292 U.S. 112 (1934), 449, Clark v. Williard

Docket Nº:No. 449
Citation:292 U.S. 112, 54 S.Ct. 615, 78 L.Ed. 1160
Party Name:Clark v. Williard
Case Date:April 02, 1934
Court:United States Supreme Court

Page 112

292 U.S. 112 (1934)

54 S.Ct. 615, 78 L.Ed. 1160




No. 449

United States Supreme Court

April 2, 1934

Argued February 15, 1934



1. Where a judgment reverses the cause and remands it for further proceedings in accordance with the court's opinion, the opinion is incorporated in the judgment, and may be considered in determining whether the judgment is final. P. 118.

2. A judgment of a state supreme court in a liquidation proceeding which sustains the validity and priority of an execution levied by an intervening creditor on property of the insolvent, leaving no discretion to the trial court with respect to the matter and fully disposing of the intervention, is a final judgment for the purposes of appeal to this Court. P. 117.

3. Under the laws of Iowa, the official liquidator appointed by statute upon the dissolution of an insolvent Iowa insurance company in a suit by the State, is the statutory successor of the corporation. P. 120.

4. In holding that such a liquidator was not the successor to the corporate personality with title derived from the statutes of the domicile, but a chancery receiver with title (if any) created by the Iowa decree in the dissolution proceeding, the Supreme Court of Montana denied full faith and credit to the statutes and judicial proceedings of Iowa. P. 121.

5. Whether there is any law or policy prevailing in Montana whereby the local creditors of an insolvent foreign insurance company are entitled to enforce their full claims, by executions upon its property in Montana, not merely as against a chancery receiver, but as against the domiciliary successor of the corporation seeking to

Page 113

devote all of it assets to pro rata distribution among all of its creditor, is a question for determination by the Supreme Court of that State. P. 123.

6. When the decision of a state supreme court, due to an error in applying the Federal Constitution, leaves unanswered a question of state law that may be determinative of the case, this Court will vacate the judgment and remand for further proceedings. P. 128.

94 Mont. 508; 23 P.2d 959, reversed.

The District Court of Montana entered a final decree adjudging that Clark, the Iowa liquidator of a dissolved Iowa insurance company, was the successor to the personality and title of the corporation, that the assets should be liquidated and ratably distributed subject only to liens existing at the date of dissolution, that a local ancillary receiver should be retained to assist the foreign liquidator, that assets in Montana should be retained in that State until local creditors had received their ratable proportion of the assets there and elsewhere, and that an execution upon a judgment which had been recovered against the corporation by the present respondents should be set aside and cancelled. Upon appeal by the judgment creditors to the Supreme Court of Montana, the decree was reversed and their execution reinstated.

CARDOZO, J., lead opinion

MR. JUSTICE CARDOZO delivered the opinion of the Court.

The question is whether full faith and credit has been given by the courts of Montana to the statutes and judicial

Page 114

proceedings of the State of Iowa. United States Constitution, Art. IV, § 1.

The petitioner, the official liquidator of an Iowa insurance company, declares himself the universal successor of the corporation (Keatley v. Furey, 226 U.S. 399, 403-404), the representative of its personality and powers after its life has been extinguished. (Relfe v. Rundle, 103 U.S. 222; Martyne v. American Union Fire Ins. Co., 216 N.Y. 183, 110 N.E. 502; Deschenes v. Tallman, 248 N.Y. 33, 37, 161 N.E. 321.) The Supreme Court of Montana has held that his title to the assets, if he has any, is derived not from any statute, but from an involuntary assignment under a judgment of a foreign court. A title traced to such a source is subject in Montana to attachment and execution at the suit of local creditors. The question has been left unanswered whether attachments and executions are enforceable to the same extent in derogation of the title of a statutory successor.

Federal Surety Company was organized as an insurance corporation under the laws of Iowa, and thereafter received authority to do business in Montana. In September, 1931, the state of Iowa sued it, alleging its insolvency and praying for a decree of dissolution and the distribution of the assets. A statute of Iowa provides that

the commissioner of insurance henceforth shall be the receiver and/or liquidating officer for any insurance company, association or insurance carrier, and shall serve without compensation other than his stated compensation as commissioner of insurance, but he shall be allowed clerical and other expenses necessary for the conduct of such receivership.

Code of Iowa 1931, § 8613-c 1. See also Code of Iowa, 1931, §§ 8402, 8964. On September 25, 1931, a decree in favor of the state was entered by default, and an amended decree on December 22 of the same year. By these decrees, the corporation was adjudged to have been dissolved on September 25, 1931;

Page 115

the Commissioner of Insurance, E. W. Clark, was adjudged to be "the successor to said corporation," and as such to hold "title to all property owned by Federal Surety Company at the time it so ceased to exist;" and liquidation was decreed in accordance with the statute.

We have said that the corporation had authority to do business in Montana. The grant was subject to conditions. A statute of Montana provides that the dissolution of a corporation does not

take away or impair any remedy given against any such corporation, its stockholders or officers, for any liability which has been previously incurred.

§ 6013, Montana Revised Codes of 1921. The preservation of existing remedies is not confined to domestic corporations. It applies to foreign corporations also. This results, in the view of the Montana court, from a provision of the state Constitution as well as from a supplementary statute. By Article XV, § 11, of the Montana Constitution,

no company or corporation formed under the laws of any other country, state or territory, shall have, or be allowed to exercise, or enjoy within this state any greater rights or privileges than those possessed or enjoyed by corporations of the same or similar character created under the laws of the state.

And by a supplementary statute (§ 6659, Revised Codes, 1921):

All foreign corporations licensed to do business in the State of Montana shall be subject to all the liabilities, restrictions, and duties which are or may be imposed upon corporations of like character organized under the laws of this state, and shall have no other or greater powers.

Construing that statute, the Supreme Court of Montana has written in the case now under review:

Suits against domestic corporations do not abate upon the entry of a decree of dissolution, and the same rule, by virtue of this statutory provision, must apply to a foreign corporation.

Mieyr v. Federal Surety Co., 94 Mont. 508, 23 P.2d 959, 963.

[54 S.Ct. 617] Long before the dissolution of the Federal Surety Company, the respondents Williard and Wheaton, as trustees

Page 116

of a syndicate, brought suit in a Montana court to recover from the surety company the damages due upon a bond. The first trial resulted in a nonsuit, which was reversed upon appeal. Williard v. Federal Surety Co., 91 Mont. 465, 8 P.2d 633. After the decree of dissolution, the case came on for a second trial, and, on May 10, 1932, judgment in favor of the plaintiffs was entered by default. The Supreme Court of Montana has held that the dissolution of the surety company did not abate the suit. There was thus a final judgment, valid under the Montana practice and effective according to that practice, to liquidate the claim.

To say that there was such a judgment is not to dispose of the whole case. A judgment existing, the remedies available to enforce it are still to be determined. Before the respondents were in a position to issue execution, the situation had been complicated by a suit for the appointment of a receiver begun in a Montana District Court. On March 25, 1932, Mieyr, a simple contract creditor, brought suit against the surety company and Clark, the foreign liquidator, praying an ancillary receivership to preserve the local assets. A temporary receiver (Crichton) was appointed the same day. While that suit was pending, the respondents filed a petition on May 24, 1932, for leave to issue an execution against securities and moneys which had been discovered in Montana, the levy to have the same effect as if no receiver had been appointed. An order to that effect was granted, subject, however, to a later motion to vacate it. Within due time thereafter, Clark filed a cross-petition and an answer, asserting his title as successor to the dissolved corporation, opposing the demands of the judgment creditors and setting up his rights and privileges under article IV, § 1, of the Federal Constitution. On August 25, 1932, the District Court of Montana entered a final decree adjudging that Clark was the successor to the personality and title of the Iowa corporation; that the assets should be liquidated

Page 117

and ratably distributed, subject only to the liens existing at the date of dissolution; that Crichton should be continued as an ancillary receiver to assist the foreign liquidator; that the assets in Montana should be retained in that state until local creditors had received their ratable proportion of assets there and elsewhere, and that the execution upon the respondents' judgment and any preference thereby created, as well as the earlier order...

To continue reading