Smith v. Taggart, 87 F. 94

Smith v. Taggart

87 F. 94 | 8th Cir. | 1898

THAYER, Circuit Judge,

after stating the casé as above, delivered the opinion of the court.

To obtain a reversal of the decree of the circuit court directing the transmission of the Colorado assets to the domiciliary assignee in New Hampshire, the appellants invoke the rule which is ordinarily applied- where the estate of a decedent is being administered at the place of his domicile, and also in a foreign jurisdiction. They assert that a foreign administrator, unless a statute of the státe *97otherwise directs, is required to pay all debts proven against the estate in the foreign jurisdiction, out of the assets in his hands, before transmitting them, or any part thereof, to the domiciliary administrator, and t ha t Uu; same rule should be applied to the case at bar. We consider this rule inapplicable to the case in hand, because of the different relations which exist between the creditors of a deceased person and the members of an organization like the Granite State Provident Association, when it becomes insolvent. The members of the Association, under and by virtue of its charter and by-laws, were engaged in a joint or mutual enterprise. They shared alike in the profits of the Association, in proportion to the number of shares which they respectively owned, and they alike incurred the risk of loss incident to bad management or other causes. With respect to the Association, they occupied the same relation which stockholders bear to a corporation organized for business purposes. The money which they paid in under the name of ‘-monthly dues” went to create the capital of the Association, which, by judicious management, was expected to make each share worth $200 at the expiration of 96 months. It cannot be said, we think, that the moneys paid, to the Association in the shape of monthly dues constituted a loan to the Association in the ordinary sense; but they were moneys intrusted to it as to an agent or trustee, to be by it invested and accumulated for the common benefit of all the members of the Association, and to be eventually divided between them according to their several contributions to the common fund. Such being the nature of the Association and the purpose of its organization, we can perceive no just or reasonable ground upon which it can be held that, when the Association became insolvent, the residence or citizenship of a member determined the amount that he should receive in the distribution of the corporate assets. The share that each member is entitled to in such distribution is governed and determined by the contract existing between the members, rather than by their places of residence; and the contract which must be implied from the very nature of the organization is that, if anything happened to the Association, — if the venture proved unsuccessful, — the assets of the Association, after debts due to nonmembers had been paid, should be divided among the members according to their several contributions to the common fund. When the effects of a deceased person are administered in different states, no contractual relations exist between the different creditors of the estate. Each state, therefore, is at liberty to pursue its own policy with respect to assets found within the state. state may provide that home creditors shall be paid in full out of local assets, before any a,re transmitted to the foreign administrator, or it may adopt a more liberal view, and make regulations which will secure a pro rata distribution of the assets of the estate among all creditors of the same class, both foreign and domestic. We think that the rule which governs in such cases has no application to the case at bar. Inasmuch, then, as a contract must be implied from the nature of the Association requiring its funds to be distributed ratably among all the members according to *98their several contributions, it is manifest that such a distribution can be more conveniently and speedily made by a single court than by numerous courts sitting in different jurisdictions; .and the rule of comity which prevails among courts, in our judgment, requires that the duty of making- the distribution should be devolved upon the New Hampshire court, that being the court in which a suit to liquidate the affairs of the insolvent company was first filed. Applying the rules of comity, there can be no doubt, we think, of the right and duty of a court of equity which has acquired possession of a part of the assets to direct them to be transmitted to the court of primary jurisdiction, to the end that they may be there distributed ratably among all the members of the Association, in proportion to their contributions to the capital of the corporation.

The question which is presented by this record is not new, but has been considered at length and decided by the court of last resort of several states. It was held by the supreme judicial court of Massachusetts, in an elaborate opinion, in the case of Buswell v. Supreme Sitting, 36 N. E. 1065, that where a mutual benefit association, with a reserve fund held by the subordinate lodges in different states, but owned and controlled by the supreme lodge, became insolvent, and a receiver was appointed with power to collect the assets wherever found, and to wind up the association, ancillary receivers of the several branches should be ordered to transmit such reserve fund to the general receiver. The same view has been taken in the states of New Jersey, Louisiana, and Michigan (Ware v. Supreme Sitting [N. J. Ch.] 28 Atl. 1041; Durward v. Jewett [La.] 15 South. 386; Baldwin v. Hosmer [Mich.] 59 N. W. 432); and by several other courts as well (Failey v. Talbee, 55 Fed. 892; Parsons v. Insurance Co., 31 Fed. 305; Fry v. Insurance Co., Id. 197). See, also, Relfe v. Rundell, 103 U. S. 222. As these authorities are also in point on all the other questions which have been raised and discussed by counsel for the appellants, w.e deem it unnecessary to pursue the subject at greater length. It is to be presumed, of course, that the New Hampshire court will distribute the assets of the Association in the manner hereinbefore indicated; that is to say, among all the members in proportion to their contributions to the common fund., This application was made by the foreign statutory assignee, for the reason that they ought to be so distributed, and that a distribution such as ought to be made could not be made unless the assets were concentrated in the hands of the domiciliary assignee. We think, therefore, that the circuit court very properly declined to require any pledge to be given as to the method of distribution, as a condition precedent to the transmission of the Colorado assets to the New Hampshire assignee. The decree of the circuit court is therefore affirmed.