Opinion ID: 2018775
Heading Depth: 1
Heading Rank: 6

Heading: Dalhar Corporation Loan

Text: Sierra listed as an asset on its 1975 annual statement a collateral loan (which the parties refer to as the Dalhar Corporation Loan) at a value of $413,959. The background leading to Sierra's acquisition of this loan is informative although not dispositive of this issue. As part of the Stipulation and Order entered between Sierra and the Idaho Insurance Commissioner on August 17, 1973, Sierra agreed to dispose of its Greater Idaho Corporation Stock. Sierra's attorney, A. Bob Jordan, testified that five individuals contracted with Sierra to buy the Greater Idaho Corporation Stock and that subsequent to such transaction the five incorporated their joint venture in Dalhar Corporation. Thereafter, the 44,313,162 shares of Greater Idaho Corporation stock held by Dalhar Corporation were used to secure a collateral loan (i.e. the Dalhar Corporation loan) payable by Dalhar Corporation to Sierra. During June of 1976, approximately one week prior to the hearing in the instant case, Sierra received payment in full on the Dalhar Corporation Loan. Sierra didn't receive cash, however. In payment of the loan Sierra received the following, according to testimony of Sierra's president, Fred Frazier: 70 acres of property in Twin Falls, Idaho that joins the campus of the college in southern Idaho, 20 acres of property south of Twin Falls, two apartment houses, and a 1/3 interest in 320 acres of agricultural land. The commissioner concluded that the 70 acre tract of property, the 20 acre tract of property, and the 320 acres of agricultural land were unimproved real estate assets not secure or well invested, and he nonadmitted those assets. The commissioner also concluded, however, that the two apartment houses were admissible assets. The commissioner did not make any finding as to the value of the nonadmitted real estate properties or of the two apartment houses. No appraisals were introduced with regard to any of these properties. The only evidence as to the value of these properties was the testimony of Sierra's president, Fred Frazier. He testified that, these properties are worth a whale of a lot more than the collateral loan and that he had just sold land for $11,000 an acre which is not as good a ground as either of the 70 or 20 acre tracts. Frazier further testified that there was approximately $300,000 owed against the properties received in payment of the Dalhar Corporation Loan, and that . . . the one piece of property, the 70 acres at $10,000 an acre would be $700,000 which would practically equal what was owed against everything and what was owed us, too. No other evidence was introduced as to the value of these properties. Consequently, there is no basis upon which this Court can ascertain the dollar amount which the commissioner could nonadmit assuming, arguendo, that the commissioner had sufficient basis to nonadmit the 70 acre tract, the 20 acre tract, and the 1/3 interest in the agricultural land. We shall consider, therefore, the $413,959 collateral loan asset on Sierra's 1975 annual statement as an admissible asset in our determination of whether the commissioner was authorized to suspend Sierra's Certificate of Authority.