In re Life Association of America
| Decision Date | 28 February 1887 |
| Parties | In the Matter of the Life Association of America, Dissolved; Bockover, Appellant |
| Court | Missouri Supreme Court |
Appeal from St. Louis City Circuit Court. -- Hon. G. W. Lubke Judge.
Affirmed.
Henry T. Kent for appellant.
(1) The special fund of ten thousand dollars, deposited, by the Life Association of America, with the treasurer of Virginia, was a necessary pre-requisite to its doing business in that state and the said amount constituted a trust fund, to protect the Virginia policy holders upon any liabilities that might arise, on the part of said company. In other words, in addition to the general liability of the company, it made a special deposit, as a security for a certain class of its policy holders, to-wit: those who were citizens of Virginia. Virginia Code, 1873, ch. 36, secs. 28, 32, 33; Acts of 1876-7, pp. 244, 331-2; Insurance Co. v. Coghill, 30 Gratt. 72. (2) The general rule in equity is, that a creditor with a double security against an insolvent estate, or the estate of a dead man, has a right to prove his whole debt against such estate, without any regard to his collateral security, and if the dividend from the general fund of the estate reduces the debt so that the collateral security will more than pay it, then it becomes the duty of the personal representative or assignee of the estate to redeem the collateral security for the benefit of the general creditors. 1 Story's Eq. Jur. [11 Ed.] sec. 564; Mason v. Bogg 2 My. & Cr. 443; Jervis v. Smith, 7 Abb. Pr. Rep. [N. S.] 220; Emmons v. Bradley, 56 Me. 333; Shunk's Appeal, 2 Pa. St. Rep.; Burrill on Assignments, sec. 440. The rule, however, in this state, seems to be modified to the extent of compelling a creditor, who has partially realized on his collateral, to deduct the amount so realized from the whole debt, and, on the balance, the creditor is entitled to the same dividend out of the general assets of the estate as that paid the unsecured creditor. McCune's Estate, 76 Mo. 200. (3) Section 6034, of the Revised Statutes of 1879, can have no application to the case of the appellant. It was passed in 1879, and it cannot be construed to act retrospectively upon contracts made prior to its passage; and even if, in explicit terms, the legislature attempted so to do, such legislation would be within the inhibition of section 10, of article 1, of the constitution of the United States, and of section 15, of article 2, of the constitution of Missouri, of 1875, which prohibits the legislature from the passage of a law "impairing the obligation of contracts, or retrospective in its operation." To make such a statute applicable to the contract of the appellant, entered into in 1872, would be to seriously and substantially impair the obligation of the contract, and to take from him the very means applicable to the performance of such contract. It is not an attempt to affect merely the remedy, but it substantially impairs and lessens the value of the contract itself. Cooley on Const. Lim., sec. 284, et seq.; Green v. Biddle, 8 Wheat. 75; McCracken v. Hayward, 2 How. 608; Curran v. Arkansas, 15 How. 304; White v. Hart, 16 Wall. 640; Von Hoffman v. City of Quincy, 4 Wall. 535; Edwards v. Kearzey, 96 U.S. 595; Provident Sav. Bank v. Skating Rink Co., 52 Mo. 452; Relfe v. Insurance Co., 76 Mo. 594.
W. S. Relfe and George D. Reynolds for respondent.
(1) The law, established by sections 6034 and 6047, is the only law now in force under which distribution of the assets of this company can be made. Story's Conflict Laws [6 Ed.] secs. 524, 525; Dixon v. Dixon's Ex'r, 4 La. 191; Jones v. Dexter, 8 Fla. 276; Harrison v. Sterry, 5 Cranch, 289; Deichman's Appeal, 2 Wharton, 395; Place v. Oldham, 10 B. Mon. 400; Armstrong v. Armstrong, 1 Ore. 210. It is exclusive and an entire substitute for any rule of equity or principle of the common law. (2) The law of section 6034 is not invalid, as contrary to article 1, section 10, of the constitution of the United States, or article 2, section 15, of the constitution of Missouri. The order in which claims are to be paid is not a question affecting the contract, but relates solely to the remedy. Union Bank v. Smith, 4 Cranch C. C. 37; Commonwealth v. Lewis, 6 Binney, 271; Morse v. Goold, 1 Kern, 286; Harrison v. Sterry, 5 Cranch, 289. (3) In the distribution of personalty, the law of domicile determines the parties to the distribution; but the law of the forum, in which the estate is being distributed, in force at the time of distribution, governs the order of classification and payment of demands. Story Confl. Laws [6 Ed.] secs. 524, 525; Ennis v. Smith, 14 How. 424; Harrison v. Sterry, supra; 2 Williams Ex'rs [6 Am. Ed.] 1058. (4) Nor can parties contract away the right of the state to alter and repeal such laws. Cooley Const. Lim. [3 Ed.] secs. 287, 288, 289; Conkey v. Hart, 14 N.Y. 30. (5) To come within the prohibitions of the constitution of the United States, the law must be one which impairs the obligation of a contract. Bennett v. Boggs, 1 Baldwin, 60; Satterlee v. Matthews, 2 Peters, 413; Watson v. Mercer, 8 Peters, 108. (6) Being of the remedy, not of the contract, the priorities in order of payment may be altered, as between creditors, at the will of the legislature. Sturges v. Crowninshield, 4 Wheat. 122; Bronson v. Kinzie, 1 How. 311; Tennessee v. Sneed, 96 U.S. 69; Penniman's Case, 103 U.S. 714; Woodbury v. Grimes, 1 Col. 100. (7) The courts of the United States have recognized these provisions of our law, and held all policy holders in this very company bound by them. Relfe v. Rundle, 103 U.S. 222; Rundle v. Life Association, 10 F. 720.
Bockover, the plaintiff, who is a citizen of the state of Virginia, insured his life in the sum of five thousand dollars with the Life Association of America, a corporation organized under the laws of this state. The policy bears date September 28, 1872. The company became insolvent, and, at the instance of the Superintendent of the Insurance Department of this state, was dissolved by a decree of the circuit court of the city of St. Louis on the tenth of November, 1879. The plaintiff presented his claim and it was allowed in the sum of $ 4,415.15, and placed in the fourth class of debts, under section 6047, Revised Statutes, 1879. The superintendent has declared dividends on this class of claims, amounting in all to seventeen and twenty-two hundredths per centum.
The company, in order to do business in the state of Virginia, deposited with the treasurer of that state securities amounting to the sum of ten thousand dollars, for the benefit of policy holders residing in Virginia. After the dissolution of the company, and prior to the payment of any dividends on the fourth class of debts, the plaintiff and others, citizens of Virginia, proceeded against the fund there. That proceeding resulted in a distribution of the amount there on deposit among the policy holders of that state, and from which source plaintiff received $ 534.84. The superintendent here paid the plaintiff $ 225.45, which, with the amount he received from the Virginia fund, makes up the seventeen and twenty-two hundredths per centum. The plaintiff insists that he is entitled to receive the full amount of the dividends, regardless of the amount he received from the deposit of securities with the treasurer of Virginia. He, therefore, moved the court in which the affairs of the dissolved corporation were pending for an order directing the superintendent to pay him the further sum of $ 534.84. The circuit court declined to award the relief prayed for.
The superintendent, as a justification of his action, relied upon section 6034, Revised Statutes, which is as follows:
"If any...
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