Globe & Rutgers Fire Insurance v. Salvation Army , 177 Ga. 890 ( 1933 )

Gilbert, J.

By its petition filed on March 27, 1933, the Salvation Army sought to recover $1239, alleged to be due to it on account of “unearned premiums” on policies issued to it bjr the Globe & Rutgers Fire Insurance Company. It alleged that the company had become insolvent and unable to pay its obligations; that its affairs and all its assets in the State of New York had been placed in the hands of a receiver appointed by the Supreme Court of New York; that in compliance with the statutes of this State the company had on deposit with the State treasurer securities of the value of $10,000, and also had in this State other assets consisting of accounts due to it; that the company was indebted to other residents of Georgia, to some because of claims for unearned premiums, and to others because of liability under policies of insurance issued by it. On behalf of itself “and all other persons having claims in the State of Georgia against said company,” the petitioner prayed that a receiver be appointed to take possession of the deposit held by the State treasurer, and other assets in the State belonging to the company; that all persons having claims in this State-against the company, “who desire to participate in the above-mentioned assets, be required to intervene in this action; and that all such persons be restrained and enjoined from prosecuting any other actions against said company or its assets and deposits in. the courts of this State;” and for general relief. The court appointed a temporary receiver.

Davis, Adams, and Gross filed a petition seeking to recover portions of premiums on policies held by^ them. Herndon and Sikes, Commercial Credit Company and H. B. Samuels, I. Goldstein, and Mrs. T. Si Chandler filed petitions seeking recovery for losses alleged to have been covered by policies of the insurance company. The suits of Davis, Adams, and Gross, that of Commercial Credit Company and Samuels, and that of I. Goldstein were by order of the court consolidated with the suit of the Salvation Army.

Herndon and Sikes and Mrs. Chandler intervened “for the sole purpose of demurring to the petition,” for the reasons (1) that it does not state a cause of action; (2) that it does not appear that Salvation Army is a creditor by reason of loss on any fire insurance policy, and it does appear that the suit is for an alleged debt; (3) that it is not shown that petitioner belongs to the class of creditors for whose benefit the deposit of $10,000 was made with the State treasurer for the protection of losses sustained by policyholders, or that petitioner has any right to bring said bill for any class of creditors; (4) that it does not appear that losses sustained by the holders of policies do not exceed the amount of the deposit with the State treasurer, and therefore it does not appear that the Salvation Army has any right or lien on said fund which would entitle it to bring the petition on behalf of itself and other creditors.

The Globe & Butgers Fire Insurance Company demurred on the grounds (1) that the petition does not state a cause of action, legal or equitable; (2) that it does not appear that the claim of petitioner is for a loss on a policy of insurance written by, the company in Georgia, and therefore it does not appear that the claim of petitioner is within the class of claims for which the deposit was made as a guaranty fund with the State treasurer.

All demurrers were overruled, the receivership was 'made permanent, and "all persons having claims in this State against” the company, "who desire to participate in the assets coming into the possession of the receiver,” were "required to intervene in this action,” and all such persons were "enjoined from prosecuting any other action against” the company. The court vacated a previous order providing that the temporary receiver should not apply to the State treasurer for surrender of the bonds on deposit. The Globe & Rutgers Fire Insurance Company assigns error upon each of these rulings. Herndon and Sikes and Mrs. Chandler by separate bills of exceptions assigned error on the same judgment.

In view of the decision in Albright v. American Central Insurance Co., 147 Ga. 492 (94 S. E. 561), the jurisdiction of this court might be doubted; so that important question will first be considered. The Albright case differs from this, in that there were no other or conflicting claims to the bonds held by the State treasurer involved in that case. The case before the court was whether the original judgment against the insurance company should be set aside on account of fraud. If the original judgment was rendered in a suit at law, then the jurisdiction of the issue made by the motion to set aside was not within the jurisdiction of this court. On the other hand, if the original case in which the judgment was rendered was an "equity case” or involved an "extraordinary remedy,” then this court had jurisdiction. The court held: "That the proceeding in which the receiver was appointed was not a suit in equity, and did not involve an extraordinary remedy, within the meaning of the constitutional amendment approved August 19, 1916.” Civil Code (1910), § 6502. The court also held: "That the receiver appointed under the provisions of §§ 2420, 2421, supra, is in effect an administrative officer of the court, with limited power; and the restraint of such receiver amounts to no more than direction by the court to a statutory administrative officer.”

If the present suit is construed to be brought strictly within the provisions of §§ 2420, 2421, 2422, this court would be without jurisdiction, according to the ruling in the Albright ease. A claim for unearned premiums does not fall within the provisions of § 2420. Under the express language of that statute, the bonds are to secure "any loss insured against,” and unearned premiums do not fall under the terms "loss insured against.” Counsel for the Salvation Army in their brief state: "It is true that those parties who have sustained fire losses under policies issued by the defendant fire-insurance company are preferred in any distribution of the bonds deposited with the State treasurer. Gelsey v. Cogswell, 112 Fed. 599.” But they contend: “However, those parties whose claims against the defendant fire-insurance company arise by reason of unearned premiums have a right to share in'the bonds deposited with the State treasurer, after the claims of those parties sustaining fire losses have been satisfied.” The Code, § 2422, provides statutory methods for the relief of those who suffer “any loss insured against.” Therefore it is obvious that a proceeding based solely upon the section cited would not be in equity and would not afford this court jurisdiction.

We come then to the question whether the petition seeks to make an “equity ease” based upon the general principles of equity, and not dependent upon the statute. Of course the nanle given to a petition, such as “a bill in equity,” “a case in equity,” etc., is not conclusive. “Bills in equity,” strictly or technically speaking, were abolished by the Code, § 5508, and by the act of 1887 known as the uniform-procedure act (§ 5538), where it is provided that “all suits in the superior court for legal or equitable relief, or both, shall be by petition.” The character must be determined by the allegations and prayers of tire petition. Burress v. Montgomery, 148 Ga. 548 (97 S. E. 538); Taylor Lumber Co. v. Clark Lumber Co., 159 Ga. 393 (125 S. E. 844); Alsabrook v. Prudential Insurance Co., 174 Ga. 637 (153 S. E. 706); Spence v. Miller, 176 Ga. 96, 98 (167 S. E. 188). The petition alleges that it proceeds for a class. Suits may proceed for a class, under the Civil Code (1910), §§ 5414, 5415. The petition prays that the court require other creditors, as described, to intervene. “Courts of equity shall have authority to appoint receivers to take possession of and protect trust or joint property and funds, whenever the danger of destruction and loss shall require such interference.” Civil Code (1910), § 5476. “Where property has been placed in the hands of a receiver, all persons properly seeking to assert equitable remedies against these assets should become parties to the cause by intervention and prosecute their remedies therein.” § 5478. The petition filed by the Salvation Army undertakes to have a receiver appointed to take charge not only of the bonds held by the State treasurer, but “ other assets located in this State.” It also alleges that the suit is brought on behalf of petitioner and all other persons having claims in the State against the company. It prays for the appointment of a receiver, and that all other persons, not intervenors in this case, “be restrained and enjoined from prosecuting any other actions against said company or its assets and deposits in the courts of this State.” Construing the petition as a whole, we rule that the allegations and the prayers are sufficient to bring the case within the jurisdiction of this court. Whether the allegations and the prayers are sufficient to afford the relief sought is another question, distinct from the matter of jurisdiction.

The court erred in overruling the demurrers. “The power of appointing receivers and ordering injunctions should be prudently and cautiously exercised, and except in clear and urgent cases should not be resorted to.” Civil Code (1910) § 5477. “A court of equity may appoint a receiver to take possession of, and hold subject to the direction of the court, any assets charged with the payment of debts, where there is manifest danger of loss, or destruction, or material injury to those interested.” § 5479. It can not be held, under the facts alleged and the law applicable, that, as to the bonds sought to be placed in the hands of the receiver now held by the State treasurer, “there is manifest danger of loss or destruction or material injury to those interested.” All parties interested -are safeguarded under the law. The bonds must be held by the State treasurer until they are turned over, under order of the superior court, to some officer acting for the court. In such circumstances all parties who have suffered a loss “insured against,” having claims against the company payable out of the bonds, may become parties to any case pending in the court, seeking to subject the bonds, and make known their claims, as provided in the Code, § 2422. The plaintiff in the present petition, not being within the class of persons holding claims for losses insured against (§ 2420), can not base its claim on that statute. Not having any lien of any kind against the company, and not alleging that the bonds amount to more than a sufficient sum to pay those losses “insured against,” it fails to make a case for a receiver. We do not overlook the allegations that the company is insolvent and a non-resident, and that “there are other assets in the State and other claims against” the company, or the allegations and prayer with reference to requiring all other parties similarly situated to intervene in the case. These allegations, except as to insolvency and non-residence, are too vague and uncertain to authorize a court to grant the extraordinary relief of injunction and receiver. Even if there are other parties, it is not alleged who such parties are, nor with reasonable certainty the basis of their claims, nor their interest in the assets, nor that such other parties are lienholders or occupy any other legal position authorizing the grant on their petition of the relief prayed for.

To entitle one to the extraordinary and harsh remedy of injunction and receiver, a clear legal right to the same must be alleged and shown. Where, as in this instance, the only property identified and pointed out as the property of the defendant is $10,000 in bonds deposited with the State treasurer as provided by statute, and the petition fails to show that petitioner has any interest therein, the remedy sought will be denied. This is true, notwithstanding the insurance company is insolvent and non-resident. The burden is on the petitioner to allege an interest that requires a resort to equity for its protection. The statute fixes definitely the purpose of the deposit and the class of creditors for whose benefit the same is required. Mere silence as to the existence of such creditors and the amount of their claims will not take the place of affirmative allegations. Although an insurance company is insolvent, nonresident, and has made a deposit under the statute, a creditor having no interest in such deposit can not obtain an injunction and receiver. Receivers must be paid. Payment comes out of the assets seized, and lessens the amount that remains available for distribution among those legally entitled to preference. Unless all necessary facts are shown, including the fact that the bonds amount to more than enough to pay losses insured against, and unless the preferred class ask for and show legal cause for a receiver, the court should not make such appointment. The court erred in overruling the general demurrers to the petition in so far as the petition sought extraordinary equitable relief and the appointment of a receiver.

Judgments reversed in part md affirmed in part.

All the Justices concur.