Court Opinion

ID: 7183826
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:50:41.70796+00
Date Added: 2024-06-11T16:16:00.382522
License: Public Domain

Buchanan, J.,
dissenting. I differ from the majority of the court on the single point, that tbe makers of guarantee notes are not bound upon contracts made by the company, after one year from the dates of their respective notes. I think, on the contrary, that we must infer an agreement on the part of the makers of those notes, to continue their liability, from the fact of their being found among the papers of the company, when put in liquidation,
Voorhies, J., dissenting. The charter of the Merchants’ and Planters’ Insurance Company, incorporated under the provisions of an Act entitled, “ an Act to provide for the organization of corporations of this State,” approved March 16th, 1848, was declared to be forfeited by a decree of the District Court, dated the 28th of January, 1852. A report, showing the amount and nature of the assets and liabilities of the company, was filed by a receiver appointed for that purpose. This report has given rise to various oppositions, both on the part of the creditors and of the corporators of the company. The fourth article of the charter is in these words:
Eor the security of those who shall insure previous to the formation of the Permanent Fund, each appearer or party to this act, or any other person, may give his or her promissory note, drawn in favor of the company, and made payable in the following manner; Not less than five, nor more than ten per cen-tum of the amount on the day of commencing business, if required by the Directors, and the balance of the amount at such times, and in such instalments as the Directors may require; but payment of said notes shall not be demanded unless the company shall sustain losses greater than its profits will enable it to pay; and the said notes shall be held by the company for the term of one year, and in case of losses by the company exceeding the profits, and the Directors should require the payment of any part of said notes, prompt payment thereof shall be made; and in default thereof, the makers of said notes shall forfeit and pay the whole balance due, which shall be collected in any court of competent jurisdiction. The makers of said notes may, however, agree with the Directors, that their notes shall remain in possession of the company for a longer time than one year, upon the same terms as hereinbefore set forth.
The notes given under this article of the charter, were classed in the Receiver’s report as part of the assets of the company, on which suits were instituted against several of the makers, namely : John Macmmdo, Denis Gronan, Elliott Robins, John A. Dougherty, Bridge & Brother, and Maunsel White & Go. These suits were cumulated with the concurso, or oppositions to the *410report, but separate judgments were rendered in several of them, and appeals taken therefrom. On the oppositions, the corporators who were condemned to . , , . . , . . , pay their notes, and the creditors whose claims were rejected, have also appealed from the judgment homologating the receiver’s report.
It is contended by John Macmurdo, one of the appellants, that the obligation contracted by him was that of suretyship, limited in its terms under the charter to twelve months; that the Directors of the company having failed to make any assessment, or to call on him for losses, or to make any arrangement with him to keep his note, within that period, his obligation ceased and was at an end. This proposition is certainly untenable. From the fact that nearly all the notes bear different dates, it is unreasonable to infer that it ever entered into the contemplation of the parties, that their liability should be limited to the losses occurring within the term stipulated for the payment of their respective notes, particularly when it is considered that some of their notes were given long after the act of incorporation had been signed by them. The terms of the charter repel such a construction, which, if conceded, would necessarily lead to a variety of assessments, more or less intricate, especially if made in reference to the ai^ustment of the incidental expenses of the company, which obviously constituted a part of the losses intended to be secured by these assets. Hence, under this construction of the contract of the parties, made in reference to the charter, the difference in relation to the dates of their respective notes, must be considered as immaterial.
It is cleai-, from the terms of the charter, that the notes thus given constituted the assets, the capital of the company “ for the security of those who should insure previous to the formation of the Permanent Fund.” Now, it may be asked, how could this capital be withdrawn as such security, previous to the happening of that contingency — “the formation of the Permanent Fund?” As no Permanent Fund was ever formed, the negative of this question would seem to be repugnant to the palpable meaning of words. The position that the obligation must be viewed in the light of suretyship contracted for the benefit of the company, is equally untenable, either on principles of law or of equity. The hope of gain, as in all aleatory contracts, formed the consideration of the notes given by the corporation, the extinguishment of which depended on the formation of the Permanent Fund as provided for by the 5th Article of the charter, in these words;
There shall be.set apart, as soon as the business and profits of the corporation will allow it, a Permanent Fund, of the amount of $200,000 ; and for the formation of said fund, all the profits arising from Insurance or any other source, during the first year, except so much as may be required for paying the subscribers, as hereinbefore mentioned, and expenses, shall be set apart for that purpose, &c.
The clause in this Article, that the profits of the first year, after certain deductions, should be set apart for the permanent fund, was evidently based on the hope that the corporators expected to realize such profits, but were disappointed. This does not shake in the least, my construction of the contract, which is, besides, fortified by another article of the charter in those words: “All persons who shall have paid their notes, or any part thereof, shall be entitled to reimbursement of such amount, with six per cent, per annum interest.”
In relation to the other notes, the same question arises. It is however urged *411by Dougherty, that the note given by him, is entirely different from the others which were' given under the 4th Article of the charter-; that it was given merely as an earnest that he would bring business to the office equal to its amount— $4,000. Having signed the charter, he must be treated as one of the corpora-tors. His note cannot be distinguised from the others, except as to its date. As we have already seen, this must be considered as immaterial and not altering the nature of his liability. Under the 4th Article of the charter it is expressly provided, that “ for the security of those who shall insure previous to the formation of the permanent fund, each appearer or party to this act, or any other person, may give his or her promissory note, drawn in favor of the company,” &c. Under this stipulation, as one of the corporators, it is clear that he cannot escape from his liability. The decisions on which he relies to sustain the grounds of his defence, were based upon premium notes of Mutual Insurance Companies, whose charters -were essentially different in many respects from the one under consideration, and therefore cannot aid us in our examination.
The question arising out of the oppositions of the creditors who are appellants, are next to be considered.
J. W. Pike, as a judgment creditor, claims a privilege on the assets of the company, by virtue of a seizure made under an execution of his judgment.
The liabilities which the company had authority to contract, wore expressly prescribed by the 17th Article of the charter, in these words:
The Board of Directors shall have full power to do all acts necessary to carry into effect the purposes of the corporation, which are declared to be, to make insurance upon ships and all other vessels, steamboats, and all other river or lake craft, upon freight, seamen’s wages, goods, wares, merchandize, gold and silver, bullion or money, against all maritime risks, risks of rivers or lakes, or such as are usually insured against. Also upon houses, stores and buildings, every kind whatsoever, and on goods, wares, merchandize, furniture, and other articles, against fire. Also, upon bottomry and respondentia, and upon the lives .of all persons, free or slaves, and granting annuities, &c.
As already stated, incidental expenses necessary to carry on the business of the company, must also be included among its legal liabilities. Its assets constituted the common pledge of its creditors. Privileges secured by the charter cannot therefore bo affected by the seizure of any one of its creditors so as to prejudice the rights of the others. Conceding the correctness of Pike's judgment, his seizure clearly gave him no privilege to be paid out of the common pledge in preference to the other creditors.
In relation to the claim of J. W. Seates, as collector of State taxes, I think his opposition was properly overruled by the District Court. The assets of the company, consisting only of the notes of its corporators, cannot be fairly considered as coming under the operations of the statute. Its profits alone could have constituted such capital, and its insolvency show's that none were ever realized. It is urged by the opponent, that the State is entitled to a privilege for its claim. The counsel has not favored the court with any authority on the subject, and I am not aware of any law granting such privilege. I think, however, the claim as allowed, should be paid concurrently with those classed on the tableau to be paid for losses out of the proceeds of the guarantee notes.
In the opposition of L. Gushing, the record show's that he is the owner of an adjusted claim in favor of B. Coffins, for the sum of $1,080, on a policy of insurance of the company for losses, which he acquired at Sheriff’s sale, under *412an execuyon issued on a judgment in his favor against said Coffins, in which sa'^ comPany was garnisheed. This claim should also be entitled to he paid concurrently with the other claims, out of the proceeds of the guarantee notes> but not with privilege, as claimed by virtue of his seizure, for the reasons assigned in the opposition of PiJce.
I am, therefore of opinion, that the judgments rendered by the District Court in favor of the Receiver against Denis Cronan, Bridge & Brother and John Dougherty, should be affirmed with costs in both courts; and that the tableau should be amended by placing thereon the claims of Cushing and Scales, to be paid concurrently with the other creditors, out of the proceeds of the guarantee notes, and so amended that the judgment of the District Court homologat-ing said tableau should be affirmed with costs.