Court Opinion

ID: 8186037
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:08:29.81952+00
Date Added: 2024-06-11T16:40:25.076713
License: Public Domain

BaedbeN, J.
A corporation may make an assignment for the benefit of its creditors to the same extent and in the same manner as a natural person, unless restricted by its charter or some statutory provision. Garden City B. & T. Co. v. Geilfuss, 86 Wis. 612; Burrill, Assignments, § 45.
While there is some difference of opinion in the courts, the better rule, and the one sustained by the great weight of authority, is that an assignment of aE the corporate property does not affect the corporate franchises, and does not dissolve the corporation. Burrill, Assignments, § 45.
By the deed of assignment of the insurance company, the equitable ownership of all of the assigned property passed to the creditors, and every creditor who filed his claim was entitled to his just share therein. Ordinarily, the rights of parties to the assigned property are fixed as of the date of the assignment. Burrill, Assignments, § 384; Jordam’s Appeal, 107 Pa. St. 75; Borne Exch. Bank v. Eames, 4 Abb. Dec. 83; In re Risley, 10 Daly, 44.
At the time this assignment was made, Kahn was a member of the company, holding two certificates, upon which he had paid all assessments or calls made by the secretary. He *6lived for more than a year thereafter. During this period he was not a creditor of the company. The deed of assignment conveyed the title to all the money.and tangible property of the company to the assignee, and carried with it as well all its choses in action. It included all the money in the policy fund, as well as the right to collect all sums due on assessments for death losses, as is fully set out in Fulton v. Stevens, 99 Wis. 307. It also covered all property and money in the reserve fund. It is urged that, inasmuch as sec. 13 of the charter [ch. 1, Laws of 188Y] provides for two funds,— the “ policy fund ” and the “ reserve fund,” the one to be used for the payment of death losses and the other to be invested as a permanent fund,— the members of the company obtained vested rights therein capable of being ascertained and valued, and that, when the company becomes insolvent, each policy holder becomes a creditor of the company. This contention is based upon a false premise. While it is true that sec. 13 provides that the reserve fund shall be safely invested by the board of directors, it is nowhere provided that it shall be set apart for any special purpose or devoted to any given object, nor was it to inure to the benefit of any particular class. On the contrary, it remains within the control of the board of directors, who are given express authority to transfer from this fund to the policy fund “ such amount for the payment of death losses as said board maj^ deem expedient ” in the event of epidemic, calamity, or other extraordinary occurrence. In absence of some express pledge entering into the contract of insurance, this fund, as well as all property of the company, is liable to the payment of the death claims in existence when the assignment was made. The claim filed is for indemnity under the certificates of membership in which claimant was named as beneficiary, and not to secure any surplus Kahn might have been entitled to as a member. This right to any surplus over and above the loonafide debts of the company cannot *7be enforced in the assignment proceedings. The surplus, if any, under the law, and under the deed of assignment, must be turned back to the company. Its legal existence was not terminated by the assignment. It may continue to exercise its franchises, and go on with its business, when the trust has been fully administered. The situation is therefore very unlike the case where a direct proceeding has been brought to dissolve the corporation.
Nearly, if not all, the cases cited to support the appellant’s position, are cases of stock companies or mutual companies where fixed and definite premium charges were collected, and where .a certain fund was set apart for a specific purpose, and where the question of distribution has arisen in proceedings to wind up the corporation. Eor a discussion of the rights of claimants under such circumstances, see People ex rel. Att’y Gen. v. Life & Reserve Asso. 150 N. Y. 94; People v. Commercial Alliance L. Ins. Co. 154 N. Y. 95; Burdon v. Mass. S. Asso. 147 Mass. 360; Dean & Son’s Appeal, 98 Pa. St. 101; Fogg v. Supreme Lodge U. O. G. L. 159 Mass. 9; In re Educational Endowment Asso. 56 Minn. 171; In re Equitable R. F. L. Asso. 131 N. Y. 355.
Under the scheme set out in the charter and by-laws of this company, it had no capital stock, and no accumulation of funds for the payment of losses except such as it secured by assessment of its members after happening of losses. The contract liability of members to assessment stands as the security of the assured in place of capital stock and reserve accumulations; and instead of fixed premiums, payable at stated intervals and including a reserve element, there are assessments leviable only after losses occur. It is therefore manifest that certificates of membership in such a company possess none of the attributes or elements which give to ordinary life insurance policies what is called an equitable value. The status of the creditors of the corporation must be fixed as of the date of the assignment; that is to say, there *8must be a liability existing at the time the assignment is made, which may ripen into a debt provable under the law. At that date the claimant had no rights which she could enforce, either actual or contingent.
Authorities as to the distribution of the assets of insolvent insurance companies may be found in an extensive note to Boston & A. R. Co. v. Mercantile T. & B. Co. (82 Md. 585), in 38 L. R. A. 97. — Rep.
"We therefore conclude that the claim the appellant is pressing is not a debt, within the meaning of the law, which she can file and enforce in this proceeding.
By the Court. — The order of the circuit court is affirmed.