State ex rel. Sorensen v. Lincoln Hail Ins. Co.
| Citation | 276 N.W. 169,133 Neb. 496 |
| Decision Date | 12 November 1937 |
| Docket Number | 30043. |
| Parties | STATE EX REL. SORENSEN, ATTY. GEN., v. LINCOLN HAIL INS. CO. ET AL. (BONNEMEIER ET AL., INTERVENERS). |
| Court | Supreme Court of Nebraska |
Syllabus by the Court.
2. The order for the sale or disposition of the assets of a trust being one within the discretion of the district court to make and enter, a receiver, appointive or statutory, has no right to appeal therefrom, for he is neither the censor of the court nor interested in the event.
3. The statutory provision applicable to the Lincoln Hail Insurance Company, and constituting a controlling element in all its contracts of insurance, recites: etc. Comp.St.1929, § 44-912 and as amended (Comp.St.Supp.1933, § 44-912).
4. It appearing that appellants as special agents were at all times in possession of their trust under an order of a court of competent jurisdiction directing them to continue to administer it " as a going concern," such order amounted to an express direction to conduct its affairs in the usual, ordinary way for which it was organized, with a full compliance with the public policy of the state as expressed in the applicable statutes, and the performance of the company's contracts with its membership as an existing solvent institution.
5. The " loss fund" created by statutory mandate, usable exclusively for payment of losses arising from the insurance risks lawfully undertaken, to which fund 50 per cent. of all premiums received were incorporated, and a like per cent. of all premiums to be received were to be added, in view of the purpose of its creation, constituted a trust fund. The use of this fund by the special agents, now appellants herein, and its application by them to purposes other than those contemplated by the law of its creation, particularly while such special agents were judicially limited in their authority to conduct the business as a going concern constituted, to the extent of the amounts so used and diverted, a misapplication thereof and rendered them personally liable therefor.
6. Record examined, and held that the denial of the claims of the special agents for further compensation amounted to the exercise of a sound discretion by the trial court, and the same is approved.
Appeal from District Court, Lancaster County; Broady, Judge.
Proceeding by the State of Nebraska, on the relation of C. A. Sorensen Attorney General, against the Lincoln Hail Insurance Company and others, impleaded with F. A. Wood and M. Witzenburg wherein Ludwig Bonnemeier and others intervened, and wherein Charles Smrha, Director of the Department of Insurance, was appointed receiver of the Lincoln Hail Insurance Company. From the judgments and decrees rendered, defendants F. A. Wood and M. Witzenburg appeal.
Affirmed.
Albert S. Johnston, of Lincoln, for appellants.
Loren H. Laughlin, E. B. Perry, and John Logan, all of Lincoln, for appellee Lincoln Hail Ins. Co.
Richard F. Stout and J. O. Rodgers, both of Lincoln, for appellees Bonnemeier et al.
Clinton J. Campbell, of Lincoln, for appellee Chas. Carr.
Heard before GOSS, C. J., and ROSE, GOOD, EBERLY, DAY, and CARTER, JJ.
This is an appeal from the decree and judgment of the district court for Lancaster county entered on August 10, 1936, denying claims for compensation in favor of F. A. Wood and M Witzenburg, as special agents of the department of insurance of the state of Nebraska, and a judgment entered against such special agents in favor of Charles Smrha, receiver, in the sum of $12,633.56. Included herein is an appeal of F. A. Wood and M. Witzenburg from an order of the district court for Lancaster county, entered on August 12, 1936, approving and confirming the sale and disposition of the assets of the Lincoln Hail Insurance Company to Charles Carr.
These proceedings are the culmination of a course of events which had their inception in the fact that the Lincoln Hail Insurance Company, a corporation organized and existing under the laws of the state of Nebraska relating to assessment hail insurance companies was, on May 7, 1932, pursuant to the provisions of section 44-204, Comp. St. 1929, by order of the district court for Lancaster county, given into the possession of the department of trade and commerce, and that department was directed and authorized to take possession of all of its property, records, and effects, and for and in the name of the defendant insurance company to conduct the business of said company as a going concern, and as expeditiously as possible to make a complete examination of the affairs of that company.
This order further directed: " It is further ordered and decreed that, upon the completion of the examination aforesaid and as soon as said department may be advised in the premises, the department make its report herein to this court setting out its acts and doings under the provisions of this decree, and its advice, recommendation and application to this court as to the resumption by the defendant company of the possession of its assets, affairs and business or the liquidation of the business, as provided in said section 44-204, Compiled Statutes of Nebraska, 1929."
In obedience to the decree last referred to, the examination of this company was completed, a report thereof was duly filed and, by order of the district court for Lancaster county entered on July 27, 1932, was approved, and it was further therein ordered:
Necessitated by a legislative amendment to the governing statute, on May 24, 1933, upon an application in behalf of the department of insurance of the state of Nebraska, as the statutory successor to the department of trade and commerce, the former was substituted for and in place of the latter, and M. Witzenburg and F. A. Wood as special agents, now of the department of insurance, were in effect continued in charge of the Lincoln Hail Insurance Company.
It appears that M. Witzenburg and F. A. Wood from the time of their original appointment in July, 1932, continued in charge of the assets of the Lincoln Hail Insurance Company, carrying on its business and affairs as a going concern without any further authorization or direction from the court which approved their original appointment.
It also appears that these special agents failed to pay hail losses occurring in 1932, and on June 29, 1934, certain policyholders in the Lincoln Hail Insurance Company, who had sustained losses covered thereby in the year, filed in the district court for Lancaster county a petition in intervention, the object and prayer of which was in part to require Lee Herdman (who was the head of the department of insurance) and the defendants M. Witzenburg and F. A. Wood to replace moneys belonging to the company and contained in its loss fund, which it was alleged had been misapplied by them and wrongfully removed from said " loss fund." Thereafter Conn W. Moose, in his official capacity as director of the department of insurance, filed an application in this cause in the district court for Lancaster county praying for the appointment of himself as receiver of the Lincoln Hail Insurance Company, for the liquidation of that organization as an insolvent company, and that as such receiver he be authorized to collect its assets and make distribution thereof according to law. On September 19, 1935, an order was entered in this cause sustaining this application of Conn W. Moose, and as he had at that time been succeeded in office by Charles Smrha, this order was entered, adjudging that the Lincoln Hail Insurance Company " be, and it is declared to be insolvent and that Charles Smrha be, and he is hereby appointed receiver of the Lincoln Hail Insurance Company," and he was therein as such receiver expressly authorized to take possession of its property of every kind, collect its assets, and liquidate the same. Charles Smrha thereupon gave the prescribed bond, qualified, and entered upon the duties of his trust. Upon his petition, F. A. Wood and M. Witzenburg were, by the district court, directed to file a report of their acts and doings as special agents in charge of the assets and business of the Lincoln Hail Insurance Company, and an account of all receipts and disbursements by them made as such agents. With this order they complied. To this report by them filed, Charles Smrha, as receiver, filed objections, and certain other parties in interest also filed objections. At this time, Wood and Witzenburg, by proper pleadings, put in issue the allegations of the petition of the intervening...
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