State ex rel. Clapp v. Educational Endowment Ass'n of Minneapolis

Collins, J. The defendant is a co-operative or assessment insurance company on the endowment plan, incorporated in the manner prescribed in Laws 1885, ch. 184. This action was brought against it under the provisions of 1878 G. S. ch. 76, § 12, to restrain and prohibit it from further exercising any of its corporate rights, privileges, and franchises; and, admittedly, a good cause 162 •of action has been set forth in the complaint- if the remedy contemplated and provided for in said section is available. The complaint does not contain facts sufficient to constitute a cause of action if the defendant corporation can only be proceeded against in the manner detailed and specified by Laws 1885, ch. 184, § 12. On the ground that a corporation organized under chapter one hundred and eighty-four (184) can only be proceeded against after an examination and report of the insurance commissioner, supplemented by the opinion and formal application of the attorney general, — strictly in accordance with the provisions of said section 12, — the court below dismissed the case on defendant’s motion. The only question on appeal is whether, by means of various provisions found in the act <of 1885, the method of procedure therein prescribed has become exclusive; no other proceedings, legal or equitable, having in view the relief herein demanded, being allowable. In terms, 1878 G. S. ch. 76, § 12, is comprehensive enough to include corporations organized under Laws 1885, ch. 184, although such corporations are not specially mentioned, and are brought into existence by means of a ..much later statute; so that, unless the method of procedure authorized in ch. seventy-six (76) is prohibited, directly, or by necessary implication, by the provisions found in Laws 1885, ch. 184, it still exists in full force, and the judgment'appealed from is erroneous. We are of the opinion that the mode of procedure authorized by Laws 1885, ch. 184, § 12, against corporations, associations, and ■ societies conducting an insurance business on the co-operative or • assessment plan, was not designed to be exclusive, nor does it in any ■ degree interfere with or supersede the right of action granted and ' the equitable remedy afforded in the General Statutes. It is to some • extent cumulative, and is in the nature of a special proceeding, : initiated in a summary manner, whenever the insurance commis- • sioner and the attorney general are of the opinion that for some •-cause or reason, not specified in the statute, and therefore unaseer-vtainable with certainty as a matter of law, such corporation, association, or society should be restrained from further continuing to transact business. This is made the only question for trial, and the verdict of a jury is conclusive “upon the propriety of restraining 163 such continuance of business.” The irregularities or acts of the corporation -which have instigated unfavorable action on the part of the state officials before mentioned need not be any of those specified in 1878 G-. S. ch. 76, § 12, and the only judgment to be entered against the defendant is one forbidding the further transaction of business. Such a judgment would prove, usually, wholly inadequate, for it would do no more than to suspend the corporation in a state of great uncertainty. The consequences which are inevitable in case a corporation is obliged to cease business are not provided for in any manner. What is to be done with the business of the past, or in behalf of the interests of the members or of the creditors, or in what manner, if at all, the corporate liabilities are to be ascertained, and its assets marshaled and distributed, is a. matter of conjecture,— being wholly unprovided for. These important matters are all carefully considered and taken care of in 1878 G. S. ch. 76, and it is impossible to conclude that by the legislation of 1885 it was intended to substitute for so complete a proceeding one which at best falls far short of accomplishing the same results. Laws 1885, ch. 184, § 12, is not a later and more precise expression of the Legislature, aimed at the same object; and therefore the case does not come within the principle which requires that specially directed and more recent provisions of the lawmaking power are to be taken as an exception to earlier general ones. Nor is there any indication in section five (5) or six (6) of chapter one hundred and eighty-four (184) of an intention to remove the corporations therein mentioned from the effect of general legislation in respect to proceedings looking to the forfeiture of corporate franchises and the winding up of all corporate affairs, as has been argued by counsel for respondent. The language on which this claim is predicated is found to conclude two distinct sections, five (5) and six (6.) .In section five (5) the corporation, association, or society which shall be deemed to be engaged in the business of life or endowment insurance on the co-operative or assessment plan is particularly described; while in section six (6) the corporation, association, or society which shall be deemed engaged in the business of casualty insurance on the same plan is also described with particu 164 larity.' The language alluded to, common to both sections, rendering such corporations, associations, and societies “subject only to the provisions of this act,” has reference merely to the modes and methods of transacting corporate business, and the regulation of the same. It means simply that corporations, associations, and societies engaged in the business specified in chapter one hundred and eighty-four (184) shall not be subject to, or compelled to comply with, the general laws of the state regulating life, endowment, and casualty insurance companies. That the proceeding authorized by section twelve (12) is not the only one contemplated. is evident from section seven, (7,) for in that section Another and distinct remedy is provided in cases where there has been a refusal to comply with the law in certain respects. And that other proceedings were anticipated again appears from the wording of section ten, (10,) wherein it is provided that every charter procured under the terms of chapter one hundred and eighty-four (184) shall continue until revoked by a court of competent jurisdiction. The judgment to be entered when proceedings are under section twelve (12) does not, in terms, revoke the charter of a transgressing corporation. As before intimated, its mission seems to be the suspension of the power to transact business; hot an absolute revocation of the charter, or a complete deprivation of corporate rights and franchises. (Opinion published 51 N. W. Rep. 908.) In conclusion, and as to the contention that the remedy provided in section twelve (12) of chapter one hundred and eighty-four (184) is exclusive, it may be well to say that a statute which would deprive a creditor, or a stockholder, or the state, of the equitable and complete remedy prescribed in chapter seventy-six, (76,) or which would deprive the latter of the right to direct its writ of quo warranto against an alleged insolvent or malfeasing corporation, its creature and especial charge, should be, and, in our judgment, would have to be, very direct and unambiguous in its provisions. Judgment reversed, and new trial ordered.