Taber v. Royal Ins. Co.

• Decision Date: 08 June 1899
• Citation: 124 Ala. 681,26 So. 252
• Parties: TABER ET AL. v. ROYAL INS. CO. ET AL.
• Court: Alabama Supreme Court

26 So. 252

124 Ala. 681

TABER ET AL. v. ROYAL INS. CO. ET AL.

Supreme Court of Alabama

June 8, 1899

Appeal from chancery court, Jefferson county; Thomas Cobbs Chancellor.

Creditors' bill by A. Cohn & Co. and others against the Royal Insurance Company and others. From the decree rendered against H. M Taber and other claimants, they appeal. Reversed.

This was a general creditors' bill filed on April 17, 1888, by A. Cohn & Co. and others against the Royal Insurance Company a corporation, and the stockholders in said insurance company, and George Eustis, as receiver of said Royal Insurance Company. The bill was filed by the complainants in behalf of these and all other creditors of the Royal Insurance Company.

It was averred in the bill that the Royal Insurance Company was a body corporate, chartered under the general laws of the state of Alabama, for the purpose of doing a fire insurance business, and having its principal office and place of business in the city of Birmingham, Ala., prior and up to December 3, 1887; that the capital stock of said corporation subscribed for was $100,000, divided into 1,000 shares, of the par value of $100 each; that W. S. Stewart was the president, and J. S. Ross, Jr., was the secretary, of said corporation; that said corporation, on and prior to December 3, 1887, became and was, at the time of the filing of the bill, utterly insolvent, and had ceased to do business; that W. S. Stewart, the president, and J. S. Ross, Jr., the secretary, of said corporation, left the state of Alabama shortly after December 3, 1887, and their place of residence was unknown to the complainant; that there was no agent of the said insurance company, or president, or secretary, or other officer thereof, within the state of Alabama upon whom process could be served; that, shortly before the said W. S Stewart and J. S. Ross, Jr., left the state, they, as stockholders in said insurance company, but holding less than three-fourths in value of the stock, filed a bill in the chancery court of Jefferson county against said Royal Insurance Company, on December 3, 1887, but no process in said cause had ever been served upon said company or upon any agent thereof; that said bill prayed, among other things, the dissolution of said insurance company, alleging its insolvency, and asking for the appointment of a receiver that under said bill the defendant George Eustis was appointed, on December 6, 1887, by the court, as receiver of said insurance company; that he qualified as such receiver, and entered upon the discharge of the duties of his office, and was acting as such receiver, under said appointment, at the time of the filing of the bill. It was then averred in the bill that there was no equity in the bill filed by Stewart and Ross, for the purpose of dissolving the said corporation, inasmuch as the complainants in said bill were in the majority of the stockholders, representing three-fourths of its stock; and that, therefore, the complainants, "as creditors of said corporation, present this their bill of complaint, for the purposes hereinafter prayed, and ask, as hereinafter prayed, that the said receivership may be transferred to this cause." The bill then alleged the amount of the claim of the complainants against the Royal Insurance Company under policies of insurance held by them in said company, and then averred the insolvency of said insurance company, and gave a list of its tangible assets, which it avers to be worthless, and further averred that the liabilities of said company will aggregate over $50,000. It was then averred in said bill that the subscribers to the capital stock owed 90 per cent. of their subscription; that a portion of said subscribers had surrendered their original stock, upon which 90 per cent. was unpaid, and for each ten shares received in lieu thereof one share fully paid up; that others, after becoming insolvent, knowing its liability, had transferred their stock to avoid liability. The number of shares held by each and the disposition of the same is then averred. The names and residence of the defendants are alleged in the bill. The prayer of the bill was that the creditors of said Royal Insurance Company be required to propound their claims, and that the stockholders in said company be assessed on their unpaid subscriptions a sufficient amount to pay said liabilities of the company.

On May 18, 1888, a decretal order was made that substituted service on the defendant the Royal Insurance Company be made on D. F. Myers, a director, and George Eustis, the receiver, of said company. On June 20, 1888, Foot, Schulze & Co., the South Bend Toy-Manufacturing Company, T. A. Eckle & Bro., M. T. Horner & Co., H. M. Taber, and H. L. Aldrich, Richard Sauer, Coleman Bros., the Alston Savings Company, William L. Warfield, and Joseph L. White filed a petition propounding their claims, and asked to be made parties to said bill; but no action was taken on said petition, and no order or decree was had making said petitioners parties to said bill. On July 28, 1888, M. E. Page & Co. also filed a petition, asking to be made parties to said bill, and a decretal order was made allowing the same, on May 20, 1889.

On August 17, 1893, said cause having been submitted for final decree, it was decreed that said Royal Insurance Company was insolvent on Aprill 11, 1888, and had been so ever since; that complainants, at the commencement of the suit, were creditors of said insurance company, and the said stockholders of said insurance company were liable to the creditors thereof on their unpaid subscription, giving the amount of the individual liability of each of the stockholders. Said decree provided for the manner of ascertaining who were creditors of said Royal Insurance Company by the following provisions: "That, for the purpose of ascertaining who are the creditors of the said Royal Insurance Company, the register shall forthwith give notice, by advertisement once a week for four consecutive weeks in the Daily News, a newspaper published in the city of Birmingham, in said county, to the creditors of said insurance company, that the court has taken jurisdiction of, and is marshaling and administering the assets of, the said Royal Insurance Company; and that they must file their claims against said company in said cause with the register, duly verified, on or before the 30th day of September, 1893, or else the same will be forever barred from participating in said assets. That the claims so filed shall be verified by the affidavit of the claimant, or by some person who knows the correctness of said claim, administered by some officer who is authorized to administer an oath; and, when so verified, such verification shall be prima facie evidence, and received and taken as such by the register, of the correctness of such claim, and entitle the claim to allowance, unless objections are filed, and the validity of the claim contested, as herein provided. That the said defendant corporation, as well as either of the defendants, who are in and by this decree declared liable for an unpaid subscription to the capital stock of said company, as well as also any other creditor of the said Royal Insurance Company who shall have filed his claim with the said register on or before the 30th day of September, 1893, shall be, and it, he, or they are hereby, authorized and may contest the validity, either in whole or in part, of any creditor's claim, so filed as aforesaid, by filing with the register of this court, on or before the 10th day of October, 1893, objections to the allowance of any such claim, specifying the grounds of such objection, and thereupon the said register, without delay, will appoint a day when he will hear the evidence and determine said objections. If the creditor whose claim is objected to has an attorney of record who resides in Jefferson county, the register will give such attorney written notice of the fact that said objections have been filed to such claim, and of the time appointed by him to hear and determine such objections. If the creditor whose claim is objected to has no attorney of record within the county, then such notice shall be given by the register by publication in some newspaper published in Birmingham, Ala., once a week, for one week prior to the date of hearing. At the time appointed for the hearing of such objections, the register will proceed, and either party may use any evidence already introduced in this cause, or proceed to examine witnesses orally, or may use any deposition of witness taken by him for that purpose. The register will proceed to determine the contested claims, and report his findings thereon, together with the evidence taken before him, to the court, and at the same time also report to the court all claims filed before him, and allowed by him, showing the amount thereof, together with interest thereon up to the date of such report," etc.

In accordance with said decree of the 17th of August, 1893, H M. Taber and H. L. Aldrich filed an affidavit of their claim, setting out a loss by fire under their policy in the Royal Insurance Company, on or about the 13th day of October, 1887, to the amount of about $1,500. On the 29th day of August, 1893, Foot, Schulze & Co. filed their claim, verified by affidavit, showing a loss of $1,412.01 by fire, under the policy held by them in said Royal Insurance Company, occurring on the 13th of February, 1888. On the 30th day of August, 1893, the South Bend Toy-Manufacturing Company filed their claim, verified by affidavit, showing a loss by fire of $1,000 occurring on the 29th day of December, 1887, under policy held by it in the Royal Insurance Company. On the 28th day of August, 1893, T. A. Eckle & Bro. filed their claim, verified by...