Clark v. Williard

• Decision Date: 02 April 1934
• Docket Number: No. 449,449
• Citation: 78 L.Ed. 1160,292 U.S. 112,54 S.Ct. 615
• Parties: CLARK v. WILLIARD et al
• Court: U.S. Supreme Court

292 U.S. 112

54 S.Ct. 615

78 L.Ed. 1160

CLARK

v WILLIARD et al.

No. 449.

Argued Feb. 15, 1934.

Decided April 2, 1934.

Messrs. Reull B. Cook and Edmond M. Cook, both of Davenport, Iowa, and M. S. Gunn, of Helena, Mont., for petitioner.

Mr. H. Leonard De Kalb, of Lewistown, Mont., for respondents.

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 judi- cial proceedings of the state of Iowa. United States Constitution, art. 4, § 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, 33 S.Ct. 121, 57 L.Ed. 273), the representative of its personality and powers after its life has been extinguished. (Relfe v. Rundle, 103 U.S. 222, 26 L.Ed. 337; Martyne v. American Union Fire Insurance 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 alowed 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 the commissioner of insurance, E. W. Clark, as 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.' Section 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 15, § 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 (section 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.

Long before the dissolution of the Federal Surety Company, the respondents Williard and Wheaton, as trustees 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 enterd 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 4, § 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 liqui- dated 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 sanctioning the levy, should be set aside and canceled.

From that decree, and from an order denying a motion to vacate or modify it, the judgment creditors, who are the respondents in this court, appealed to the Supreme Court of Montana. After argument and reargument, the decree and order were there reversed, two members of the court dissenting. Mieyr v. Federal Surety Company, 94 Mont. 508, 23 P.(2d) 959. The court held that the respondents' judgment had been lawfully recovered, though the defendant was dissolved; that the ancillary receivership was void for the reason that a simple contract creditor (Mieyr) was without standing to maintain the suit; that Clark, the foreign liquidator, was not the successor to the corporate personality with a title derived from the statutes of the domicile, but was a chancery receiver with a title (if any) created by the Iowa decree; that, as against such a receiver, creditors in Montana were at liberty to levy attachments and executions, irrespective of their right to enforce such a levy against a statutory successor; and hence that the respondents' execution should be reinstated, and the cause remanded for further proceedings in accord with the opinion. A writ of certiorari brings the case here.

Our jurisdiction to issue the writ is challenged on the ground that the decree to be reviewed is without the requisite fanality. Judicial Code § 237, 28 U.S.C. § 344 (28 USCA § 344). The challenge should not prevail. The decree of the Montana court is final to the extent that it confirms the respondents' execution and permits a levy that will override the liquidator's title. A final order results where a court denies a petition by an intervening creditor to establish a prior lien (Gumbel v. Pitkin, 113 U.S. 545, 548, 5 S.Ct. 616, 28 L.Ed. 1128), or a petition by a municipal corporation intervening in a foreclosure suit to enforce a lien for taxes superior to the mortgage (Savannah v. Jesup, 106 U.S. 563, 564, 565, 1 S.Ct. 512, 27 L.Ed. 276), or one by a chancery receiver appointed by a state court for the delivery of property in the possession of another court (Ex parte Tiffany, 252 U.S. 32, 36, 40 S.Ct. 239, 64 L.Ed. 443. Cf. Hovey v. McDonald, 109 U.S. 150, 155, 3 S.Ct. 136, 27 L.Ed. 888; Williams v. Morgan, 111 U.S. 684, 689, 4 S.Ct. 638, 28 L.Ed. 559; United States v. River Rouge Co., 269 U.S. 411, 414, 46 S.Ct. 144, 70 L.Ed. 339; Dexter Horton National Bank of Seattle v. Hawkins (C.C.A.) 190 F. 924, 927). The doctrine of those cases is applicable here. Further judicial proceedings may be necessary between the liquidator and others not before us. As between the liquidator and the respondents claiming as judgment creditors, the suit is at an end. They came into court pro interesse suo with a petition to establish the priority of their judgment. The petition has been granted and priority decreed. Not only that, but an order vacating the execution has been reversed, and the...