right to the possession of all the assets of the defendant Lion Bonding & Surety Company, its books and records, and that the defendant have no right to their possession and for an injunction in the usual form. In addition to the Bonding Company, the officers of the company, the Department of Trade and Commerce of the state of Nebraska, Amos Thomas personally and as the agent and representative of that Department, and W. B. Young, the chief of the Bureau of Insurance of the state of Nebraska are defendants.

The complaint, after setting out the proceedings in the District Court for the District of Minnesota, resulting in the appointment of the plaintiffs as receivers of the property and assets of the bonding company, and their qualifications as such receivers, which are fully set forth in our opinion in No. 5902, Lion Bonding & Surety Co. v. A. H Karatz, 280 F. 532, filed this day, and to which reference is made for the facts leading to the appointment of the receivers, alleges that, before their appointment as such receivers, on April 12, 1921, the defendant the Department of Trade and Commerce, referred to herein as the Department, had filed in the district court of Douglas county, state of Nebraska, its verified petition, praying for an order directing it to take possession of the records, property, etc., of the said bonding company, which had, in the conduct of its business, violated the laws of the state, and conduct its business until such time as, after a hearing, it shall appear to the court that the cause of the order directing the Department to take possession has been removed, and...