Court Opinion

ID: 8190615
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:13:33.911083+00
Date Added: 2024-06-11T16:40:35.549944
License: Public Domain

The following opinion was filed April 3, 1912:
Wihslow, C. J.
Sec. I791e, Stats., as amended by ch. 504, Laws of 1905, requires every trust company to deposit with the state treasurer not less than fifty per centum of its capital stock, nor more than $100,000 in cash, bonds, or first-mortgage securities on real estate, which “shall be held by the state treasurer in trust as security for the depositors and creditors of said corporation, and for the faithful execution of any trust which may be lawfully imposed upon and accepted by it.”' The section further provides that the securities may be from time to time withdrawn, “provided that securities or cash of the amount and value required by this section shall at all times during the existence of such corporation remain in the possession of the state treasurer for the purpose aforesaid.”
These provisions unquestionably make it the official duty of the state treasurer to hold the securities or cash so deposited in trust, the beneficiaries of which trust are the depositors, creditors, and cestuis que trustent of the trust company. The treasurer’s official bond upon which this action is brought runs to the state as obligee and is conditioned not only for the faithful discharge of the duties of his office, but also for the delivery to his successor in office, or to my other persons au*79thorized by law to receive the same, of all moneys, books, records, papers, and other articles and evidences belonging to said office. The duty to safely keep the securities in question is a duty whose faithful discharge is guaranteed by the bond just as fully as any other official duty. True, it is a duty in which neither the state nor the general public has any direct interest; it is to be performed for the benefit of a class and probably a very limited class of people, but it is none the less an official duty.
The first proposition urged in support of the demurrer is that the action is not brought by the proper parties, but must be brought by the state itself, represented by the attorney general. This objection must be overruled. The promise is made in form to the state, but, so far as this fund is concerned, it is entirely for the beneficial interest of third persons, and those third persons must (if they are to receive the full benefit of the promise) have some way of enforcing its provisions not dependent upon the will of others who have no beneficial interest in the promise. Such bonds running to the state or some public official as obligee, but securing the performance of duties owing only to individuals or classes of individuals, are quite frequent, and the general principle is that in the absence of express statutory provision it will be held that the statutory intent is to grant permission to the individual or class protected by the bond to use the name of the state, or official, as plaintiff in an action brought to recover for breach of such a duty. Howard v. U. S. 184 U. S. 676, 22 Sup. Ct. 543. Unquestionably the attorney general could bring the action without relator, and use the name of the state as plaintiff, because the state is for this purpose the trustee of an express trust (State v. Wettstein, 64 Wis. 234, 25 N. W. 34); but where, as here, the attorney general has refused, as he doubtless properly may, to bring the action because the-state has no beneficial interest in it, there seems no good rea*80son which should prevent the bringing- of the action in the name of the obligee on the relation of the parties beneficially interested.
Passing this preliminary question, we come to the merits. The respondents claim and the trial court held that the state treasurer was vested with a discretion or quasi-judicial power in deciding when the securities in question should be released, and that the complaint here shows affirmatively that he released the securities upon sworn proof that the company had been dissolved and paid all of its obligations. It is further claimed that the complaint shows that the treasurer’s action was taken in good faith, and in the absence of bad faith or intentional malfeasance there can be no recovery.
The difficulty with this contention is that the statute lays down a perfectly certain and definite duty with regard to the custody of the securities up to the time of the dissolution of the corporation. There can be no mistake about the scope of that duty, no room for the exercise of judgment or discretion. The securities are required to remain in the possession of the treasurer for the trust purposes named “at all times during the existence of the corporation.” Sec. 1791e, Stats. Now if the statute fixes a definite time at which the corporation ceases to exist, there can be no question of doubt under the statute as to the duty of the treasurer previous to that time.
It seems very clear that sec. 1789, Stats., fixes a very definite and certain limit to the existence of a corporation which, as in the present case, desires to voluntarily dissolve. There is no ambiguity or uncertainty in its provisions. ■ The section prescribes the contents and manner of adoption of the resolution of dissolution, and requires a certified copy thereof to be recorded in the office of the register of deeds of the home county of the corporation, and a like copy to be filed in the office of the secretary of state. “Thereupon such corporation shall cease to exist except for winding up its affairs.”
The corporation ceases to exist upon the recording and fil*81ing of the certified copies of the resolution and not before, and until that time the duty of the treasurer to keep possession of the securities is absolute. He had no judgment or discretion to exercise. The statute is his sole rule of action.
It now appears definitely that the resolution of dissolution, although filed with the secretary of state on March 1, 1909, was not recorded in the proper register’s office until March 2, 1909. Ho dissolution occurred, therefore, until March 2d. The securities to the amount of $45,000 were released by the treasurer on March 1st, — hence the complaint clearly states a breach of the treasurer’s duty as to this sum.
Sec. 1764, Stats. (1898), provides that all corporations which shall be voluntarily dissolved or whose existence shall be terminated in either of several ways named in the section shall continue to exist for three years thereafter for the purpose of prosecuting and defending actions, settling and closing up their business, conveying their property and dividing their capital stock, and for no other purpose. In the consideration of this case we have had some doubt whether it ought not to be held that the corporation exists within the meaning of sec. 179 le, supra, but we have cbncluded that it ought not to be so held. It is very evident that the securities may be needed in the closing up of the affairs of the corporation, and, if it were impossible to release them during the three years limited for the closing-up process, the very object sought to be attained by the deposit, namely, the protection and satisfaction of creditors of the corporation, might be seriously impeded and delayed.
The sum of the present holding is that in case of a trust corporation sought to be dissolved by voluntary proceedings under see. 1789, supra, the treasurer’s duty to retain the deposited securities is absolute up to the moment when, under the provisions of that section, the dissolution is complete, and after that time the treasurer remains in possession of the securities still charged with the .duties of a trustee, but re*82lieved from the absolute mandate to retain possession. During this time if any court having jurisdiction of the subject matter and of the parties directs that the moneys be delivered over to an officer of the court, or to a third party, the treasurer will, of course, be protected in obeying such order; probably he would be protected also in releasing the funds without the order of a court if he act in good faith and exercise reasonable care and diligence. Whether he would be protected if he acted without reasonable care though still in good faith may be a question of some doubt, and inasmuch as it is not absolutely essential to a decision of this case at the present time, we do not decide, it. So far as the $45,000 payment is concerned, we hold that a breach of the bond is stated.
The question whether the action should have been brought at law rather than in equity we find it unnecessary to decide. Even if wrongfully brought in equity, the defect can no longer be taken advantage of by general demurrer. Sec. 2649a, Stats. (Laws of 1911, ch. 354). While this law was passed since the decision below, we find no difficulty in applying it to the present case, as it merely changes the procedure and affects no substantial or vested right.
By the Court. — Order reversed, and action remanded with directions to overrule the demurrer to the complaint.
Vinje, J., took no part.
A motion for a rehearing was denied June 4, 1912.