State ex rel. James v. Marion Superior Court, s. 27896

• Decision Date: 20 December 1943
• Docket Number: Nos. 27896,27897.,s. 27896
• Citation: 51 N.E.2d 844,222 Ind. 26
• Parties: STATE ex rel. JAMES, State Auditor, v. MARION SUPERIOR COURT et al. (two cases).
• Court: Indiana Supreme Court

222 Ind. 26

51 N.E.2d 844

STATE ex rel. JAMES, State Auditor,

v.MARION SUPERIOR COURT et al. (two cases).

Nos. 27896, 27897.

Supreme Court of Indiana.

Dec. 20, 1943.

Two original actions by the State of Indiana, on the relation of Richard T. James, Auditor of the State of Indiana, and by the State of Indiana, on the relation of Richard T. James, as Auditor of the State of Indiana, receiver for Fidelity Assurance Association, a West Virginia corporation, against Marion Superior Court, Room No. 4, Marion County, Indiana, Walter Pritchard, Judge thereof, and Marion Probate Court, Marion County, Indiana, and Dan V. White, Judge thereof, for writs of prohibition to prohibit the Superior Court of Marion County, Room 4, from proceeding further in liquidation of the assets of the Fidelity Assurance Association, and for an order directing such court to vacate its appointment of a receiver for such corporation.

Petitions denied.James A. Emmert, Atty. Gen., Frank Hamilton, 1st Asst. Atty. Gen., and Joseph W. Hutchinson and Cleon H. Foust, Jr., Deputy Attys. Gen., for relator.

Edwin McClure, David M. Lewis, and Schortemeier, Eby & Woods, all of Indianapolis, and Chester R. Montgomery and Walter R. Arnold, both of South Bend, for respondents.

SHAKE, Judge.

Tow original actions for writs of prohibition will be disposed of by this opinion. The facts are involved but are not in dispute.

The Fidelity Investment and Loan Association, the name of which was subsequently changed to Fidelity Investment Association and later to Fidelity Assurance Association, was incorporated under the laws of West Virginia in 1911. In 1925 said corporation was admitted to do business in Indiana pursuant to the Foreign Investment Corporations Act of 1901. Acts 1901, ch. 215, p. 487; § 25-3801 et seq., Burns' 1933, § 8173 et seq., Baldwin's 1934. Said corporation continued in business in this state until April 17, 1941, when the Auditor of State canceled its license on account of litigation in West Virginia which resulted in receivership.

By § 3 of the aforesaid Act of 1901 any foreign investment corporation authorized to do business in this state was required to deposit and keep on deposit with the Auditor of State approved securities equal in value to the amount of its liabilities to citizens of this state. Section 4 of said Act provided that if any such corporation should become insolvent the Auditor should ask the proper court to appoint a receiver to take charge of such deposit for the benefit of its creditors in this state. The Foreign Investment Corporations Act of 1901 was repealed by Acts of 1935, ch. 179, § 18, but § 19 of said last mentioned Act provided that no vested right, which had accrued under the former law, should be impaired by such repeal.

Between 1925, when the Fidelity corporation was admitted to Indiana, and April 1, 1935, when the repealing Act passed that year became effective, said corporation sold a large number of its investment certificates to citizens of this state and deposited with the Auditor securities of the par value of $150,000 for the protection of such certificate holders, pursuant to the provisions of the Act of 1901. Meanwhile, said corporation, the Auditor of State and the Fletcher American National Bank of Indianapolis entered into a contract whereby the latter accepted custody of said deposited securities, and the same are now in the possession of its successor, American National Bank.

The General Assembly of 1937 repealed the aforesaid Act of 1935, with a proviso saving vested rights, and enacted the present Indiana Securities Law. Acts 1937, ch. 120, p. 656; § 25-851, Burns' 1933 (Supp.); § 14862, Baldwin's Supp.1937. From the time of the repeal of the Act of 1901, until the enactment of the Securities Law of 1937, there was no statute in this state requiring foreign investment corporations to make current deposits of securities for the protection of Indiana citizens; but on April 19, 1939, the Fidelity corporation deposited with the Auditor of State$12,000 in securities for the protection of holders of certificates acquired subsequent to March 31, 1939, and pursuant to the terms of the Act of 1937. These securities are on deposit with the Indiana National Bank of Indianapolis, Indiana, for safe keeping, in the name of the Auditor of State.

It will be noted that there are three groups of Indiana citizens holding certificates of the Fidelity corporation, namely, the 1925-1935 group, protected by the Act of 1901, the 1935-1937 group for whom there was no specific statutory protection, and the 1937-1941 group, protected by the Act of 1937. All of said certificate holders, including the members of the 1935-1937 group, are general creditors of the corporation, however, and are entitled to participate in its assets in this state, or elsewhere, which are not required to discharge specific pledges.

With this factual background, we come to a consideration of the litigation that brought about a resort to the original jurisdiction of this court. The first suit was instituted in the Superior Court of Marion County, Room 4, by Joseph E. Kernel on May 1, 1941. Said corporation, American National Bank of Indianapolis, as Trustee, and Richard T. James, as Auditor of State, were named as defendants. The plaintiff alleged in his complaint that he was a member of the 1935-1937 group of certificate holders of the Fidelity corporation. There was a prayer for an accounting and for the appointment of an ancillary receiver without notice to administer the Indiana assets of said corporation, which appointment was made on the day the complaint was filed. Subsequently, the defendant James, as Auditor, demurred to said complaint and assigned in his memorandum thereto that he was vested with the exclusive right to maintain such a proceeding under the terms of § 4 of Chapter 215 of the Acts of 1901, § 25-3804, Burns' 1933, § 8176, Baldwin's 1934. This demurrer was overruled but there was no interlocutory appeal from that decision.

The second suit was instituted on May 2, 1941, when Richard T. James, as Auditor of State, filed a petition in the Madison Circuit Court for the appointment of a like receiver for the Fidelity corporation, naming it as sole defendant. On the same day said Auditor was appointed such receiver without notice. By two other proceedings a declaratory judgment as to the rights of the parties was sought, and it was asserted that the only tribunal having jurisdiction of the subject matter of this litigation is the Probate Court of Marion County.

In Cause No. 27896, pending before us, the relator seeks, as an individual, to prohibit the Superior Court of Marion County, Room 4, from proceeding further in the liquidation of the assets of the Fidelity corporation and for an order directing said court to vacate its appointment of a receiver for said corporation. Cause No. 27897 is brought by the same relator in his official capacity as Auditor of State and seeks the same relief. The reason advanced by the relators as to why the Superior Court of Marion County does not have jurisdiction is the same in both cases. It is that the Auditor of State is the only person authorized by the Act of 1901 to institute and maintain an action for a receiver of the pledged assets of the Fidelitycorporation, and that the jurisdiction of the Superior Court of Marion County was not invoked by that officer.

Neither the repealing Act of 1935 or the Securities Law of 1937...