Ass'n Smith v. Banking Comm'n (In re Fidelity Assur.)

• Decision Date: 20 November 1945
• Citation: 20 N.W.2d 638,247 Wis. 619
• Parties: In re FIDELITY ASSUR. ASS'N. SMITH et al. v. BANKING COMMISSION.
• Court: Wisconsin Supreme Court

247 Wis. 619

20 N.W.2d 638

In re FIDELITY ASSUR. ASS'N.SMITH et al.

v.BANKING COMMISSION.

Supreme Court of Wisconsin.

Nov. 20, 1945.

Proceeding in the matter of Fidelity Assurance Association, a West Virginia corporation, wherein the Banking Commission of Wisconsin filed a motion to review a circuit court order for distribution of proceeds of sale of securities which had been deposited by the association with the state for the benefit of policy holders within the state. On motion of the West Virginia receivers and the auditor of that state, and Robert M. Rieser, a contract holder, to dismiss the Commission's motion to review.-[By Editorial Staff.]

Motion to dismiss granted.

Motion to dismiss a motion to review, under sec. 274.12, Stats. J. Campbell Palmer, III, of Charleston, W. Va., and Rieser & Mathys, of Madison, for appellant.

Rickard H. Lauritzen, of Milwaukee, for respondent.

FRITZ, Justice.

On April 14, 1941, the Banking Commission of Wisconsin (hereinafter referred to as the ‘Commission’) obtained-in proceedings instituted on its petition filed, under sec. 215.33(2), Stats., in the circuit court for Dane county, in the matter of the Fidelity Assurance Association (a West Virginia corporation, hereinafter referred to as the ‘Association’)-an order which provided:

‘That possession and control of all of the property, business and assets of that Association located in Wisconsin be and thereby is vested in the Commission; which is ordered to forthwith take possession of and hold and administer said property, under the supervision and control of said court for the benefit and security of contract, bond or certificate holders and other creditors of said Association who are residents of or located in this State; and that title to securities heretofore deposited by said Association with the State Treasurer of Wisconsin be likewise vested in the Commission, but the custody and possession thereof is to remain in said Treasurer pending the further order of the court.'

Those securities had been so deposited by the Association under and pursuant to secs. 215.38 and 215.39, Stats., in trust for the benefit and security of, and to protect the liability of the Association to its contract holders in Wisconsin; and the market value of said securities on April 11, 1941-after the appointment of receivers in a general equity receivership proceeding against the Association in the circuit court of Kanawha county, West Virginia-was $2,635,277.29. After its appointment as such receiver, the Commission, acting under orders of the Dane county circuit court, liquidated approximately 50% of said securities and on May 27, 1941, had received therefor $1,259,244.04, of which it used $1,103,431.97 to make payments of 50% of the cash surrender values of the contracts to persons who were in Wisconsin when they purchased their contracts and until they filed their claims with the Commission. Thereafter the Commission converted the rest of the securities into cash, and after deducting $27,118.19 as its expenses to April 14, 1944, approximately $1,435,000 remained unexpended. On April 27, 1945, the Dane county circuit court entered an order which, so far as here material, reads:

‘1. That only claimants residing in Wisconsin as of April 11, 1941, and those claimants holding contracts carried on the books and records of Fidelity Assurance Association as liabilities protected by the Wisconsin deposit fund, shall have any claim herein, and that the claims of all other persons shall be denied.

‘2. That only those claimants who qualify within the provisions of paragraph 1 above, who had contracts which on April 11, 1941, had a net cash surrender value thereto, that is, cash surrender value as of April 11, 1941, plus additional credits and advance payments and less any loans, with interest to April 11, 1941, shall have a claim against the deposit fund being administered by the Banking Commission of Wisconsin, such claimants to be allowed claims for 100% of the net cash surrender value of their respective contracts as of April 11, 1941.

‘3. All such contract holders who have claims in accordance with paragraph 2 above in the amount of the net cash surrender values of their contracts shall be allowed interest to be computed and paid on such claims at the rate of 6% per annum from April 1, 1941.

‘4. That contract holders having claims to be allowed in Wisconsin in accordance with the foregoing are entitled to a prorata distribution of the funds comprising the Wisconsin deposit less the fees and expenses of these proceedings.

‘5. That any claim of the said West Virginia receivers and Auditor and ExOfficic Insurance Commissioner of the State of West Virginia for the payment to them of the amount existing in said Wisconsin deposit fund over and above the amount of the aggregate net cash surrender values of contracts, held by claimants herein in accordance with this order, be denied, and the Banking Commission of Wisconsin be allowed and permitted to disburse the funds comprising said Wisconsin deposit in accordance with the terms and provisions of this order.'

Notice of an appeal taken by the receivers appointed in the West Virginia receivership proceedings, and by the auditor of that state from the provisions in paragraphs Nos. 3, 4 and 5 of that order was served on the Commission. It then noticed a motion under sec. 274.12, Stats., for a review on that appeal of also the provisions in paragraph No. 2 of the order. Thereupon, the West Virginia receivers and the auditor and Robert M. Rieser, a contract holder residing in Wisconsin, joined in a motion in this court for the dismissal of the Commission's motion to review. From the briefs filed by the parties in relation to that motion it appears that the West Virginia receivers and auditor appealed from paragraphs Nos. 3, 4 and 5 of the order because they claim that the court, in ordering payment to Wisconsin contract holders who, under their contracts, had a net cash surrender value, erred in ordering (in paragraph No. 3) that they shall be allowed also interest thereon at 6% per annum from April 14, 1941, amounting to approximately $330,000, which, if not so ordered to be paid, should have been ordered to be paid to the appellants. On the other hand it appears that the Commission seeks the review of the provisions of paragraph No. 2 of the order because it claims that the court-instead of thereby limiting the distribution of the proceeds in question to only those Wisconsin claimants who had contracts which on April 14, 1941, had a net cash surrender value-should have included as distributes all Wisconsin contract holders, and distribution to them should have been made on the basis of the amount paid in by each, together with 6% interest on each payment to the date of the receivership; and that if the court had so ordered there would be no surplus to be turned over to appellants. In considering those claims it must be noted that there is no provision in the order of April 27, 1945, which can be deemed to direct the disposition of any such surplus or to authorize the removal from Wisconsin of any of the proceeds of the securities in question. Instead, by provisions in paragraph No. 5 of the order there is expressly denied ‘any claim’ of the West Virginia receivers and auditor for the payment to them of the amount of the deposit fund in excess of the aggregate net cash surrender value of contracts held by the Wisconsin claimants; and it is provided that the Commission ‘be allowed and permitted to disburse the fund comprising said Wisconsin deposit in accordance with the terms and provision of this order’. Consequently in the absence of some future order by the court to the contrary, there can be no lawful removal of any part of that fund from Wisconsin to West Virginia.

Appellants' principal contention in support of their motion to dismiss the Commission's motion for a review is that the Commission has no immediate, pecuniary or other substantial interest in the subject matter involved under the provisions in paragraph No. 2 of the order, and that therefore it is not aggrieved or prejudicially affected thereby, and has no appealable interest or right to appeal therefrom or have a review thereof on a motion under sec. 274.12, Stats. The purpose of this statute is ‘to enable a party who is adversely interested in an appeal, generally the respondent, to secure a review of alleged errors prejudicially affecting him.’ Lezala v. Jazek, 170 Wis. 532, 539, 175 N.W. 87,176 N.W. 238, 239;Hilam, Inc. v. Petersen Oil Co., 217 Wis. 86,...