127 Wis. 412 | Wis. | 1906
Lead Opinion
Tbe following opinion was filed January 30, 1906:
Counsel for tbe respective parties, as we view tbe complaint, in effect, take issue as to tbeir rights on tbis state of facts: A purely mutual company was organized under a charter providing that policy-holders only should be members thereof. It conducted its business for some fifty years. In that time it accumulated a surplus of over $200,000. At the time of the commencement of the action and during the re-organization acts hereafter mentioned, plaintiff was a member of the company. The entire membership at the time of such proceedings constituted but a small proportion of those who had joined the company from the beginning. The legislature, after the surplus was substantially as indicated, enacted a law in terms authorizing such a company to be turned into a stock corporation at the option of two thirds of its existing policy-holders representing not less than one half of its outstanding insurance. It did not recognize such policy-holders as having any greater several interests in the corporate property, or rights to participate in the taking of stock in the re-organized company, than past policy-holders, or treat them as being the owners of the corporate property and business, or having any interest therein worthy of being sought after in the re-organization proceedings, or as a result thereof, or policy-holders, past and present, as having, in the aggregate, rights in such property equivalent to but a small proportion of the whole thereof, or of a character reasonably probable to be realized upon. The scheme in its entirety was such that its execution in any case would probably or necessarily result in bestowing the net assets over liabilities of the company upon the new organization, and indirectly upon the promoters thereof as a mere gratuity. The officers of the Germantown Farmers’
Counsel for respondents by their attitude in printed and oral arguments accepted tbe situation stated, affirming that tbe conduct complained of is justifiable on principle and authority, that it is neither a wrong to appellant or to anyone else, of sufficient dignity at least to be a subject for judicial redress at bis suit or that of any other party; that it is not even one of those wrongs from the standpoint of good morals, laying one liable to tbe condemnation of bis fellow-men; and that, if it were otherwise as an original proposition, it is not a wrong under tbe circumstances by force of legislative authorization within its legitimate field. Counsel for appellant as confidently assert tbe negative, maintaining that tbe acts of tbe legislature involved, and to which respondents point for their justification, is a clear usurpation, — is within tbe condemnation of tbe letter and spirit of tbe constitution, state and national, and of elementary and judicial authority as well.
Tbe very statement of tbe position which must be maintained in order to defeat tbe complaint as insufficient to show any wrongdoing as regards tbe appellant of which be can be judicially beard to complain in tbe manner attempted, or at all, at first sight, we must confess, so shocks tbe moral sense that one is inclined to enter upon a study of tbe subject with tbe impression that no substantial basis can be found for it in tbe law. As a rule, one can.'rightly acquire property only by gift inter partes or operation of law, or by finding or le
The company was organized in 1854. It had done business for forty-eight years at the time of the acts complained of. At the end of such period, as appears hy the last public record, the amount of unexpired risks was $2,922,889. The amount paid for carrying such risks was $42,331.32. The length of the policy periods was about as follows: one fourth one year, one half two years, and one fourth five years. The total amount of premium assessments paid into the company’s treasury from its organization was $896,558.64. Assuming that the average rate for carrying risks for the entire period of the company’s existence was substantially the same as for the last five years thereof the total amount of risks from the beginning was approximately $68,334,000, indicating that at the time of the attempted re-organization the number of policy-holders and the amount of risks then in force was to the total number of persons who became members of the company from the start, and the total amount of risks carried during the entire period, as one to twenty-two. The reorganization act provided as follows:
“Sec. 1. Any mutual fire insurance corporation, organized under any law of this state” circumstanced as the one in question “may, with the consent in writing of two thirds (f) of the members of such corporation representing not less than one half of its outstanding insurance, become a stock corporation, by proceeding in accordance with the provisions of the statutes of this state regulating the organization of stock fire insurance corporations.
“Sec. 2. Every member of such corporation on the date of said annual or special meeting shall be entitled to priority in subscribing to the capital stock of such corporation, for one month after the opening of the books of subscription, and in the proportion that the amount of cash premium paid in by*425 sucb member-bears to the total amount of risks in force on the date of said annual or special meeting; provided, that if any one of the' past or present members shall not subscribe for stock, then the said corporation shall, upon application, within ninety (90) days return to him his equitable proportion of the surplus of the company, to be computed by an actuary to be employed by the corporation for that purpose.
“Sec. 3. No part of the assets of such mutual fire insurance corporation shall be divided among the members thereof, but shall, after such re-incorporation, become the property of such stock corporation, to be expended by it for the ordinary disbursements of the company, in carrying on its business, including the payment of losses incurred upon its policies; and all property of such mutual fire insurance corporation shall be transferred to such stock corporation, organized as aforesaid, in the manner provided by law.”
It will be observed that one month only was allowed after the opening of the books for subscriptions for stock in the new corporation for members of the old company to become subscribers. That contemplated that all persons who had become members of the company during the forty-eight years of its existence, and who were living, and the personal representatives or the heirs wherever they might be, of those who were dead, should exercise the right afforded by the act to take stock in the corporation within the thirty days named. No provision, however, was made for any notice to the possible beneficiaries of the opening of such books, nor as to the amount of capital stock of the new corporation. All that was left to the custodians of the property and business of the old concern, who presumably were to be, and who in.fact became, the promoters of the new organization. The complaint does not state what amount of stock was finally determined upon for the new organization. It could not have been less than $100,000, for that is the minimum fixed by the statute. It is safe to assume, probably, that it was fixed at that sum. So it appears by computation that every one of the existing policy-holders was afforded the opportunity, if he should de
The act treated, as before indicated, every one as having a membership right who at any time held a policy in the corporation and entitled to the same consideration as any other member. Provision was made, in form, to enable each one having any such right to claim a part of the surplus, in case of his failing to take advantage of the valueless opportunity indicated, to take stock, but such provision was likewise valueless as will be seen. As a condition of any past or pi’esent member obtaining any part of the surplus he was required to be vigilant and make application therefor, and then to take such sum for his appropriate share as the company’s actuary might deem equitable. Obviously, if the legislative basis for subscription rights of members were taken as the equitable standard for measuring rights to the surplus, the amount coming to each member would not be worth the trouble required to obtain it. It must be presumed that the legislature
If what has been said needs reinforcement sec. 3 of the act furnishes it. That is sufficiently significant to bear repeating at this point:
“No part of the assets of such mutual fire insurance corporation shall be divided among the members thereof, but shall, after such re-incorporation, become the property of such stock corporation, to be expended by it for the ordinary disbursements of the company in carrying on its business, including the payments of losses incurred upon its policies.”
How could all the property of the old organization become that of the new one, “io be expended by it for Us ordinary expenses ” no part being divided among the members- of the old organization, and yet such members obtain their equal proportion under the second section of the act? The only
In respect to the peculiar features before referred to there is no similar law anywhere, so far as we are able to discover. ■Counsel for respondent place great reliance on Grobe v. Erie Co. Misc. Ins. Co. 24 Misc. 462, 53 N. Y. Supp. 628, affirmed 39 App. Div. 183, 57 N. Y. Supp. 290, which will be discussed at some length hereafter. As suggested by ■counsel for appellant, the law there, quite unlike the one before us, dealt with existing members of the old organization as, in the aggregate, the equitable owners of its assets and entitled to become the owners of all of the stock of the new corporation. The total amount paid into the corporate treasury was deemed to stand for all the stock in the new organization. Each policy-holder was secured the right to take such proportion of the entire stock as the amount paid by him on unexpired insurance bore to the aggregate of all sums so paid by ■existing members. Laws of N. Y. 1896, ch. 850. We venture to say that, except in the one instance before us, no law has been enacted for converting a mutual insurance company, or ■other non-stock organization, into a stock company, not recognizing the members of the old company as its owners and entitled to be recognized as such in the organization of the new •one.
Proceeding logically the next question to be taken up is this: Who were the members of the Germantown Farmers’
Erom the foregoing it is evident that whatever private interests there were in the assets of the Farmers’ Company over and above sufficient to satisfy its liabilities, were the property of persons holding unexpired policies therein, and that part of the legislation under which respondents seek to
Where is the ownership of the net assets of a mutual insurance company located ? That the legal title is in the corporation goes without saying. The rule in that regard must be the same in case of one corporation as another. Why is not the equitable right, — the real beneficiary interest, — independently of the corporate use, vested in the members of the cor-' poration in one case the same as in the other? It would seem that, after the corporate purposes are exhausted, the property of every business corporation belongs to its members, is self-evident. It is no answer to the proposition to ■say, no member has “any aliquot part of the corporate assets subject to identification, conservation and recovery,” ■for that is true as to any corporation. It is likewise no answer to say, it is no part of the business of a purely mutual insurance company to distribute its profits among the members, unless that is provided for by the contract or the organic act. Unless prohibited from doing so> such a corporation, in the event of its accumulating a needless surplus, may distribute the same to its members (Mygatt v. N. Y. P. Ins. Co. 21 N. Y. 52, 65), and may make such distribution at such ■times and to such extent as the governing authority may de
However, the question at issue is not what right a member of a corporation of the sort under consideration, while it is a going concern, has in its net assets, but what right has he when it ceases to do business; when its property 'must necessarily pass out of its hands, though his interest in the latter situation would appear to be more appreciable in case of a surplus accumulated in contemplation of a distribution thereof to members than otherwise. Obviously, if he has an equity in the surplus, whenever it is no longer needed in any reasonable view for the corporate business, the right to realize thereon must exist.
The authorities supporting- the last foregoing are not numerous. One would not expect them to be on a matter which so appeals to one’s common sense as necessarily right upon fundamental principles. However, harmonious quotations from text and judicial authorities could be given at great length. To illustrate: “The principle which lies at the foundation of mutual insurance, and gives it its name, is mutuality; in other words, the intervention of each person
Titcomb v. Kennebunk Mut. F. Ins. Co. 79 Me. 315, 9 Atl. 732, relied upon by counsel for the respondents, is in harmony with the foregoing, notwithstanding some discussion, which will be referred to hereafter. The case went upon the ground that there were no existing policy-holders. The last policy had expired. It was absolutely without membership.
In Carlton v. Southern Mut. Ins. Co. 72 Ga. 371, it was
“A mutual insurance company is based on the idea that each of the assured becomes one of the insurers, thereby becoming interested in the profits and liable for the losses. Without a charter, such an organization would -be governed by the general' law of partnership.”
In the case in hand the distributees were held to include all stockholders, and that the word “stockholders” under the terms of the charter included every person who had contributed to the fund on hand, whether holding any unexpired- insurance or not. That conclusion was reached based on language peculiar to the charter. It has no application whatever to such a charter as the one in question on that point.
It does not seem best to spend further time on the branch oft the case last treated. We hold that there is no difference between business corporations as regards ownership of property. In the general sense, every member of a mutual corporation is a stockholder and is the equal of any other member similarly situated, or any member of any corporation having an equal interest, proportionally, as to holding the beneficiary title to the corporate assets. Eor corporate purposes only the corporate entity owns the property, otherwise it belongs to the members. No principle of law is more firmly founded in reason, and none more important to be kept in bold relief by courts so as to challenge the attention of those who have to do with corporate affairs, especially corporations dealing with the subject of insurance. The officers of such a-concern have no greater authority over its assets, as regards appropriating the same to their private use, than those in other corporations. Neither does legislative power legitimately extend to interfering with property rights more in
But it is said that under the reserved power in the constitution what the legislature may create, as regards corporate -organizations, it may alter or destroy, and that as it may pro-wide for the dissolution of a corporation it may also provide for the disposition of its assets. .Begardless of the legislative •control suggested, the law-making body has no authority to appropriate private property to the use of the state, except under the taxing or police power, or power of eminent domain, or rto a private party. There can be no confiscation of corporate :any more than of individual property.
“Corporations are persons within- the meaning of the constitutional provisions forbidding the deprivation of property without due process of law as well as a denial of the equal protection of the laws.” Covington & L. Turnp. R. Co. v. Sanford, 164 U. S. 578, 17 Sup. Ct. 198; Pembina Con. S. M. & M. Co. v. Pennsylvania, 125 U. S. 181, 189, 8 Sup. Ct. 737; Santa Clara Co. v. Southern Pac. R. Co. 118 U. S. 394, 6 Sup. Ct. 1132.
We should not pass wholly from this subject without referring to tbe fact that so learned a writer as Judge Elliott in bis valuable work on Private Corporations at see. 606, adds to tbe corporations specified by Justice Bradley, to which tbe supposed ancient rule now applies, mutual insurance companies, referring to Titcomb v. Kennebunk Mut. F. Ins. Co. 79 Me. 315, 9 Atl. 732, and Cummins v. Hollis, 108 Ga. 402, 33 S. E. 919. Tbe Tiicomb Case is also referred to in 2 Clark & M. Corp. at sec. 328, but without approval so far as bearing on tbe question in band. It is unfortunate that so careful a writer as Judge Elliott should bave lent bis distinguished approval to tbe cases cited by adopting tbe construction thereof which be incorporated into bis text. An examination of Cummings v. Hollis, suprcn, shows that it went distinctly upon tbe ground that tbe corporation was public. It was based on tbe decision in Mason v. Atlantic Fire Co. 70 Ga. 604, which involved also a public corporation. By implication tbe Hollis Case held that in case of the dissolution of any corporation not public tbe net property would go to its members, using this language: “On tbe dissolution of a corporation of this character, its assets are appropriated in other ways than by a division among its members.” ' In harmony therewith tbe same court said in Dade C. Co. v. Penitentiary Co. 119 Ga. 824, 829, 47 S. E. 338, 340: “Tbe mere fact that a corporation bas no capital stock does not necessarily deprive its members of their proportionate rights in tbe corporate property.”
True, in Titcomb v. Kennebunk Mut. F. Ins. Co., supra, tbe supposed ancient rule of tbe common law was quoted with approval. That fact, as it appears, bas been a disturbing ele
It should be noted that in Smith v. Hunterdon Co. Mut. F. Ins. Co. 41 N. J. Eq. 473, 4 Atl. 652, tbe rule of distribution condemned in tbe Maine case was adopted by a process of reasoning not deemed to be logical. It ignored tbe obvious fact that tbe members of a corporation, and tbe members only, own tbe corporation and that it is not permitted to any court upon its own notions, of equity to take any part of the corporate property and distribute it to those not members. If the rule were applicable in any event, it could not be to a corporation whose charter expressly provides, as in this case, that only persons bolding unexpired risks shall be deemed members. The New Jersey court was evidently persuaded to tbe course adopted by Carlton v. Southern Mut. Ins. Co. 72 da. 371, failing to observe that it turned upon a construction of language in tbe charter which'the court felt bound to bold was used to make every one who contributed to tbe corporate surplus a member, or stockholder, as was said, for tbe purposes of any distribution of such surplus.
No hardship can result to members of a mutual insurance company from their relation with tbe organization being considered as above stated. Every policy-holder knows, or ought
To summarize at this point: The members of the German-town Farmers’ Mutual Insurance Company at the time of the proceedings under ch. 229, Laws of 1903, to supersede it by a new corporation, denominated the Germantown Insurance Company, were the persons then having unexpired policies in the former. F'or all except corporate purposes they were the beneficial owners of its assets. In case of its being ■ wound up the net assets constituted a fund for distribution between the members according to their respective contributions to the company’s treasury. In case of any distribution of its surplus, other than following a dissolution, they were entitled to so participate. The surplus in excess of the reasonable needs of the corporation was a proper subject for distribution at any time. The right of the corporation to hold
All cases and the authorities, generally, so far as we can discover, not excepting the one to be presently specially mentioned, upon which counsel for respondents mainly rely, are in substantial harmony as regards members of a corporation of the sort under discussion being the owners of the corporate property, subject to the corporate purposes, in the absence of some charter provision to the contrary, as we have held. If there was want of harmony as to who are to be deemed members of a corporation of the kind in hand,, in the absence of a charter provision on the subject, it would not be material in this case since the charter here expressly provides that only
We have thought best to proceed to this point without referring to the decision most confidently relied upon by counsel for respondents, — Grobe v. Erie Co. Mut. Ins. Co. 24 Misc. 462, 53 N. Y. Supp. 628, affirmed 39 App. Div. 183, 57 N. Y. Supp. 290, or the one on which with equal confidence counsel for appellant rely, — Schwarzwaelder v. German Mut. F. Ins. Co. 59 N. J. Eq. 589, 44 Atl. 769, because the former, when rightly understood on the. main point,— that as to the validity of legislation providing for the trans-. fer of the property of one corporation to another and the substitution of the latter for the former without the consent of all of the members of the old corporation, — is entirely inapplicable to the case before us from the attitude of respondents, and. is in harmony with the 'ease relied upon by appellant, as we shall see, and both bear on the question yet to be treated of, whether if the appellant has a ground of complaint he invoked the proper remedy.
Before proceeding to the next point we will state briefly our view of the above cited New York case on the main question. The court there met this situation: The insurance company sought to be superseded was formed in 1874 under a general law. There was a re-organization law then in force substantially like the one here, except that it treated all policy-holders of any mutual company sought to be superseded, at the time of the re-organization proceedings, owners of the company as regards the. right to take the entire stock in the new corporation. In short, it contemplated the substitution of one corporation for another without any change of membership, except at the option of the members of the old corporation. When the subject of dispute was organized there was a system of laws on the statute books, originating as early as 1853 and continued to and inclusive of the re-organization proceedings, authorizing any mutual0 insurance company by
Turning to the New Jersey case, upon which counsel for ■appellant rely, the situation before the court was precisely like that here. There was no provision, express or implied, in the charter of the corporation sought to be superseded author
On the subject of whether plaintiff has a cause of action in equity the point is made, in addition to those heretofore discussed, that the complaint, in effect, admits the incorporation of the stock company; that therefore it became vested with the property of the old organization, and, there being no allegation that the new company is not ready, willing, and able to pay all the liabilities of the old company, the latter could not maintain this action, therefore plaintiff cannot. The complaint, as we understand it, makes no admission that the new company is vested with the title to the assets of the Germantown Farmers’ Mutual Insurance Company. It admits that it has manual possession thereof, but charges that the legal title and right of possession is in the mutual company. It further alleges that the officers of the latter are so-concerned in the commission of the wrong that there is no> reasonable ground to expect that they will efficiently assert its-rights. That makes a clear case for the plaintiff, since he is-pecuniarily interested in the protection of the old company’s rights, to invoke equity to enforce its cause of action. Whether the right of the mutual company is legal or equitable makes no difference as regards the rights of the appellant to invoke equity. That field of judicial activity only is open to him. One of the most common and important subjects of equity jurisdiction is the protection of equitable rights formed on-legal or equitable rights of corporations, public or private,.
The doctrine of tbe New York court, cited to our attention from Grobe v. Erie Co. Mut. Ins. Co. 39 App. Div. 183, 57 N. Y. Supp. 290, that “tbe unascertained interest of a mere member of a corporation is not of sufficient significance to challenge attention of a court of equity to protect it. To permit corporations to be managed by suits in equity, instituted in the interests of persons holding such indefinite rights, would produce intolerable confusion and end substantially in the destruction of such enterprises,” has no place here. We-had occasion to examine it at some length in Land, L. & L. Go. v. McIntyre, supra. It is entirely inconsistent, as it seems, with the real functions of equity jurisdiction. The idea that a member of a corporation pecuniarily interested in the vindication or prevention of some wrong to it, which it has not capacity to do for itself because of the attitude of unfaithful officers, cannot in behalf of himself and others similarly interested apply successfully at the door of equity because his interest as a single member is small, is unworthy to’ be entertained. It has not found and cannot find any favor here. There is no such reproach upon our judicial system. The jurisdictions are exceptional where the rule is not recognized and broadly applied that where a cause of action exists^ in favor of a corporation and its governing body refuses to-enforce it, any member thereof may do so, suing in equity in behalf of himself and others. The direct injury to the corporation is the primary end, in such action, to be remedied.. It may be very large and the interest of the active instrument-in conserving it may be very small. The former is the significant end, the latter is sufficient for the case so long as it' is appreciable as a property interest. 4 Thompson, Corp„
The point is made that the complaint alleges that the Ger-mantown Insurance 'Company is a corporation organized un•der the provisions of ch. 89, Stats. 1898, and ch. 229, Laws •of 1903, and that such being the case it must necessarily, as a de facto corporation at least, be the owner of the assets of the old corporation and beyond the reach of any but direct proceedings at the suit of the state to inquire into its right in the matter. True, the complaint so alleges, but the allegation must be construed in the light of the whole pleading. It can mean no more than that everything was done, which it was -competent to do under the laws referred to, to make the Ger-mantown Insurance Company a corporation. The whole -gravamen of the pleading is that the law of 1903 offends ■against the constitution and therefore everything done under it is void. The complaint states: “The individual defendants with divers other persons combined and confederated for the unlawful purpose” of depriving the .Germantown Farmers’ Mutual Insurance Company of its property “and therefore caused to be organized the above named defendant, Ger-mantown Insurance Company, and thereafter undertook to re-incorporate said Germantown Farmers’ Mutual Insurance Company into a stock corporation under the name of'the Ger-mantown Insurance Company, and undertook” to transfer the property of the old company to the Germantown Insurance
The foregoing results in the respondent company having-no basis for corporate existence but the unconstitutional law,, which is not sufficient to support even a de facto corporation. The latter can exist only where there is a‘valid law under which the corporation might have been created de jure. It is in the latter situation that the existence of a corporation ,can only be inquired into by a direct action in the name of the state. Evenson v. Ellingson, 67 Wis. 634, 646, 31 N. W.
It is proper and perhaps best to observe, in passing, tbat upon tbe facts alleged tbe title to tbe business and assets formerly possessed by tbe Germantown Farmers’ Mutual Insurance Company is still in sucb company entirely unimpaired by tbe re-organization law and tbe acts wbicb occurred under it. Tbe business conducted by its pretended successor, tbe Germantown Insurance Company, must be regarded as a mere continuation of its business with all tbat sucb situation means.
If it were a fact in tbe case before us tbat tbe Germantown Insurance Company was a valid corporation, it would make no difference witb plaintiff’s cause of action if tbe fact remained tbat it bad obtained wrongful possession of tbe assets •of tbe Farmers’ Company and tbe officers of tbe latter would not take tbe proper steps to remedy tbe mischief. This is not an action necessarily depending on whether the wrongdoer was a valid corporation or not. It is not an action to inquire into corporate existence. It is one to recover into tbe possession of tbe Germantown Farmers’ Mutual Insurance Company its property in specie, or tbe equivalent thereof, wbicb has been, as is alleged, wrongfully taken from it. Tbat might be accomplished whether tbe new company was or was not a corporation de jure or de facto. It is only a mere incident of tbe action tbat it is held to be neither.
Some other questions of minor importance are discussed in tbe briefs of counsel. They are included, it is thought, in those heretofore treated, or are rendered immaterial by what has been said. Tbe discussion of tbe ground of demurrer tbat tbe complaint is insufficient to state a cause of action, to wbicb this opinion has been mainly directed, really covers
We apprehend tbat we have sufficiently covered tbe whole subject presented fox consideration as to render it useless to proceed further.
By ihe Oourt. — Tbe order appealed from is reversed.
Rehearing
Eespondents moved for a rehearing.
Lewis & Roach, attorneys, and Quarles, Spence & Quarles, of counsel, for the appellant.
Sawyer & Sawyer and G. A. Kuechenmeister, for the respondents.
All points suggested to secure a modification of the former decision have received due attention. The 'argument in favor of the motion in.that regard is significantly headed “Explanatory.” "Why counsel regarded an explanation of their position necessary is not perceived. Counsel are always presumed here to present in good faith the cause of their client as they find it. They are not supposed, in any case, to be otherwise concerned. It was not thought here, prior to the explanation, that the situation was different in this instance than commonly. Any case after, presentation here must necessarily be disposed of as it seems to deserve. If it is a bad one, such disposition is liable to indicate that character with more or less clearness, yet without any reflection whatever on counsel for merely having performed professional duties, giving the best reasons occurring to them, after a diligent study of the subject, and referring to authorities within their reach, by them supposed to apply, to aid the court. We may well credit counsel for respondents with having distinguished themselves in that regard. They probably called to our attention, and in a helpful manner, every feature of the law of 1903 affecting favorably its validity. With like probability they invoked every legal principle bearing upon the matter, citing an array of authority for examination, evincing the most commendable industry. The case of respondents did not suffer for.want of any aid counsel could have afforded the court.
What is said in the discussion in support of a decision is directed wholly to the case as it appears. That is treated in a wholly impersonal way. It may reflect on the party responsible for the situation, but not on the attorney who merely performs his professional duty. It does not seem, here, that any explanation whatever was required from counsel who so ably presented the case at the bar, or the other distin-
What was formerly said as to that part of the decision holding that the so-called re-organized company is not even a de facto corporation was grounded upon very familiar principles. The result was inevitable. It cannot be changed. If it were true that the decision in that regard will result in the hardships suggested, as to leaving a large number of policy contracts in a state of uncertain validity, and a large amount of securities, taken in the name of the new organization, with an uncertain status, it would not change the law. If one unlawfully takes the money of another and loans it to a third person presumed to know the facts, it is hardly a good answer to a claim for restoration that the vindication of the right of such other will embarrass the wrongdoer and those who have dealt with him, on account of the former having confused his money with that of such other and loaned the two in combination to the third person.
It is thought that the former opinion renders it plain that the business of the so-called new corporation was in effect a mere continuance of that of the Farmers’ Company under a somewhat new name. The so-called new policy-holders, and! the so-called old policy-holders whose contracts have not expired, are policy-holders with equal standing in the German-town Farmers’ .Mutual Insurance Company. The last officers elected of such company are still its officers and will necessarily continue'to be such until their successors shall have been duly elected and qualified according to the charter. Whatever titles there are outstanding as to tangible or intangible things, belonging to the Farmers’ Company, are held merely in trust therefor by the collection of individuals who have assumed another name. The whole beneficial interest in such property is in the Farmers’ Company. It has a right to be immediately clothed with the legal title .thereto, so far as it is not possessed thereof, and to that extent the trustees of the
We note what counsel say as to persons holding policies issued in the name of the so-called new company not having participated in, and so perhaps not being bound by, the adjudication that such company is not a corporation in any sense and may hold it to be otherwise on the doctrine of es-toppel. We are not unmindful of the rule in that regard and that in some circumstances it extends beyond corporations de facto and includes such cases as that of a collection of persons falsely assuming to be a corporation, when there is no semblance of corporate existence. Citizens’ Bank v. Jones, 117 Wis. 446, 94 N. W. 329; Clausen v. Head, 110 Wis. 405, 85 N. W. 1028. It does not apply, however, where the parties knew, or ought to have known, the true situation, for then the essential element, the reasonable belief in the corporate •existence and reasonable reliance thereon, does not exist. Here .•all parties must be presumed, conclusively, to have known that the ostensible corporation was not a corporation at all, but was a mere usurping representative of the Farmers’ Company.
So it will be found, by looking at the matter rightly, that the supx>osed difficulties in the way of a restoration of the rightful condition of things as to the Farmers’ Company, are but spectres: merely contemplated, they may grow: approached with one purpose, they will merely recede: approached with a firm determination to accept the inevitable situation, they will disappear as the dew before the morning sun.
By the Court. — The motion is denied.