{ "id": 2986929, "name": "The Republic Life Insurance Company v. Charles P. Swigert, Auditor, and Samuel D. Ward, Receiver", "name_abbreviation": "Republic Life Insurance v. Swigert", "decision_date": "1890-10-31", "docket_number": "", "first_page": "150", "last_page": "179", "citations": [ { "type": "official", "cite": "135 Ill. 150" } ], "court": { "name_abbreviation": "Ill.", "id": 8772, "name": "Illinois Supreme Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "3 Dill. 477", "category": "reporters:federal", "reporter": "Dill.", "opinion_index": -1 }, { "cite": "2 Ired. 463", "category": "reporters:state", "reporter": "Ired.", "opinion_index": -1 }, { "cite": "6 Blatchf. 156", "category": "reporters:federal", "reporter": "Blatchf.", "opinion_index": -1 }, { "cite": "4 Ben. 88", "category": "reporters:federal", "reporter": "Ben.", "opinion_index": -1 }, { "cite": "32 Iowa, 209", "category": "reporters:state", "reporter": "Iowa", "case_ids": [ 2298230 ], "opinion_index": -1, "case_paths": [ "/iowa/32/0209-01" ] }, { "cite": "1 H. & J. 318", "category": "reporters:state", "reporter": "H. & J.", "case_ids": [ 11300539 ], "opinion_index": -1, "case_paths": [ "/h-j/1/0318-01" ] }, { "cite": "34 Conn. 548", "category": "reporters:state", "reporter": "Conn.", "case_ids": [ 507738 ], "opinion_index": -1, "case_paths": [ "/conn/34/0548-01" ] }, { "cite": "91 U. S. 496", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 5648674 ], "weight": 2, "opinion_index": -1, "case_paths": [ "/us/91/0496-01" ] }, { "cite": "20 Blatchf. 525", "category": "reporters:federal", "reporter": "Blatchf.", "opinion_index": -1 }, { "cite": "17 Wall. 619", "category": "reporters:scotus_early", "reporter": "Wall.", "opinion_index": -1 }, { "cite": "15 N. Y. 44", "category": "reporters:state", "reporter": "N.Y.", "opinion_index": -1 }, { "cite": "80 Ill. 188", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2681109 ], "opinion_index": -1, "case_paths": [ "/ill/80/0188-01" ] }, { "cite": "13 Wend. 280", "category": "reporters:state", "reporter": "Wend.", "case_ids": [ 2015741, 2015653 ], "opinion_index": -1, "case_paths": [ "/wend/13/0280-02", "/wend/13/0280-01" ] }, { "cite": "3 Scam. 483", "category": "reporters:state", "reporter": "Scam.", "case_ids": [ 2470902 ], "opinion_index": -1, "case_paths": [ "/ill/4/0483-01" ] }, { "cite": "52 Ill. 154", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5300282 ], "weight": 2, "pin_cites": [ { "page": "258" } ], "opinion_index": -1, "case_paths": [ "/ill/52/0154-01" ] }, { "cite": "1 Scam. 321", "category": "reporters:state", "reporter": "Scam.", "case_ids": [ 2479498 ], "opinion_index": -1, "case_paths": [ "/ill/2/0321-01" ] }, { "cite": "21 Wend. 454", "category": "reporters:state", "reporter": "Wend.", "case_ids": [ 2151831 ], "opinion_index": -1, "case_paths": [ "/wend/21/0454-01" ] }, { "cite": "4 Cranch, 237", "category": "reporters:scotus_early", "reporter": "Cranch,", "case_ids": [ 639423 ], "opinion_index": -1, "case_paths": [ "/us/8/0141-01" ] }, { "cite": "11 Ill. 540", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2575861 ], "opinion_index": -1, "case_paths": [ "/ill/11/0540-01" ] }, { "cite": "9 Metc. 23", "category": "reporters:state", "reporter": "Metc.", "opinion_index": -1 }, { "cite": "11 Cush. 40", "category": "reporters:state", "reporter": "Cush.", "case_ids": [ 1970419 ], "opinion_index": -1, "case_paths": [ "/mass/65/0040-01" ] }, { "cite": "4 Wheat. 122", "category": "reporters:scotus_early", "reporter": "Wheat.", "case_ids": [ 4696 ], "weight": 2, "pin_cites": [ { "page": "213" } ], "opinion_index": -1, "case_paths": [ "/us/17/0122-01" ] }, { "cite": "2 Story, 322", "category": "reporters:federal", "reporter": "Story", "opinion_index": -1 }, { "cite": "1 Holmes, 105", "category": "reporters:federal", "reporter": "Holmes", "opinion_index": -1 }, { "cite": "1 Woods, 1", "category": "reporters:federal", "reporter": "Woods", "opinion_index": -1 }, { "cite": "93 N. Y. 426", "category": "reporters:state", "reporter": "N.Y.", "case_ids": [ 553063 ], "opinion_index": -1, "case_paths": [ "/ny/93/0426-01" ] }, { "cite": "94 Ill. 145", "category": "reporters:state", "reporter": "Ill.", "weight": 2, "pin_cites": [ { "page": "220" } ], "opinion_index": -1 }, { "cite": "53 Ala. 191", "category": "reporters:state", "reporter": "Ala.", "case_ids": [ 3346765 ], "opinion_index": -1, "case_paths": [ "/ala/53/0191-01" ] }, { "cite": "101 U. S. 216", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 5632433 ], "opinion_index": -1, "case_paths": [ "/us/101/0216-01" ] }, { "cite": "20 Wall. 520", "category": "reporters:scotus_early", "reporter": "Wall.", "case_ids": [ 3393296 ], "opinion_index": -1, "case_paths": [ "/us/87/0520-01" ] }, { "cite": "40 Ohio St. 575", "category": "reporters:state", "reporter": "Ohio St.", "case_ids": [ 916941 ], "opinion_index": -1, "case_paths": [ "/ohio-st/40/0575-01" ] }, { "cite": "77 N. Y. 275", "category": "reporters:state", "reporter": "N.Y.", "opinion_index": -1 }, { "cite": "3 N. Y. 479", "category": "reporters:state", "reporter": "N.Y.", "case_ids": [ 2007203 ], "weight": 2, "opinion_index": -1, "case_paths": [ "/ny/3/0479-01" ] }, { "cite": "7 R. I. 136", "category": "reporters:state", "reporter": "R.I.", "case_ids": [ 4811894 ], "opinion_index": -1, "case_paths": [ "/ri/7/0136-01" ] }, { "cite": "14 N. Y. 44", "category": "reporters:state", "reporter": "N.Y.", "opinion_index": -1 }, { "cite": "125 Ill. 303", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2938684 ], "opinion_index": 0, "case_paths": [ "/ill/125/0303-01" ] }, { "cite": "60 Me. 178", "category": "reporters:state", "reporter": "Me.", "case_ids": [ 661064 ], "opinion_index": 0, "case_paths": [ "/me/60/0178-01" ] }, { "cite": "42 Barb. 87", "category": "reporters:state", "reporter": "Barb.", "case_ids": [ 5116370 ], "opinion_index": 0, "case_paths": [ "/barb/42/0087-01" ] }, { "cite": "74 Mo. 495", "category": "reporters:state", "reporter": "Mo.", "case_ids": [ 441843 ], "opinion_index": 0, "case_paths": [ "/mo/74/0495-01" ] }, { "cite": "123 Ill. 142", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2924131 ], "opinion_index": 0, "case_paths": [ "/ill/123/0142-01" ] }, { "cite": "84 Ill. 145", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2651388 ], "opinion_index": 0, "case_paths": [ "/ill/84/0145-01" ] }, { "cite": "97 Ill. 593", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2843099 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ill/97/0593-01" ] }, { "cite": "17 Wall. 619", "category": "reporters:scotus_early", "reporter": "Wall.", "opinion_index": 0 }, { "cite": "15 N. Y. 44", "category": "reporters:state", "reporter": "N.Y.", "weight": 2, "opinion_index": 0 } ], "analysis": { "cardinality": 1643, "char_count": 62493, "ocr_confidence": 0.492, "pagerank": { "raw": 1.1397438616233767e-06, "percentile": 0.9864633034590048 }, "sha256": "0e3509c9b2e40e1f9da95ba38f7689adda43433731815b4db90ca8a955ca34af", "simhash": "1:9b89f5347cfebe5d", "word_count": 10764 }, "last_updated": "2023-07-14T15:56:42.978205+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "The Republic Life Insurance Company v. Charles P. Swigert, Auditor, and Samuel D. Ward, Receiver." ], "opinions": [ { "text": "Mr. Justice Baiceb\ndelivered the opinion of the Court:\nOn the 25th of May, 1877, the State Auditor filed his petition in the circuit court of Cook county, against the Republic Life Insurance Company, under the provisions of the act in regard to the dissolution of insurance companies, approved ^February 17, 1874. The Auditor alleged in his petition that he had caused an examination to be made of the assets and liabilities of the company, and that, from such examination, he was of the opinion that the condition of the company was such as to render its further continuance in business hazardous to the insured therein. The prayer of the petition was, that the company might be enjoined and restrained from further proceeding with its insurance business, and that a receiver might be appointed to take charge of the real estate and effects of the company, in pursuance of the act aforesaid, and with the power therein prescribed, and usually vested in a receiver.\nOn the same day that the petition was filed the company waived service of process, and entered its \u2022 appearance, and filed an answer, which was as follows: \u201cNow comes the said defendant, by its solicitor, and saith that it can not deny the matters in said bill alleged, and it prays to be hence dismissed, \u201d \u25a0etc. Thereupon, and on the same day, on motion of the solicitors for the Auditor, and no objection being made by the company, Samuel D. Ward was appointed receiver. It was also ordered, that the company, its officers, agents, attorneys .and servants, be enjoined and restrained, until the further order of the court, from further proceeding with its business, or from any transfer of the property other than to the receiver, and from receiving or paying out any moneys, and that neither the receiver nor the defendant, nor its officers, agents, servants \u25a0or attorneys, should exact or take from its policy holders any sum or sums of money to accrue from premiums on policies, beyond what might be justly due or payable on or as of the 25th day of May, 1877.\nIt was specified in the order appointing the receiver, that said Samuel D. Ward \u201cbe and is hereby appointed receiver of, all and singular, the real estate, personalty, choses in action, bonds, bills, notes, securities, evidences of indebtedness, books, records, moneys, checks, drafts and property, and assets of every nature, real and personal, of and belonging to said defendant, or in any manner held in trust for or subject to the-control of said defendant, as the same are on this 25th day of May, with power to take possession of the same forthwith, and to institute any and all necessary proceedings or actions to recover the same, either at law or in equity.\u201d And it was .further ordered, that the president and secretary of the company should forthwith execute and deliver to the receiver all necessary deeds, conveyances and assurances of title proper and requisite to carry out the foregoing order, and to vest in the receiver full title to, all and singular, the properties, assets and choses in action of the defendant, and that said receiver should have and exercise, all and singular, the rights and powers conferred upon such receiver by the statutes of this State in that behalf, and that he should have the usual powers of a receiver in equity, with liberty to apply to the court, from time to time, for such further directions and orders as might he necessary to the discharge of his trust. In conformity with this order and decree, the officers of the company made to the receiver deeds for all the real estate of the company, and on May 27, 1877, the president and secretary executed and delivered to him an assignment of all the property of the company, and immediately turned over to him such property.\nOn December 1, 1877, the receiver presented to the court a petition, in which it was stated, that at a meeting of the stockholders of the Bepublic Life Insurance Company, held on the 11th day of June, 1873, the following resolutions were adopted, to-wit:\n\u201cResolved, That the board of directors of this company be and the same is hereby instructed and empowered to receive .from such of the stockholders as may desire, and to cancel, ..all outstanding certificates of the stock of this company upon \u2022which but twenty per cent has been paid, and to issue in place thereof a new certificate to each stockholder for the \u2022\u00a1number of shares, at par, represented by the twenty per cent .already paid, or secured to be paid, by such stockholder or .stockholders.\n\u201cResolved, That the remainder of the stock of this company .be held as unissued stock, subject to sale and issue, as the -directors shall deem best, but at par, and for cash, only, exclusive of expense and commissions.\u201d\nIt further appeared from said petition, that in pursuance \u2022 of said resolutions a large number of the subscribers to the ..stock of said company surrendered their certificates of stock .upon which but twenty per cent had been paid, and received in lieu thereof certificates for one-fifth the number of shares -of stock so surrendered, which said new certificates represented the holders thereof as entitled to the number of shares of full paid stock therein respectively specifie.d. It also appeared from the petition, that the largest proportion of the liabilities \u2022 of the company was contracted before the said 11th day of June, 1873, when, by vote of the stockholders, the directors -were authorized to issue full paid certificates of stock on the . surrender of the certificates on which only twenty per cent had been paid. The petition stated: \u201cTour petitioner knows of no resources out of which he will be able to realize any money \u2022to pay the balance of the liabilities of said company, over and \u2022above twenty or twenty-five per cent thereof, unless the same can be collected of said stockholders and subscribers to said -.stock.\u201d The prayer of the petition was for the direction of the court in the premises, and for such other and further order in reference to the matter of commencing proceedings against \u00a1said subscribers and stockholders as should seem just and .proper.\nOn January 31, 1878, an order was entered in said cause, which was as follows, to-wit: \u201cSamuel D. Ward, receiver of said defendant, having heretofore, to-wit, on the 1st day of December, A. D. 1877, filed his petition herein, asking for the direction of the court in reference to further legal proceedings against the subscribers to the stock and stockholders of said defendant, and it appearing to the court that said receiver has published a notice, etc., that the application contained in said petition would be heard on this day, etc., and said application now coming on to be heard, after argument by counsel for said receiver and for said complainant, and the court being advised in the premises, it is ordered by the court that the said receiver be and he is hereby authorized and directed to institute such legal or equitable proceedings as he may be advised are necessary and proper, against the subscribers to the stock and stockholders of said defendant, or against such of them as he may be advised are or may be indebted to the said company, and that he institute such proceedings against resident and nonresident subscribers .to stock, and stockholders, or either of them, and proceed with all convenient speed with the same, for the purpose of collecting a sufficient amount to pay the debts and liabilities of said defendant.\u201d\nOn the 22d day of June, 1881, the cause came on for a hearing in the circuit court, and the court rendered a final decree therein, overruling the prayer of the company, in its answer, to be dismissed out of court, and decreeing that the company be perpetually enjoined, restrained and prohibited from the further prosecution of its business, and that the previous ap'pointment of Ward, as receiver, be ratified and confirmed. Thereafter a writ of error was sued out of this court by the Republic Life Insurance Company. The errors assigned upon the amended record which was filed in this court, were, that the court erred in not dismissing the petition of the Auditor, as prayed for in the answer of the plaintiff in error, and that the court erred in making each and every of the orders and decrees set forth in the record aforesaid.\nIn the briefs and arguments which were filed on behalf of the plaintiff in error prior to the rehearing, the grounds of objection urged to the decree and orders of the court were, that the allegations of the petition filed by the Auditor were not sufficient to sustain the final decree, and that it was therefore erroneous; that the law authorizing the appointment of a receiver, and the dissolution and winding up of the company and its affairs, was violative of the contract clauses of both the Federal and State constitutions, and the act therefore void and the decree erroneous; and that, even assuming the act to be valid and the allegations of the petition to be sufficient, the court had no power, on the application of the receiver, to authorize him to call in question the surrender of subscriptions to capital stock and the receipt of paid up stock for the money paid on such subscriptions, as being in fraud of the rights of creditors, and that such transaction could be impeached only by and on the application of creditors \u00f3f the company.\nSection 1 of the act of 1874, now under consideration, provides: \u201cThat if the Auditor of State, upon examination of any insurance company incorporated in this State, is of the opinion that it is insolvent, or that its condition is such as to render its further continuance in business hazardous to the insured therein, or to the public, * * * he shall apply, by petition, to a judge of any circuit court of this State, to issue an injunction restraining such company, in whole or in part, from further proceeding with its business until a full hearing can be had, or otherwise, as the court may direct.\u201d The further clause of this section provides that the court \u201cmay, in all such cases, make such orders and decrees, from time to time, as the exigencies and equities of the case may require, and in any case, after a full hearing of all parties interested, may dissolve, modify or perpetuate such injunction, and make all such orders and decrees as may be needful to suspend, restrain or \u25a0prohibit the further continuance of the business of the company. \u201d Section 5 of the act provides for the appointment by the court of one or more receivers, \u201cto take charge of the \u25a0estate and effects of the company, including such securities as may be deposited with the Auditor or Treasurer of State, .and to collect the debts due and property belonging to it, with power to prosecute and defend suits in the name of the corporation, or in their own names, to appoint agents under them, -and do all other acts necessary for the collection, marshaling and distributing of the assets of the company and the closing of its concerns.\u201d\nThe petition which was filed by the Auditor in this cause \u2022contained all the averments that section 1 of the act requires to enable the court to grant an injunction and to appoint a receiver. The allegations of the petition conferred jurisdiction to render a decree appointing a receiver, and perpetually enjoining the further prosecution of the business of the corporation, and decreeing its involuntary dissolution, and especially so since the company answered that it could not deny the matters alleged in the petition.\nThe constitutional question which is argued by counsel was .fully considered by this court in Ward v. Farwell, 97 Ill. 593. It was there held that the statute now under consideration was \u2022constitutional. It is not necessary to again state the reasons which led to that conclusion.\nWas the order which was entered by the court on the 31st \u2022day of January, 1878, directing the receiver to institute proceedings against stockholders, erroneous ? Preliminary to giving attention to this question, there are several matters which may properly be examined.\nIt is urged that said order of January 31, 1878, is not in the record, except as a matter of evidence. The record, consists of the record which was originally filed in this court, and \u25a0of an additional or supplemental record which was afterwards Bled. This latter record contains the pleadings and the orders and proceedings in the cause. It is informally made up, and after the statement that \u201cpetitioner, in support of his motion for a perpetual injunction, introduced on the hearing the following evidence,\u201d follow the various petitions, answers, proceedings and orders in the cause. The certificate of the clerk is, that the transcript is a true, perfect and complete transcript of the record, prepared in accordance with the stipulation of counsel contained in the record. The stipulation was .filed in the cause, and immediately precedes the certificate of the clerk, and it is, in substance, that the record first filed in this court, \u201ctogether with the foregoing record, as made up for said Supreme Court, * * * shall be taken as the complete record in said cause for the purposes of this suit. \u201d There is also indorsed upon said record a stipulation, signed by the solicitors for the defendants in error, that the errors assigned upon the record originally filed may be considered as assigned and made upon said amended record, and one of the errors so assigned is, that \u201cthe court erred in making each and every of the orders and decrees set forth in the record aforesaid.\u201d It would seem that the transcript was made up for this court in the way in which it was by consent of counsel for both parties, and probably for the purpose of avoiding the supposed necessity of copying the pleadings, proceedings and orders twice in the record, and at the same time showing that the same were given in evidence in support of the motion for a perpetual injunction. Upon the first hearing of this cause in this court it was submitted by both parties to the controversy, upon the theory that the order in question was properly in the record and before the court for review. The case was heard and determined upon that assumption. We must now regard that order as a part of the record, and as legitimately before ns for examination.\nIt is suggested that it is for the interest and benefit of the corporation that a sufficient amount should be collected from its stockholders to pay its debts, and that it can not be heard to complain of the order directing suits to be brought against \u25a0such stockholders. In Ward v. Farwell, supra, it was held that on a petition filed by the Auditor to dissolve an insurance company or to restrain its further transaction of business, the stockholders of such corporation were not necessary parties to the proceeding. It would seem, then, that in any matter which affects the rights or interests of the stockholders, the company must, from the nature of the case, have the right to protect its stockholders, and that it is its duty so to do. A contrary conclusion would be subversive of justice, and in antagonism with first principles.\nIt is claimed that the order of the court now under investigation does not direct the receiver to proceed either at law or in equity against stock subscribers or stockholders, whether they have surrendered their certificates of partly paid stock or not. It must be conceded that it does not in express terms-direct or authorize such suits. But in order to apprehend the full scope of the order it is necessary to take into consideration one or two matters which are here not thus far stated.\nSection 6 of the charter of plaintiff in error provides as follows : \u201cThe real and personal property of each individual stockholder shall be held liable for any and all liabilities of the company to the amount of stock held or subscribed by him and not actually paid in. In all cases of losses exceeding the means of the corporation, each stockholder shall be-liable to the amount of unpaid stock held by him.\u201d\nA corporation may, if it acts in good faith, buy and sell shares of its own stock. (Chicago, Pekin and Southwestern Railroad Co. v. Marseilles, 84 Ill. 145; Same v. Same, id. 643; Chetlain v. Republic Life Ins. Co. 86 id. 220; Clapp v. Peterson, 104 id. 26.) The surrender by stockholders, to the com,pany, of the certificates of stock upon which twenty per centum Jhad been paidj and the issuance to such stockholders of certi- \u25a0 ficates for paid up stock, was, in substance and in legal effect, a purchase by the company of the unpaid stock at its par value. The transaction was not ultra vires. It was based upon resolutions adopted by the corporation at a stockholders\u2019 meeting. It does not appear that any stockholder has ever objected either to the resolutions or to the transfers of stock, which, in conformity therewith, took place between the corporation and such of the stockholders as elected to avail themselves of the privilege given thereby. The contracts were valid as between the company and the stockholders who gave up their part paid stock, and received in lieu thereof full paid stock for one-fifth of the amount relinquished. \u2022 The transaction was binding upon the company, and the stockholders who sold their stock to the corporation should be protected against further payments upon their subscriptions, unless there were, at the time of such transaction, existing creditors in respect to whose rights it was fraudulent. It is to be noted, that thereafter, as between such stockholders and the company, there was no indebtedness to the company in regard to the subscriptions for stock.\nSuch being the law, and the condition of affairs being such as has already been sufficiently indicated herein, the circuit court made the order of January 31, 1878, authorizing and directing the receiver to institute legal or equitable proceedings, not only against such of the subscribers to the stock and stockholders as he should be advised \u201care or may be indebted to the said company,\u201d but also \u201cagainst the subscribers to the stock and stockholders of said defendant.\u201d The language of the order is broad enough to cover suits prosecuted upon the liability of the stockholders to the creditors, and where the only liability is to the creditors. Construing the order in the light of the petition of the receiver, upon which it was based, the purpose of it was clearly to authorize and direct the receiver to sue for and recover from the stockholders, subscriptions for stock which they had, under the resolutions of the 11th of June, 1873, surrendered to the company. We think, therefore, that the grounds wffiich are urged by plaintiff in error for the reversal of that order clearly appear upon the face of the order, when properly construed.\nIt is suggested that the order in question is merely an interlocutory order, and that error can not be assigned thereon. But that order is still in force by virtue of the final decree, and it involves and determines a matter of substantial right, and we understand that under such circumstances error may be assigned upon an interlocutory order.\nIf the order directing proceedings against the stockholders who had transferred their unpaid stock to the corporation was valid and was not erroneous, it seems it must necessarily be so either because the assignment made by the company to the receiver invested the latter with such title, right or power as would enable him to maintain such suit, or because a receiver has authority, under the rule which prevails in the chancery courts, to avoid the voluntary and lawful acts of the person or corporation whose estate he represents, or may be clothed with such power by the court of chancery which appointed him, or because the statute for the dissolution of insurance companies makes the receiver appointed in conformity with its provisions, the representative of the creditors of the company that is restrained from the further prosecution of its business.\nWe will first consider the matter of the deed of assignment. It has been suggested that the transfer of the unpaid stock to the company did not operate as an absolute discharge of the stockholders\u2019 indebtedness for such stock, but was a discharge sub modo, only; that the debts continued to exist just as they did before, for the purpose of liquidating the claims of the creditors; that the company continued to be the creditor, and the subscribing stockholders the debtors, so far as the creditors of the company are concerned; and that, the legal title and interest in the debts remaining in the company for the benefit of its creditors, such legal title and interest, and the right of the company to control the claims, passed to the receiver by virtue of the company\u2019s assignment to-him, in pursuance of the order of the court directing such assignment. The statement of this theory is qualified by the expression, \u201cfor the benefit of the creditors,\u201d and other expressions of like import. It is to be borne in mind that there are no creditors who were parties to the proceeding the record of which is now before us. The statement also includes the element of \u201cthe right of the company to control the claims.\u201d But the transaction in question was lawful and valid, so far as the company itself was concerned, and was binding upon it, and it had no right to impeach it,\u2014only the creditors were entitled to that privilege; and the company had no authority to enforce or \u201ccontrol\u201d the claims, and it could not pass, by its deed of assignment, to any one, either assignee or receiver, any right of control or enforcement that it did not itself have.\nIt would seem that the company, by its deed of assignment to the receiver, did not transfer to him any rights greater or in addition to those that would have been conveyed had the assignment been made to an assignee under the Voluntary Assignment law. The provisions of the assignment now under investigation are no broader or more comprehensive than those that would have been contained in a deed made to such assignee, and, even if they were, it would be immaterial, for in the nature of things one can not transfer to another a right which he does not have, unless he is acting under a power.\nIn the case of Bouton v. Dement, 123 Ill. 142, this court, in speaking of an assignment under the. act relating to assignments for the benefit of creditors, said: \u201cThe company, by its assignment, conveyed no greater right, in respect to its property, than the company itself possessed. It is a rule of extensive prevalence, that a general assignment for the benefit of creditors does not pass to the assignee any interest in property before fraudulently transferred by the assignor, nor any right to impeach or set aside such fraudulent transfer, such right belonging to the creditors, only. * * * As held by this court, an administrator can not, even for the benefit of creditors, avoid a fraudulent conveyance made by his intestate. * * * We think consistency with our decision with respect to administrators requires the adoption of the rule above stated. It would seem, upon principle, that the same rule in this respect which exists in regard to an administrator should be held to apply to an assignee under a voluntary assignment. We do not perceive that our statute respecting assignments makes any change of the rule. The assignee, under the above doctrine, is not the representative of creditors, but the agent of the assignor for the distribution of the property assigned. The assignee\u2019s duty * * * is confined to the distribution of the property assigned to him. Any interest in property before fraudulently transferred by the assignor was not assigned to the assignee.\u201d\nIn the cases passed upon by this court in respect to an administrator, and in respect to an assignee under the Assignment act, there were the same elements that are claimed here, \u2014at least so far as the assignment made by the company is concerned. These elements are, the existence of creditors at the time of the transfers of property, and in respect to which creditors such transfers were or were claimed to be fraudulent, and a subsequent vesting in another person, either by operation of law or by conveyance of the property rights of the party who has made the supposed fraudulent transfers, and an attempt by such person to enforce the right of -creditors to reach, in payment of their debts, the property fraudulently transferred by the person to whose property rights the person making such attempt has succeeded. And there was the same element lacking that is lacking here,\u2014i. e., the right sought to be enforced had not been vested in the person from whom title and interest were derived.\nWe think that consistency with this decision in Bouton v. Dement, in regard to an assignee under a voluntary assignment, as well as consistency with the decision of the court in regard to an administrator, requires that the same rule should be adopted in this case in respect to the effect of the assignment that was executed by the plaintiff in error to the receiver. In other words, the receiver took, by the assignment made by plaintiff in error, no right to control or enforce the claims against the stockholders growing out of the transaction between the company and some of the stockholders, whereby certificates of stock were surrendered to the company in payment of unpaid subscriptions to capital stock.\nThe only authority to impeach the sale of the stock to the company being in the creditors of the corporation, the receiver, \"Ward, if he has such authority, must have it either because the doctrines applicable to proceedings in chancery invest him with an agency and right to act on behalf of the creditors in that regard, or give the court of equity, by virtue\"of its inherent powers, the prerogative to so invest him, or upon the ground that the statute for the dissolution of insurance companies clothes him with the right to enforce the rights of the creditors in that behalf.\nWe understand the rule to be, that where a receiver is appointed for the purpose of taking charge of the property and assets of a corporation, he is, for the purpose of determining the nature and extent of his title, regarded as representing \u25a0only the corporate body itself, and not its creditors or shareholders, being vested by law with the estate of the corporation, and deriving his own title under and through it, and that, for purposes of litigation, he takes only the rights of the corporation such as could be asserted in its own name, and that upon that basis, only, can he litigate for the benefit of either shareholders or creditors. In High on Receivers, (sec. 315,) the rule is formulated substantially and almost in words as stated above, except that the rule is qualified in said section by the statement, that when acts have been done in fraud of the rights Of creditors, but which are valid as against the corporation itself, the receiver holds adversely to the corporation. The only authority cited as sustaining the qualification found in the text is the case of Curtis v. Leavitt, 15 N. Y. 44. That case was decided upon the basis of such qualification. It was assumed and conceded by counsel, upon the argument of the case, that the receiver succeeded to the rights of creditors. It was announced in the opinion of the court, that \u201cfor all the-purposes of the present controversy\u201d they would \u201cproceed upon this assumption.\u201d The receivership there in question was. constituted under statutory provisions in which were found the expressions, \u201cappoint one or more receivers to take charge of the property and effects of the corporation;\u201d \u201cthe property that may belong to it;\u201d \u201care vested with all the estate, real and personal, of such corporation;\u201d \u201cas trustees for the benefit of creditors and stockholders;\u201d \u201cdeemed vested with all the-real and personal estate of the debtor; \u201d and \u201cpower to sue, in their own names or otherwise, and recover all the estate, debts, and things in action belonging or due to such debtor, in the-same manner and with the like effect as such debtor might or could have done if no attachment had been issued or trustees-appointed.\u201d Comstock, J., in his opinion, said: \u201cIt has been said in this as in other cases, that the receiver represents the creditors and the stockholders; but for all the purposes of inquiry into his title he really represents the corporation. He is by law vested with the estate of the corporate body, and takes his title under and through it. It is true, indeed, that he is declared to be a trustee for creditors and stockholders; but this only proves that they are the beneficiaries of the fund in his hands, without indicating the sources of his title or the extent of his powers. If, then, in a controversy between the receiver and third parties, in respect to the corporate estate, it is possible to form a conception of rights, legal or equitable,, belonging to the shareholders as individuals, which the corporation itself could not assert in its own name, the receiver does not represent those rights. So far as the shareholders are concerned, he can litigate respecting the fund upon precisely the grounds which would be available to the corporation if it were still in existence, solvent, and no receivership had been constituted. In regard to creditors, I should certainly incline to take the same view of his rights and powers under the statutes referred to.\u201d\nIn Alexander v. Relfe, 74 Mo. 495, it was said in the opinion of the court: \u201cWhen acts have been done in fraud of the rights of creditors, the receiver may litigate for their benefit, though the acts in question be valid as to the corporation itself, in which case he holds adversely, to the corporation.\u201d This language was wholly unnecessary to the decision of the ease, and the only authority cited therefor was \u201cHigh on Receivers, sec. 315, .and cases cited,\u201d which we have mentioned and considered above.\nIn Hyde v. Lynde, 4 N. Y. App. 387, it was said by Bronson, C. J.: \u201cThe recovery in this case seems to have gone upon the ground that the receiver had greater rights than those which belonged to the company. But for most, if not for all, purposes, he took the place and stands as the representative' of the company. He is as much bound by a settlement which the company was authorized to make as was the company itself. It would be strange, indeed, if the legal acts of a corporation did not bind the receiver of its effects. * * * If the settlement, though a lawful act in itself, had been made for an illegal purpose,\u2014if, for example, the parties had known that there were valid claims against the company to the payment of which the defendant ought to contribute, and yet the note was given up without consideration, for the purpose of defrauding either the creditors or the other members of the corporation, the persons defrauded would undoubtedly have a remedy. But I do not see how the receiver could sue. It would be like the case of a conveyance of property for the purpose of defrauding the creditors of the grantor, which, though void as against the persons intended to be defrauded, is nevertheless valid against the grantor and all who represent him. A receiver of the effects of such a grantor could not avoid the grant; neither can this receiver avoid a settlement which bound the corporation, though, in the supposed case, it was a fraud upon the creditors and other members of the company. The persons injured must sue.\u201d\nIn Farnsworth v. Wood et al. 91 N. Y. App. 308, the court said: \u201cThe rights of certain creditors to prosecute their claims .against certain of the stockholders never were the property of the corporation, nor rights of action vested in it, nor is there .any provision of the statute which transfers these rights of action from the creditors to the receiver.\u201d\nIn Coope v. Bowles, S. C. 42 Barb. 87, it was held that a receiver is not clothed with any right to maintain an action which the parties or the estate which he represents could not maintain, and that he must show a cause of action existing in those parties, and that by the appointment of the court, lawfully made in a matter where the court had jurisdiction, the power had been conferred on him, in his representative capacity, to prosecute the action.\nIn Piscataqua Fire and Marine Ins. Co. v. Hill, 60 Me. 178, a bill in equity was brought in behalf of the creditors of the corporation, by the plaintiffs, who were trustees under a winding-up statute, which gave them power to take charge of the \u25a0estate and effects of the corporation, and to collect its debts, and to prosecute and defend suits. The defendant was a stockholder, director and treasurer of the company. The bill charged -that he had illegally surrendered securities to stockholders, and that he had illegally sold to the company a large amount of stock, and received payment therefor, when he knew the company was insolvent, and that he had committed a variety of other acts, which were set out in detail, done by virtue of contracts with the company which were alleged to be illegal, fraudulent and void. A demurrer to the bill was- sustained, \u2022and it was dismissed. It was there said: \u201cThe trustees represent the corporation, alone, and not its creditors or stockholders. * * * The claims of the creditors and of the stockholders, if they have any, are in the first instance against the corporation, and they have no other except as provided by law. If the conduct of the corporation, its officers or stockholders, has been such as to give other remedies to the creditors, such may properly be pursued in their own names. So far as their rights are in question they must be vindicated by themselves, and not by others in their behalf.\u201d\nIn Waterhouse v. Jameson, 2 Pat. H. L. (Scotch App.) 1812, and Land Reps. 2 S. & D. App. 29, Lord Westbury said, before the House of Lords: \u201cI take it to be quite settled that the rights of creditors against the shareholders of a company, when enforced by a liquidator, must be enforced by him in right of the company. What is to be paid by the shareholders is to be recovered in that right. What is due to the company is that, only, which is in fact recoverable by the company. The liquidator, therefore, standing in the place of the company, the question is, has he a right to impeach the memorandum, set aside the articles, reduce the certificate, and recover in right of the company that which the company could not for one moment, as against a bona fide shareholder, be entitled themselves to recover ? I entirely adopt, in few words, what fell from my noble and learned friend (Lord Cairns) in the case of In re Duckworth, (L. R. 2 Ch. App. Cases, 577,) where my noble and learned friend used these words: \u2018The liquidator represents the creditors only because he represents the eom- . pany, and through the company the rights of the creditors are to be enforced.\u2019 * * * Could the company recover against him ? If there had been no winding-up order the question would not have admitted of a moment\u2019s doubt, and the winding-up order does not place the liquidator in a better position against the shareholder than the company were in.\u201d\nIn the same case, Lord Chelmsford said: \u201cIt is contended on the part of the respondent, that under the winding-up order the liability of the appellant is entirely changed; that it is competent to the official liquidator, who, it is said, represents not only the company but also the creditors of the company, to show .that the company was founded bn misrepresentation; that \u25a0the allegation in the memorandum and articles of association, that \u00bf6100,000 had been paid, was false; that the statement-on the register of \u00bf6100 having been paid on the appellant\u2019s shares was also false, and that the liquidator is therefore entitled to make calls upon the. appellant to the extent of \u00bf6100, not actually but only nominally paid on each of his shares. Upon examining the Companies Act, 1862, I find nothing to-warrant the assertion that the powers of the liquidator are as-extensive and searching into the constitution of a company as\u00eds thus alleged. He is appointed for the purpose of assisting, the court in the winding up of a company, but in all his proceedings he appears to be merely substituted for the company.\nIn Litchfield\u2019s case, L. R. 1 Eq. 231, John and Robert Clay-pole conveyed a patent right to the British and Foreign Cork Company, and received shares of paid up stock therefor. No-money was paid. A portion of these shares was afterwardstransferred to Litchfield. It was contended that the transaction was a fraud on creditors, and the liquidator applied to-have Litchfield\u2019s name put upon the list of contributories, it being claimed that the shares transferred to him were not paid up shares. It was held, that the right of creditors was only to get payment of their debts from those shareholders who-were liable to contribute to the payment, and that the holders-of paid up shares were not liable to so contribute. It was-further held, that it was not necessary to inquire whether the creditors could obtain any relief by bill in chancery.\nDefendant in error cites numerous cases in which it has1 been decided that a receiver could bring suit to set aside a transaction which was binding upon the person or corporation over whose estate he wras appointed. Almost all of the cases cited by defendant in error fall in one or another of the four classes following: Where the receiver, by force of some statute, can act for the creditors'; where the act complained of was ultra vires, and not binding upon the corporation; where the receiver was appointed in a proceeding prosecuted by creditors, which was supplemental to execution, and the receiver had the rights of the creditors at whose instance and to secure whose claims he was appointed; and where the receiver was suing for property or assets that belonged to the debtor. With the law of such cases we have no fault to find. To analyze and examine the various cases cited would unduly expand the proportions of this opinion, and would accomplish no useful purpose. We do not wish to be understood as saying that there is no conflict in the authorities in regard to the matter under consideration; but we think the decided weight of authority sustains the rule in respect to the powers of receivers, where there has been no enlargement of their powers by legislative enactment, that they have such rights of action, only, as were possessed by the persons or corporations upon whose \u00abstates they administer.\nA receiver is the right hand and creature of the court of \u2022equity, and he has such powers as are conferred upon him by the order appointing him, and the course and practice of the court. It will hardly be claimed, however, that the court of chancery, even with all its inherent powers, is authorized, in the absence of legislative sanction, to clothe its receiver with power to seize and enforce a property right which belongs only to parties who are not before the court nor asking its assistance.\nWhat are the powers of a receiver under the provisions of the act for the dissolution of insurance companies, and to what extent have his powers, according to the usual course and practice of the court, been increased thereby ? Section 5 of the act provides for the appointment of \u201cone or more persons to be receivers, to take charge of the estate and effects of the company, including such securities as may be deposited with the Auditor or Treasurer of State, and to collect the debts due, and property belonging to it, with power to prosecute and defend suits in the name of the corporation or in their own names, to appoint agents under them, and do all other acts necessary for the collection, marshaling and distributing of the assets of the company and the closing of its concerns.\u201d Section 6 of the act is as follows : \u201cThe receiver shall pay all debts due from the company, if the funds in his hands are sufficient therefor, and if not, he shall distribute the same ratably among the creditors who prove their debts, in such manner as the court may direct; and receivers may be authorized by the court to sell, convey and dispose of, and convert into money, any of the securities or assets of the company, for the purpose of paying such debts and distributing such funds. If there is a balance remaining after the payment of the debts, the receiver shall distribute the same among those who are justly entitled thereto, as members, stockholders, or otherwise, or their legal representatives.\u201d These two sections contain all of the powers that are expressly given to the receiver by the statute.\nIt will be noted that no provision is made in the act for the execution of an assignment by the corporation to the receiver. It would seem that the property rights of the company are committed, by force of the statute and by virtue of the decree \u2022of the court appointing a receiver, to the charge of such receiver) to be sued for, sold, conveyed and disposed of, and converted into money, as the court may direct. It appears that a decree ordering the execution of an assignment, and the making of an assignment to the receiver, are not necessary in order to vest in the latter full and exclusive charge and control, under the direction of the court, of the property rights of the company. In this particular case such decree and such assignment were in fact made, and so, in any view that may be taken, the property rights of the corporation have in fact vested in Ward, the receiver and assignee.\nThe powers of the receiver specially designated in the statute-do not seem to be essentially different from those mentioned in the Voluntary Assignment act as being given to the assignee under a voluntary assignment. In both acts the powers specified seem to be limited to the enforcement of property rights-derived from the corporation or assignor, respectively.\nSection 5 of the Dissolutions act defines the powers and property rights of the receivers. It says they are: \u201cto take-charge of the estate and effects of the company;\u201d \u201cto collect the debts due, and property belonging to it,\u201d the company \u201cto prosecute and defend suits in the name of the corporation, or in their own names; \u201d \u201cto do all acts necessary for the collection, marshaling and distributing of the assets of the company;\u201d and \u201cto do all acts necessary for the closing of its concerns.\u201d Section 6 defines the duties of the receiver in respect to paying out and distributing such moneys as may be in his hands, and also gives him power, when authorized by the court, to sell, convey and dispose of, and convert into money, any of the securities or assets of the company. The property rights donated him or given into his charge are, the-estate and effects of the company, the debts due the company, and the property belonging to it. We have already seen that in this case there were ho debts due the company from the stockholders here in question. To say, \u201cthe estate and effects of the company,\u201d means precisely the same thing as saying the estate and effects owned by the company. Ohio and Mississippi Ry. Co. v. Barker, 125 Ill. 303; Montgomery v. Wyman, 130 id. 17.\nWe do not find any words in said sections which afford any pretence for claiming that the powers of the receiver are so-enlarged thereby as to include the right to impeach a transaction which the corporation could not challenge but which the creditors could arraign, unless such enlargement is accomplished by the use of the words, \u201cthe assets of the company,\u201d or follows, by necessary implication, from the power given the receiver to marshal assets, or by like implication from the power donated \u201cto do all acts necessary for the closing of the \u25a0concerns\u201d of the company. As now used, the expression, the assets of a person, corporation or estate, is generally equivalent to the expression, the property of such person, corporation \u2022or estate. From the connection in which the expression, \u201cthe assets of the company,\u201d is found in this statute, we think it has reference only to the estate, effects, securities, debts and property specified in said statute, and which are to be placed in charge of the receiver. There may be frequent occasion for the application by the receiver of the equitable doctrine of marshaling, without any such amplification, of the fund to be .administered by him, as is contended for by the defendants in \u25a0error, and so there is no sufficient justification for saying that such enlargement follows by necessary intendment. The expression \u201cthe concerns of the company,\u201d falls in the same category with the phrase, \u201cthe assets of the company. \u201d Although broad enough, in one sense, to include the enforcement of claims which the company could not enforce but which its creditors \u25a0could, yet we think, from the context, that they were not intended to thus magnify the powers of the receiver. The expression may be given a signification which is both reasonable .and usual, and is also consistent with the other parts' of the statute, and with the functions of a receiver according to the \u25a0course and practice of the court, without holding that there is \u2022any enlargement of the powers of the receiver beyond what is \u25a0specified in the statute, and, therefore, it can not be held that .an expansion in that behalf results by implication.\nAn administrator is merely the representative of his intestate. An assignee is not the representative of creditors, but is the agent of the assignor for the distribution of the property assigned. A receiver, virtute officii, and without regard to any \u25a0expansion of his powers by statute or by an authorized decree of court, is only a custodian of property. He is ordinarily, in respect to his title and in respect to the litigations in which lie may engage, merely the representative of the oymers of the property submitted to his control. But, so far as his powers \u25a0are derived from a statute or from a lawful decree of court, and the powers do not involve rights which, at the time of his \u25a0appointment, were vested in such owners, he is not merely their representative, but is the instrument of the law and the agent of the court which appointed him. Such right and authority as the law and the court rightfully give him he possesses, and in respect to such right he.is not circumscribed and limited by the right which was vested in and available to the :owners.\nIt is claimed by counsel for defendants in error, and the \u2022claim is supported by Very able and learned arguments, that the legislature, in enacting the law here under consideration, invested the court of equity with jurisdiction and authority to make final settlement of the unfinished business of the corporation and close up its concerns, and that this authority, when supplemented by the powers inherent in the court of \u25a0chancery, was amply sufficient to warrant the court in making the order which is here called in question, and in doing all \u2022other acts necessary for the accomplishment of the ultimate purposes contemplated by the act. \u2022 But, as we have already \u25a0seen, the ultimate purposes intended by th\u00e9 act are, to perpetually enjoin insurance companies which fall within its purview, from the further continuance of the business for which they were organized, and to enable the court, through its re\u2022ceivers, to administer upon the estate, effects, securities, property and assets owned by such companies, and upon the debts \u25a0due them. The means by which these objects are to be accomplished are designated and fixed by the statute itself. The ninth section of the act provides: \u201cThe mode of summoning parties into court, the rules of practice, course of procedure \u2022and powers of courts, in cases arising under this act, shall be the same as in ordinary proceedings in equity in this State, \u25a0except as herein otherwise provided.\u201d As we have already, in. substance, remarked in another connection, it is not a power inherent in the court of chancery, and it is not in conformity with the course of procedure and rules of practice which obtain in ordinary proceedings in equity, for the court to clothe its receiver with power to seize and enforce a property right which belongs only to parties who are not before the court, and who are not asking its assistance. \u25a0\nNor is it provided in the statute, nor legitimately deducible therefrom, as is the case in respect to the statutes in force in some jurisdictions, that the receiver may represent creditors, and bring suits to set aside acts of the persons or corporations-whose property is in charge of the receivers, which were in fraud of such creditors. The legislature has made no provision of this kind, and in its absence it does not devolve upon the courts, by judicial legislation, to assume a jurisdiction that they have not heretofore possessed.\nOur conclusion upon this branch of the case is, that the-order made by the circuit court on January 31,1878, authorizing and directing the receiver to institute proceedings against the subscribers to the stock and stockholders of plaintiff in error, was erroneous.\nOne of the assignments of error is, that the court erred in-making each and every of the orders and decrees set forth in the record. It is claimed that an order made in January, 1878, directing the receiver to pay a \u201cdividend of fifteen percent of all accepted valuations made by him of policies, and certified by the actuary of the State Insurance Department, and of all other admitted liabilities of the said Republic Life-Insurance Company,\u201d etc., was erroneous. The statute provides for the payment of dividends to \u201ccreditors who prove-their debts,\u201d and it is claimed that this statutory requirement was disregarded in making said order. As we understand the record, no objection was made to this order upon the first submission of the case, nor until after the awarding of a rehearing. The receiver, acting in good faith upon this order, paid out $93,568.99, and his report of such payments was confirmed by the court. There was no objection taken in the court below either to the order or to the report. The order was a final and appealable order, but no appeal was taken or writ of error sued out until after the entry of the final decree in the cause. We think that under the circumstances the objections now urged should not be considered by us. The order, without any examination by us, should be allowed to stand for the protection of the receiver.\nThe final decree perpetually enjoining the plaintiff in error from the further prosecution of its business is affirmed. The order and decree licensing the receiver to set aside the transactions by which unpaid stock was surrendered and paid up stock issued is reversed.\nDecree reversed in part and in part affirmed.\nMr. Justice Scholfield :\nI do not concur in the foregoing opinion. I think that the statute conferred ample power upon the circuit court to make the order in question. Although the corporation may be estopped to sue these subscribers for stock, the receiver is not, for he represents, as to the transaction whereby they claim to be protected from suit by the corporation, both the corporation and its creditors, and it is his duty to collect the amounts subscribed, for the benefit of the creditors. 2 Morawetz on Private Corp. sec. 867, and authorities cited; High on Receivers, sec. 315; Curtiss v. Leavitt, 15 N. Y. 44; Sawyer v. Hoag, 17 Wall. 619.\nMr. Justice Magruder :\nThis is a controversy between creditors on the one side and stockholders on the other. Having acted as attorney for one of the creditors in the court below, I have taken no part in the decision of this case.", "type": "majority", "author": "Mr. Justice Baiceb Mr. Justice Scholfield : Mr. Justice Magruder :" } ], "attorneys": [ "Messrs. Sleeper & Whiton, for the plaintiff in error:", "Mr. George F. Westover, also for the plaintiff in error.", "Mr. C. Beckwith, also for the plaintiff in.error:", "Messrs. Hutchinson & Luff, for Ward, the receiver:", "Mr. Jno. N. Jewett, also for Ward, the receiver." ], "corrections": "", "head_matter": "The Republic Life Insurance Company v. Charles P. Swigert, Auditor, and Samuel D. Ward, Receiver.\nFiled at Ottawa October 31, 1890.\n1. Insurance companies\u2014dissolution\u2014powers of the Auditor\u2014constitutionality of the act of 1874. Section 1 of the act of 1874, in regard to the dissolution of insurance companies, which authorizes the Auditor of State to institute proceedings in equity to wind up the concerns of such companies, when he is of opinion, upon examination of their affairs, that they are unsafe, is not unconstitutional, but is a valid law.\n2. Same\u2014powers of receiver\u2014how acquired\u2014deed of transfer not necessary. In a proceeding by the Auditor to close the affairs of an insurance company, the statute does not require the company to execute a deed of assignment of its property to the receiver, when appointed, but the property rights of the company are, by force of the statute and the decree of the court, committed to the receiver, to be administered upon as the court may direct.\n3. Same\u2014powers of receiver\u2014statutory\u2014and such as are conferred by order of court\u2014or by deed of assignment. The powers of a receiver specially designated in the statute relating to insurance companies, are not materially different from those of an assignee under the Voluntary Assignment act. In both acts the powers specified are limited to the enforcement of property rights derived from the corporation or assignor.\n4. It is not a power inherent in the court of chancery, and it is not in conformity with the course of procedure and practice which ordinarily obtains in equity, for the court to clothe its receiver with power to seize and enforce a property right which belongs only to parties who are not before the court and who are not asking its assistance.\n5. Where a court of chancery, on the petition of the State Auditor, appoints a receiver to wind up the business of an insiu-ance company, it is error for the. court to direct the receiver to institute suit against the shareholders to collect their subscriptions to the capital stock, after the company has, by contract, put it out of its own power to collect such unpaid subscriptions. The receiver, in such a case, will have no greater powers than the company he represents. He is the representative of the company, and does not represent its creditors.\n6. A deed of assignment of an insurance company, made under, a decree of court, on the Auditor\u2019s petition to close the business of the corporation, transfers to the receiver no greater rights than would be transferred by the deed of an insolvent debtor under the Voluntary Assignment act. The deed will not pass any rights not possessed by the corporation. Therefore, the assignee will not take the rights of the \u25a0creditors to impeach the acts of the corporation. One can not transfer to another a right which he does not have, unless he is acting under a power.\n7. Beceiveb\u2014of his powers, generally-^and whom he represents. A receiver appointed to take charge of a corporation, is, for the purpose \u25a0of determining the nature and extent of his title, regarded as representing only the corporate body itself, and not its creditors or shareholders, and for the purpose of litigation he takes only the rights of the corporation such as can be asserted in the name of the corporation itself. Upon this basis, only, can the receiver litigate for the benefit \u25a0of either shareholders or creditors.\n8. Pabties\u2014closing affairs of insurance company\u2014on application of the Auditor. On petition by the State Auditor to wind up the affairs \u2022of an insurance company, or restrain its further transaction of business, the stockholders of the corporation are not necessary parties. In such a case it is the duty of the corporation to protect the interests of its stockholders, and it may assign for error any matter injuriously affecting their interests.\n9. Cobpobations\u2014buying and selling their own stock. A corporation may, if it acts in good faith, buy and sell shares of its own stock.\n10. The charter of an insurance company made each stockholder liable for the debts of the company to the extent of his unpaid stock. Under a resolution duly passed, the corporation canceled all certificates of stock not fully paid, and issued new paid up certificates for the amount of the surrendered stock actually paid: Held, that this, in legal effect, was a purchase by the company of the unpaid stock at its par value, and was binding as between the stockholders and the corporation, and could not be avoided by a receiver of the company.\n11. Assignment op ebbob\u2014on interlocutory order. Where an interlocutory order involves and determines a matter of substantial right, and is continued in force by the final decree, error may be assigned upon such order.\n12. Pbactice in the Supbehe Cottbt\u2014matters of record. Where a cause, at its first hearing in this court, is submitted by both parties, upon the theory that the order appealed from is properly in the record and before the court for review, such order will be treated as in the record when the cause is brought up a second time.\nWbit of Ebbob to the Circuit Court of Cook county; the Hon. Mubbay F. Tuley, Judge, presiding.\nMessrs. Sleeper & Whiton, for the plaintiff in error:\nA receiver of an insolvent corporation, for purposes of litigation, takes only the rights of the corporation such as can be asserted in its own name, except where acts have been in fraud of the rights of the latter, and which are valid as against the corporation itself, in which case he holds adversely to the corporation. High on Receivers, secs. 315, 320, 250; Curtiss v. Leavitt, 14 N. Y. 44; Hayes v. Kenyon, 7 R. I. 136; Gillett v. Moody, 3 N. Y. 479; Gillette v. Phillips, 13 id. 114; Osgood v. Layton, 3 Keyes, 521; Edwards on Receivers, 141.\nThe receiver of an insolvent corporation represents not only the corporation, but also the creditors and stockholders. In his character as trustee for the latter he may disaffirm and. maintain an action as receiver, to set aside illegal or fraudulent transfers of the property of the corporation. Attorney General v. Insurance Co. 77 N. Y. 275; Furnace Co. v. Peters, 40 Ohio St. 575; Pollard v. Bailey, 20 Wall. 520; Terry v. Little, 101 U. S. 216; Smith v. Hickobee, 53 Ala. 191.\nMr. George F. Westover, also for the plaintiff in error.\nMr. C. Beckwith, also for the plaintiff in.error:\nThe exchange of part paid for full paid stock was a valid transaction as between the parties thereto, and no one except, a creditor can avoid the same.\nThe receiver took no greater powers than the company had..\nError can not be assigned upon an interlocutory, order, but after final decree confirming such interlocutory order, error-may be assigned.\nCorporations may buy their own stock. Railroad Co. v. Marseilles, 94 Ill. 145; Chetlain v. Insurance Co. 86 id. 220; Strong v. Railway Co. 93 N. Y. 426.\nNo form of liquidation of an insolvent or bankrupt corporation authorized by a State law has any force whatever, so-far as it conflicts with any law of Congress upon the same-subject. Thornhill v. Bank, 1 Woods, 1; In re Independent Association Co. 1 Holmes, 105; Ex parte Eames, 2 Story, 322; Sturges v. Crowningshield, 4 Wheat. 122; Ogden v. Saunders, 12 id. 213; May v. Breed, 11 Cush. 40; Griswold v. Pratt, 9 Metc. 23.\nMessrs. Hutchinson & Luff, for Ward, the receiver:\nThe order appointing a receiver and restraining the company from further proceeding with its business, having been entered by consent of the company, error can not be assigned upon it. Armstrong v. Cooper, 11 Ill. 540; Haas v. Building Society, 80 id. 248.\nThe order appointing the receiver was one within the sound discretion of the court, and error can not be assigned upon it. Woods v. Young, 4 Cranch, 237; Insurance Co. v. Hodgson, 6 id. 206; Jenkins v. Brown, 21 Wend. 454; Crain v. Bailey, 1 Scam. 321; Powell\u2019s App. Proc. 336, 398.\nThe order complained of was for the benefit of the company. It was for the interest of the corporation that a sufficient-amount of its unpaid stock should be collected to pay its debts. Unless the whole record shows that the order was to the prejudice of the company, even if it were error, this court will not annul it. Douglas v. Soutter, 52 Ill. 154; Clark v. Marfield, 77 id. 258; Richards v. Greene, 78 id. 525; Hedges v. Mace, 72 id. 472; Van Valkenburg v. Trustees of Schools, 66 id. 103; Schlencker v. Risley, 3 Scam. 483; Bosley v. Insurance Co. 3 Gill & J. 450; Hughes v. Stickney, 13 Wend. 280; Powell\u2019s App. Proc. 131, 133.\nThe order complained of was interlocutory, and had no relation whatever to the final decree, and the court will not reverse an interlocutory order, when it appears, upon the-whole record, that there is no error in the final decree. Hanford v. Blessing, 80 Ill. 188.\nThe statute under which the receiver was appointed, empowered the court to \u201cmake such orders and decrees, from time to time, as the exigencies and equities of the case may require,\u201d and expressly authorized the receiver to prosecute and defend suits in his own name, and do all other acts necessary for the collection, marshaling and distributing of the assets of the company. Rev. Stat. chap. 73, secs. 103, 107.\nThe receiver of an insolvent corporation is a trustee for the creditors. High on Receivers, sec. 314; Gillett v. Moody, 3 N. Y. 479; Talmage v. Pell, 7 id. 347.\nWhere acts have been done in fraud of the rights of creditors, but which are valid as against the corporation itself, the receiver holds adversely to the corporation, and may sue the stockholders in his own name. High on Receivers, sec. 315; Curtiss v. Leavitt, 15 N. Y. 44; Gillet v. Moody, 3 id. 479; Porter v. Williams, 5 Seld. 142; Nathan v. Whitlock, 9 Paige, 152; Sawyer v. Hoag, 17 Wall. 619; Jacobson v. Allen, 20 Blatchf. 525; Osgood v. Osgood, 4 Keyes, (43 N. Y.) 70.\nThe act in regard to the dissolution of insurance companies, under which this proceeding was instituted, is not an insolvent law. The only insolvent law in force in this State at the time of the filing of the Auditor\u2019s petition was \u201cAn act concerning insolvent debtors,\u201d in force July 1, 1872. Rev. Stat. chap. 72; Mayer v. Hellman, 91 U. S. 496.\nThe State Insolvent law was not suspended, nor the jurisdiction of the State courts divested, by the passage of the Bankrupt law. That law had no effect upon the jurisdiction of the State courts over persons or property until the institution of proceedings in bankruptcy. Hawkins\u2019 Appeal, 34 Conn. 548; Shepardson\u2019s Appeal, 36 id. 23; Maltbie v. Hotchkiss, 38 id. 80; Clark v. Ray, 1 H. & J. 318; Reed v. Taylor, 32 Iowa, 209; In re Clark, 4 Ben. 88; Sedgwick v. Menck, 6 Blatchf. 156; Ex parte Ziegenfuss, 2 Ired. 463; Chandler v. Siddle, 3 Dill. 477; Mayer v. Hellman, 91 U. S. 496.\nMr. Jno. N. Jewett, also for Ward, the receiver." }, "file_name": "0150-01", "first_page_order": 150, "last_page_order": 179 }