90 Neb. 664 | Neb. | 1912
Lead Opinion
The attorney general for the auditor of public accounts filed a petition in the district court under the provisions of section 28, ch. 43, Comp. St. 1911, setting forth facts tending to show that the defendant, which is a fire insurance company, is insolvent, and unable to meet its obligations or to continue in a solvent manner to transact the business for which it was organized. The prayer ivas that “upon a hearing of this petition said company be dissolved and a receiver appointed to wind up its affairs and to make distribution of its assets as provided by law, under the direction of this court; and for such other and further relief as the court may deem just and equitable.” A rule to show cause on the 23d day of January was duly served upon the defendant, and on that day the parties appeared and stipulated that all informalities and irregularities in the service and notice were waived, a general
On February 2 a motion for a new trial was filed by respondent, and also a motion by the relator for a nuno pro tunc judgment ordering the dissolution of the corporation. The motion for a new trial was overruled, the motion for a decree nunc pro tunc sustained, and a decree entered, as of date January 30, dissolving the corporation.
A number of errors were assigned in the motion for a new trial and are presented on appeal, but the argument is practically confined to the question whether the district court had power to appoint a receiver in a case where the action is brought by the attorney general, under section 28, ch. 43, Comp. St. 1911, acting for the auditor of public accounts, for the purpose of dissolving the corporation and distributing its effects. The respond
On the other hand, it is contended by the attorney general that the district court of this state, being a court of chancery as' well as of common law jurisdiction, has inherent power to appoint a receiver. It is also argued
There is much force in the respondent’s contention that unless there is a statute permitting the law officer of the state to apply for the dissolution of a corporation on the ground of its insolvency, and for the distribution of its effects and the appointment of a receiver, a court of equity has no such powers.
An examination of the reports of other states shows that, in nearly every instance where the statute provides that an officer of the state may apply to the courts to dissolve a corporation, the right to appoint a receiver is directly conferred in the same statute. Basing in' large part their decisions upon- this fact, some courts have held that, unless the statute conferring the power upon the court to entertain such an action expressly provides that a receiver may be appointed to distribute the assets of the dissolved corporation, the power to appoint does not exist. Perhaps the most exhaustive discussion of this question is to be found in the cases of Havemeyer v. Superior Court, 84 Cal. 327; Harrison v. Hebbard, 101 Cal. 152; State Investment & Ins. Co. v. Superior Court, 101 Cal. 135. Other cases are collected in notes to sections 288, 289, High, Receivers (4th ed).
The laws of this state governing the A-arious classes of insurance companies haAe been passed at different times, and' to some extent consist of amendments to former statutes. Some of them appear to be very loosely draAvn, but all of them recognize the necessity of supervision by an officer of the state, and authorize the closing of the business and Avinding up of their affairs Avhen it is against the public interest that the corporation should be allowed to continue. The statute under which this proceeding Avas brought has been in force since 1873. Following the enactment of this statute, which is general in its terms, a number of acts of the legislature providing for the incorporation and management of insurance corporations deA'oted to certain special lines of that 'business have been passed. Some of these laAAs are exceedingly minute and specific in their provisions with reference to the poAvers of the court upon an application by the attorney general at the request of the auditor of this nature, while others are general in their terms, apparently implying that, the poAver to close up the affairs being given to the court, the necessary poAvers to appoint instruments to do so Avere already possessed. Section 6562, Ann. St. 1911, relating to City Mutual Insurance Companies, provides: “If upon such examination it shall appear to the auditor that the condition of such company does not justify its continuance in business he may apply to the district court * * * for an order requiring the company to show cause why it should not be closed.” Section 6586, relating to Mutual Hog Insurance, uses identically the same language as in the last section quoted. Section 6634, relating to Mutual Plate Glass Insurance Companies, uses the same language. Section 6691, relating to
The precise language of the section in question in this case is that the “court or judge shall decree a dissolution of said company, and a distribution of its effects.” Comp. St. 1911, ch. 43, sec. 28. It is our opinion that, until the judgment of dissolution and the decree of distribution is entered, the court acts under the special powers conferred upon it by the statute, and, unless it had been so enacted, jurisdiction to act on the application of the attorney general would, not exist; but we are also of the opinion that, having dissolved the corporation and being charged with the winding up of its affairs, the court may properly,
The supreme court of California has taken a different view, saying: “The jurisdiction of the superior court to decree a dissolution of any corporation exists only by virtue of statutory authority. It does not possess this authority by virtue of its inherent general jurisdiction in equity * * * And, as its jurisdiction is derived from the statute, it is limited by the provisions of the statute, both as to the conditions under which it may be invoked and the extent of the judgment which it may malte in the exercise of this jurisdiction.” State Investment & Ins. Co. v. Superior Court, 101 Cal. 135, 146. So far we agree, but we cannot agree that, after a decree of dissolution has been made and the court is winding up the affairs of the corporation, it may not, if in its discretion it appears necessary, call a receiver to its assistance, not as a part
In construing' a similar provision as to appointment of a receiver by competent authority, the supreme court of Alabama said: “The manifest general purpose of the legislature was to commit the affairs and properties of a corporation so dissolved to the persons who were its managers at the time of the dissolution; but the lawmakers recognized that there might be special circumstances or peculiar exigencies in a given case which would breed a necessity to take the corporate affairs and property out of the hands of such managers, and, to exclude any idea that the statutory designation of trustees should have the effect of ousting the ordinary jurisdiction of courts of chancery to appoint receivers upon such circumstances or exigencies being made to appear, they expressly saved this jurisdiction, though doubtless such reservation avus in fact unnecessary. But, whether necessary to that end or not, the provision in the statute having relation to the appointment of receivers by courts of competent jurisdiction Avas in pure conservation of an existing jurisdiction, and in no sense creative of a neAV power and jurisdiction. It does not undertake to confer authority upon any court which it had not before, but it refers to courts already invested Avith ‘competent authority! The rule declared by the statute is that the managers of the corporation at the
The appointment is discretionary, and, unless an abuse of discretion has been shown, a reviewing court will not interfere. We may incidentally remark that this court has uniformly discountenanced the practice of taking property from its owners by the hands of a receiver against their consent except upon the clearest grounds. Miller v. Kitchen, 73 Neb. 711; Ponca Mill Co. v. Mikesell, 55 Neb. 98; Smiley v. Sioux Beet Syrup Co., 71 Neb. 586; Vila v. Grand Island E. L., I. & C. S. Co., 68 Neb. 222. It would seem that the respondent was of the opinion that the district court had power to appoint a receiver, for the record recites that it suggested a person to act in that capacity, who was denied appointment. The record also recites that it was agreed that the day to which the case is continued “would be the day upon which the order dissolving said company might be made and a receiver- appointed.” It was not until this day to which the agreement referred that respondent asked leave to file a showing next day why a receiver should not be appointed. Obviously no reason being apparent for this delay, the court did not err in refusing further time.
Objection is made here that Mr. Knapp is a relative of the judge who made the appointment. No objection was made to his appointment at the time for that reason, and no showing has been made that he is incompetent or untrustworthy, or even to prove the allegation that he is a relative of the judge, except a mere affidavit that the affiant is informed and believes that the receiver is a relative. This is insufficient, and under these circumstances we cannot consider these objections.
For these reasons, the judgment of the district court must be
Affirmed.
Dissenting Opinion
dissenting.
Upon the question of the power of the district court to appoint a x*eceiver in a case like this, I think the law is correctly stated in the California cases cited in the majority opinion. The fact that the legislature, in the several instances set out in the opinion, added to the provisions cited express authorization for. the appointment of a receiver strengthens, rather than Aveakens, the contention that it did not intend to grant such authority in the statute under consideration. The legislature said that in a case like this the “court or judge shall decree a dissolution of said company and a distribution of its effects.” There the legislature saw fit to stop, and there the court should stop. Where, upon examination of an insurance company, the auditor finds that its capital is impaired more than 20 per cent., the district court, in a proceeding instituted by the attorney general, may say to the company that the state xvill no longer sanction its continuing business as a going concern, and that it must immediately cease doing business as aix insurance company and distribute its effects among those entitled thereto. Having doxxe that, the law department of the state has performed its full duty, and the court has gone as far as authorized to go by the statute. It then becomes the duty of the directors of the insurance company to close the doors to general bxxsixxess and to immediately proceed to collect and distribute the assets of the company as ordered by the court. This in my judgment is a wise provision. A receiver is the most expensive luxixry kxxown to the law. The directors of the coxnpany, if they are honest, and they must be presumed to be so until the contrary is shown, can collect and distribute the assets of the company with far less expense than can be or ever is done by a receiver. Many corporations, the affairs of which have been administered by honest officials, have proved unsuccessful as business enterprises. Even if this lack of success be attributable to a want of capacity by the officers and direc
Since writing the foregoing, there has been added to the majority opinion a quotation from the opinion in Weatherly v. Capital City Water Co., 115 Ala. 156. An examination of that opinion shows that, if it is to be followed as an authority by us, the judgment in this case must be reversed. The two sections of the syllabus applicable to the point under consideration read:
“(2) Under the provisions oí the statute (Code of 1886, sec. 1691), after the dissolution of a corporation by its charter being adjudged forfeited, a receiver is not appointed as a matter of course; but the business and properties of the corporation so dissolved are committed to the persons who were its managers at the time of its dissolution, and they become entitled to the right, and are charged with the duties, of administering and settling its affairs.
“(3) The provisions of the statute (Code of 1886, sec. 1691), committing the estate of a corporation dissolved by forfeiture of its charter to those who were its managers at the time of its dissolution as trustees for its creditors and stockholders, do not oust the ordinary jurisdiction of courts of chancery to appoint receivers under the circumstances and exigencies which demand such appointment; but, in order to justify the appoint*676 ment of a receiver of a corporation so dissolved, there must appear such facts as, under the general principles of equity jurisprudence, call the power into exercise; such as incompetency or unfaithfulness or mismanagement on the part of trustees or the absence of authority on their part to subserve some peculiar interest of the party complaining, by reason of which he is injured.”
None of the reasons there assigned as being sufficient to justify the exercise by the court of its general chancery powers is alleged in the case at bar. Such being the fact, then, under the law as announced by the Alabama court, the managers of this company, at the time its dissolution was ordered by the court, became “entitled to the right” of administering and settling the affairs of the the company, and, nothing having been alleged to justify a refusal to grant them that right, the appointment of a receiver was unwarranted.- The reasoning and holding of the Alabama court are in entire harmony with the views I have tried to express.
