Masters v. Hartmann
Masters v. Hartmann
Opinion of the Court
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
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
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.
Reference
- Full Case Name
- MASTERS v. HARTMANN HARTMANN v. MASTERS
- Cited By
- 4 cases
- Status
- Published
- Syllabus
- Corporations; Officers; Life Insurance; Parties; Equity; Receivers; Trusts and Trustees. 1. Officers of an insurance company who come into the possession of the assets of the company, which had been transferred to it by another company whose business and assets it had acquired, have no right to retain, without authority, such assets in their possession as self-constituted trustees for the policy holders of the company which had transferred them, and are responsible for such assets to a receiver of the company to which they had been transferred; and if they have sold any of them are liable for their actual value; nor have such officers, where they refuse to attend directors meetings, any right to acquire new offices for the company and to charge it with rent for the same. 2. ' Policy holders of an insurance company which had transferred its assets to another insurance company, who had acquiesced in such transfer and accepted the liability of that company and paid premiums to it, are not necessary parties to á suit in equity for the appointment of a receiver for the company to which such assets had been transferred. 3. Capital stock of an insurance company issued to certain of its officers, who gave no consideration for it, cannot be made the basis of any claim in a receivership proceeding affecting the company, 4. Where disagreement of the members of the board of directors of a corporation, who are equally divided in number, results in a suspension of the business of the company, leaving nobody to manage its affairs or conserve its assets, a receiver will be appointed to take possession of its property and manage its affairs under the supervision of the court. 5. In a receivership proceeding involving an insurance company which had taken over the assets of another company and assumed its obligations, the assets, including those received from the transferring company, will be conserved and used for the benefit of its policy holders and the policy holders of the transferring company who have accepted the liability of the other company.