Court Opinion

ID: 7278571
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:03:14.518402+00
Date Added: 2024-06-11T16:18:57.994026
License: Public Domain

Mr. Chief Justice Shepard
delivered the opinion of the Court:
The action of Masters and Kinnear is indefensible. Assuming that they may have been authorized to make,the transaction with the bank, whereby they discharged the notes of themselves and Hartmann and Cohill with the money borrowed thereon, they had no right, without the authorization of the Royal Insurance Company, to take the assets formerly assigned by the Modem Workmen of the World and hold the same for the Modem Workmen of the World as they professed to do. They had-come into possession of these assets as directors and officers of 1he Royal Insurance Company. The Modem Workmen of the World had accepted the transfer, and it had retired from business. They were self-constituted trustees of the supposed ■interest of the Modem Workmen of the World.
The court was right in holding them responsible for the assets of the Royal Insurance Company in their possession at the time of the misunderstanding between the parties, and also for the value of the furniture converted by them. They had no right to sell any of this, and must be held liable for its actual value at the time. The surrender of the lease of the offices of the Royal Insurance Company was beyond the power of Masters and Kinnear as president and treasurer, without the approval of the board of directors, but the same and the surrender of the linoleum floor covering to affect the cancelation of the lease may be upheld as to the actual benefit of the Royal Insurance Company, but they had no right to transfer the business of the company to the new office occupied by them in pursuance of their attempt to reorganize the Modem Workmen of the World and to charge the Royal Insurance Corn-pay with a part of the rent of the same.
The certificate holders of the Modern Workmen of the World, having accepted the liability of the Royal Insurance Company, were not necessary parties to this proceeding. They had acquiesced in the transfer, accepted the' liability of the Royal *259Insurance Company, made payments of premiums to it, and received benefits therefrom. Their interests, whatever they may be, or as they may accrue, are to be protected by the Boyal Insurance Company. It is obvious that there is no foundation for the issue of the twenty-five thousand ($25,000) dollars stock in the Boyal Insurance Company, the same not having been paid for, and no one is entitled to claim the same.
By the disagreement of the directors of the Boyal Insurance Company, and the equal division of the members thereof, that corporation cannot proceed with its business. There is nobody to manage its affairs and conserve its assets, and it has practically suspended.
This situation, we think, calls for the appointment of a receiver for the Boyal Insurance Company, who shall take possession of its property and undertake to reorganize and manage its affairs under the supervision of the court. Sheridan Brick Works v. Marion Trust Co. 157 Ind. 292-299, 87 Am. St. Rep. 207, 61 N. E. 666; Jasper Land Co. v. Wallis, 123 Ala. 652-656, 26 So. 659; D. A. Tompkins Co. v. Catawba Mills, 82 Fed. 780.
The assets of the Boyal Insurance Company, including those received from the Modern Workmen of the World, are to be conserved and used for the benefit of the policy holders of the Boyal Insurance Company and the Modem Workmen of the World, who have accepted the liability of the Boyal Insurance Company, and not for that of the stockholders of the Boyal Insurance Company. They are in the nature of a trust for the benefit of the certificate holders in that company.
The decree in No. 2873, Hartmann et ah, against Masters and Kinnear, is reversed, with costs, and the cause remanded with direction to appoint a receiver for the Boyal Insurance Company, and tifie further order that Masters and Kinnear deliver to him the assets of the Boyal Insurance Company derived from the Modern Workmen of the World, as shown in the auditor’s report. In the event any of these assets have been converted into money, they shall be made to account for the *260money, with interest from the date of its receipt; also to surrender the books and records of the Royal Insurance Company. And the court will enter such other orders as may be necessary to carry -out the objects of this decree as are not inconsistent with this opinion.
This conclusion makes it unnecessary to consider the appeal in No. 2814; and that appeal is dismissed, with costs.

Reversed.

A petition for a modification of the decree was denied July 5, 1916.