Lyle v. Keehn

• Decision Date: 09 February 1943
• Docket Number: 14398.
• Citation: 24 S.E.2d 655,195 Ga. 508
• Parties: LYLE et al. v. KEEHN.
• Court: Georgia Supreme Court

24 S.E.2d 655

195 Ga. 508

LYLE et al. v. KEEHN.

No. 14398.

Supreme Court of Georgia

February 9, 1943

Rehearing Denied March 11, 1943.

Syllabus by the Court.

association or corporation does not apply to an action to collect assessments made by court of another state against members of insolvent mutual insurance company so as to permit maintenance of one action against two alleged members. Code § 22-1001.

This suit was brought in Fulton superior court by Roy D. Keehn, as receiver of Central Mutual Insurance Company of Chicago, hereinafter referred to as the company, jointly against Hugh H. Lyle, a resident of Fulton County, and Alexander E. Wilson, Jr., a resident of DeKalb County, seeking to collect from them assessments levied in Illinois against all members of the company, an insolvent insurance corporation, the defendants in this case being alleged to be such members. The allegations of the petition as amended were substantially as follows: The company was incorporated under the laws of the State of Illinois, and was qualified to conduct its business in Georgia. On March 25, 1935, the company executed and delivered to defendant Lyle, a policy insuring him against loss from liability arising out of the operation of a described automobile, from March 25, 1935, to January 19 1936. On August 22, 1935, the company likewise delivered to defendant Wilson a policy, insuring him against loss from fire or theft of a described automobile from August 22, 1935, to August 22, 1936.

It was alleged in paragraph five of the petition that each policy was in consideration of a cash premium, and subject to the conditions therein provided, including the contingent liability of the assured one time the premium. The cash premium named in each policy was fully paid, and each policy was in force throughout the term stated. Excerpts from the by-laws of the company, together with quotations from laws of the State of Illinois in reference to mutual insurance companies, were set out in the petition.

The policy issued to each of the defendants contained the clause: "The contingent liability of the assured hereunder is limited to one time the premium named herein, and no more. The assured is given and hereby accepts notice that by virtue of this policy he is a member of the Central Mutual Insurance Company of Chicago, and that the annual meetings of the company are held at its home office at Chicago, Illinois, the first Tuesday following the second Monday of February in each year."

In paragraph nine of the petition it was alleged: "Each of the defendants by accepting the policy so issued to him became and continued to be throughout the term thereof a member of [the company], and assumed all the obligations and liabilities of members." On January 8, 1937, a proceeding for the liquidation of the company was instituted in the circuit court of Cook County, Illinois, by the petition of the attorney-general upon the request of the director of insurance, pursuant to the laws of that State. The company appeared, and has been continuously represented by counsel. On January 11, 1937, an order was entered, declaring that the company was insolvent, and that sufficient cause existed for the appointment of a receiver. On the same date the director of insurance of Illinois appointed Henry G. Miller receiver of the company.

On May 10, 1938, Miller as receiver filed a petition for assessment against the holders of all policies issued by the company during the period from January 31, 1935, to January 11, 1937. On March 19, 1940, the circuit court by its order approved the report, which showed that the company had sufficient liabilities remaining unsatisfied, that were incurred between January 31, 1935, and January 11, 1937, to warrant an assessment of 100 per cent. of the cash premium paid, against all persons who were holders of policies at any time during such period, applying the proposed assessment against each policyholder, including defendants, only to the liabilities which were incurred during the term of his particular policy. The order declared that the material allegations of the petition for assessment were true, and directed that an assessment be levied by the receiver against all individuals who, at any time during such period, were holders of a policy. The assessment, a copy of which is attached to the petition as an exhibit, was levied by the receiver on March 19, 1940. Thereafter the receiver computed the amount due upon each policy, which was confirmed by a separate order of the circuit court.

In paragraph fourteen of the petition it was alleged that by virtue of the foregoing there was levied and assessed against each defendant in this case, and lawfully owing by them to the company under their policies, an amount equal to each annual cash premium. On July 20, 1940, the receiver caused written notice to be given to, and demand made of, defendant Wilson for the payment of the amount so assessed against him. On February 8, 1941, similar notice and demand was made on defendant Lyle; but the defendants have refused to pay the same.

The order of the circuit court directing the levy of the assessment is final, having been affirmed by the Illinois Appellate Court. People v. Central Mut. Ins. Co., 313 Ill.App. 84, 39 N.E.2d 400.

Miller resigned, and petitioner was appointed receiver on May 26, 1941. An order approving his bond was duly entered. He is now vested by operation of law with the title to all the property of the company, including the claims sued on in this action.

In paragraph eighteen it was alleged: Except as to the amount claimed against each of the defendants, the claims asserted herein are identical in character, each case involving the liability of a policyholder of the company to a pro rata assessment made by the same court in the same proceedings and for the same purpose, to wit, the creation of a fund out of which the claims of creditors of the same insolvent corporation may be paid. The amounts sought to be recovered are the debts of defendants as members of the company, a corporation, owing to petitioner as receiver and successor in title and interest of such corporation, and are sought to be recovered for the payment of the debts of the corporation. The amounts so sought to be recovered are less than the total amount of such debts of the corporation. It was alleged also, that this action presents a common right to be established by the plaintiff against the several defendants, and that it is proper for the court to determine the whole matter in one action, thereby avoiding a multiplicity of suits and granting speedy and effectual relief.

In paragraph nineteen it was alleged that there is now due and owing from each of the defendants to petitioner, stated amounts equal to 100 per cent. of the cash premiums expressed in the respective policies, with interest.

The receiver prayed (a) that the trial court, either as a court of equity or under the Code, § 22-1001, relating to suits against the members of corporations, take jurisdiction of the matter, determine the common questions of law and fact involved herein and the several liabilities of each defendant, and render its decree accordingly: (b) that judgments be granted against each of the defendants for the amounts stated in the petition, with interest and costs of court; (c) that process issue; (d) that a second original issue directed to the sheriff of DeKalb County, for service of defendant Wilson.

The defendants interposed separate demurrers and a joint answer. Each demurrer attacked the petition on the ground it contains a misjoinder of parties and causes of action. The demurrer by Wilson, before otherwise pleading, alleged that as to him the superior court of Fulton County was without jurisdiction.

By consent the case was tried by the judge without a jury. The exception is to an order overruling the demurrers, and entering judgment against the defendants as prayed.

Alexander E. Wilson, Jr., of Atlanta, for plaintiffs in error.

Gambrell & White and James S. Wilson, Jr., all of Atlanta, for defendant in error.

ATKINSON Justice.

Distinct and separate claims of or against different persons may not be joined in the same action. Code, § 3-110; Gordy v. Levison & Co., 157 Ga. 670(2), 122 S.E. 234, and cit. But where there is one common right to be established by or against several, equity will determine the matter as to all parties in one action. Code, § 37-1007; Robertson v. Cox, 183 Ga. 744, 189 S.E. 844, and cit.

It is insisted in the brief for the defendant in error, that the Code section last above mentioned justified the joinder under the court's equitable jurisdiction; that there was one common right to be established by the plaintiff against both defendants; that the alleged common right was based upon the assessment made by the receiver pursuant to the direction and authorization of the Illinois court; that while the defendants were alleged to be liable in different amounts and upon the basis of separate and distinct policies, the provisions in the policies which were relied upon were identical; that the alleged common right did not stem from the separate policies, but from the single assessment; that the questions of law and fact involved were substantially identical as to each defendant, and by taking jurisdiction of the entire matter the court acted not only to avoid a multiplicity of suits, but also to avoid the unnecessary costs and expenses that would have been incident to separate actions; that the basic question was the same as to both defendants, namely, whether the defendants...