Court Opinion

ID: 5508802
Source: CourtListenerOpinion
Date Created: 2022-01-10 03:27:32.943249+00
Date Added: 2024-06-11T08:34:06.924474
License: Public Domain

O’BRIEN, J.
In the year 1874, J. Young Scammon, petitioner’s testator, held two matured policies issued at Chicago, 111., by the Adriatic Fire Insurance Company, a New York corporation. In July, 1875, the insured property having been destroyed by fire, actions were brought against the company on each policy within the time required by their terms. The company was duly served with process of the court of general jurisdiction of the state of Illinois,, and appeared and defended each action. Suits were also brought by Scammon against a number of other insurance companies upon other policies issued upon the same property. While these actions-were pending, stipulations were entered into by which in effect it was provided that all the suits should abide the event of Scammon’s suit against the Commercial Union Assurance Company. In 1879 an action for the dissolution of the Adriatic Fire Insurance Company was begun in the supreme court of this state, and thereafter one-William A. Seaver, president of the company, and owner, as is claimed, of all the stock, was made receiver; and it is alleged that he-assumed control of the defense of the two actions of Scammon against the company, and in fact, though not in name, was connected with such defense as receiver until his death, when one Nelson C. Rodgers was appointed receiver in his stead, and continued as such until June, 1883, when he was removed, and the Metropolitan Trust Company of New York was substituted, and continued as such receiver, pursuant to the judgment of dissolution, which was entered against the company in August, 1883. The Metropolitan Trust Company thereafter conducted the defense until notified in February, 1887, of the decision of "the case of Scammon v. Commercial Union Ins. Co., the event of which action, as stated, the actions-against the Adriatic Company were to abide, when it paid the counsel appearing in the actions, and stated to them that it would not continue to be represented in the litigation, and thereafter counsel did' not appear. It is claimed that neither the petitioner’s testator nor his attorneys had any notice of the proceedings for the dissolution of the company, and that they did not know of such proceedings, or that any orders had been made thereunder until after judgments had been taken by default against1 the company in 1889. In 1884 a referee was appointed to take and state the receiver’s accounts. The referee advertised for claims, and thereafter reported to the court,. . and by order the receiver was directed to retain in its hands a sum to await the final disposition of the Scammon claims; and it is to> reach the sum so retained, and upon the strength of the judgments-obtained by default in Illinois in 1889, that the petitioner seeks the aid of the court.
*325If the Illinois judgments are illegal and unenforceable against the receiver in this state, then the order appealed from was right. The crucial question presented therefore is, were the judgments entered in favor of the petitioner’s testator valid, notwithstanding the previous dissolution of the corporation? Their validity is claimed upon the ground that the Illinois court having general jurisdiction and having the right, regardless of the dissolution of the corporation, to proceed during the term of two years, by such statute of Illinois as well as by the stipulations made in the suits pending in that state, the judgments entered were valid both in Illinois and New York. In regai-d to the stipulations, all that need be said is that the first, by its terms, expired on the reversal of the judgment in the case of the -Commercial Union Assurance Company; and the second, which was made subsequent to the dissolution of the corporation, was entered into without authority.
This brings us to the question as to the effect of the Illinois statutes, and upon the view taken by the Illinois courts as to the construction of their own statutes no more instructive case can be found than that of Association v. Fassett, 102 Ill. 315. As therein said:
“From this and. other provisions of the statute it clearly appears that it is .a part of the settled policy of the state, at least so far as domestic corporations are concerned, that upon their dissolution, however that may be effected, they shall, nevertheless, be regarded as still existing for the purpose of settling up their affairs and having their property applied for the payment of their just debts; and we see no sufficient reason why the same policy should not, so far as practicable, be extended to foreign corporations that have property here, .and are located among us for business purposes.”
It will thus be seen that the extent to which that decision goes is in holding that the dissolution of the corporation shall not take away or impair a remedy given against such corporation previous to its dissolution as respects assets or property in that state. As said in another portion of the opinion in that case:
“Whatever may be the effect of a decree of dissolution in the state creating the corporation, it may, nevertheless, be regarded as at least a de facto corporation here for the purpose of enabling creditors to reach its effects in this ■state.”
And, again:
“It is not denied or even questioned that by the common law a corporation which has been dissolved absolutely for all purposes whatsoever stands upon the same footing as a dead person in respect to any power in the courts to •enter a valid judgment against it.”
We do not find, therefore, either in the language of or the construction given to the statutes of Illinois, that the judgments so entered after the dissolution of the company were valid for any purpose except to reach assets of the company which might be in that state. If, however,' there was a statute that went as far as claimed by appellant, we do not think it would give the judgments validity in this state. It must be remembered that the Adriatic Fire Insurance Company was a creature of our own statutes, and the judgment dissolving it pursuant to our statutes put an end to its *326existence; and it was not in the power of the legislature or the courts of any other state to impair the force of the decree of dissolution in New York. Neither the constitution of the United States nor any principle of.comity goes to the extent of permitting such interference.
The suggestion that full faith and credit shall be given to the judgments of other states is thus answered by Story in his Conflict of Laws (section 609), in commenting on article 4, § 1, of the constitution:
“But this does not prevent an inquiry into the jurisdiction of the court in which the original judgment was rendered to pronounce the judgment, nor an inquiry into the right of the state to exercise authority over the parties or the subject-matter. * * * The constitution does not mean to confer any new power upon the states, but simply to regulate the effect of their acknowledged jurisdiction over persons and things within their territory. It does not make the judgments of other states domestic judgments to all intents and purposes, but only gives a general validity, faith, and credit to them as evidence.”
That no such force should be given to a statute of another state when in conflict with the law of our own is well exemplified by the effect the adoption of such a view would have in the case at bar. Under our own law, upon the dissolution of the corporation, creditors could not proceed and enter judgment against it as though it were still alive. And yet, if creditors in another state might thus obtain judgments that would be valid in New York, the result would be to deprive our own citizens, suing in our own courts, of a right or advantage conceded to strangers suing in the courts of a foreign state. It would permit the legislature and the courts of every other state to override the statutes of New York and the judgments of our supreme court.
We think the inquiry, therefore, must be directed, not to what may be the force and effect of an Illinois judgment, but to whether, under our statutes, the parties in Illinois, after the judgment of dissolution here, could proceed and take judgments against the corporation by default.
In Sturges v. Vanderbilt, 73 N. Y. 384, where a statute of New Jersey was sought to be availed of, it was said:
“It Is not material to refer to the New Jersey statute as to the mode of continuing an action, as that is a matter of practice which must be governed by our own laws; and in the present case there was no attempt to continue the action pursuant to the laws of either state.”
So far as our own state is concerned, we must regard the law as settled in favor of the view that by the judgment in 1883, dissolving the company, that corporation ceased to exist, and all suits pending against it, including the suits brought by Scammon in Illinois, abated. No valid judgment thereafter could be rendered against it, and the judgments obtained by default in 1889 are null and void so far as being enforceable in this state, whatever validity they might have as against property or assets of the company in Illinois.
In McCulloch v. Norwood, 58 N. Y. 566, it was said:
“We feel constrained to differ from the learned court below on the question of the validity of the judgment rendered in the Ohio court against the cor*327poration of which the defendant is receiver. * * * At that time the corporation was not in existence, it having been dissolved by a judgment duly rendered in the supreme court of this state. * * * And, the defendant having been appointed the receiver'of its property and effects, the corporation had no longer any legal existence or capacity to he sued, or any property which could be subjected to a judgment to be rendered against it. All authority to appear in the case had been withdrawn from the attorneys who had formerly represented the dissolved corporation.”
,In the case of People v. Knickerbocker Life Ins. Co., 106 N. Y. 619, 13 N. E. 447, suit was pending in Tennessee; and after a judgment against the company, and while upon appeal to the supreme court of the United States, and after dissolution, the receiver appeared through counsel on the argument. The judgment was reversed, and a new trial ordered, and thereafter a judgment was entered by default against the company. The court there referred to and approved the principle decided in McCulloch v. Norwood, supra, and, in addition, disposed of the question of the effect of the receiver’s appearance upon the appeal as validating the judgment. It was therein held that the.dissolution of the company put an end to the action, and, at the time of the rendition of the judgment, it had no property against which the judgment could be enforced; that the receiver could not be affected by it unless he had by some action under the direction of the court appointing him made himself responsible for the final result; that the intervention in the United States supreme court did not make him so responsible, as it was simply for the purpose of protecting the assets in his hands from an incumbrance which had no connection with the subject-matter of the litigation, and the reversal of the judgment ended his connection with the action, and the parties litigant were thereby restored to the same, position in which they were prior to its rendition; that the United States court acquired no jurisdiction over him, or over the funds sought to be reached by its adjudication; and that, therefore, the receiver was not estopped by the judgment
It is useless to multiply the cases, because by those of In re Norwood, 32 Hun, 197, Sturges v. Vanderbilt, 73 N. Y. 384, and Martine v. Insurance Co., 53 N. Y. 339, and others that might be cited, the same principle has been affirmed; so that, as stated, we must regard the rule as settled that actions pending in the courts of our own or of another state against a domestic corporation are ended by a judgment of dissolution, and unless, by authority of the court appointing the receiver, he intervenes, so that jurisdiction is continued, a valid enforceable judgment against the company or its receiver, or one enforceable against the assets or property within this jurisdiction, cannot be obtained. The reasons for this rule are not hard to find. A court has no more authority to render judgment against an artificial person after dissolution than it has against a natural person after death.. Such dissolution, pursuant to the laws of the state creating the corporation, operates as its legal death in any other state in which it may be doing business; and it must be assumed that every person contracts with the corporation with knowledge that the state under whose authority it *328was created may arrest its franchises, and dissolve it, and wind up its affairs.
Having reached the conclusion, therefore, that, so far as the receiver here and the assets in its hands are concerned, the judgments obtained in Illinois by default after dissolution are null and void, the court below was right in denying the petition requiring the receiver to pay the amount of such judgment.
Order accordingly affirmed, with $10 costs and disbursements. All concur.