Evans v. Illinois Sur. Co.
| Decision Date | 16 December 1925 |
| Docket Number | No. 16380.,16380. |
| Citation | 319 Ill. 105,149 N.E. 802 |
| Parties | EVANS et al. v. ILLINOIS SURETY CO. McKEGNEY v. HOPKINS. |
| Court | Illinois Supreme Court |
OPINION TEXT STARTS HERE
Error to First Branch Appellate Court, First District, on Appeal from Superior Court, Cook County; Denis E. Sullivan, Judge.
Proceeding by H. H. Evans and others against the Illinois Surety Company for appointment of a receiver and for dissolution, wherein James S. Hopkins was appointed receiver. Objections to a claim allowed by the master in favor of Terence McKegney were sustained by the superior court, but its decree was reversed by the Appellate Court, with directions to allow the claim (233 Ill. App. 398), and the receiver brings certiorari.
Judgment of the Appellate Court reversed, and decree of the superior court affirmed.
Tenney, Harding, Sherman & Rogers, of Chicago (Roger Sherman and Charles F. Harding, Jr., both of Chicago, of counsel), for plaintiff in error.
Brown, Packard, Peckham & Barnes, of Chicago (John J. Peckham, of Chicago, of counsel), for defendant in error.
On June 16, 1913, Terence McKegney instituted an action in the Supreme Court of New York against the Illinois Surety Company for damages arising out of a contract entered into by the surety company while it was domiciled and doing business in the state of New York. Judgment was rendered for the defendant. Upon appeal to the Appellate Division of the Supreme Court of that state (170 App. Div. 261, 155 N. Y. S. 1041), the judgment was reversed and the cause remanded for another trial. Subsequently, on April 19, 1916, upon a bill by a majority of the stockholders of the surety company alleging insolvency and praying for the appointment of a receiver and the dissolution of the company, the superior court of Cook county, Ill., appointed James S. Hopkins receiver of the company's property, with the power, among others, to collect and conserve its assets, to prosecute and defend suits either in the company's or in his own name, and to appoint attorneys for those purposes.
The second trial of McKegney's suit began in the Supreme Court of New York on November 21, 1916, and also resulted in a judgment for the defendant. A second appeal was prosecuted to the Appellate Division (180 App. Div. 507, 167 N. Y. S. 843), and again the judgment was reversed and the cause remanded. The same attorneys represented the surety company in both trials, but in the second they acted under the direction of the receiver appointed by the superior court of Cook county.
On March 1, 1917, the superior court entered an order directing the creditors of the surety company to file their claims with the receiver on or before September 1, 1917. Pursuant to this order McKegney on August 30, 1917, filed with the receiver his verified statement of claim for $22,000, with interest from February 15, 1913. In his statement he set forth the pendency of the suit in the Supreme Court of New York and expressly reserved the right to prosecute that suit. On January 15, 1918, the receiver submitted to the superior court his report upon the claims that had been filed with him. Later, on January 30, 1918, the superior court, by order, referred certain of these claims, including McKegney's, to a master in chancery to take evidence upon them and to report his conclusions thereon. By a second order entered on the same day, the superior court prohibited the receiver from making any additional expenditures in the defense of suits pending in foreign jurisdictions against the surety company or against that company and its receiver, and directed him to give notice of the order by mail to all claimants in such suits or their attorneys. It was further ordered that all such claimants who failed to file their claims with the master within a fixed time should not participate in any dividends arising out of the assets of the surety company in the possession of the receiver. A copy of the order was mailed to McKegney within 10 days after it was entered. The receiver, in addition, notified McKegney and his attorneys that in compliance with the order no further defense would be made to his suit in the Supreme Court of New York. The case was called for trial in that court on March 6, 1918, at which time the surety company's attorneys also notified McKegney and his attorneys of the order of January 30, 1918. Pursuant to that order the attorneys for the surety company withdrew from the case. Notwithstanding the order and notice, the Supreme Court of New York directed that the trial proceed. No defense was made to the suit, and on March 9, 1918, a verdict for $15,464.50 in favor of McKegney followed, upon which judgment was rendered against the surety company.
At the first hearing before the master in chancery of the superior court on May 3, 1918, McKegney filed an amended and supplemental affidavit of claim, in which he averred his recovery, with the knowledge of the receiver, of the judgment in the Supreme Court of New York, and that there was due him the amount of the judgment, with interest at 5 per cent. per annum from the date of its rendition. To this affidavit an exemplified copy of the judgment roll was attached. At a subsequent hearing before the master on May 21, 1918, McKegney offered the exemplified copy in evidence, but upon the receiver's objection it was excluded on the ground that McKegney had not complied with the order of January 30, 1918. On May 27, 1918, McKegney moved that he be allowed to submit proofs of his claim upon the merits, but on June 1, 1918, the master ruled that the motion would only be granted upon the condition that the judgment rendered by the Supreme Court of New York be vacated. At a later hearing, on April 9, 1919, McKegney refused to vacate the judgment, and his motion was denied and his claim disallowed. He filed objections to the master's report. The master sustained the objections, found that the judgment was binding upon the receiver, amended his report accordingly, and recommended the allowance of the claim in the amount of the judgment. Objections by the receiver to the amended report followed. These objections were overruled, and the amended report came on for hearing before the chancellor upon exceptions by the receiver. The exceptions were sustained, and on November 15, 1922, a decree was entered disallowing the claim and giving McKegney 15 days within which to adduce proofs before the master in support of his claim upon its merits. McKegney refused to proceed before the master, but prosecutedan appeal to the Appellate Court for the First District. That court reversed the decree of the superior court, and remanded the cause, with directions to allow the claim, with interest at 5 per cent. per annum from the date of the judgment rendered by the Supreme Court of New York. A petition for certiorari was allowed by this court, and the case is here.
The question to be determined is whether a court of this state, in administering the assets of an insolvent corporation through its receiver, must give effect to a judgment rendered against the corporation by a court of another state in an action commenced prior to the appointment of the receiver but prosecuted to judgment after such appointment and after the court appointing the receiver had directed him to discontinue the defense of all suits in foreign jurisdictions, and had made a general order, of which due notice was given, that all claimants who had actions pending against the corporation in other states should within a certain time file their claims with, and establish them before, the master in chancery designated by the court which appointed the receiver. May the claimant under such circumstances establish his claim by proof of the judgment, or has the court in possession of the insolvent corporation's assets through its receiver the power to require proof of the claim upon its merits, regardless of the judgment?
[1][2][3] A court exercising equity judisdiction in appointing a receiver of the property of a corporation, holds and administers the estate, through the receiver as its officer, for the benefit of those whom the court shall ultimately adjudge to be entitled to it. Evans v. Illinois Surety Co.,...
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