McDonald v. Pacific States Life Ins. Co.

• Decision Date: 20 January 1939
• Docket Number: 36250
• Citation: 124 S.W.2d 1157,344 Mo. 1
• Parties: Joseph McDonald, Respondent, v. Pacific States Life Insurance Company, a Corporation, Defendant, M. T. Minton, Garnishee, Jackson Cochrane as Commissioner of Insurance of the State of Colorado and Primary Statutory Liquidator of Pacific States Life Insurance Company, a Colorado Corporation, and Frederick W. Standart as Special Deputy Commissioner of Insurance of the State of Colorado, and Agent in the Liquidation of said Pacific States Life Insurance Company, Interveners and Appellants
• Court: Missouri Supreme Court

124 S.W.2d 1157

344 Mo. 1

Joseph McDonald, Respondent, v. Pacific States Life Insurance Company, a Corporation, Defendant, M. T. Minton, Garnishee, Jackson Cochrane as Commissioner of Insurance of the State of Colorado and Primary Statutory Liquidator of Pacific States Life Insurance Company, a Colorado Corporation, and Frederick W. Standart as Special Deputy Commissioner of Insurance of the State of Colorado, and Agent in the Liquidation of said Pacific States Life Insurance Company, Interveners and Appellants

No. 36250

Supreme Court of Missouri

January 20, 1939

Appeal from Circuit Court of St. Louis County; Hon. Julius R Nolte, Judge.

Reversed and remanded (with directions).

Wallace F. Morgan, Oliver & Oliver, Dines, Dines & Holme and Milton J. Keegan for appellants.

(1) The title of a primary or domiciliary statutory liquidator of an insolvent life insurance company to the assets of the company as the statutory successor of the company under the laws of the state of the domicile of the corporation for the benefit of all the company's creditors is entitled to recognition by the courts of other states under the United States Constitution. Relfe v. Rundle, 103 U.S. 222, 26 L.Ed. 337; Converse v. Hamilton, 224 U.S. 243, 32 S.Ct. 415, 56 L.Ed. 749; Clarke v. Williard, 292 U.S. 112, 78 L.Ed. 1160. (2) The court below should have ordered, adjudged and decreed that the said writ of execution, levy and sheriff's sale, sheriff's deed and said writ of garnishment be vacated, set aside, quashed and dismissed and held null and void. O'Malley v Hankins, 207 Ind. 589, 194 N.E. 168; O'Malley v Wilson, 182 Ga. 97, 185 S.E. 109; Wilson v. Mo. State Life Ins. Co., 184 Ga. 184, 190 S.E. 552; Harrison v. Mo. State Life Ins. Co., 177 Okla. 377, 59 P.2d 774; Parsons v. Charter Oak Life Ins. Co., 31 F. 305; Bockover v. Life Assn. of Amer., 77 Va. 85; Martyne v. Am. Union Fire Ins. Co., 216 N.Y. 183, 110 N.E. 503; Kinsler v. Casualty Co., 103 Neb. 382, 172 N.W. 33; Cogliano v. Ferguson, 245 Mass. 364, 139 N.E. 527; Joy v. Midland State Bank, 128 N.W. 147; Relfe v. Rundle, 103 U.S. 222, 26 L.Ed. 337; Converse v. Hamilton, 224 U.S. 243, 32 S.Ct. 415, 58 L.Ed. 749. (3) The court below should have ordered, adjudged and decreed that respondent was estopped and barred from having the clerk of said court issue said writ of execution and from having said sheriff levy upon and sell said lands and issue said writ of garnishment and attachment. Continental Oil Co. v. Amer. Cooperative Assn., 31 Wyo. 433, 228 P. 503; Wilson v. Keels, 54 S.Ct. 545, 71 Am. St. Rep. 816; Rice v. Farnham, 7 Ohio N. P. 189, 4 Ohio N. P. 217; Kirkendall v. Weatherley, 77 Neb. 421, 109 N.W. 757. (a) Grounds for relief against the writ of execution and sheriff's sale existed, and when such relief is sought in the original cause where the writ of execution first issued, it should be granted. Mo. General Code of Civil Procedure, R. S. 1929, secs. 1223, 1224, 1225; Nelson v. Brown, 23 Mo. 13; State v. Hogan, 324 Mo. 1130, 27 S.W.2d 24. (4) The Circuit Court of St. Louis County had jurisdiction to grant relief against execution, sale and sheriff's deed and this court has jurisdiction to correct the error of the circuit court in failing to grant such relief. Mo. General Code of Civil Procedure, R. S. 1929, secs. 1223, 1224, 1225; Nelson v. Brown, 23 Mo. 13; State v. Hogan, 324 Mo. 1130, 27 S.W.2d 21; Relf v. Rundle, 103 U.S. 222, 26 L.Ed. 339; 15 Mo. Stat. Ann., 1933, Mo. Const., Art. VI, Sec. 12, p. 593; Yeomans v. Lepp, 80 Mo.App. 584.

Patrick A. Lavin and William Kohn for respondent.

(1) Neither by comity nor by the Federal Constitution are the courts of this State required to enforce the insolvency laws of Colorado to the detriment of its own citizens, particularly in view of the fact that the Colorado insolvency statute was not in effect at the time the obligation to plaintiff was contracted. King v. Cross, 175 U.S. 400; Security Trust Co. v. Dodd, 173 U.S. 629; Oakey v. Bennett, 11 How. 44; Reynolds v. Adden, 136 U.S. 354, 34 U.S. 360. (2) The liquidator of a foreign insurance corporation, appointed by a court of the State of its domicile, pursuant to an insolvency law of that State, will not be permitted to take property out of Missouri to the detriment of Missouri creditors. Insolvency statutes have no extraterritorial force or effect. Pendleton v. Perkins, 49 Mo. 570; Robertson v. Stead, 135 Mo. 138; Waters-Pierce Oil Co. v. Amer. Exchange Bank, 71 Mo.App. 653; Davis v. Amra Grotto, 89 S.W.2d 756, 91 S.W.2d 295; Shloss v. Met. Surety Co., 128 N.W. 384; Taylor v. Columbian Ins. Co., 14 Allen, 353; McHelus v. Stillman, 58 N.Y.S. 431; Deschenes v. Tallman, 161 N.E. 321; Seaboard Air Line v. Burns, 86 S.E. 270; State ex rel. v. Crabbe, 114 Ohio St. 504, 151 N.E. 758; Lackmann v. Supreme Council O. C. F., 142 Cal. 22, 75 P. 583; Zacher v. Fidelity Trust & S.V. Co., 59 S.W. 493; Mieyr v. Federal Surety Co., 97 Mont. 503; Clark v. Williard, 294 U.S. 211; Great Western Min., etc., Co. v. Harris, 198 U.S. 561, 49 L.Ed. 1163; 98 A. L. R. 353; 14 R. C. L. 639, sec. 11; 32 C. J. 813, sec. 12. (a) Nor is the principle enunciated in Relfe v. Rundle, 103 U.S. 222, and other cases relied on by appellants, applicable, because plaintiff recovered his judgment long before the Colorado insolvency statute was enacted. The principle of those cases, that insolvency laws of a state in effect at the time a corporation of such state is chartered are part of the charter provisions, binding upon all persons dealing with it, is not invocable here. (3) By filing his claim in the Colorado liquidation proceedings plaintiff was not estopped or barred from proceeding by execution here. No evidence having been adduced that plaintiff at the time had any knowledge of the existence of assets here upon which he could levy, but, on the contrary, it appearing that such assets had been concealed by keeping them in the name of straw men, the principle of estoppel is inapplicable. Davis v. Morgan Foundry Co., 224 Mo.App. 162, 23 S.W.2d 231; Robinson v. Levy, 217 Mo. 498; Stephens v. Steckdaub, 202 Mo.App. 398; Horigan Realty Co. v. First Natl. Bank, 221 Mo.App. 960; Autocar Sales & Service Co. v. Holscher, 11 S.W.2d 1074; Taverns v. Am. Auto Ins. Co., 112 S.W.2d 941; Segnitz v. Garden City Banking & Trust Co., 107 Wis. 171, 50 L. R. A. 330; Moore v. Church, 30 N.W. 856; Packer v. Lehner, 180 A. 407, 115 N.J. Law 346; In re Messmore's Estate, 138 A. 81, 290 Pa. 107; Hannigan v. Italo-Petroleum Corp., 181 A. 4; First Natl. Bank v. Flynn, 250 N.W. 806; Thompkins v. Adams, 20 P. 535; Koechl v. Leibinger & Oehm Brewing Co., 50 N.Y.S. 573; 53 C. J. 404, sec. 672; 20 C. J. 35, sec. 28; 9 R. C. L. 962, sec. 8.

OPINION

Clark, J.

Appeal from a special order and decree after judgment entered March 28, 1938, in the Circuit Court of St. Louis County.

The facts are not in dispute. On February 16, 1934, respondent McDonald obtained a judgment in said circuit court against Pacific States Life Insurance Company, a Colorado life insurance corporation, on a policy on the life of his wife, who died in 1932. An execution was issued and returned unsatisfied.

On April 20, 1935, by decree of a district court in Colorado, the insurance company was adjudged insolvent and placed in liquidation under the Colorado Statutory Liquidator Act, and Cochrane, the Colorado Insurance Commissioner, was appointed liquidator. Thereafter, Cochrane appointed one Standart as a special deputy and agent.

By the terms of the decree and of the Colorado Act (Sess. Laws of Colo. 1935, chap. 137; 1935 Colo. Stat. Ann., chap. 87, secs. 223-231) the liquidator was charged with the duty to take charge of the assets of said corporation and liquidate them for the benefit of all the creditors. Said Act, among other things, provides that the liquidator "shall be vested by operation of law with title to all the property, contracts and rights of such company as of the date of the order so directing him to liquidate."

On June 17, 1935, the Colorado District Court entered an order enjoining "all persons, associations and corporations from maintaining, commencing and prosecuting any and all suits and actions at law or in equity wherein said Pacific States Life Insurance Company is a defendant, and from levying executions and having writs of attachment or garnishment in such litigation on any judgments heretofore or hereafter obtained against said company," etc.

On August 5, 1935, by decree of the Circuit Court of the City of St. Louis, R. E. O'Malley, Superintendent of the Missouri Insurance Department, was appointed ancillary receiver of said company to liquidate its assets on deposit with that department.

On January 23, 1936, respondent McDonald filed his verified proof of claim, based on his judgment, with the Colorado liquidator who allowed said claim. Claims were filed by other Missouri creditors aggregating about $ 350,000 and allowed by the liquidator.

On July 23, 1937, respondent McDonald had the Clerk of the Circuit Court of St. Louis County issue an alias execution on his judgment directed to the Sheriff of Stoddard County, Missouri. Said sheriff levied upon the right, title and interest of the insurance company in a certain described tract of land in said county approximating 1880 acres, and, after publishing notice, sold said land and executed a deed to respondent for the sum of $ 715.50.

The 1880 acre tract is a part of several tracts of approximately 27,000 acres of land in Stoddard and Dunklin Counties Missouri, upon which the insurance company had in 1932 acquired deeds of trust securing notes. At about the same time the company had acquired a warranty deed purporting to convey a portion of the 1880 tract. This deed was in blank, that is, it did...