Wilson v. Alliance Life Ins. Co.
| Decision Date | 16 December 1939 |
| Docket Number | No. 9082.,9082. |
| Parties | WILSON v. ALLIANCE LIFE INS. CO. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Geo. M. Hopkins, of Denton, Tex., for appellant.
Mack L. Vickrey, of Dallas, Tex., for appellee.
Before SIBLEY, HUTCHESON, and HOLMES, Circuit Judges.
After much elaborate and unnecessary pleading the simple facts were found by the court and are uncontested here. They are: On April 4, 1923, Jim and Lizzie Cunningham, apparently in Texas, and citizens of Texas, gave a note for $3,000 to Commerce Farm Credit Company, a Texas corporation, and secured it by a deed of trust on land in Texas. The note promised to pay ten percent attorney's fees if sued and the deed promised to keep the buildings insured and to reimburse the holder of the note if he paid the premiums. A month later the papers were transferred by Commerce Farm Credit Company to Peoria Life Insurance Company, a corporation of Illinois. In May, 1930, the Cunninghams sold the land to Mrs. Modena Wilson, a citizen of Texas, who in the deed to her expressly assumed to pay the obligations of the Cunninghams. In November, 1933, Peoria Life Insurance Company was put in liquidation and Charles V. O'Hearn was appointed receiver. In May, 1936, in the district court the receiver sued Modena Wilson on the note and her assumption, and prayed a foreclosure on the land, naming as defendants other persons, citizens of Texas, who claimed an interest in the land. In his suit he asked to recover $2,756.25 as principal, $53.49 advanced insurance premiums, and ten percent attorney's fees, besides interest, asserting that a principal sum of more than $3,000 was involved, and that diverse citizenship existed as above. Sept. 2, 1936, Modena Wilson, applying for relief under Sect. 75 of the Bankruptcy Act, 11 U.S.C.A. § 203, was adjudicated a bankrupt under Subsection s; but she died Sept. 16, 1937, and on May 14, 1938, the bankruptcy proceedings were dismissed. Her administrator appealed but obtained no supersedeas, and the dismissal was affirmed. Wilson v. Alliance Life Ins. Co., 5 Cir., 102 F.2d 365. Meanwhile, on Sept. 10, 1937, the receiver transferred the note and lien and cause of action to Alliance Life Insurance Company. On March 12, 1938, this assignee applied to be substituted for and stand in the place of the receiver, and to have the same relief he had prayed for. The substitution was allowed, the administrator of Mrs. Wilson was made party, and a trial was had and decree entered for the substituted plaintiff Jan. 6, 1939, while the bankruptcy appeal was pending.
There being no supersedeas, the bankruptcy proceeding stood dismissed and was no obstacle to the foreclosure. The plaintiff merely took the chance of having to vacate the foreclosure decree if the bankruptcy case should be reversed on appeal.
The appellant next contends that O'Hearn as receiver had no right to sue outside the State of his appointment, that there was no real suit till Alliance Life Insurance Company appeared in it and at that time Mrs. Wilson was dead, and the suit had abated for that reason; and that the probate court was engaged in administering her estate, so that the claim could only be presented there and could not be sued in court; citing Cole v. Franklin Life Ins. Co., 5 Cir., 93 F.2d 620. It is also contended that if presented in the probate court, by Rev.Civil Stats. of Texas, Art. 3515a, Vernon's Ann.Civ.St.Tex. art. 3515a, only one-half of the promised attorney's fee would be allowable, so that there was not enough in controversy to give federal jurisdiction.
Appellant is correct in asserting that an ordinary court receiver, since he has not title and is only the arm of the court appointing him, has no function outside the territorial jurisdiction of his court. But O'Hearn was not such, but was a statutory receiver appointed to liquidate Peoria Life Insurance Company under a statute of Illinois, (Smith-Hurd Rev. Stats. Sect. 498, Chap. 73), by which he is "vested by operation of law with title to all of the property, contracts and rights of action of such company as of the date of the order so directing liquidation." See O'Malley v. Hankins, 207 Ind. 589, 194 N.E. 168. Such a receiver, having full title to the assets, may sue anywhere as other owners may. 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, Ann.Cas.1913D,...
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