Court Opinion

ID: 5458964
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:27:56.849376+00
Date Added: 2024-06-11T08:32:47.477417
License: Public Domain

By the Court, Johnson, J.
It is settled, upon authority, that a corporation, like the insurance company in question, may make a valid general assignment for the benefit of creditors. (Haxtun v. Bishop, 3 Wend. 13. De Ruyter v. The Trustees of St. Peter’s Church, 3 Barb. Ch. 119. Hill v. Reed, 16 Barb. 280. 1 Am. Lead. Cas. 89, note.) Our statute prohibits the giving of preferences in such assignments.
' The assignment being valid, it follows that the assignee can maintain actions against all the debtors of the corporation. The question whether any right of action had accrued against the defendant, when these actions were brought, does not arise, upon this appeal. The only question here is, whether there was any valid assessment on which any execution could issue. The statute under which this corporation was organized, (Sess. Laws of 1853, ch. 466, § 13,) makes every person effecting an insurance in such a company a member of the corporation during the period of insurance, and liable to pay for losses and neces-. sary expenses thereon, in proportion to the amount of his deposit note. By this section it is made the duty of the directors of the corporation, on receiving notice of loss or damage sustained by fire, and ascertaining the same, or after rendition of judgment for the same, to settle and determine the sums to be paid by the several members, as their proportion of such loss. This settlement and determination of the proportion to be paid by each, is to be published, according to the by-laws, and unless paid within thirty days after publication and personal demand, the insured may be prosecuted and judg*224ment recovered for the whole amount of his deposit note. But execution can only be issued for the amount of the assessment, and costs as they accrue.
The act, it will be seen, has made it the duty of the directors to ascertain losses in the first instance, and determine what amount the corporation is liable to pay; and after ascertaining the same, or the rendition of judgment on the claim, they are further required to settle and determine the sum each of the insured is to pay.' This duty is in its nature judicial. The statute has conferred the power as a personal trust upon the directors, and they cannot delegate it to another to exercise, either by a power of attorney or by an assignment. It is urged by the plaintiff’s counsel that the assessment is a mere clerical act; or if it is not, the power to make it must necessarily vest in the assignee, to enable him to perform the trusts created and imposed, and for the benefit and protection of creditors. But this case shows conclusively, that something more than the duties of a mere clerk are involved, in making an assessment. Here are three items, amounting in the aggregate to over §14,000, for expenses, in addition to the losses. So that the assignee, as the affidavits show, has passed upon and determined, from proofs submitted, or otherwise, not only the amount of losses the corporation is liable to pay, but also the expenses thereon, Nor does it follow because a corporation can make a voluntary assignment, that it can transfer the power of its officers to the assignee. What is assigned ? It is the assets merely; not the franchise. The assignee does not, by accepting the assignment, become the corporation, nor acquire the powers the statute confers upon the corporate body and its officers. He merely takes the choses in action belonging to it—the assets for collection and distribution. The corporation is not dissolved by the act of assignment, although it would in most, if not all cases, I think, be good .cause for it. (The State v. The Real Estate Bank, 5 Pike, 596.) The corporation and its officers remain, with all the powers with which'the statute has clothed them—the same after the asignment ay before. The necessity claimed, *225therefore, does not exist. But if it did, it could not operate to transfer powers which in their nature are not transferable.
[Monroe General Term,
December 3, 1855.
The courts can always appoint a receiver in such a case, and prevent any failure of justice. The assessment, therefore, on which the executions were issued, was wholly unauthorized and void, and afforded no warrant to the assignee for issuing such writs. Had the assessment been proper in other respects, it was clearly erroneous in respect to the extraordinary and apparently exorbitant charges for expenses included in it. The act makes the insured liable for losses, and expenses which have accrued thereon. It is clear that a large proportion of the amount assessed as expenses, did not accrue from losses, and had not accrued when the assessment was made. Much of it was anticipated expense, from other causes, and must as is apparent, have rested very much upon speculation and conjecture. This power to assess for expenses, ought to be construed strictly, or its exercise, in unfaithful hands, would lead to the most flagrant and dangerous abuses.
Order of the special term affirmed.
Welles, Selden and Johnson, justices.]