Friedrichs v. Goldy

• Decision Date: 02 December 1963
• Docket Number: No. 20699,20699
• Citation: 153 Colo. 554,387 P.2d 274
• Parties: Otto FRIEDRICHS, as Special Deputy Commissioner of Insurance for the State of Colorado and Acting Receiver for Colorado Credit Life, Inc., a Colorado insurance corporation, Plaintiff in Error, v. Frank E. GOLDY, as State Bank Commissioner for the State of Colorado, and Maurice Reuler, as Special Deputy State Bank Commissioner and Liquidator of Boulder Industrial Bank, a Colorado industrial banking corporation, Defendants in Error.
• Court: Colorado Supreme Court

Page 274

387 P.2d 274

153 Colo. 554

Otto FRIEDRICHS, as Special Deputy Commissioner of Insurance for the State of Colorado and Acting Receiver for Colorado Credit Life, Inc., a Colorado insurance corporation Plaintiff in Error, v. Frank E. GOLDY, as State Bank Commissioner for the State of Colorado, and Maurice Reuler, as Special Deputy State Bank Commissioner and Liquidator of Boulder Industrial Bank, a Colorado industrial banking corporation, Defendants in Error.

No. 20699.

Supreme Court of Colorado, In Department.

Dec. 2, 1963.

Gelt & Grossman, Percy S. Morris, Denver, for plaintiff in error.

Mason, Reuler & Peek, Denver, for defendants in error.

HALL, Justice.

The parties appear here in the same order as in the trial court. We refer to them by name or as the plaintiff and the defendants.

In his complaint, filed January 29, 1962, plaintiff alleges:

1. That since December 11, 1961, plaintiff has been and now is the duly court appointed receiver of Colorado Credit Life, Inc., an insolvent insurance company, and as such he is charged with the duty of taking possession of all of the assets of the insolvent corporation.

2. That on October 10, 1960, Boulder Industrial Bank was duly declared insolvent and on said date the affairs and assets of said bank lawfully placed in the hands of the defendant Reuler for distribution to those lawfully entitled thereto.

3. Among the assets of Boulder Industrial Bank is the sum of $502,345.44 deposited with and credited to the account of Colorado Credit Life, Inc., which sum Reuler has in his possession. That plaintiff filed with Reuler its claim for said sum, which claim Reuler, on July 28, 1960, denied in toto.

4. That denial of said claim was arbitrary, capricious and erroneous.

Plaintiff prays that Reuler be ordered to allow said claim and on final liquidation of said bank to pay to plaintiff such amount as the court may determine is due on said claim.

To this complaint the defendant filed a motion to dismiss, stating:

I. There is only one party to this lawsuit, namely, the State of Colorado, and the state cannot sue itself.

II. That the action is prematurely brought.

III. That as a matter of public policy, the within action should be dismissed.

The trial court sustained the motion to dismiss, stating:

'* * * The Court finds that there is only one party in interest in this case, the same being the State of Colorado, and that being the case, and adversary proceeding does not exist. * * *' The plaintiff seeks reversal.

The problem sought to be resolved is the ownership of a half million dollars. The state of Colorado, Freidrichs, Goldy and Reuler do not, nor does any of them, claim to be the equitable owner of said fund or any portion thereof.

The equitable owners of the funds are (1) the creditors, policyholders and stockholders of the insurance company, or some one or more of them, or (2) the creditors, depositors and stockholders of the bank.

The finding of the trial court that

'* * * there is only one party in interest in this case, the same being the State of Colorado, * * *.

is predicated on form, not substance; fiction, not fact, and is lacking in reality. Colorado makes no claim, it can have no substantive claim, it has duties to perform and, as an incident to performance of those duties, has administrative rights such as the right to appoint the individual parties to this litigation to the end that assets, the property of others, may ultimately repose in the rightful owners thereof.

The further observation of the trial judge, that 'an adversary proceeding does not exist,' is equally untenable. Here, Friedrichs, a legal entity, claims the ownership of funds possessed by Reuler, a legal entity. The foregoing poses a justiciable issue--in fact an issue which Reuler resolved, resolved in a manner unacceptable to Friedrichs. Adverse contentions--grist for the judicial process--prevail and remain unadjudicated.

In substance, we have a situation here comparable to an attorney in fact maintaining an action against another attorney in fact representing a different group with adverse interests.

One who becomes a stockholder, creditor or policyholder of an insurance company, or a stockholder, creditor or depositor of a bank, acquires contractual rights and duties subject to the provisions of existing statutes. Here, the aforementioned stockholders, policyholders and creditors, on acquiring their rights and as part and parcel thereof sanctioned the appointment of Friedrichs and Reuler to act in their behalf to the end that they realize that to which they are entitled.

While functioning and prior to being divested of authority, the bank and the insurance company acted in behalf of their creditors, depositors, policyholders and stockholders. They could have engaged in court proceedings--adversary proceedings to determine their respective rights to the monies here involved.

It is elementary of course that without adversary parties there can be no justiciable issue presented for judicial adjudication. Looking at substance rather than form, we do not have Colorado suing Colorado; we do not have the Bank Commissioner, an arm of Colorado, suing the Insurance Commissioner, another arm of the state. We do have Friedrichs, a legal entity, suing Reuler, another legal entity--each acting in behalf of persons claiming to be the rightful owners of certain specified property. To the extent that one group's claim is good, the other group's claim is without merit. Here is real controversy, and when and if the controversy is finally adjudicated, and not until, will it be known that the funds repose in those legally entitled thereto.

Contrary to the decision of the trial court, we hold that the State of Colorado is not the only party in interest, but in truth and in substance the State is not a party in interest or at all. Colorado can have no interest in how the problem sought to be adjudicated terminates, it will neither profit nor lose one iota no matter how the question is resolved.

In 1 C.J.S. Actions § 31, p. 1074, it is stated:

'It is a well settled rule of law that a party cannot maintain an action against himself, or, stated otherwise, one person cannot in one and the same action, hold the position both of plaintiff and defendant. This is the rule whether the action is one in contract or one in tort. * * * The rule has no...