Winger v. Chicago City Bank & Trust Co.

Decision Date21 May 1946
Docket NumberNos. 28984,28985.,s. 28984
Citation394 Ill. 94,67 N.E.2d 265
CourtIllinois Supreme Court
PartiesWINGER et al. v. CHICAGO CITY BANK & TRUST CO. et al.

OPINION TEXT STARTS HERE

Appeal from Third Division, Appellate Court, First District, on Appeal from Circuit Court, Cook County; Julius H. Miner, Judge.

Action by James Wilson Winger and others, for themselves and other policyholders of the Illinois Bankers Life Association, against the Chicago City Bank & Trust Company, the Illinois Bankers Life Assurance Company, George B. Pillsbury, as administrator of the estate of Arthur T. Sawyer, deceased, Helen Z. Martin, as administratrix of the estate of Hugh T. Martin, deceased, and others, to require the administrators or their intestates' heirs to account for all moneys or profits received by intestates on transfer of the association's assets to the assurance company, which filed a cross-complaint for conversion of money. From judgments of the Appellate Court, 325 Ill.App. 459, 60 N.E.2d 560, affirming in the main circuit court decrees which required defendants Martin, Pillsbury, and another to account and impressed a trust on stock owned by the estate of defendant Martin's intestate, and granting plaintiffs a lien on stock held by the two estates, defendants Pillsbury and Martin appeal.

Reversed and remanded, with directions.

See also 392 Ill. 624, 65 N.E.2d 688.

Vogel & Bunge and Cassels, Potter & Bentley, all of Chicago, and A. M. Fitzgerald, of Springfield, for appellant George B. Pillsbury, administrator.

John S. Leahy, of St. Louis, Mo., and W. T. Day, of Springfield (Joseph B. Fleming and Thomas B. Martineau, both of Chicago, of counsel), for appellants Helen Z. Martin et al.

Vernon R. Loucks and Malcolm McKerchar, both of Chicago (Charles O. Loucks, Richard W. Proctor, and James L. Henry, all of Chicago, of counsel), for appellees James Wilson Winger et al.

C. J. Bassler, William S. Kleinman, and Maxfield Weisbrod, all of Chicago, for appellees Ella Krupicka et al.

Poppenhusen, Johnston, Thompson & Raymond, of Chicago (Edward R. Johnston, of Chicago, of counsel), for appellee Illinois Bankers Life Assur. Co.

GUNN, Justice.

On February 2, 1942, a complaint was filed in the circuit court of Cook county on behalf of policyholders of the Illinois Bankers Life Association, for themselves and in behalf of other policyholders like situated, against the administrator and heirs of Hugh T. Martin, deceased, and others. Later an amended compliant was filed, and thereafter a supplement, making additional parties. A number of other policyholders of the company intervened, and the Illinois Bankers Life Assurance Company, made a party to said suit, filed a cross complaint.

The Illinois Bankers Life Association was organized as an assessment life insurance company, and will hereafter be called the ‘assessment company.’ The Illinois Bankers Life Assurance Company is a legal reserve life insurance company, and will hereafter be referred to as the ‘insurance company.’ The purpose of the suit, as disclosed by the pleadings, is to require the directors of the original assessment company, or their administrators, or heirs, to account, because while acting as such directors they purchased the assets and property of such assessment company for their own benefit by having it transferred to the insurance company, in which they own all of the capital stock. The complaint asserts their actions were such as to raise a constructive trust in all of the property acquired from the assessment company in favor of such company or its policyholders, and prays a decree of court requiring such capital stock to be turned over to the assessment company, and for an accounting of all moneys or profits received by such defendants. No relief was prayed against the insurance company, and apparently it was made a party for the purpose of aiding the court in administering relief by requiring its officers to transfer the stock in case they were decreed to do so. The legal representatives and heirs of each deceased director were made parties because the capital stock of the insurance company was a part of the respective estates; and certain purchasers of stock in the insurance company, parties claimed not to be bona fide, were made parties to require them to transfer after the accounting had been awarded.

The insurance company filed a cross complaint alleging that the causes of action for the conversion of money belonged to it as the assignee of all of the assets of the assessment company. We will not at this time attempt to make an historical statement of all of the facts, as they fully appear in the opinion of the Appellate Court, reported in 325 Ill.App. 459, 60 N.E.2d 560. As occasion arises to apply the principles applicable to the several parties, recourse will be had to the facts found by the Appellate Court.

The decree of the circuit court of Cook county required Helen Z. Martin, as administratrix of the estate of Hugh T. Martin, deceased, to account, and impressed a trust upon the stock owned by said estate, presently held by the Chicago City Bank and Trust Company, as trustee, for purposes hereafter disclosed; and also decreed an accounting against George B. Pillsbury, as administrator of the estate of Arthur T. Sawyer, deceased, and James D. Stice, purporting to be an innocent purchaser of the major portion of Sawyer's stock; also a decree against William H. Woods to account for the money claimed to have been paid for the purpose of influencing his vote as a director. The Appellate Court in the main affirmed the trial court, but in addition held the plaintiffs had a lien upon the stock held by the two estates; but neither court passed specifically upon the ownership of the stock in the insurance company, under the facts established in the cause.

There are two appeals in this case-that of George B. Pillsbury, as administrator of the estate of Arthur T. Sawyer, deceased, No. 28984; and that of Helen Z. Martin, individually and as administrix of the estate of Hugh T. Martin, deceased, et al., No. 28985. There was no appeal from the judgment against Woods. After allowing the appeals in both cases they were consolidated in this court for argument.

The first contention made by appellants is that the circuit court had no jurisdiction to entertain the suit in this case because the insurance company was a party, and the Illinois statute on insurance companies vested the right to bring the suit in the Director of Insurance of the State of Illinois through the Attorney General of the State. This motion was urged in the circuit court, and in the briefs filed in the Appellate court, and overruled by both courts. The Insurance Code of 1937 (Ill.Rev.Stat.1945, chap. 73, pars. 613 to 1064, incl.) is a revision of the insurance law of the State, and makes specific provision for the several kinds of insurance, the duty of officers and directors, requirements of supervision, and the powers and duties of the Director of Insurance, as well as a minute regulation of the administration of insurance business. It is divided into twenty-eight articles, each of which pertains to a different subject, and in most of which there are express power and duties prescribed for the Director of Insurance. For illustration, section 45 (par. 657) of article 3 (Domestic Companies) provides what documents shall be delivered to the Director. Under articles 4 (Reciprocals, par. 683); 5, (Lloyds, pars. 706 and 714); 6 (Foreign Companies, pars. 722 and 723); 9 (General Provisions, par. 744); 10 (Merger, par. 774); 13 (Rehabilitation, Liquidation, etc., par. 800); 14 (Legal Reserve Insurance, par. 835); and nearly all of the other articles, including article 24, (par. 1013 et seq.), which defines the general powers of the Director, authority is given to, and the duties of the Director over insurance companies are prescribed. It is notable that with all of the different powers, authority and duties prescribed for the Director of Insurance there is now nothing in the act which requires or authorizes the Director to bring a suit for accounting against delinquent officers or directors on behalf of the policyholders, other than might be inferred from the powers granted under article 13, relating to rehabilitation, liquidation, conservation and dissolution of companies. In such cases he is given extensive authority, as may be observed upon examination of sections 187 to 210, inclusive, of this article. Ill.Rev.Stat.1945, chap. 73, pars. 799 to 822, incl.

Great reliance is placed upon section 201 (par. 813), which provides: ‘No order, judgment or decree enjoining, restraining or interfering with the prosecution of the business of any company, or for the appointment of a temporary or permanent receiver, rehabilitator or liquidator of a domestic company, or receiver or conservator of a foreign or alien company, shall be made or granted otherwise than upon the petition of the Director represented by the Attorney General as provided in this article, * * *.’ It is contended that the suit brought by the plaintiffs interferes with the prosecution of the business. In determining whether the cause of action is one that can be brought only by the Director of Insurance it must be observed that while the power vested in him is granted under the police power of the State, still, he may not exercise powers not expressly, or by necessary implication, given him by the statute. This section grants powers in connection with the rehabilitation or liquidation of insurance companies. It does not purport to have anything to do with policyholders or stockholders of a solvent company requiring an accounting, or the doing of any act which will not interfere with the business of a solvent and going insurance company. Section 201, just mentioned, before the adoption of the Insurance Code, read: ‘No order, judgment or decree providing for an accounting or enjoining, restraining, or interfering with the prosecution of the business of any...

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