The People agt. Globe Mutual Life Insurance Company. SUPREME COURT. THE PEOPLE OF THE STATE OF NEW YORK agt. THE GLOBE MUTUAL LIFE INSURANCE COMPANY. Life insurance company· Code of Procedure, section 430— Duty of attorney-general under — Practice as to winding up insolvent insurance companies - Waiver. A life insurance corporation which is bound by law to hold its property and funds for the benefit of the insured, when it, by the deliberate and fraudulent action of its officers and trustees, has wasted and misappropriated its entire capital, and several thousand dollars in addition of moneys received from policyholders, it has, then, offended against not only some, but against all the provisions of the act or acts creating such corporation." * * * Section 430 of the Code of Procedure expressly declares it to be the duty of the attorney-general, on leave granted by the supreme court or a judge thereof," to bring an action "for the purpose of vacating the charter, or annulling the existence of a corporation, other than a municipal," which has thus conducted itself. The power conferred, and duty imposed, upon the attorney-general by this section of the Code of Procedure has not been in any wise impaired or affected by the act of 1853, or any other statute. Where, in pursuance of the provisions of this section, the attorney-general commenced this action in the supreme court by the service of a summons and complaint upon the defendant, for the purpose of enjoining further business by it as a life insurance company and to distribute its assets, and upon an order to show cause, the defendant appearing by its counsel, an application for the appointment of a receiver was heard; the court hearing the allegations and proofs of the respective parties, and the result of the application being an order made by the court appointing a receiver of the defendant. The counsel for the defendant not only took no objection to the form or manner of procedure, but formally united with the attorney-general in the application and strenuously argued and urged the need of prompt action "by the court, as asked for by that state official: Held, that this appearance in the action and consent to the order waived all irregularities, if any existed, and foreclose the defendant from all objections, constitutional or otherwise. An artificial being, as a natural one, when summoned before a tribunal having, by the law of the land, jurisdiction of the subject-matter of the relief asked, and which by the The People agt. Globe Mutual Life Insurance Company. service of process has also obtained jurisdiction of its person, must object at the proper time or be foreclosed from making any. The objections made to the constitutionality of the act of 1869 considered and held to be untenable. Held, also, that the order appointing the receiver is valid under the act of 1869. The order entered having been held to be valid is irrevocable by consent of the attorneys for the parties. When individuals have voluntarily placed their property in the hands of a receiver made by the court, by no consent of their's can he be removed and the trust abrogated. The court has assumed a duty which is beyond their control. This doctrine is especially applicable to a proceeding against a life insurance corporation, because the course of procedure is all defined by statute. Albany Special Term, June, 1880. TRIAL by the court without a jury. The cause, though on the calendar of the Albany circuit and special term, was heard by the judge holding such circuit at his chambers in Kingston, by the agreement of parties. S. W. Knevals, for attorney-general. Hamilton Harris, for superintendent of insurance. G. W. Wingate and W. Bartlett, for receiver. Henry E. Knox, for policyholders. Augustus Van Wyck, for policyholders. A. Schoonmaker, for policyholders. Charles T. Lewis, for defendant. WESTBROOK, J.- By permission of a judge of the court, first had and obtained, the attorney-general of the state commenced this action in the supreme court by the service of a summons and complaint upon the defendant, for the purpose The People agt. Globe Mutual Life Insurance Company. of enjoining further business by it as a life insurance company, and to distribute its assets. The complaint averred the organization of the company in the year 1864, and the prosecution and the carrying on by it of the general business of life insurance. It further alleged a gross mismanagement of its affairs by the officers thereof, a diversion of the assets to the use of its officers and trustees, and its insolvency for more than a year. It also declared that a new board of directors had been elected in March, 1879, with a view to its re-organization, but that such board after a careful investigation of its affairs had found a deficiency in its assets of more than $700,000, and that as a consequence thereof, its business could no longer be continued, and that they had unanimously resolved, that the attorney-general should be requested, for the protection of its policyholders, to take proceedings for the appointment of a receiver. A perpetual injunction against the continuance of its business by the defendant was asked for, and also the appointment of “a receiver of its property and effects pursuant to the provisions of the Revised Statutes and Laws of this state." A judgment dissolving the corporation was likewise demanded, and also an injunction restraining the defendant, its officers and agents, pendente lite, from doing business, but no other demand for a receiver was made except as just stated. * * Upon an order to show cause, at a special term of this court, held in the city of Albany, the defendant appearing by its counsel, Wm. Allen Butler, an application for the appointment of a receiver was heard. The superintendent of insurance, by Hamilton Harris, his counsel, likewise appeared, and united with the attorney-general in the application. The court then heard "the allegations and proofs of the respective parties." Such proofs consisting of a very full and detailed report by a committee of the board of trustees of the defendant, verified by their oaths, which showed its exact condition, which was one of most hopeless insolvency, The People agt. Globe Mutual Life Insurance Company. produced by careless if not fraudulent mismanagement of its affairs by its officers and trustees, and also a resolution of its board of trustees passed only three days before the application, asking the attorney-general to place its affairs, property and effects in the hands of a receiver. The counsel for the defendant not only took no objection to the form or manner of procedure, but formally united with the attorney-general in the application, and strenuously argued and urged the need of prompt action by the court as asked for by that state official. The result of the application was an order made by the court, entered on the 10th day of June, 1879, appointing Mr. James D. Fish receiver of the defendant. This order was resettled by the court, all parties appearing on such resettlement, and a new order entered on the 17th day of June, 1879, which is in exact conformity as to its terms and provisions, except as to the personality of the receiver, Mr. Fish, with the wish and views of the then attorney-general (Hon. A. Schoonmaker), and the counsel (Wm. Allen Butler) of the defendant. A much more full statement of the proceedings and of the orders entered in this action, are given in a previous opinion rendered therein upon the application to confirm the report of the actuary, appointed in conformity with section eight of chapter 902 of the laws of 1869, to which reference is hereby made (See ante, 57). It is sufficient now to say, what in the former opinion is established, that the order appointing the receiver, provides for no receiver pendente lite, but that it is a final order for distributing the property and effects of the company, pursuant to the act of 1869, and it is proper here also to state that neither the complaint nor order to show cause asked for a temporary receiver until a final decree or judgment was made, but one which should take and hold the assets for distribution, and who should proceed at once to wind up the business of the defendant pursuant to the provisions of law. On the 26th day of February, 1880, over eight months after The People agt. Globe Mutual Life Insurance Company. the order had been entered in the action, as has been stated, the defendant served, and the attorney-general accepted an answer therein, which puts in issue the insolvency of the defendant. Orders have also been made allowing certain policyholders to intervene and become parties to the action, (Att'y-Gen. agt. North Am. Life Insurance Co., 77 N. Y., 297), some of whom have appeared therein, and by answer insist that after the order aforesaid had been entered, it was incompetent for the attorney-general and defendant to make an issue for trial, and they demand judgment affirming and validating the former order. The issues in the action were noticed for trial at the Albany circuit, and were by consent of parties heard at the judge's chambers, in the city of Kingston, before him without a jury. On such trial the plaintiffs put in evidence all the proceedings and orders in the action, and also the report of the committee of the board of trustees of the defendant, of which mention has already been made, and the resolution of the said board of trustees requesting the attorney-general to place it in the hands of a receiver, adopted on the 26th day of May, 1879. After this evidence had been introduced, it was moved in behalf of the plaintiffs, the policyholders who had intervened, and the receiver, that there should be a judgment in the action affirming the past action, which the defendant resisted, and a counter motion was made in its behalf, to dismiss the whole proceeding as irregular and void. The motion on the part of defendant will be first examined, for if that be sustained, there can manifestly be no judgment affirming past action, as claimed by the other parties. The general power of the supreme court over corporations will not be disputed. On leave granted by a justice of this court, as has already been stated, the attorney-general, by summons and complaint duly served, brought the defendant within its jurisdiction. The allegations of the complaint |