Davis v. Shearer

• Decision Date: 23 April 1895
• Parties: DAVIS v. SHEARER ET AL.
• Court: Wisconsin Supreme Court

90 Wis. 250

62 N.W. 1050

DAVIS

v.SHEARER ET AL.

Supreme Court of Wisconsin.

April 23, 1895.

Appeal from circuit court, Winnebago county; George W. Burnell, Judge.

Action by C. W. Davis, receiver of the Oshkosh Mutual Fire Insurance Company, against Caleb Shearer and another, to recover on an assessment made upon a premium note. From a judgment for plaintiff, defendants appeal. Affirmed.

This action was brought to recover the amount claimed to be due on an assessment made upon a premium note given by the defendants to the Oshkosh Mutual Fire Insurance Company. The former assessment made upon the notes given to the said insurance company was declared invalid in the case of Same Respondent v. Parcher & J. & A. Stewart Co., 82 Wis. 488, 52 N. W. 771, where the proceedings against the insurance company are stated. The present action is upon a new or second assessment made by a referee, and confirmed by the court in the action against the Oshkosh Mutual Fire Insurance Company to wind up its affairs, and in which the plaintiff was appointed its receiver. The amount of the assessment against the defendants was $707.40 upon a premium note of $1,000, given after the company was fully organized, upon which the defendants paid $200 at the time they took their insurance, which was credited to them when the assessment was made. The necessary amount to be raised by assessment was $66,933.25, made up as follows: Expense bill unpaid, $3,574.15; fire losses, contested and uncontested, $34,205.23; other claims, $153.62; interest on uncontested losses from February 24, 1891, to September 24, 1893, $5,264.54; interest on miscellaneous claims, $214.13; interest on contested claims, $177.77; receiver's expenses, estimated at $6,000,--from which was deducted $574.50, leaving $50,199.92 to be raised, to which was added 25 per cent. for uncollectible assessments, $16,733.31. The plaintiff was appointed receiver in an action instituted by R. McMillen and others, officers, board of directors, and creditors of the said insurance company, to adjust, settle, and wind up the business of the corporation, to take charge of its property, convert its assets into money, collect its debts, and close out its affairs under the direction of the court, and a dissolution of the corporation was asked for. The complaint in that action sufficiently showed that the defendant was insolvent, and at least in a failing condition, and unable to meet its just debts. In re Oshkosh Mut. Fire Ins. Co., 77 Wis. 366, 46 N. W. 441. The company transacted business on the assessment plan, the notes of its policy holders providing and the by-laws authorizing an assessment to raise funds with which to meet liabilities from its premium and deposit notes. The premium and stock notes amounted to about $180,000. There was evidence tending to show that 90 per cent. of the note makers were solvent. The amount of cash on hand and due from agents was $11,000 when the receiver was appointed. One draft of $700 was the only overdue claim. The amount of cash on hand when the plaintiff was appointed receiver was but $2.17. It was contended that the court in the action against the insurance company had no jurisdiction to appoint a receiver, and that the assessment is invalid: (1) Because it includes $5,656.92 as interest; (2) because it includes $16,733.31 for shrinkage on the premium notes; (3) because it includes $9,574.15 for expenses of receivership, $6,000 of which is estimated; (4) because defendants had paid the earned premium on their policy down to date of insolvency, and a valid assessment could only be laid against the stock notes to pay losses after insolvency. The court held that the assessment was valid, and in due and proper form, and was equitable, and gave judgment against the defendants for the amount of the assessment, with interest and costs, from which they appealed.

M. C. Phillips, for appellants.

Finch & Barber and Thompson, Harshaw & Davidson, for respondent.

PINNEY, J. (after stating the facts).

1. The principal case of McMillen v. Insurance Co., in which the plaintiff in this action was appointed receiver of said company to take charge of its property, convert its assets into money, collect its debts, and close up its affairs, under the direction of the circuit court, came before this court upon the question of the relation of the attorney general to the action, and the right of the plaintiff to maintain it (77 Wis. 366, 46 N. W. 441); and the sufficiency of the complaint in that action, under section 3218, Rev. St., to authorize the issue of an injunction restraining the corporation and its officers from exercising any of its corporate rights, privileges, or franchises, and from collecting or receiving any debts or demands, and from paying out or in any way transferring or delivering to any person any of the moneys, property, or effects of such corporation, was expressly affirmed, upon the ground that it appeared from the complaint that the defendant was insolvent, and unable to pay its debts, and that it was in a failing condition. The object of that action was to close up the business of the corporation, and it was brought by its directors, who were members of the corporation, and one of whom was one of its creditors. Under section 3219, Rev. St., the court had power in that action to appoint a receiver “to take charge of the property and effects of such corporation, and to collect, sue for and recover the debts and demands that might be due and the property that might belong to such corporation,” with the powers and authorities of receivers in other cases. It is too plain to admit of question that the company, with only $2.17 on hand, was unable to meet and discharge its debts and liabilities in the ordinary course of business when and as they became due; and the court might properly appoint the plaintiff in this action receiver, as provided by the statute.

No appeal has been taken, so far as we are informed, from the order of appointment, and, the plaintiff having qualified, the validity of his appointment cannot be contested when it comes in question collaterally, as it does in this action. While the order might have been erroneous, and subject to reversal on appeal, it cannot be collaterally...