87 A. 410 | Md. | 1913
On the 13th January, 1911, the United Surety Company was placed in the hands of receivers. The bill filed in the case was by some of the stockholders and directors of the company, and among other things alleged that through mismanagement and wastefulness in the conduct of its affairs, the surplus of $250,000 had been altogether wiped out, and its capital stock had been impaired, but nevertheless the said company was solvent, but had been prohibited by an order of the State Insurance Commissioner from writing any further bonds of any nature or description until the impairment of its capital stock had been made good. The prayer of the bill was, first, that receivers might be appointed; second, for an injunction requiring the officers, agents and employees of the company to deliver to receivers the books, papers and accounts, and all the property of the company, and to refrain from interfering in any manner with the possession of the property by the receivers; and, third, that a day should be fixed before which all claims of every description should be filed in Court, or be forever barred from participation in the assets *350 of the corporation. The allegations of the bill were admitted by the company by its answer.
In May, 1906, the company had deposited with the Treasurer of Maryland, $100,000, of the registered stock of the City of Baltimore, par value, in order to comply with the provisions of the Act of 1896, Chapter 160. (Code 1912, Art. 23, § 110.) At the same time it had deposited with the Treasurer of the State of Maryland an additional $100,000.00 par value, of the registered stock of the City of Baltimore, in order to meet the legal requirements imposed by the laws of some of the other States in which the company wished to do business. On the 27th July, 1911, the receivers filed a petition, the object of which was to require the State Treasurer to deliver over to them the $200,000 par value, of Baltimore City stock, and by its order of July 28th, 1911, the Circuit Court of Baltimore City ordered such transfer from the State Treasurer to the receivers. Thereafter, and before the decree had become enrolled, the State Treasurer filed a petition to re-open the order of July 28th, in order that he and his bond might be heard thereon, and present objections thereto. These objections came on to be heard later, and after such hearing, on March 16th, 1912, the Court re-affirmed its order of July 28th, 1911, and directed the securities in the hands of the State Treasurer to be by him delivered over to the receivers of the company, and it is from these two orders or decrees that the present appeal has been taken.
The question presented is a narrow one, and one for which no precise precedent has been cited or found. While there are a number of cases in which receivers of insolvent corporations, or corporations which have been dissolved, or the charters of which have been declared forfeited, have sought to recover from an official depository securities placed in his hands for the security of those doing business with the company, in order that the proceeds of such securities might be distributed among claimants according to their respective legal rights, no case has been found of a like application to *351 gain possession of the securities of a solvent company. The solvency of the company in question is not merely alleged in the bill, but has been re-iterated time and again by these receivers in various papers filed by them, and was distinctly testified to on the stand by one of the receivers, and it is alleged to have been the reason for the dismissal of an action instituted by certain of the stockholders of the company for the dissolution of the company. One of the receivers testifies in these words: "We are endeavoring to work out a practical liquidation that will result in a benefit to those who own the property, that is, those who own its bonds, policies and stock."
In the case of the American Casualty Co. case,
The leading case on this subject is Cooke et al., Receivers,
v. Warner, Treasurer,
The case of the Attorney General v. North Am. Life Ins.Co.,
In Falkenbach v. Patterson,
An Ohio Statute read, "The securities deposited with the Insurance Department pursuant to this section, shall be held by the Superintendent in trust for the benefit of, and as security for, the policyholders of such corporation, their legal representatives and beneficiaries," and in the State v.Matthews,
Much stress was laid in argument upon the complication and increased expense which would ensue from a distribution of the fund arising from the proceeds of sale of the securities in the hands of the State Treasurer, if that were required to be done in a separate and independent proceeding. Upon the case as presented in the record there is no case of distribution before this Court, or even evidence that this fund, or any of it, will be required by the receivers for the liquidation of valid claims. From their report they apparently hold assets of the corporation to an amount somewhere between four and five hundred thousand dollars not impressed with any trust, and if the company is, as they aver *357 and testify, solvent, it may well be that no part of the $200,000 will be required for the payment of any claims of policy holders. Apparently some such belief was in the mind of the Court below, as it passed no decree dissolving the corporation, but in fact dismissed a bill having that ultimate object in view.
The State Treasurer is now a party to the present proceeding; by his answer the disposition of the securities or the proceeds arising from them is under the control of the Equity Court in which these receivers were appointed, and while we do not decide that under a different condition of facts it might not be right and appropriate to direct the turning over of the proceeds of the sale of the securities to the receivers to distribute, or that the State Treasurer might not make a distribution of them in the same proceeding, we can find no sufficient warrant in the statute, or in the condition of the company as it now exists, to justify the turning over at this time to the receivers of a solvent corporation, securities which have been placed in the hands of a trustee for a specific trust purpose, and with beneficiaries scattered in a large number of States.
The decree of July 28th, 1911, and March 16th, 1912, must therefore be reversed.
Decrees of July 28th, 1911, and March 16th, 1912, reversed,and cause remanded; the appellees to pay the costs of thisappeal. *358