The People v. Niehaus

The court declares in the foregoing opinion that the question for determination is whether the respondent had the power to appoint receivers of the Peoria Life Insurance Company in the face of the statutory provision that the appointment of a receiver of such a company should be made by the Director of Insurance. After deciding in the negative the sole question presented, the court proceeds to declare, among other things, that the applicable statute makes the receiver an executive or administrative, and not a judicial, officer; that adherence to what was said inPeople v. Marquette Fire Ins. Co. 351 Ill. 516, with respect to the status or character of the receiver of an insolvent insurance company is withdrawn; that the circuit court exercises a limited supervision over such a receiver and that it has jurisdiction to try claims against an insolvent insurance company and to pass upon the charges and allowances to be made out of the assets of such a company. Neither the question whether the receiver of an insolvent insurance company is an executive, administrative or judicial officer and the scope of the circuit court's supervision over him, nor the extent of the court's jurisdiction in an appropriate proceeding for the liquidation of an insolvent insurance company was presented for decision in this case.

It is an accepted principle that a court may not speak authoritatively upon questions not involved in the litigation. This restrictive principle is salutary for expressions of opinion upon extraneous matters necessarily lack binding force. It will be proper to consider the questions upon which unnecessary pronouncements have been made by the majority only after those questions have been argued and their decision is essential to a disposition of the case.

The opinion filed is based upon the act in relation to delinquent insurance companies, associations and societies (Cahill's Stat. 1933, p. 1603; Smith's Stat. 1933, p. 1707). Recourse to that act exemplifies the danger of the wide range taken by the majority of the court. Section 2 of the act requires the Attorney General, for any of the enumerated causes reported by the director, to apply to the circuit court of the county in which the principal office of the particular insurance company is located, for an order directing the company, upon such notice as the court may prescribe, to show cause why a receiver should not be appointed to take possession of its property and to conduct its business, and for such other relief as the nature of the case and the interests of its policyholders, creditors, members, stockholders or the public may require.

Section 3 provides that on such application, or at any time thereafter, the court may, in its discretion, issue an injunction restraining the company, its officers, agents and employees, from the transaction of its business or the disposition of its property. The court may also issue other injunctions to conserve the company's property and to prevent preferences, judgments, attachments or other liens thereon. Upon the return of the order to show cause, and after a hearing, the court is required to enter an order denying the application or finding that sufficient cause exists for the appointment of a receiver to take possession of the company's business and to conduct it until the further order of the court. In case an order showing cause for such appointment is made, the director shall appoint some competent person, resident of the State, receiver, who shall enter into bond in such sum and with such sureties as the court shall approve. Upon his appointment and qualification, the receiver shall take possession of the company's property and conduct its business until, on the application of the director, through the Attorney General, or of such company, it shall, after a like hearing, appear to the court, that the ground for the appointment of the receiver has been removed and that the company may properly resume possession of its property and the conduct of its business.

By section 4, it is provided that, if, on like application and order to show cause, and after a hearing, the court shall order the liquidation of the business of the company, such liquidation shall be made by and under the direction of the receiver, who may deal with the property and business of the company in his own name as receiver or in the name of the company, as the court may direct. At any time after the court shall order liquidation, the director may apply for the dissolution of the company, and the court, after notice to all parties interested, a hearing and such other procedure as the court may deem proper, for reasonable cause, shall decree a dissolution.

Section 8 provides that the compensation of the receiver, special deputies, clerks, assistants, attorneys and solicitors, and all expenses of taking possession of, and conducting the business of liquidating, any such company shall be fixed and allowed by the court and shall be paid out of the funds and assets of the company. The section further provides that, for the purposes of the act, the director shall have power, subject to the approval of the court, to make and prescribe such rules and regulations as to him shall seem proper. The eleventh section prescribes that the mode of summoning parties, the rules of practice, the course of procedure and the powers of the court, in all cases arising under the act, shall be the same as in ordinary proceedings in equity and as by law provided.

The foregoing review of the provisions of the act discloses that the circuit court determines whether a receiver shall be appointed. An affirmative decision requires the court to fix the amount of the receiver's bond and to pass upon the qualifications of his sureties. The court likewise determines whether the cause for the appointment of a receiver has been removed and whether the company may resume the possession of its property and the conduct of its business. The liquidation of the company's business and the dissolution of the company are ordered only after notice and hearing and proceed as the court may direct. The compensation of the receiver and his assistants is fixed and allowed by the court. Even the power of the director to make rules and regulations may be exercised only subject to the court's approval. The powers of the court and its course of procedure, it is expressly provided, shall be the same as in ordinary proceedings in equity. Apart, therefore, from the mere appointment of a receiver of a delinquent insurance company, after the court shall have decided that such an appointment should be made, the receiver is not solely an executive or administrative officer. In the conduct of the company's business as well as in its liquidation and the dissolution of the company, if successively ordered by the court, the receiver acts subject to the court's jurisdiction and supervision, not for a limited purpose, but to the same extent as in ordinary proceedings in equity. It follows, in my opinion, that the conclusions of the majority respecting the character of the receiver and the scope of the court's supervision over him are unnecessary to the decision of the case and are unsupported by the provisions of the governing act. Accordingly, I assent only to that part of the opinion by which it is decided that the power to appoint the receiver was vested in the Director of Insurance.