Forte v. Chamberlin
Decision Date | 03 January 1910 |
Citation | 124 S.W. 234,93 Ark. 112 |
Parties | FORTE v. CHAMBERLIN |
Court | Arkansas Supreme Court |
Appeal from Pulaski Chancery Court; John E. Martineau, Chancellor reversed.
Decree reversed.
Carmichael Brooks & Powers, for appellant.
Appellants at the time they were enjoined were pursuing a plain statutory remedy in a court of equal and concurrent juris-suit against the bond. Acts 1905, §§ 4 and 6 approved April from a policy holder who has suffered a loss the Auditor of State is the only person to whom authority is given by statute to bring suit against the bond. Acts 1905, §§ 4 and 6, approved April 24, 1905. The statute under which the receiver was appointed comprises §§ 949 to 952, inclusive, Kirby's Dig. The bond is not an asset in the hands of the receiver. The word assets used in the statute, § 950, was used in its legal sense, and, when applied to a corporation, embraces its real estate as well as personal property, stock and choses in action. 2 Pears. (Pa.), 38, 39; N. Y. Laws, 1869, C. 902; 3 N.E. 193-4; 100 N.Y. 279. The liability upon the bond is nothing more than a chose in action, and not such a chose in action as belongs to the corporation, because it could never maintain a suit upon it. 36 L. R. A. 647; 91 N.Y. 308; 180 Ill. 608; 72 Am. Dec. 236. See also 47 L. R. A. 620, 621; 38 L. R. A. 418. The statutory liability is to the creditors. The corporation could not enforce it, and where the corporation could not sue, the receiver cannot. Beach on Receivers, 433; High on Receivers, § 315; 20 Am. & Eng. Enc. of L. 13. The right of action against the bondsmen is only upon fire losses. Kirby's Dig., §§ 4376, 4377.
T. N. Robertson and Horace Chamberlin, for appellees.
The chancery court was correct in exercising jurisdiction over the affairs of the insolvent insurance company, and in appointing a receiver. Kirby's Dig. §§ 950, 951, 952 and 954, 6342, 6348. In addition to the statutory grounds, the fact that claims in excess of the limited liability on the bond were filed with the receiver, and the fact that all the bondsmen were not equally liable on all claims, constitute grounds for equity jurisdiction. If the statute supra, §§ 950-954, enacted in 1893, conflicts with § 4376, relied upon by appellants, and enacted in 1891, the later law will prevail. 6 Ark. 24; 27 Ark. 419; 40 Ark. 448. For further authorities as to jurisdiction of the chancery court, see 93 U.S. 228; 113 U.S. 302; 92 Md. 245; 41 Minn. 91; 84 F. 10; 29 C. C. A. 529; 102 Ill. 350.
The bond was an asset in the hands of the receiver. Kirby's Dig., § 6348; 3 Cyc. 1111; 44 Minn. 37; High on Receivers, §§ 314, 316, 317a; 107 Mo. 590; 74 Mo. 516; 103 Mo. 212; 75 Ark. 40.
OPINION
The Commercial Fire Insurance Company, a mutual fire insurance corporation, was by order of the Pulaski Chancery Court, at the instance of certain creditors and stockholders, on allegations of insolvency, placed in the hands of a receiver to wind up its assets and affairs, and appellee was appointed as such receiver. Authority for the proceeding is found in the following statute:
"Any creditor or stockholder of any insolvent corporation may institute proceedings in the chancery court for the winding up of the affairs of such corporations, and upon such application the court shall take charge of all the assets of such corporation and distribute them equally among the creditors after paying the wages and salaries due laborers and employees." (Sec. 950, Kirby's Digest.)
The corporation had given, and prosecuted its business as an insurance company under, certain bonds required by the act of the General Assembly, approved April 24, 1905, entitled "An Act to regulate mutual fire insurance companies." Section 4 of that act provides that, "before any such company or association shall do business in this State, it shall file in the office of the Auditor of State a qualified indemnity bond with three or more sureties or with a surety or trust company authorized to do business in this State, to be approved by the Auditor, in the sum of fifteen thousand dollars, to be conditioned for the prompt payment of all claims arising and accruing to any person or persons during the term of said bond by virtue of any policy issued by any such company or association upon any property in Arkansas, whenever the same shall become due, and shall faithfully comply with and perform all and singular the duties and obligations imposed upon them by the laws of the State." In the same clause it is further provided that any such company or association may, upon giving an additional bond in the sum of $ 10,000, conditioned as aforesaid, issue non-assessable policies. Section 6 of the act contains the following provision:
It is, therefore, seen that, according to the terms of the statute, liability on the bond is for losses sustained by policy holders on property in Arkansas, and also for a sum sufficient to replace any deficit in the reserve of fifty per centum of the premiums caused by the unauthorized use of such reserve for other purposes than the payment of losses, the action on the last-named liability to be instituted by the Auditor of State.
Appellants were policy holders on property in Arkansas, and sustained a loss before the insolvency proceedings were instituted, and they instituted an action at law against said corporation and the sureties on one of said bonds to recover the amount of their said loss. The receiver filed a petition in chancery court, praying that appellants be restrained from prosecuting their action against the sureties on said bond, and the court overruled their demurrer to the petition, and rendered a decree perpetually restraining them from prosecuting said action.
"While the receiver of an insolvent corporation," says Mr High, ...
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