Case Name: BREDEWEG v. FIRST STATE BANK OF HOLLAND
Court: Michigan Supreme Court
Jurisdiction: Michigan
Decision Date: 1937-06-07
Citations: 280 Mich. 247
Docket Number: Docket No. 18, Docket No. 1, Calendar No. 38,907
Parties: BREDEWEG v. FIRST STATE BANK OF HOLLAND.
Judges: North, Bushnell, and Potter, JJ., concurred with Butzel, J. Fead, C. J., concurred in the result.
Reporter: Michigan Reports
Volume: 280
Pages: 247–257

Head Matter:
BREDEWEG v. FIRST STATE BANK OF HOLLAND.
1. Workmen’s Compensation — Nature op Relation Between Parties Under Act.
By virtue of being under the workmen’s compensation act, relation between banks, as employers, their employees and the State is a contractual one.
2. Banks and Banking — Receivers—Conservators—Appointment.
Receivers and conservators of banks do not, ipso facto, by their appointment become bound by, or entitled to the benefits of, all contracts made by the debtor.
3. Workmen’s Compensation' — Bank Receivers and Conservators —Adoption op Compensation Contracts.
Receivers and conservators of banks who fail to give notice of a contrary intention within a reasonable time after their appointment are deemed to have adopted the workmen’s compensation contracts of banks in charge of whose assets they have been placed.
A Same — Bank Receivers and Conservators — Adoption of Compensation Contracts.
Receiver of bank who paid renewal premium on workmen’s compensation insurance as to bank’s employees would not thereby bind officers in charge of two other banks as to compensation for injuries sustained by their coemployee, a watchman at factory on which the three banks jointly held a mortgage, yet by lapse of five or six weeks without voicing a contrary intention, conservators of latter banks are likewise deemed to have adopted workmen’s compensation contracts.
5. Same — Injury to Employee of Bank in Charge op Custodian— 'Return of Assets to Bank.
Property of three banks to which receiver and conservators returned assets upon their discharges as such officers helct, liable for workmen’s compensation to watchman employed by them to look after a furniture factory on which banks held a joint mortgage, since liability for torts of such custodians follows corpus into hands of new custodian.
Wiest, Sharpe, and Chandler, JJ., dissenting.
Appeal from Department of Labor and Industry.
Submitted June 10, 1936.
Reargued April 7, 1937.
(June Term, 1936,
Docket No. 18,
April Term, 1937,
Docket No. 1, Calendar No. 38,907.)
Decided June 7, 1937.
John Bredeweg presented Ms claim against First State Bank of Holland, Peoples State Bank and Holland City State Bank, employers, and Travelers Insurance Company, London Guarantee & Accident Co., Ltd., and Fidelity & Casualty Company of New York, insurers, for compensation for accidental injuries suffered in defendants’ employ. Award to plaintiff. Defendants appeal.
Affirmed.
J. Thomas Mahan, for plaintiff.
Alexander, McCaslin & Gholette, for defendants.

Opinion:
Butzel, J.
The three banks had all elected to come under the workmen's compensation act. (2 Comp. Laws 1929, § 8407-8485, as amended.) In January, 1932, a receiver was appointed by the circuit court for the county of Ottawa for the Peoples State Bank. The three banks held a joint mortgage on the property of the Ottawa Furniture Company. Plaintiff had previously been employed by the furniture company as a watchman, and as the banks needed someone to look after their security, plaintiff was employed by the three banks, the Peoples State Bank at the time being in the hands of a receiver. About 60' days later conservators were appointed by the State banking commissioner for the First State Bank and the Holland City State Bank. Plaintiff's employment was continued. While the opinion of the department states that the conservators were appointed in February, 1933, the record indicates that they were appointed in the early part of March.
The accident occurred on April 15, 1933, apparently five or six weeks after the conservators had been appointed. The accident happened out of and in the course of the plaintiff's employment. When the receiver and conservators were appointed to take over the affairs of the respective banks, no steps were taken to file a formal election to come under the workmen's compensation act. However, the receiver of the Peoples State Bank paid for renewal of the workmen's compensation insurance and apparently considered himself under the act.
Prior to the appointment of the receiver and conservators, the relation created between the banks, their employees and the State, by virtue of being under the workmen's compensation act, was a contractual one. It is true that the receiver and conservators did not, ipso facto, by their appointment become bound by, or entitled to the benefits of, all contracts made by the debtor. However, when a receiver or conservators take over the management of banks, retaining employees of the debtor banks to aid them in the proper performance of their duties, and fail, within a reasonable time after their appointment, to give notice of a contrary intention, they are deemed to have adopted the workmen's compensation contracts of the debtor banks. The situation is analogous to a receiver's adoption of a lease or other contract of the debtor, the benefits of which he accepts in administering his trust. While the payment of the insurance premium by the receiver Jalving', manifesting an affirmative adoption of the workmen's compensation contract, would not bind the officers in charge of the First State Bank and the Holland City State Bank, the conservators of the latter banks, after the lapse of some five or six weeks, without voicing a contrary intent, are likewise deemed to have adopted the workmen's compensation contracts.
In Link Belt Machinery Co. v. Hughes, 174 Ill. 155 (51 N. E. 179), the court stated:
"No express declaration by the receiver to the landlord of his intention or election to abide by or carry out the terms of the lease or contract of his insolvent is necessary. It may be done by acts, by continuing in possession of the premises and for a time paying the rent provided for in the lease, # or by a failure to make other and different arrangements with the landlord on the question of amount or terms of the lease."
Again in London v. Public Utilities Commission of Kansas, 245 Fed. 950:
"There never has been any formal adoption by the receiver of these supply contracts. In such case it is not the law that a contract shall be binding upon the receiver until it is disavowed by him, but the law is that it is not binding upon the receiver until it is accepted by him; and ordinarily the law requires the receiver to indicate within a reasonable time whether or not he will accept a contract. ' ',
It is entirely within the spirit of the act that such receiver and conservators remained liable under the act until they withdrew as they had a right to do under 2 Comp. Laws 1929, § 8412. Undoubtedly, the employees had a right to believe that they were being protected under the act and the liability was thus created.
Inasmuch as the accident occurred while the banks were in the hands of a receiver and conservators, the further .question arises whether the banks after the return of the corpus or assets, remained liable for an unpaid claim which arose during the receivership.
In Bartlett v. Cicero Light, Heat & Power Co., 177 Ill. 68 (52 N. E. 339, 42 L. R. A. 715, 69 Am. St. Rep. 206), the court said:
"The main question, presented by the demurrer to the amended declaration in the present case, is this: Where a corporation has been placed in the. hands of a receiver, and an injury or death has been caused by the negligence of the receiver while he is operating the property of the corporation; and where, by stipulation between the parties, the receiver is discharged, and the property is restored to the possession of the corporation, can the corporation itself be held liable for damages for the injury so received during the receivership?
"The receivers in such cases are not personally liable upon their discharge for claims of this character, but the claims follow the property or fund which alone can be used to satisfy them. Not merely claims' arising out of contract, but claims for torts, arising through the negligence of the receivers or their subordinates, thus follow the property or fund.
"In the case at bar, if the plaintiff has no remedy for the death of Ms intestate against the company, then he has no remedy at all, inasmuch as the receiver, during whose administration the death occurred, has been discharged from his office, and cannot be held personally liable."
In that case the court further quoted as follows from 5 Thompson's Commentaries on the Law of Corporations, § 7151:
"The receiver becomes the new custodian of a property which was before, in a sense, a trust prop erty in the hands of the corporation. In the management of this trust property negligences are committed by his servants, for which, under the settled principles of law, the receiver is liable, — not personally, except where he has been guilty of personal fault,- — but out of the trust funds in his hands. The liability is then essentially a liability of the fund, and not of the custodian. When, therefore, the fund is transferred to a new trustee, whether it be to a new and reorganized corporation created by -the purchasers at a mortgage sale, or whether it be the original corporation, its former owner, to whom, it is redelivered under a new management, it is the case of a trust property, to which a liability has attached, passing into the hands of a new trustee. The trust property continues liable; but from the very nature of the case, any action brought to charge it must, if the receiver has been discharged prior to the bringing of the action, be brought against the corporation which is its custodian,— that is to say, against the new trustee."
The rule is recognized in an annotation in L. R. A. 1918F, p. 320, as follows:
"As a general rule, a corporation, while its property is in the hands of a receiver, has no control over either the receiver or his servants, and therefore, in the absence of any liability imposed by statute, or of an agreement to assume liability, is not personally responsible for the negligence or wilful torts of the employees of the receiver; although, as will presently be explained, its property may be chargeable with the amount of the damages thereby occasioned."
Also, see, Ryan v. Hays, (1884) 62 Tex. 42.
The award is affirmed, with costs to appellee.
North, Bushnell, and Potter, JJ., concurred with Butzel, J. Fead, C. J., concurred in the result.