Johnson & Cotnam v. Baxter

Hart, J., (after stating the facts). The plaintiff, in his complaint, bases his right to recover on the alleged fraudulent representations made in the letters set out in the statement of facts. The particular representations which he alleges were false and which were made with intent to deceive him, and which were relied upon by him to his loss and injury, are contained in a letter written by the defendants to Carlton on the 28th day of January, 1909. In that letter, the defendants stated that the assets of the Southern Insurance Company were in good condition and ample to meet the outstanding claims. In it the defendant stated: “We have arranged with the Fidelity & Deposit Company for them to assume payment of any losses that may occur under Southern policies in connection with liabilities that now exist to the extent of $20,000.” The natural effect of this statement would be to repress any further inquiry upon the part of the plaintiff as to the solvency of the insurance company, and to lull him into a sense of security as to his policy. Bepresentations of this character, if false and made with intent to deceive the plaintiff, and relied upon by him to his loss and injury, are actionable. The undisputed evidence, however, shows that the statement was true in every respect, and was made by the defendants in good faith. The receiver had in his hands four thousand dollars of the assets of the company. In addition to this, he had made an agreement with the surety company to deposit in the chancery court the sum of $20,000, the full amount of the bond upon which it was liable as surety, and under the agreement, the amount of the bond was to be administered as assets of the company. This made the sum of $24,000 as available assets of the company at the time the letter was written. The claims proved and allowed by the court amounted to $22,170.64. Thus, it will be seen that the assets were sufficient to pay all the outstanding claims against the company. It is true the chancellor disallowed the claim of the plaintiff, but under the ruling of this court in the case of the Federal Union Surety Co. v. Flemister, 95 Ark. 389, his action in so holding was error. In that case, which was decided after the chancellor had refused to allow the claim of the plaintiff in the present case, the court, in deciding a precisely similar question, held : “1. The courts of this State have no authority to dissolve a foreign corporation, but may appoint a receiver to collect and distribute its assets in this State to its creditors. “2. Where there was no adjudication of the insolvency of a foreign mutual insurance company, and no decree dissolving the corporation, but there was an order of a chancery court appointing a receiver to collect and distribute its assets in this State to the creditors, a policy holder whose policy has not been cancelled, may recover for a loss which accrued after the receiver’s appointment. ’ ’ So it may be said that if the plaintiff had prosecuted an appeal from the action of the court in not allowing his claim, he would have recovered. Not having done so, he is in no attitude to complain of the defendants. Cotnam presented his claim to the chancellor for allowance, and the chancellor disallowed it on the ground that the loss occurred after the receiver had been appointed. Cotnam notified him of the ruling of the chancellor and of his reasons for so holding. It was not then the duty of Cotnam to prosecute an appeal from the decree of the chancellor. It was the duty of the plaintiff, himself, to do that. Hence, the loss suffered by the plaintiff arose from his neglect to prosecute an appeal from the decree of the chancellor refusing to allow his claim, and his loss did not result from any false representations made to him by the defendants in regard to the ability of the insurance company to pay losses on claims outstanding against it. The representations made by the defendants to the plaintiff in the letters set out in the statement of facts were true in every respect, and did not cause his loss in the present case. The testimony on this question is undisputed, and no inference unfavorable to the view we have expressed could be deduced from it. It follows that the court erred in not directing a verdict for the defendants as requested by them, and for this error, the judgment must be reversed, and, it appearing that the case has been fully developed, and that no other testimony favorable to the plaintiff could be obtained on a new trial of the case, it is ordered that the •complaint of the plaintiff be dismissed.