Opinion ID: 2054217
Heading Depth: 2
Heading Rank: 1

Heading: Full Faith and Credit: Clark v. Williard (I and II)

Text: We begin our analysis with two Supreme Court cases dealing with Article IV, § 1 of the Constitution: the Full Faith and Credit clause. In Clark v. Williard, 292 U.S. 112, 54 S.Ct. 615, 78 L.Ed. 1160 (1934) ( Clark I ), Williard, trustee of a syndicate, filed suit in a Montana court against Federal Surety, an Iowa insurance company, to recover damages due upon a bond. Shortly after Williard brought suit but before he had obtained a judgment, an Iowa court issued a decree of dissolution against Federal Surety, adjudging the Iowa Commissioner of Insurance, E.W. Clark, to be the successor to said company. Williard then obtained a judgment against Federal Surety in the Montana court and began efforts to satisfy the judgment by filling a petition for leave to execute against securities and moneys owned by Federal Surety, which had been discovered in Montana. Clark, the foreign liquidator, opposed Williard's petition, asserting his title as successor to the dissolved corporation. The Montana trial court agreed with Clark and ruled that Federal Surety's assets should be liquidated and ratably distributed subject only to liens existing at the date of dissolution in Iowa. Williard appealed, and the Montana Supreme Court reversed, ruling that Clark was not the successor to the corporate personality but was merely a chancery receiver with a title (if any) created by the Iowa decree. Id. at 117, 54 S.Ct. at 617. The court then held that, as against such a receiver, creditors in Montana were at liberty to levy attachments and executions, irrespective of their right to enforce such a levy against a statutory successor. Id. The United States Supreme Court reversed and remanded, holding that the Supreme Court of Montana denied full faith and credit to the statutes and judicial proceedings of Iowa in holding . . . that [Clark] was a receiver deriving title through a judicial proceeding, and not [a statutory successor]. Id. at 121, 54 S.Ct. at 619. The Court, however, remanded the case for the Supreme Court of Montana to determine whether Montana had a local policy whereby an insolvent foreign corporation in the hands of a liquidator with title must submit to the sacrifice of its assets or to their unequal distribution by writs of execution. Id. at 129, 54 S.Ct. at 622. According to the Supreme Court, if Montana had such a policy, then the Montana courts could allow Williard, the judgment creditor, to execute against the assets of Federal Surety. If, on the other hand, Montana law provided that a court-appointed Montana liquidator was entitled to priority over judgment creditors, then the Montana courts would be required to accord that same priority to Clark, the foreign liquidator, and thus could not allow Williard to execute against Federal Surety's assets. On remand, the Montana Supreme Court held that the local policy of Montana permitted attachments and executions against insolvent corporations, foreign and domestic, and that this rule prevailed against statutory successors clothed with title to the assets, just as much as it prevailed against corporations themselves or against chancery receivers. [25] Clark again appealed to the United States Supreme Court, which affirmed the Montana Supreme Court in Clark v. Williard, 294 U.S. 211, 55 S.Ct. 356, 79 L.Ed. 865 (1935) ( Clark II ). The Court held in Clark II that, although [e]very state has jurisdiction to determine for itself the liability of property within its territorial limits to seizure and sale under the process of its courts, id. at 213, 55 S.Ct. at 357, the Full Faith and Credit Clause establishes that: Iowa may say that one who is a liquidator with title, appointed by [Iowa] statutes, shall be so recognized in Montana with whatever rights and privileges accompany such recognition according to Montana law. For failure to give adherence to that principle were reversed and remanded when the case was last before us. Iowa may not say, however, that a liquidator with title who goes into Montana may set at naught Montana law as to the distribution of Montana assets, and carry over into another state the rule of distribution prescribed by the statutes of the domicile. Id. at 215, 55 S.Ct. at 358. Thus, under Clark I and Clark II, the District of Columbia must (1) recognize the status of a foreign receiver, as established by foreign law, and (2) accord that foreign receiver the same rights and privileges against judgment creditors, seeking to levy against assets in the District of Columbia, that the District would accord the same kind of receiver if appointed locally in the District of Columbia. We therefore must determine the rights, under District of Columbia law, to which a District of Columbia receiver of an insurance company is entitled vis-a-vis judgment creditors.