Bashford-Burmister Co. v. Aetna Indemnity Co.

105 A. 470 | Conn. | 1919

The present case is a reservation upon the applications of the Bashford-Burmister Company and others, for the issuance by the Superior Court of an order to the receivers to report their respective claims as duly presented and allowed claims against the assets in the hands of the receivers of the AEtna Indemnity Company. These applications are in substantially the same form, and they arise upon the judgment rendered in the District Court of the United States for the District of Arizona in the case of the United States against the AEtna Indemnity Company upon one of its surety bonds.

The bond upon which the action is based was given under the provisions of an Act of Congress of August 13th, 1894, Chapter 280, as amended by the Act of February 24th, 1905, Chap. 778 (33 Stat. at Large, 811, § 6923 of the U.S. Compiled Statutes of 1916). No question is made but that the action was properly brought in a court of competent jurisdiction under the statute and was pending at the time of the appointment of the receiver, and that the judgment therein in favor of the intervenors, the applicants in the present case, was entirely regular under the terms of the Act.

The parts of the Act specially relevant to the question now presented for decision, are the following, to wit: after providing for the giving of the usual penal bond by the contractor with good and sufficient sureties, the Act further provides that the bond shall contain, "the additional obligation that such contractor or contractors shall promptly make payments to all persons supplying him or them with labor and materials in the prosecution of the work provided for in such contract." Then, after providing for intervention in any suit brought by the United States under the provisions of the Act, the Act goes on to say: "If no suit should be brought by the United States within six months from the completion and final settlement of said contract, then the person or persons supplying the contractor with labor and materials . . . shall be, and are hereby, authorized to bring suit in the name of the United States in the Circuit Court of the United States in the district in which said contract was to be performed and executed, irrespective of the amount in controversy in such suit, and not elsewhere, for his or their use and benefit, against said contractor and his sureties, and to prosecute the same to final judgment and execution."

This Act is held to create a new right of action. InUnited States ex rel. Texas Portland Cement Co. v. McCord, 233 U.S. 157, 34 Sup. Ct. 550, 58 L.Ed. 893 (1914), the Supreme Court of the United States, in construing the Act, said: "By this statute a right of action upon the bond is created in favor of certain creditors of the contractor. The cause of action did not exist before and is the creature of the statute. The Act does not place a limitation upon a cause of action theretofore existing, but creates a new one upon the terms named in the statute. The right of action given to creditors is specifically conditioned upon the fact that no suit shall be brought by the United States within the six months named, for it is only in that event that the creditors shall have a right of action and may bring a suit in the manner provided. The statute thus creates a new liability and gives a special remedy for it, and upon well settled principles the limitations upon such liability become a part of the right conferred and compliance with them is made essential to the assertion and benefit of the liability itself." This statement was confirmed in Illinois Surety Co. v. UnitedStates, 240 U.S. 214, 36 Sup. Ct. 321, 60 L.Ed. 609 (1916). The provision that "the suit shall be brought in the Circuit Court of the United States in the District in which said contract was to be performed and executed . . . and not elsewhere," was not in the original Act of 1894, and operates to confer exclusive jurisdiction of the action in the name of the United States upon said Circuit Court. No other court, State of Federal, has jurisdiction in such a suit to ascertain the liability and fix its amount. Davidson Bros. MarbleCo. v. United States, 213 U.S. 10, 29 Sup. Ct. 324,53 L.Ed. 675 (1909); United States ex rel. Texas PortlandCement Co. v. McCord, 223 U.S. 157,34 Sup. Ct. 550, 58 L.Ed. 893: United States v. Illinois Surety Co., 238 F. 840 (1917); United States v. Boomer, 106 C.C.A. 164, 183 F. 726 (1910). In United States v. Congress Construction Co., 222 U.S. 199,32 Sup. Ct. 44, 56 L.Ed. 163 (1911), the court said of this Act: "Considering the purpose of the statute, as manifested in these provisions, we think the restriction respecting the place of suit was intended to apply, and does apply, to all actions brought in the name of the United States for the purpose only of securing an adjudication and enforcement of demands for labor or materials, whether instituted by the United States or by the creditors themselves. The reasons for the restrictions are as applicable in the one instance as in the other, and it is difficult to believe that it was intended that it should be less potent when the United States acts for the creditors than when they act for themselves. The contention to the contrary is rested largely upon the supposition that, in instances like the present, where the defendants, or some of them, are inhabitants of another district, there is an insuperable barrier to the maintenance of the action in the district wherein the contract was to be performed. But this supposition is a mistaken one, for the provision restricting the place of suit operates pro tanto to displace the provision upon that subject in the General Jurisdictional Act,25 Stat. 433, Chap. 866, § 1 [U.S. Compiled Statutes, 1901, page 508], and amply authorizes the Circuit Court in the district wherein the action is required to be brought to obtain jurisdiction of the persons of the defendants through the service upon them of its process in whatever district they may be found." By the Federal Judicial Code, which took effect January 1st, 1912, the United States Circuit Courts were abolished and the district courts were made the Federal courts of general original jurisdiction.

Upon the argument in the present case the doctrine of the supremacy of the court appointing the receiver was vigorously invoked. It may be admitted that the general rule is stated in Porter v. Sabin, 149 U.S. 473,479, 13 Sup. Ct. 1008, 37 L.Ed. 815, to wit: "It is for that court [the court appointing the receiver], in its discretion, to decide whether it will determine for itself all claims of or against the receiver, or will allow them to be litigated elsewhere. . . . and no suit, unless expressly authorized by statute, can be brought against the receiver without permission of the court which appointed him." However general this rule may be, it must give way before the express provisions of an Act of Congress creating the right and the remedy, and definitely naming the court in which the suit authorized by the Act may be brought as the United States Circuit Court in the District where the contract was to be performed, "and not elsewhere." Mondou v. NewYork, N. H. H.R. Co., 223 U.S. 1, 32 Sup. Ct. 169,56 L.Ed. 327 (1912); United States v. Southern DredgingCo., 251 F. 400 (1918). In Pollard v. Bailey, 87 U.S. (20 Wall.) 520, 22 L.Ed. 376 (1874), a case in which a creditor of a bank brought an action against a stockholder based upon the statutory liability of stockholders, the court said: "The liability and the remedy were created by the same statute. This being so the remedy provided is exclusive of all others." ThePollard case was cited and the principle just stated applied, in Middletown National Bank v. Toledo, A. A. N.M. Ry. Co., 197 U.S. 394, 25 Sup. Ct. 462,49 L.Ed. 803 (1905), also a stockholder liability case. The same principle was cited and approved as well-settled law in a copyright case. Globe Newspaper Co. v. Walker,210 U.S. 356, 28 Sup. Ct. 726, 52 L.Ed. 1096 (1908).

It is apparent, then, from the express language of the Act of Congress as construed by the courts referred to, that the Superior Court for Hartford County was powerless to determine the validity and amount of the liabilities of the Indemnity Company for labor and materials in a suit upon the bond in the name of the United States, as authorized by the Act of Congress in question. The consent of the Superior Court to such action was immaterial as a delegation of power, for the court could not delegate a power it did not possess. The judgment of the United States Court for the District of Arizona is binding in all courts where it is necessary that the amount and validity of the claim under the Act should be determined. The Act of Congress acts as a supersedeas and pro tanto displaces the jurisdiction of the court appointing the receiver over such an action. The judgment does not of itself affect the fund in the receiver's hands, and can only be enforced against the property of the Indemnity Company in the custody of our Superior Court, by intervention in that court and by order of that court. United States v. Illinois SuretyCo., 238 F. 840, 846.

It will be noticed that this exclusiveness of jurisdiction relates to an action in the name of the United States. The question is not now before us whether a claimant under a bond given under the provisions of this Act may have any claim under such a bond enforceable, as to the determination of its extent and validity, in the court of the receivership, or in any other way than by a suit in the name of the United States in the specific court designated in the Act. The judgment on which the claimants rely was obtained in a suit which strictly conformed to the provisions of the Act.

Neither is the question before us as to the duty of the court of the receivership to allow a claim based upon such a judgment whenever it might be presented to such court in a case where the judgment had been procured independently of any action of the court of the receivership or authorized conduct of the receivers in the litigation, or without their knowledge. The finding of facts clearly shows such action by the court, and such authorized conduct by the receivers, and such knowledge of the claims, that for reasons hereinafter stated in detail the judgment in the Arizona suit should be given the status of an allowed claim, whether it be regarded as a judgment obtained in a statutory action in a court of exclusive jurisdiction, or in any court of general jurisdiction other than the court of the receivership.

The history of this case and the order of time show no valid reason for not permitting these claimants to share in the assets of the Indemnity Company. On the other hand, they show that the receivers acted on the fullest information that the most correct statement of claims could have given them. The action in the Arizona court had been pending for a year and a half before the appointment of the receiver of the Indemnity Company. The pendency of this action became known to the receiver soon after his appointment; he sent notices of the order of limitation to creditors, and the pending action in Arizona being in the name of the United States as nominal plaintiff, he sent the notice to the United States District Attorney for the District of Arizona, and not to the real parties in said action, though the record in the District Court then showed who the real claimants were. The Indemnity Company had employed counsel to defend this action, and the receivers continued the employment of the same counsel to defend the suit under their direction, but in the name of the Indemnity Company alone, and in 1914, by authority of court, paid to this counsel for services to the receivership in the case from February 7th, 1911, the date of the receivership, to October, 1912, the date of the stipulation for the compromise judgment. The knowledge of the pendency of the action and the direction of its defense, dated from some time prior to March 1st, 1911, and therefore long before the expiration of the time limited for presenting claims, which was January 1st, 1912. This action by the receivers was taken under the order of court of January 18th, 1911, authorizing the receivers generally to defend actions pending against the Indemnity Company in other jurisdictions. The receivers, having full knowledge, in the name of the Indemnity Company, negotiated for a compromise, and on June 25th, 1912, applied to the Superior Court for Hartford County for specific authority to compromise the claim as for the best interests of the receivership by saving large expense in conducting a defense where the result of the litigation would be doubtful. The application set out the name of the action; that it was pending in the United States Circuit Court for the District of Arizona, and was based on the bond given by the Indemnity Company to the United States as surety for one English who had a contract for the erection of government buildings in Arizona. The Superior Court authorized the discontinuance of the further defense of this action upon the entry in the Arizona court of the compromise judgment, as recommended by the receiver. Pursuant to this authority a compromise stipulation was made, and on December 12th, 1912, judgment was rendered for the intervenors, the real plaintiffs, severally, to recover amounts aggregating, in the whole, the sum of $52,448.91. The judgment was against English, the principal, and the Indemnity Company, surety, and not against the receivers by name. By special and repeated directions of the receivers everything was done in the name of the Indemnity Company alone. No information was given by the receivers or their counsel of the existence of any receivership, and it is not found that the plaintiffs learned of the receivership as a matter of fact until after the judgment was rendered.

The receivers had authority to defend and they did defend, and finally, as above stated, presented the essential facts of the Arizona action to the court which specifically authorized the compromise judgment entered in the case and on which the claims now stand. Whether the receivers called the attention of the court to the peculiar statute under which the action was brought or not does not appear. The court had specific knowledge of the nature and amount of the claims on June 25th, 1912, and the order then passed was a recognition that the claim was before it, and that it was a good claim to the extent of the proposed compromise. It was no academic question that was being determined, but a claim or claims resulting in an agreed judgment of more than $50,000. If the order then passed meant anything, it meant that the court would, to the extent of the compromise, recognize the judgment as a valid claim. Upon the rendition of the judgment pursuant to the compromise order, the judgment became an allowed claim, and it became the duty of the receiver to report this judgment to the court and the duty of the court to direct its entry upon the list of allowed claims. Whatever discretion the court may have had was exhausted on passing the compromise order. Its judicial obligation became fixed on the date of the rendition of the judgment, and the order asked for is really but an order to the receiver to perform a clerical duty.

The receiver, and creditors whose claims have been allowed, contend that these claims should not be listed and permitted to share in the assets in the receiver's hands, for several reasons. It is claimed that the application should be denied because no claim was presented to the receiver until more than a year after the expiration of the period of litigation. As stated above, the receivers, within the time limited, had, by their action in reference to the Arizona suit, recognized these claims as claims to be defended at the expense of the receivership funds. The claim of the applicants in their first application was that they never knew of the receivership until soon after the Arizona judgment was rendered, and the contrary nowhere appears. It does appear that no notice of limitation was sent to these claimants, though they had already intervened in the Arizona suit. And it is further found that the receivers, during the entire period prior to the rendition of judgment, intentionally and by repeated instructions to counsel refrained from entering for the defense as receivers, and from procuring the receivers to be formally made parties defendant, and from disclosing the existence of a receivership to the applicants, while at the same time they actively directed the defense and procured from the Superior Court the order for a compromise and judgment thereon. The receivers, after having, under the general order of court, undertaken to defend the pending action, and after having, upon presentation of the essential facts, obtained an order for a compromise pursuant to which the compromise judgment in the Arizona court was rendered, are precluded from now disputing the binding force of this judgment because the applicants, not knowing of the receivership — which was due to the intentional failure of the receivers to disclose its existence — formally presented no claim until they learned of the receivership very soon after the judgment was rendered. Laches in presenting a claim cannot be imputed to one who under such circumstances did not know of the receivership, and certainly there was no laches in presenting the Arizona judgment to the court here in a month from its rendition in Arizona. Neither the receivers nor other creditors can, in view of the facts, be heard to say that claimants were not diligent.

That the defense was continued in the name of the corporation is of no consequence. The corporation was not dissolved. The statute provides that receivers of a corporation shall have "power in their own names, or in its name, to commence and prosecute suits for and on behalf of said corporation; to defend all suits brought against it or them." General Statutes, § 6083. If the receiver had entered as receiver to continue the defense of the action, what more would have been necessary for a presentation of the claim than the continuance of this action by the plaintiffs knowing the receivers as such were defending? The receiver continued the defense for the benefit of the receivership; it was so alleged, in substance, in the application of June 25th, 1912, and found to be the fact by the court in making the compromise order. The local attorneys were in fact the attorneys of the receivers, employed and paid by them, authorized and directed by the receivers, who were in turn authorized by the court appointing them. Knowledge of the claim is given when the receiver has knowledge of the pending litigation. This knowledge becomes notice available to the creditor when the receiver, under authority of this court, with full knowledge of the facts, steps into the litigation and continues it to judgment. As is said in one case: "Notice of a claim is in effect given by the litigation."Powell v. Leavitt, 80 C.C.A. 43, 45, 150 F. 89, 91. See also Pratt v. Stoner, 78 Conn. 310, 313,61 A. 1009; Brown Bros. v. Brown, 56 Conn. 249,14 A. 718; Insurance Commissioner v. Commercial Mut.Ins. Co., 20 R. I. 7, 36 A. 930.

Though the stipulation for a compromise was in from the stipulation of the Indemnity Company, it was in fact the authorized act of the receivers; and to say that the receivers and the court are not bound by the judgment rendered pursuant to that stipulation, is to make the order of the court a nullity and the action of the receivers thereunder a means of misleading plaintiffs to their harm. "It is unnecessary to inquire whether, as an abstract proposition, the doctrine of estoppel can be applied to courts as well as to individuals. It is sufficient to say that the proceedings of courts must be based upon the same principles of fairness which are ordinarily applied to the conduct of individuals."Smith v. U.S. Express Co., 135 Ill. 279, 293,25 N.E. 525. The situation is not unlike that of the undisclosed principal. Plaintiffs in the litigation supposed they were dealing with the attorneys for the Indemnity Company. These attorneys had been in fact attorneys for the Indemnity Company. Without the knowledge of the plaintiffs these attorneys became representatives of new principals — the receivers of the Indemnity Company — so that the plaintiffs were as a matter of fact dealing with attorneys of the receivers, and the receivers and the court authorizing them are as much bound as though the defense had been conducted openly in the name of the receivers. The underlying principle is as stated in Smith v. U.S. Express Co., 135 Ill. 279 (25 N.E. 525): "One, in whose behalf or under whose direction the suit is prosecuted or defended, will be bound by the judgment or decree rendered in it; and parol evidence will be admitted to show who is the real party in interest, and that such party conducted the litigation in the name of another person." See alsoBank of North America v. Wheeler, 28 Conn. 433, 441; High on Receivers (4th Ed.) § 268a.

As a further objection, it is said that there was no power in the Arizona court to finally determine the amount of these claims as against the fund in the receiver's hands. The answer to the first part of this objection is, as already shown, that by the express provision of the statute under which the bond was given, no court other than the Arizona court had jurisdiction over the determination of the extent and validity of the claim in an action brought in the name of the United States.

The answer to the second part of the objection is, that by the compromise order of June 25th, 1912, the court of the receivership, as definitely as words could do it, expressly recognized the jurisdiction of the Arizona court, the existence of a claim pending against the assets in its hands, and allowed the claim to an amount not then defined in dollars and cents but definitely to be ascertained in the manner provided in the order. It may be that the order was not based upon or allowed because of the exclusiveness of the jurisdiction of the Arizona court. It can now be justified by reference to the statute. But even apart from the statute, there can be no question of the power of the court of the receivership by its order to refer the determination of claims to a court of another jurisdiction. This is clearly recognized in the cases cited in behalf of the receiver. In Pendleton v. Russell, 144 U.S. 640, 12 Sup. Ct. 743,36 L.Ed. 574, a case which turns upon the fact, unlike the present case, that the corporation at the time of the judgment had no legal existence, the court said: "It ceased to be a pending suit; and if it were otherwise, the receiver could not take charge of any proceeding in a foreign jurisdiction by commencing an action, or defending an action, without the express authority of the court, whose officer he was, so as to bind any property or effects in his hands as receiver." In Attorney-General v. American Legion of Honor, 196 Mass. 151,81 N.E. 966, a case in which a plaintiff recovered a foreign judgment after the appointment of receivers and then presented his claim upon this judgment, the court said: "To establish that right he had to prove his claim in this court [the court of the receivership] or get an order from this court that a judgment in the action in the foreign court should establish his right to share in the assets here. It is for the court which has taken the assets of the insolvent into its hands for distribution and for that court alone to determine who its creditors are and what is due to them respectively." The last statement, that it is for the court to determine what is due to them, must here be taken with reference to and subject to the overriding provision of the United States statute, as already explained. Going on, the court says: "As we have said, it may in its discretion leave that issue to be determined by another court. Lowell on Bankruptcy, § 209. But in the absence of an order to that effect the subsequent judgment binds the insolvent and not the assignee or receiver of the assets of the insolvent as representative of the insolvent's general creditors. In the case at bar no order has been made authorizing the receiver to submit to courts of other jurisdictions the question whether the petitioners now before us were creditors of the defendant corporation. . . . If it is the fact that the receiver has in fact (although not authorized so to do) contested one or more of these twenty-seven claims in the courts of another State to final judgment, there is nothing to prevent this court from entering an order nunc pro tunc submitting the question so litigated to that court and allowing the judgment so obtained to be proved so far as it covers a debt or a disability benefit." Here is the clearest recognition of the power of the court of receivership by any proper order to delegate to any other jurisdiction the right to determine the extent and validity of claims against the fund in its hands, and the Massachusetts court even goes so far as to say that after it has already been done by the receiver without order, there is nothing to prevent the court from passing a retroactive order which will adopt and confirm the results that have followed the receivers' unauthorized action in litigating in foreign jurisdiction. And this Massachusetts case goes far beyond the requirements of the present case, quite independently of the Act of Congress, because we have the preliminary general orders of the court and the specific order as to the compromise judgment upon these claims. In Odell v. Batterman Co., 223 F. 292, 298, Judge Rogers, reviewing the authorities, said: "It was therefore within the discretion of the court below to decide whether it would determine for itself the right which the appellant asserts against the premises which the court has taken into its possession, or would allow the question to be litigated elsewhere." Judge Rogers also cites with approval from 34 Cyc. 420: "Generally it is considered to be a matter within the discretion of such court [court of the receivership] whether it will determine for itself all claims of or against the receiver, or will allow them to be litigated elsewhere, and the latter is usually done when the issues can be more conveniently tried in the place where the facts arise and the venue belongs."

For another reason of objection, the receiver and creditors most strenuously insist that the doctrine of res judicata is a perfect defense to the present application, and that the denial by the Superior Court on January 24th, 1913, of the application of January 11th, 1913, for permission of the applicants to intervene and present their claims for allowance, unappealed from, settled the rights of the applicants once for all. They say that the present application is in substance no more than a renewal of the application then denied. It is, therefore, necessary to examine these applications somewhat closely and in view of the facts of the case. The original application is in substance the ordinary creditors' application for an extension of time in which to intervene, and to submit his claim to the court for allowance, which means for determination by the court as to its amount and validity, and for an order allowing the claim, so determined, to participate in the assets. The existence of the prior orders of court in the premises was then unknown to the applicants. The statute upon which the claim was based was not adverted to or counted upon, and, under the finding of facts concerning that hearing, does not appear to have had the attention of the court or counsel. Neither the application for, nor the order of, June 25th, 1912, call attention to the statute or its exclusive jurisdictional feature. It does not appear upon the face of the application that the claim is founded upon any judgment whatever. No reference is made to the compromise order, nor does it appear that any report of the conclusion of the litigation had been made to the court. No such report had in fact been made. There is an allegation that the receiver and the claimant had agreed upon the amount due, and that the applicants had no knowledge of the receivership until January 3d 1913, and that they never had any notice of the limitation for the presentation of claims, and that upon notice of the receivership they proceeded with all diligence to get their claims before the court. It appears clearly enough from all the attendant facts stated in the finding, and indeed by inference in the application itself, that the allegation that the compromise of the claim was done by authority of the receivers, must be construed as a statement of a fact first known to the applicants after the receivers had stated to them on or about January 3d 1913, that they had conducted the defense, and not as a statement that at the time of the compromise and judgment the applicants knew of the receivership. Upon these facts, the application of January 11th, 1913, can only be regarded as an application of a creditor for an extension of time in which to intervene and present his claim. As such, it was within the judicial discretion of the court to grant or deny, and it was denied. The effect of the denial is not to be extended beyond the scope of the application, and when, as the finding shows, upon the hearing, and not until then, the applicants were first informed of the orders of court, that information then given, did not enlarge the scope of the application. The applicants, instead of attempting to amend and change the nature of their application, preferred to pass it and bring a new and more specific application setting up their exact claim. The applicants had in fact mistaken the true nature of their claim. They were not then simply creditors holding claims to be liquidated by the court of the receivership, but judgment creditors holding judgments, authorized by the court of the receivership, for claims liquidated by the court which had the power to judicially determine their amount, and which had fully accrued under the statute in question prior to the appointment of the receivers and were therefore at that time valid and existing claims. In denying the applications the court did not pass beyond the scope of the applications, which, through clear mistake of fact — explainable by the very specific directions of the receivers to their counsel in the Arizona suit not to disclose the existence of receivership proceedings — led the applicants to state claims of a very different nature from those they in fact had, or at the time even supposed they had. The pending applications set out the material facts of the Arizona suit, the special condition of the bond under the statute, the pendency of the action at the appointment of the receivers, its defense by the receivers, its postponement from time to time upon the request of the receivers' counsel, the stipulation for judgment, the final judgment authorized and agreed to by the receivers, that the receivers had not reported said judgment to the court, and that no distribution of the assets of the Indemnity Company had yet been made. The prayer for relief (including the claim for a preference which has been abandoned) is that the receivers report the claim as evidenced by the Arizona judgment as a claim duly presented and allowed, and that they participate in dividends to general creditors. This is a claim which the court has not had before it, and the denial of such a claim would upon the facts have been a clear abuse of discretion. It is inconceivable that the court could have ignored its own orders and repudiated the judgment resulting from them. The court, in its denial of the application of January 11th, 1913, did not adjudicate the question whether the applicant's claims had been merged in a judgment under such a statute and under such orders of the court and conduct of the receivers that they had become definitely established and allowed claims against the estate in the receiver's hands, requiring only to be reported and listed upon the records of the court of the receivership as allowed claims entitled to participate in the assets. The doctrine of res judicata does not apply.

The law with reference to claims arising under this statute was not, in 1912, as well settled as it is at the present time, and the receivers were apparently in good faith attempting to save every point to protect the fund. It appears very clearly from the correspondence between the receivers and their counsel conducting the suits, that during all the time prior to May 23d 1912, the receivers were negotiating settlement upon the theory that these claims if compromised would be allowed as other compromised claims had been by stipulation agreed to be allowed, and in a letter of April 29th, 1912, said: "If such compromise is made we will expect to be in a position to get the claims allowed by the court for this amount irrespective of the fact that the time limited for presentation has now expired"; and in the same letter estimated the dividend at twenty to forty per cent. It further appears that after negotiations were under way the attitude of the receivers was changed with reference to these claims, and that this change was due to the decision in People v. Metropolitan Surety Co., 205 N.Y. 135,98 N.E. 412, decided April 2d 1912, and referred to by the receivers in a letter of May 23d 1912. The decision in this case was construed, and perhaps fairly so, as holding that the claims in the present case had not accrued and become absolute at the time of the institution of the receivership, because the claimants had not recovered any judgment before the appointment of the receivers, and that under the statute in question, no judgment having been rendered, the claims were contingent, and therefore not properly provable or allowable as against the assets in the receiver's hands. With this idea in view, the receivers were specially careful that the stipulation should not in terms bind the fund in their hands. As tending to support the view of the receivers, it was held in People v. Metropolitan Surety Co.,211 N.Y. 107, 105 N.E. 99, that under the statute in question a claim was conditional and not absolute until a judgment establishing the amount and validity of the claim had been obtained and presented to the receivers. Finally, in Matter of Empire State SuretyCo., 216 N.Y. 273 (1915), 110 N.E. 610, in a case arising under this same statute, there was, among others, this question certified to the Court of Appeals: "Did the procurement of judgments against the Empire State Surety Company in the United States District Court after the date of the liquidation, to wit, December 16, 1912, in actions regularly begun before that date, entitle the claimants recovering such judgments to share in the assets of said surety company in the hands of the superintendent of insurance as liquidator?" It appears that the superintendent of insurance had rejected these claims as contingent. But the Court of Appeals held that these claims were certain and absolute at the date of the entry of the order of liquidation. The court proceeded to distinguish and explain the decision above referred to in 211 N.Y. page 107, and answered the question certified to it in the affirmative. The facts in the case in 216 N.Y. are, so far as the pendency and institution of the action is concerned, exactly as in the case now under consideration. It is not now claimed that the cause of action of the respective claimants had not accrued at the time of the receivership, but this is apparently because the principle derived from the case in the 205th N.Y. is not now held applicable to a situation like the present, and these cases are referred to rather as probably explaining the action of the receivers back in 1912 and before the legal situation of claimants under this statute had become authoritatively settled. Our own court has since 1912 clearly stated the kind of claims that are to be considered as accrued and not contingent, and therefore capable of presentation to a receiver. Bridgeport v. AEtna Indemnity Co., 91 Conn. 197, 99 A. 566. It is also to be noticed that the decisions interpreting the Act of Congress in question were all rendered after the appointment of the receivers and after the receivers had undertaken the defense of the Arizona action.

The Superior Court is advised to render judgment for the claimants, directing the receiver to enter and list the claims of the respective claimants for the amounts evidenced by their judgments, upon the list or schedule of claims presented and allowed and entitled to share, according to the nature of the claims, but not as preferred claims, in the assets which may be in the receiver's hands for distribution.

No costs in favor of either party will be taxed in this court.

In this opinion the other judges concurred.

Case Details

Case Name: Bashford-Burmister Co. v. Aetna Indemnity Co.

Court Name: Supreme Court of Connecticut

Date Published: Jan 30, 1919

Citation: 105 A. 470

Court Abbreviation: Conn.