Walker v. McMillen

The majority opinion gives to the circuit court of Pulaski County exclusive jurisdiction to determine and wind up the affairs of insolvent life, fire, casualty and all other insurance companies doing business in this State. This is done without any authority of law cited in the opinion or that I have been able to find on my own investigation. The only semblance of authority cited is subdivision 8 of 5951 of Crawford Moses' Digest, which reads as follows:

"Whenever the Insurance Commissioner shall have reason to believe that any insurance company of this State is insolvent or fraudulently conducted, or that its assets are not sufficient for carrying on the business of the same, or during any noncompliance with the provisions of this chapter, he shall communicate the fact to the Attorney General, whose duty it shall then become to apply to the Supreme Court or the circuit court, or, in vacation, to any of the judges thereof, for an order requiring said company to show cause why their business should not be closed; and the court or judge, as the case may be, shall thereupon hear the allegations and proofs of the respective parties, or appoint some suitable person as examiner to perform such duty and report upon the facts to said court or judge. If it appear to the satisfaction of said court or judge that such company is insolvent, or that the interests of the company so require, the said court or judge shall decree a dissolution of such corporation, and a distribution of its effects; but, in case it shall appear to said court or judge that said corporation is able to comply with the provisions of this act, and that it is not insolvent, a decree shall be entered annulling the act of the Insurance Commissioner in the premises and authorizing such company to resume business."

The majority opinion upholds the authority of the Pulaski Circuit Court to displace a receivership theretofore determined in the Pulaski County Chancery Court after insolvency adjudged. It will be noted that the subdivision of the statute heretofore quoted does not authorize the appointment of any receiver by the circuit court. The fact is, this subdivision of the statute only authorizes the circuit courts of Pulaski County or any judge thereof in vacation or any member of the Supreme Court in vacation, to make an investigation and determine whether or not the insurance company is in fact insolvent. When this adjudication is made, the jurisdiction of that tribunal ends, so far as the statute is concerned. Not only is the majority opinion in this case without statutory law to support it, but it is in direct violation of the ancient jurisdiction of courts of equity.

Just how the circuit court of Pulaski County, or any member of this court under like circumstances, would wind up and finally settle the affairs of an insolvent insurance company is not pointed out in this majority opinion. I do assert without fear of contradiction that whatever orders and judgments may be entered by the Pulaski Circuit Courts or the judges in vacation, referred to in the statute, will be without authority of law and in strict violation of the jurisdiction of chancery courts.

The majority opinion cites Franklin v. Mann,185 Ark. 993, 50 S.W.2d 606, in support of its present position. This case is like the one here decided. It has no authority to support it. The section of the statute cited to support the present opinion was cited in the Franklin case and no other authority was cited. It is not necessary to undertake to argue the merits or demerits of the case of Franklin v. Mann, because it has no statutory or common-law authority to support it and should be overruled. The proposition of the circuit courts of this State, or the judges of the Supreme Court, appointing receivers had never been heard of until the announcement in Franklin v. Mann, and just now the court reached the conclusion that any such authority was granted under subdivision 8 of 5951 is beyond my power of comprehension.

Just how this circuit court receiver is expected to perform his duties is not divulged in the opinion. Receivers appointed by courts of equity in this State are subject to the rules, orders and directions of the courts of chancery.

Section 8600 of Crawford Moses' Digest, provides in part: "Whenever it shall not be forbidden by law and shall be deemed fair and proper in any case in equity, the court, judge or chancellor shall appoint some prudent and discreet person as receiver, etc." This section of the statute grants an exclusive remedy in the appointment of receivers and the manner in which they may and shall operate.

Section 8601 of Crawford . Moses' Digest, provides in effect: "When it appears to the court, judge or chancellor, that such appointment should be made additional bonds may be required in behalf of the receiver."

Section 8603 of Crawford Moses' Digest provides in effect that, after this statutory receiver shall have taken the oath of office and filed a bond, "he shall possess all the powers which a receiver in a court of chancery can possess, unless otherwise provided in this act."

Section 8604 of Crawford Moses' Digest provides that he may institute and maintain suits subject to the orders of the court, judge or chancellor, etc.

Section 8606 of Crawford Moses' Digest provides, in effect, subject to the further order or decree of the court, judge or chancellor, such receiver shall have full possession, custody and control of all property in his hands.

Section 8609 of Crawford Moses' Digest provides in effect, that receivers may be removed any time by the court, judge or chancellor.

Section 8610 of Crawford Moses' Digest provides, in effect, that receivers shall make reports of their proceedings every six months or oftener, if required by the court, judge or chancellor.

It will thus be seen that all the statutory law in this State in reference to receiverships vests the jurisdiction thereof exclusively in the courts of equity or the chancellor thereof in vacation. These positive statutory laws are nullified and destroyed by the receivership herein created. There is no rule of conscience, law or equity that will circumscribe the performance of his duties after he once gets possession of the property.

A serious mistake has now been made in judicial procedure in this State. This court has now read into a statute, wherein no such language is employed, that the circuit courts in this State may appoint receivers, but it has prescribed no rules for such receiver to be guided by after he shall have taken the oath of office. No limitation is prescribed on his authority. I take it, he can sell the property, with or without notice, which may come into his hands. He may account for the proceeds or he may not at his selection. Certainly, he IS not required to report to any court in reference to his actions. This circuit court receiver is not an officer of any court and is not required to pay allegiance to any forum.

It must be admitted by all that this circuit court receiver is a hybrid, so far as law and the rules of equity are concerned.

Since when, and until now, was it ever dreamed by the most idealistic judicial tribunal that the great Story would be desecrated on the altar of judicial legislation?

"The appointment of a receiver is a part of the jurisdiction of equity, etc." So says 3, article "Receivers," 23 R.C.L., page 9, and up to the opinion of this court in Franklin v. Mann it was thought by the profession to state a universal rule of law in reference thereto but, alas, there seems to be no end to this unwarranted desecration.

This court, in the early case of Hempstead v. Watkins,6 Ark. 317, held that the Legislature of this State was without authority to limit or abridge the powers or authority of courts of chancery. This rule has been adhered to by this court without exception until the pronouncement in Franklin v. Mann.

It must be seen, therefore, that under our statutory laws, when construed according to their plain language, the circuit courts of this State have no semblance of authority to appoint receivers and wind up insolvent corporations. On the other hand, had the Legislature passed a statute, as held by this court in Franklin v. Mann, such statute would be absolutely null and void as limiting and abridging the ancient jurisdiction of chancery courts. Taking either horn of the dilemma, the majority opinion in this case is without authority to support it.

The statute cited as authority gives the same jurisdiction to a judge of the Supreme Court that it gives to the circuit courts. Can it be imagined a judge of this court having half a dozen receivers operating under his direction and control throughout the State? Would any lawyer in the State believe his eyes and ears were he to see a receiver operating under the direct jurisdiction of the supreme Court?

A construction of this kind would absolutely nullify and abrogate the plain mandate of the Constitution, wherein it vests the Supreme Court of this State with appellate jurisdiction only. The fallacy of the argument and logic sufficiently appears without further elaboration.

I therefore respectfully dissent.