67 Minn. 245 | Minn. | 1897
Two demurrers to the complaint were interposed, —one by the Metropolitan Trust Company (which we shall hereafter call the “Trust Company”) on the ground that it did not state a cause of action; and the other by the state auditor, Dunn, on the same ground, and on the further ground that the court had no jurisdiction of him. The court overruled the demurrer of the trust company, and sustained that of Dunn on the second ground.
The essential allegations of the complaint, stated briefly and according to their legal purport, were as follows: The National Credit Insurance Company (which we shall hereafter call the “Insurance Company”) was a domestic corporation engaged in ,the business of insuring against' losses resulting from the insolvency of those to whom the insured had sold goods on credit. In February, 1893, pursuant to G. S. 1894, § 3332, it assigned to and deposited with the insurance commissioner, in trust for the benefit of its policy holders, a note and mortgage executed by one Maxcy, for the amount and of the actual value of $114,000. Subsequently, during the years 1893, 1894, 1895, it issued a large number of policies, upon which it was at the time of'its failure, in September, 1895, and still is, indebted to the holders over $125,000.
In January, 1895, without the knowledge of the policy holders, the insurance company and the trust company (which had knowledge of all the foregoing facts) made and carried into effect an agreement by which the former assigned to the latter the Maxcy note and mortgage in exchange for notes and other securities of the face value of $104,000, but of a much less actual value, which the trust company assigned to the insurance company. At the same time, and as part of the same transaction, the two companies withdrew the Maxcy note and mortgage from the insurance commissioner, and
In September, 1895, the insurance company, being insolvent, made an assignment for the benefit of creditors. Its assets, exclusive of the securities on deposit with the insurance commissioner, are almost nominal, not exceeding $5,000. In an action subsequently commenced by the insurance commissioner and one of the policy holders on behalf of all the policy holders of the insurance company, the plaintiff was appointed receiver for the purpose of converting all securities deposited with the insurance commissioner in trust for the benefit of policy holders into money and distributing the proceeds. In order to carry this purpose into effect, he was given power to take possession of all such securities, and to bring such actions as might be necessary for that purpose. He demanded of both the trust company and the state auditor a delivery to him of the Maxcy note and mortgage, and at the same time tendered to the trust company all of the securities which it assigned to the insurance company, and which the latter had deposited with the insurance commissioner. This tender did not include the securities (of the face value of $18,-000) which the insurance company itself retained, and never deposited with the insurance commissioner. Of course, neither these securities nor their proceeds have ever come into the hands of the
We have eliminated from this statement all the allegations of the complaint of actual fraud and fraudulent representations on part of the two companies to induce the insurance commissioner to surrender the Maxcy securities, and accept other securities in place of them, for the reason that these allegations are not essential to the plaintiff’s cause of action.
The policy holders of the insurance company were the beneficiaries of the trust, and, to the extent necessary to satisfy their policies, were the equitable owners of the Maxcy note and mortgage. They never consented to the exchange of securities. The insurance commissioner had no authority to consent to any exchange, or to surrender the trust property, except with the consent and approval of the state treasurer, expressed in the manner provided by statute. G-. S. 1894, § 3155. He was merely the custodian of the property, vested with the bare legal title in trust for the policy holders. The trust company bad or was chargeable with notice of these facts.
From a legal standpoint, the facts present a case where one person has unlawfully and knowingly taken the property of another, and deposited it with a third person. The law of the case would have been the same if the two companies had feloniously abstracted the securities from the office of the insurance commissioner, and one of them had subsequently deposited them with the state auditor.
And for the same reason this is not an action to rescind a voidable contract on the ground of fraud, as counsel for the defendants argue. The transfer and surrender by the insurance commissioner of the Maxcy securities were absolutely void. So far as the policy holders, or this plaintiff, who sues in their behalf, is concerned, there is nothing to rescind, and the law of rescission has nothing to do with the case. The policy holders were no parties to the arrangement by which the two companies exchanged securities and secured the surrender of their trust fund by the insurance commissioner, and the acceptance by him of something else in its place. They are merely seeking, through the plaintiff, as an officer of the court, to recover what is and has been all the time their property. On secur
It is contended, however, that the kind of business which the insurance company was doing was prohibited by G. S. 1894, § 3157, and therefore its deposit with the insurance commissioner was unauthorized, and could be withdrawn at pleasure. The section referred to in its original form was section 1, tit. 3, c. 1, Laws 1872, which was a codification and revision of the insurance laws of the state, the provisions of which related exclusively to fire, life, and marine insurance. Assuming, without deciding, that it prohibited other kinds of insurance, they were clearly authorized by Laws 1881, c. 123 (G. S. 1894, §§ 3331-3337, inclusive), entitled “An act to authorize and regulate within this state the business of insurance other than life, fire, and marine.” We think this act is broad enough to authorize any kind of insurance that is not against good morals or public policy. Laws 1891, c. 94, § 1 (changing section 3157 to its present form), was an amendment of, and a restriction upon the operation of, the act of 1.872, and was never intended to repeal the numerous acts on the subject of insurance which had been passed in the meantime since 1872. Section 3157, among others, was quoted in Seamans v. Christian B. M. Co., 66 Minn. 205, 68 N. W. 1065, cited by counsel, merely with reference to the authority of fire insurance companies.
What is said in the brief of counsel as to the standing and powers
2. The defendant Dunn, in support of his contention that the court has no jurisdiction over him, relies on a line of decisions of this court commencing with Rice v. Austin, 19 Minn. 74 (103), and ending with State v. Braden, 40 Minn. 174, 41 N. W. 817, to the effect that the courts cannot control or interfere with an executive officer of the state in his official acts. This court has undoubtedly gone further than any other in holding executive officers of the state exempt from the control of the courts in the performance of their official duties. This is especially true as to executive officers other than governor. It will be found, however, that in many of these cases what was said went further than what was decided. Whether our decisions on the subject ought to be modified, we have no occasion to consider now, for the reason that they are all clearly distinguishable from the present one. It will be found that in every one of these cases the state, as such, was interested. Some of them were suits to recover money or property from the state of which it was owner; others were brought to determine adverse claims to property claimed by the state, or to compel specific performance of the statutory contracts of the state; and still others to prevent a state officer from paying out the money of the state upon obligations of the state alleged to be void.
But this case involves only private rights in private property which is in the possession of a state officer, but in which the state, as such, never had, and never can have, any shadow of right of property. The court is not asked to compel the state auditor to perform any official act that can affect the interests of the state. All that is asked of him is that he turn over this trust fund to the court, so that it may be administered in accordance with the provisions of the trust to which it has been devoted. It cannot be that because this trust
On the appeal of the trust company the order appealed from is affirmed, and on the appeal of the plaintiff the order appealed from is reversed.