Case Name: Walker v. McMillen
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1933-06-12
Citations: 187 Ark. 586
Docket Number: 4-3109
Parties: Walker v. McMillen.
Judges: 
Reporter: Arkansas Reports
Volume: 187
Pages: 586–594

Head Matter:
Walker v. McMillen.
4-3109
Opinion delivered June 12, 1933.
Rouse & Moses and W. H. Holmes, for appellant.
Geo. A. McConnell and Shields M. Goodwin, for appellee.

Opinion:
Kirby, J.
The question involved in this appeal is whether the circuit court'at the suit of the Attorney General under the direction of the Commissioner of Insurance has the exclusive right or jurisdiction to appoiut a receiver for an insolvent insurance company.
Appellant was appointed receiver for the Southern Surety Company of New York by the Pulaski Circuit Court on the 7th day of June, 1932, on the application of the Attorney General under the direction of the Commissioner of Insurance of the State, the corporation being insolvent.
Appellee had previously been appointed receiver for the company by the chancery c ourt of Pulaski County on March 25, 1932, on the petition of a general creditor of the Southern Surety Company. The company was insolvent, and the question to be determined is which of the two receivers should be recognized for liquidating its assets.
Appellant, after being appointed receiver and proceeding with the duties, was enjoined by the Pulaski Chancery court from continuing to act as such, and he then filed a petition asking that the chancery court dis solve the injunction, to which appellee filed a reply and appellant demurred thereto. The chancery court overruled the demurrer*, and this appeal was taken from such order.
In Franklin v. Mann, 185 Ark. 993, 50 S. W. (2d) 606, this court held that a proceeding to dissolve an insolvent insurance company should be brought in the circuit court by the Attorney General under direction of the Insurance Commissioner under the statute providing therefor, § 5951, subdivision 8, Crawford & Moses' Digest, holding such proceeding an exclusive remedy, and that no creditor or policyholder was authorized to bring suit anywhere in the State for the purpose of taking charge of an insolvent insurance company. It was further said there:
"It was manifestly the intention of the Legislature, in creating the office of Commissioner of Insurance and prescribing his duties, to protect all the policyholders and persons interested in an insurance company, and for this reason provided a State officer whose duty it is to supervise all insurance companies in this State, and to see that all laws are faithfully executed, to the end that every one interested in an insurance company may have protection.
"It was evidently thought that this would be a greater protection to the policyholders and interested persons than to permit any creditor or policyholder to bring suit anywhere in the State for the purpose of taking charge and management of an insolvent insurance company.
"This is a special proceeding provided for by statute for the purpose, among other things, as we have said, of protecting the interests of policyholders and the property of the company."
It is insisted for appellee that under the statute, which was adopted from the State of New York, that it should not exclude the rights of a creditor to have a receiver appointed by the chancery court, which, having acquired jurisdiction by such proceedings, would have the right to continue to administer the affairs of the corporation for the purposes for which the suit was brought.
His chief insistence, however, is that the statute has no relation to anything but life and fire insurance companies, and does not affect the jurisdiction of the chancery court to appoint a receiver for winding up the affairs of an insolvent casualty and surety company organized under the laws of the State of New York, and duly authorized to do business in the State of Arkansas.
In adopting this statute, it was made general, its provisions applying to "any insurance company of this State, etc.," and has been construed to include all insurance companies authorized to do business in the State. Franklin v. Mann, supra.
Appellee insists, however, that the Southern Surety Company of New York was not an insurance company within the meaning of this statute, but sets up in his written petition for appointment as receiver upon which the chancery court acted that the Southern Surety Company of New York is a casualty and surety company organized and doing business under the laws of the State of New York and duly authorized to do business under the laws of the State of Arkansas, etc., and that it had filed a bond with the Insurance. Commissioner and otherwise complied with the laws of this State with reference to casualty and surety companies. It was doing both a casualty insurance business and a surety bond business, and comes within the regulatory power of the State, under the terms of the statute providing that "when any insurance company of the State is insolvent, etc."
It is argued that the statute applies only to life and health insurance companies, since such was the case in the State of New York, from which it was adopted and where it had received such construction in the courts of that State, but such construction had not been given to said act before its adoption here., and our statute is broader and more comprehensive than that of New York relating to any insurance company, as already said; and the fact that it was copied exactly from the New York statute, so far as providing for determination of the question of insolvency of the insurance company by the Supreme Court, or a judge of the Supreme Court, was evidently inserted inadvertently and has no effect to confer jurisdiction on our Supreme Court for that purpose. Where, a court exercising a general jurisdiction under the Constitution has been given special statutory jurisdiction in certain matters and the manner in which such jurisdiction is to be exercised is pointed out in the statute, the record of such court must show the. jurisdictional facts, the statute in such cases must be strictly pursued, and the. jurisdiction must be made to appear in the manner pointed out in the statute. Wallace v. Hill, 135 Ark. 353, 205 S. W. 699; Freeman on Judgments, § 119.
The chancellor erred in holding that the Pulaski Chancery Court had jurisdiction to appoint a receiver herein, and the cause will be reversed and remanded with directions to sustain the demurrer to the response of appellee, dissolve the injunction against appellant receiver and leave him to proceed with the winding up of the affairs of the insolvent insurance company without any interference from the receiver wrongfully appointed by the chancery court who should be directed to make immediate final settlement of the receivership and turn the assets over to the appellant receiver. It is so ordered.