Court Opinion

ID: 6660116
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:01:09.156159+00
Date Added: 2024-06-11T16:00:07.652912
License: Public Domain

Fawcett, J.,
dissenting.
Upon the question of the power of the district court to appoint a x*eceiver in a case like this, I think the law is correctly stated in the California cases cited in the majority opinion. The fact that the legislature, in the several instances set out in the opinion, added to the provisions cited express authorization for. the appointment of a receiver strengthens, rather than Aveakens, the contention that it did not intend to grant such authority in the statute under consideration. The legislature said that in a case like this the “court or judge shall decree a dissolution of said company and a distribution of its effects.” There the legislature saw fit to stop, and there the court should stop. Where, upon examination of an insurance company, the auditor finds that its capital is impaired more than 20 per cent., the district court, in a proceeding instituted by the attorney general, may say to the company that the state xvill no longer sanction its continuing business as a going concern, and that it must immediately cease doing business as aix insurance company and distribute its effects among those entitled thereto. Having doxxe that, the law department of the state has performed its full duty, and the court has gone as far as authorized to go by the statute. It then becomes the duty of the directors of the insurance company to close the doors to general bxxsixxess and to immediately proceed to collect and distribute the assets of the company as ordered by the court. This in my judgment is a wise provision. A receiver is the most expensive luxixry kxxown to the law. The directors of the coxnpany, if they are honest, and they must be presumed to be so until the contrary is shown, can collect and distribute the assets of the company with far less expense than can be or ever is done by a receiver. Many corporations, the affairs of which have been administered by honest officials, have proved unsuccessful as business enterprises. Even if this lack of success be attributable to a want of capacity by the officers and direc*675tors of such corporation to successfully conduct a business undertaking, it by no means follows that they are not competent, when the further prosecution of the business is stopped, to collect and distribute the assets; and the court should not deprive them of that right by the appointment of a receiver, thereby unquestionably reducing the amounts of the dividends to the distributees, unless clearly and explicitly authorized to do so by express statute. If in the collection and distribution of the assets it appears that the directors are either incompetent, negligent, or dishonest, any one interested in the assets may apply for the appointment of a receiver. In such a case the court would have jurisdiction under the general statutes cited.
Since writing the foregoing, there has been added to the majority opinion a quotation from the opinion in Weatherly v. Capital City Water Co., 115 Ala. 156. An examination of that opinion shows that, if it is to be followed as an authority by us, the judgment in this case must be reversed. The two sections of the syllabus applicable to the point under consideration read:
“(2) Under the provisions oí the statute (Code of 1886, sec. 1691), after the dissolution of a corporation by its charter being adjudged forfeited, a receiver is not appointed as a matter of course; but the business and properties of the corporation so dissolved are committed to the persons who were its managers at the time of its dissolution, and they become entitled to the right, and are charged with the duties, of administering and settling its affairs.
“(3) The provisions of the statute (Code of 1886, sec. 1691), committing the estate of a corporation dissolved by forfeiture of its charter to those who were its managers at the time of its dissolution as trustees for its creditors and stockholders, do not oust the ordinary jurisdiction of courts of chancery to appoint receivers under the circumstances and exigencies which demand such appointment; but, in order to justify the appoint*676ment of a receiver of a corporation so dissolved, there must appear such facts as, under the general principles of equity jurisprudence, call the power into exercise; such as incompetency or unfaithfulness or mismanagement on the part of trustees or the absence of authority on their part to subserve some peculiar interest of the party complaining, by reason of which he is injured.”
None of the reasons there assigned as being sufficient to justify the exercise by the court of its general chancery powers is alleged in the case at bar. Such being the fact, then, under the law as announced by the Alabama court, the managers of this company, at the time its dissolution was ordered by the court, became “entitled to the right” of administering and settling the affairs of the the company, and, nothing having been alleged to justify a refusal to grant them that right, the appointment of a receiver was unwarranted.- The reasoning and holding of the Alabama court are in entire harmony with the views I have tried to express.
Reese, C. J., concurs in this dissent.