# Reynolds v. Stockton

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United States Supreme Court
140 U.S. 254
Reynolds v. Stockton
The first paragraph of the complaint discloses the purposes and object of the suit. It is as follows: '(1) That the plaintiffs, the policy-holders hereinafter name, sue and bring this action on behalf of themselves and all others who are policy-holders in the Hope Mutual Life Insurance Company of New York, as well as all who are interested in the trust fund hereinafter mentioned, and who shall in due time elect to come in and seek relief by contributing to the expenses of this action.' It is true that the second paragraph in the complaint, which is as follows: 'That the plaintiff, the stockholder hereinafter named, sues and brings this action in behalf f h imself and all others who are stockholders in the said the Hope Mutual Life Insurance Company of New York, as well as in behalf of all who are interested in the assets of the said company or the trust fund hereinafter mentioned, and who shall elect to come in and seek relief by contributing to the expenses of this action,' suggests a broader field of inquiry and a larger demand; but the intimation therein contained of a proceeding in behalf of all interested in the assets of the New York company (and it is only an intimation) is so clearly limited by the subsequent wording of the complaint that a general reading of the whole complaint makes manifest the fact that the scope and object of the suit was to reach and appropriate this fund deposited with the superintendent of the insurance department of the state of New York. After this, we find in paragraphs 13 and 14 these allegations, the intermediate paragraphs simply disclosing the respective interests of various plaintiffs: '(13) These plaintiffs, on information and belief, further show that when the said the Hope Mutual Life Insurance Company of New York commenced business as such it deposited with the superintendent of the insurance department of this state, as provided by the provisions of the act under which it was organized, one hundred thousand dollars in certain securities belonging to said company, as a fund for the protection of its policy-holders, said securities comprising, as the plaintiffs are informed and believe, United States bonds, bonds and mortgages, and cash, being of the value of one hundred thousand dollars. (14) That the defendant John F. Smyth is the superintendent of the insurance department of the state of New York, and as such has the sole control and custody of the said securities and fund, and now has and holds the same and every part thereof as a fund for the protection and security of the policy-holders in the said the Hope Mutual Life Insurance Company of New York, with the increase and accumulations thereof and interest thereon which has been collected by the superintendent of the insurance department, and that the said fund, together with the increase, interest, and accumulations thereof, belong to the plaintiffs, the policy-holders, to the extent of the value of their respective policies, issued by the said insurance company as aforesaid.' Paragraph 15 alleges the contract of reinsurance. Paragraph 16 is as follows: 'These plaintiffs further aver, on information and belief, that the said insurance companies had no power or authority to enter into said contract; that the said contract is, and at the date thereof was, wholly null and void, but that if valid it conveyed and transferred to the defendant the New Jersey Mutual Life Insurance Company no interest whatever in the fund and securities on deposit as aforesaid, nor in any of the assets or property of the said company, except such as may remain after all the claims of the policy-holders in the said the Hope Mutual Life Insurance Company of New York are satisfied and discharged;' and contains the averment that the contract of reinsurance gave to the New Jersey company no interest whatever in the funds deposited with the insurance commissioner. Paragraphs 17 and 18 are in respect to the cessation of business by the New York company, and the assumption of its business by the New Jersey company. Paragraph 19 is in these words: 'The plaintiffs, the policy-holders, therefore claim and allege that they are entitled to receive the amount due on their respective policies of insurance issued to them by the said the Hope Mutual Life Insurance Company, out of the fund and securities in the hands of the defendant, the superintendent of the insurance department of the state of New York, and should be paid out of the said fund the value of their said respective policies, and that the respective amounts due to them on their said policies of insurance so issued as aforesaid are a lien on the fund and securities and on all the interest and accumulations thereof in the handsof the said superintendent of the insurance department to the extent of the value of each of their said policies, as the same shall be ascertained and determined by this court;' and discloses the contention of the policy-holders, and their claims upon simply the fund deposited with the insurance commissioner. Paragraphs 20 and 21 aver the appointment of the receiver by the court of chancery of New Jersey, and the lack of power in any one to collect the interest on the securities deposited with the insurance department since December 31, 1872. Paragraphs 22 and 23 set forth the interest of Traver, the lastnamed plaintiff, as stockholder in the New York company. Paragraph 24 alleges, in behalf of said last-named plaintiff, the invalidity of the reinsurance arrangement between the two insurance companies; the title of the plaintiff to his interest as stockholder in the New York company; and closes with the averment that he is 'rightfully entitled to be paid therefor, as such owner and holder of said stock, his distributive share out of any surplus which may remain of the said trust fund, and the accumulations thereof in the hands of the superintendent of the insurance department, after paying the policy-holders aforesaid in the said company.' Paragraphs 25, 26, and 27 are in respect to some other proceedings, which do not affect the question in controversy here. Paragraph 28 contains allegations in respect to the amount of the actual fund in the hands of the superintendent of insurance. And upon these various averments the complaint concludes with this prayer: 'Wherefore these plaintiffs demand judgment that the defendant John F. Smyth, the superintendent of the insurance department of the state of New York, be adjudged to account for all sums of money, bonds and securities which were deposited in his hands by the defendant the Hope Mutual Life Insurance Company of New York, and for all the interest, increase, and accumulations of the said fund, and every part thereof; that the said securities be ordered to be sold by order of this court; that the proceeds thereof be distributed among the plaintiffs and other policy-holders of the said the Hope Mutual Life Insurance Company in the proportion in which they are entitled to the same; that the said the Hope Mutual Life Insurance Company of New York may be dissolved and adjudged by this honorable court to have surrendered and abandoned all its rights, privileges, and franchises as an incorporate life insurance company, and that, after the payment of the policy-holders and creditors of the said company, any surplus that may be left of the said trust fund and accumulations thereof may be distributed among the stockholders of the said company, and that the plaintiffs may have such other, further, or different order or relief in the premises as may be just and equitable; and that the defendant John F. Smyth, the superintendent of the insurance department, his officers, servants, agents, and attorneys, and all other persons acting for or under him, be enjoined from converting the said securities, or paying or distributing or parting with the same, or any part thereof, except under and pursuant to an order or decree to be entered in this action.'
While the New York company was made party defendant, it does not appear that it was served with process; and it made no appearance and filed no answer. The only answers filed were that of the superintendent of the insurance department and the joint answer of Parker, as receiver, and of the New Jersey company. The last answer, containing many denials and some admissions, did not assume to put in issue the question of the indebtedness of the New Jersey company to any of the plaintiffs; but, accepting the obvious purpose of the complaint, it met its allegations with an assertion of right in the New Jersey company to the fund in the hands of the superintendent of the insurance department. The answer of the superintendent of the insurance department, admitting the receipt of the fund, put in issue several of the allegations of the complaint; and rested his denial of plaintiffs' right on the existence and validity of the proceedings referred to in paragraphs 25, 26, and 27 of the complaint. Upon these pleadings the case proceeded to trial. The preliminary order was one of reference, on January 15, 1880, to James W. Husted. After some interlocutory proceedings, a final report was made by the referee on February 24, 1885, and thereafter, on March 13, 1885, a decree was entered, which decree confirmed the report of the referee, and made final disposition of the funds in the hands of the superintendent of the insurance department in partial payment of the various claims presented. It also, in paragraph 8, contained this reservation: 'And it is further ordered that either party to this action, or any person interested in the subject-matter thereof, have liberty to apply for further directions on the foot of this decree, and the question of the indebtedness of Joel Parker, as receiver of the New Jersey Mutual Life Insurance Company, and the former superintendent, John F. Smyth, and William McDermott, and Messrs. Harris and Rudd, reported by referee Samuel Prentiss, be reserved.' Thereafter, and on October 11, 1886, as heretofore noticed, and apparently on the reservation in paragraph 8, as above quoted, and on notice to the attorney who had represented Parker, the receiver, and the New Jersey company, the judgment was entered in favor of the plaintiffs for one million and odd dollars, as heretofore stated. The court of chancery of New Jersey, when this judgment was presented, declined to recognize this as an adjudication against the existing receiver or the assets of the insurance company in his hands. On appeal to the court of errors and appeals of that state, this decision of the chancery court was affirmed, and the case remanded to that court for further proceedings. The opinion of the court of errors and appeals will be found in 43 N. J. Eq. 211, 10 Atl. Rep. 385.
A. Q. Keasbey and R. J. Moses, Jr., for plaintiffs in error.
[Argument of Counsel from page 262-263 intentionally omitted]
F. W. Stevens, for defendant in error.
BREWER, J.

## Notes

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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