Martin v. General Am. Cas. Co.

• Decision Date: 08 November 1954
• Docket Number: No. 41960,41960
• Citation: 46 A.L.R.2d 1178,76 So.2d 537,226 La. 481
• Parties: , 46 A.L.R.2d 1178 Wade O. MARTIN, Jr., Secretary of State, v. GENERAL AMERICAN CASUALTY COMPANY et al.
• Court: Louisiana Supreme Court

Page 537

76 So.2d 537

226 La. 481, 46 A.L.R.2d 1178

Wade O. MARTIN, Jr., Secretary of State, v. GENERAL AMERICAN CASUALTY COMPANY et al.

No. 41960.

Supreme Court of Louisiana.

Nov. 8, 1954.

Rehearing Denied Dec. 13, 1954.

C. C. Wood, Baton Rouge, for relator.

Kantrow, Spaht & West, Baton Rouge, for respondents Marguerite Boudreaux and Ruth Papizan.

Taylor, Porter, Brooks, Fuller & Phillips, Baton Rouge, for respondent Travelers Fire Ins. Co.

MOISE, Justice.

Writs were granted with a stay order, issued under the supervisory jurisdiction of the Supreme Court, directed to the Nineteenth Judicial District Court for the Parish of East Baton Rouge, to review a judgment of that court denying a preliminary injunction applied for by the Secretary of the State of Louisiana seeking to enjoin further proceedings to satisfy the execution of a judgment which was the outgrowth of an automobile accident on June 27, 1953, in which the respondents, Marguerite Boudreaux and Ruth Papizan, filed a suit in the Eighteenth Judicial District Court for the Parish of West Baton Rouge, making as a party-defendant the General American Casualty Company of San Antonio, Texas, the insurer of the vehicle which collided with the Boudreaux automobile. Ruth Papizan was a passenger in the Boudreaux automobile. All parties of interest filed an answer. A petition of intervention was filed on behalf of The Travelers Fire Insurance Company, as subrogee on a collision policy issued to Marguerite Boudreaux insuring her automobile.

After due proceedings had judgment was rendered in favor of the respondents. Writs of Fieri Facias were obtained from the Clerk of Court of West Baton Rouge Parish, directed to the Sheriff of the Parish of East Baton Rouge, Louisiana, commanding him to seize and take into his possession the property, rights and credits of the General American Casualty Company, and respondents also instituted garnishment proceedings and named A. P. Tugwell, Treasurer of the State of Louisiana, as garnishee. Thereafter, the garnishee filed his answer, admitting that certain United States Treasury Bonds belonging to the General American Casualty Company were on deposit with him, and that no prior liens or attachments had been levied against this property. The judgment recognized the seizure of the bonds and also the first lien on the property. The sheriff then took into his possession the bonds described in the answer filed by the garnishee.

The General American Casualty Company was placed in receivership in its domiciliary State of Texas. When knowledge of this fact was obtained the Secretary for the State of Louisiana filed a petition in the court, recognizing respondents' prior valid seizure and alleging that after respondents had been satisfied there would be sufficient funds left for an ancillary receivership in this State. The Secretary of State prayed for and was appointed ancillary receiver.

Thereafter, the Secretary of State filed a supplemental and amended petition, by which a Rule Nisi issued to the respondents, including the Sheriff for the Parish of East Baton Rouge, ordering them to show cause why any further action should not be enjoined.

The facts are that respondents' seizure was recognized as effected on June 7, 1954, and the General American Casualty Company of Texas was placed in the hands of receivership in that State on June 17, 1954. Thus, the seizure was perfected ten days before the receivership proceeding was filed in Texas.

The Secretary of State made the admission----

(a) That Texas is not a reciprocal state within the meaning of the Uniform Insurers Liquidation Act.

(b) That respondents were in good faith.

After submission of the case on the merits, the Court held that----

'The Uniform Insurers Liquidation Act and Section 762 of Title 22 of Louisiana Revised Statutes of 1950 does not apply if the domiciliary state of the insurer is not a reciprocal state within the contemplation of the act.'

and, accordingly, dismissed the restraining order obtained by the Secretary of State.

The parties litigant have agreed on the legal question involved, because in his brief the Secretary of State holds:

'It is submitted that the only question involved in the case is whether, under the above quoted Section 762, relator is entitled to the relief prayed for, and we do not understand that the trial judge or opposing counsel seriously urge that there is any other question presented.'

The General American Casualty Company was not authorized to do business in Louisiana since 1953, but its funds were held because such were in the nature of a guarantee as a protection of claimants on policies written in this State. The deposit with the Secretary of State was bonds and securities to the extent of $20,000. The condition of the deposit, as set forth in LSA-R.S. 22:1022, is as follows:

'The above deposit shall be conditioned for the prompt payment of all claims arising and accruing to any person by virtue of any policy issued by any such insurer upon the life or person of any citizen of the State of Louisiana, or upon any property or other risk situated in this state.'

Relator argues that 'whether Texas is a reciprocal state, within the meaning of the aforementioned Section 762, is a matter of no importance and that the Section is applicable in Louisiana under the facts involved in this cause, without regard to whether Texas has a similar provision.'

Our concept is that the uniformity of interpretation is in law 'a consummation devoutly to be wished for'. ' § 763. Uniformity of interpretation

'This Uniform Insurers Liquidation Law (R.S. 22:757 through 22:763) shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states that enact it.' (Emphasis ours.)

The Trial Judge clearly understood the situation, for in his reasons for judgment dictated in court he said:

'The seizure was effected prior to the date when the company was placed in receivership in the State of Texas. Subsequent to such proceedings in Texas, the Secretary of State of Louisiana instituted these proceedings seeking to enjoin the sale of the bonds under the writ of fieri facias and also seeking to have an ancillary receivership.'

Furthermore, the law is uniform in this State, and it has been for many years, that a seizure by a fieri facias prior to the appointment of a receiver gives the seizing creditor a valid lien. Thus, Section 762 referred to is in derogation of rights which have heretofore existed in this State, and which law has been well established in the jurisprudence.

In the very early case of Receivership of Bryce Cash Store, 12 La.App. 365, 124 So. 544, 545, the following pertinent rule was made:

'Code of Practice, art. 722, provides that the creditor, 'by the mere act of seizure, is invested with a privilege * * * which entitles him to a preference over other creditors, unless the debtor has become bankrupt previous to the seizure.' It is conceded that there was in this case an act of seizure, which was declared by the court to be valid and was sustained. The Baker Grocery Company was, therefore, entitled to a preference over the other less diligent creditors. The property of the debtor was attached before the receiver was appointed, and the privilege, when recognized by the court, dated back to the service of the writ. Now, was this seizure and the privilege conferred by it divested when the receiver was appointed and took over the property? The answer is, 'No.'

'A receiver is but an officer of the court, who acts as trustee for both the creditors and the debtor corporation. He acts, not for himself, but for both, and represents each. Property in his hands is in the custody of the law. He is but an agent, through whom the court acts. * * *

'The appointment of a receiver sustains the status quo of the corporation, and is meant to preserve and not to cause injury either to the creditors or to the corporation. State [ex rel. Gaiser] v. King, 46 La.Ann. 110, 14 So. 902. His taking over of the property brings about no change of title and cannot prejudice the rights of any creditor. He takes the property as he finds it, burdened with all the liens and privileges which affected it in the hands of the corporation, and to the same extent. He stands in the shoes of the corporation. The order appointing the receiver in this case specifically directed him to take charge of all the assets of the corporation, and to hold or administer the same 'in such manner as he may be directed by this court and subject to the further orders of this court.' The property was, at the time the receiver was appointed, in the custody of the sheriff, who had taken possession of it under the writ of attachment. Presumably he surrendered the property to the receiver. But such surrender did not 'destroy the privilege resulting from the seizure.' Cleveland Steel Company v. Joe Kaufman Co., 155 La. 529, 99 So. 428, 429; Item Co., Ltd., v. Nu-Grape Bottling Co., Inc., 160 La. 975, 107 So. 770; Item Co., Ltd. v. Nu-Grape Bottling Co., Inc., 160 La. 631, 107 So. 471.' (Italics ours.)

In the case of Duval v. T. P. Ranch Co., 151 La. 142, 91 So. 656, 658, this Court held:

'It is well settled that a receiver cannot enjoin the execution of a judgment wherein the seizure occurred prior to his appointment in the absence of allegations of fraud or special interest in the property seized.' (Italics ours.)

This holding was followed in the cases of Item Co., Ltd. v. Nu-Grape Bottling Co., Inc., 160 La. 631, 107 So. 471; Id., 160 La. 975, 107 So. 770. See also Owens v. Allied Underwriters, 207 La. 437, 21 So.2d 490.

The case of Hankins v. Sallard, La.App., 188 So. 411, 413, held:

'If the seizure of the funds in the hands of the State Treasurer had been made before the receiver was appointed the seizing creditor would have acquired a privilege on the funds so seized and the receiver could not have...