The company made and filed with the auditor of state three reports disclosing its assets and liabilities and its income and expenditures for the respective periods covered, dated, respectively, January 29, 1908, February 23, 1909, and April 7, 1910. The first

note and each renewal thereof for the balance of directors were made by appellees and at after payments made, the makers thereof in- their instance as officers and directors. The tended that the several notes should be and earliest of these reports was made January the same were, their personal obligations, and 28, 1908, and the last one January 11, 1910. the company was in no wise liable for the pay- The respective reports are set out either ment thereof. October 5, 1907, at the first specifically or substantially in the finding. formal meeting of the board of directors, the The sum of $20,000, advanced by appellees, members of which were appellees and one appears in each of these reports in the sense Fredericks, the board by unanimous vote that it augments the assets. Its source, howadopted a resolution approving the action of ever, is not revealed. The reports disclose appellees in negotiating said loan for the the payments made on said note and its rebenefit of the company in accordance with the newals being designated in each case as made agreement aforesaid, and resolving that such "for refund of guaranty deposit." The resum should be repaid when in the opinion of port dated January 11, 1910, was made to the the executive committee the funds of the com- company by Coate as secretary, and approved pany would justify. At a subsequent meet- by the other appellees as directors. A printing of the board of which Coate, Byers, and ed copy was mailed on or about said day to Furnas constituted a majority, held May 19, each member and policy holder. This re1910, the board by unanimous vote adopted, port contained an explanation of the origin and ordered spread of record, a resolution of the fund of $20,000, and a statement to to the effect that the said notes executed by the effect that the company was entitled to appellees represented their individual indebt-return such fund in such installments and edness and created no liability against the at such times as its finances would reasoncompany, but that it was the original intent ably permit, and that the company had reof the resolution of October 5, 1907, that as turned $17,500 of such fund. the funds of the company justified, the amount so placed to the credit of the company by appellees, with such interest as might accrue, should be returned to them. The court specifically finds that the facts embodied in the resolution of May 19, 1910, were true. Said sum of $20,000, deposited as afore-two were verified by Coate and Ebner, the said, was carried on the ledger of the com- last by Coate and Furnas. The court finds pany in an account designated as the "guaran- each of such reports to have been a correct tee fund account." The board of directors, statement of the assets, liabilities, income, on the advice of the executive committee, and expenditures of the company for the made payments to the bank out of the assets period covered by it. These reports are inof the company, which payments were credit- cluded in full in the finding. They cover 22 ed by the bank on said note and its renewals pages of the transcript. In each of them as follows: December 26, 1907, $5,000; July also the fund of $20,000 augments the assets. 15, 1908, $5,000; September 15, 1908, $5,000; there being, however, no explanation of its May 19, 1909, $2,500; also interest amounting origin. These reports set out the amounts of to $1,217.73. On such payments being made, the respective payments made on said note a credit was entered on the books of the com- and its renewals, designated in the respective pany to the effect that that amount of the reports as follows: Return of the organizaguarantee fund had been returned. When the tion fund, $5,000; payment guarantee fund, company made each of the payments, appel- $10,000; payment return guaranty fund $2,lees executed to the bank a substituted renew- 500. Neither in the reports made to the al note for the unpaid balance. The last re-auditor of state, nor in those made to the newal, however, given May 19, 1909, for $2,- company and policy holders, is the obligation 500, was executed only by Coate, Furnas, to repay listed as a liability, except as set and Byers. When each of such payments, out in the report of January 11, 1910, as principal and interest, was made, Coates, Eb- aforesaid. ner, and Byers constituted the executive committee and also a majority of the board of directors. The executive committee and the board of directors and appellees in good faith believed at the time that such payments could be safely made without impairing the ability of the insurance company to pay all losses that might reasonably be anticipated. Appellees at all times intended that said note and the renewals thereof should be and the same were the personal obligations of appellees, and not the liabilities of the company.

Certain specific financial reports to the

Before making and filing the first of the reports to the auditor of state above mentioned, Coate, as secretary of the company, consulted the deputy auditor of state in charge of the insurance department, as to whether under the facts surrounding the transaction as herein set out, the receipt and retention of said sum of $20,000, designated on the books of the company as a guarantee fund, should be shown in the report as a liability of the company. The deputy auditor advised Coate that such obligation, under the circumstances, should not be listed as

cial condition of the company immediately after making such payments was substantially the same as on the dates of such statements respectively.

As above set out 304 persons applied for 1908, September 30, 1908, and May 31, 1909, insurance in the prospective company, and respectively, being at the close of the re with their applications executed premium spective months in which the payments agnotes aggregating $103,165.90, before license gregating $17,500 for application on the note was issued by the auditor of state. Such and its renewals held by the bank and exapplications and notes were procured by ecuted by appellees were made. These stateagents and canvassers employed for that ments indicate that at each of such times purpose. The organizers of the company, the company was apparently in sound finanincluding appellees, directed such agents cial condition. The court finds that the finanand canvassers, in soliciting such applications and in taking premium notes, to explain fully to the persons solicited the facts respecting the advancing of the $20,000, and the time when the circumstances Early in 1910 serious dissension arose under which it was to be repaid. These in- among the officers and directors. Each party structions as a general rule were followed, sent communications to the policy holders in and the facts respecting the advancing of advocacy of the merits of the controversy said sum and the arrangement for its repay- from its standpoint. As a result a large and ment were generally made known and ex- unusual number of the members surrendered plained to such applicants. In some par- their policies, which were canceled, and the ticular instances, however, the instructions unearned premiums thereon returned in cash, were not followed. Also, after license was aggregating about $16,000, in a period of 90 issued, canvassers in soliciting insurance in days after April 1, 1910. Mutual policies behalf of the company continued in a gen- were issued for periods of from one to five eral way, except in some particular instanc-years.

es, to inform persons solicited both respect- November 17, 1910, the company was ading the plan pursued in procuring said $20,- judged insolvent and appellant appointed re000, and the arrangement for its repayment | ceiver.

At that time there were unpaid fire

as above set out. At no time prior to the loss claims aggregating $17,525.21. There appointment of the receiver as hereinafter set out had any policy holder objected to the conduct of appellees or the board of directors, in advancing or procuring said sum, in executing the notes and the renewals therefor, or in repaying such sum in part as above set out. Appellees, at all times prior to the appointment of the receiver, believed that their acts and conduct with reference to such transaction were consented to and approved by the members and policy holders. Appellees at no time attempted to conceal the fact that said sum of $20,000 was to be repaid as the financial condition of the company would permit, or that payments had been or were being made thereon. The company paid dividends to its policy holders, from time to time, aggregating $8,866.16, no part of which has been returned.

were also miscellaneous liabilities other than claims based on premiums paid, but unearned, aggregating $889.95. The total assets of the company, exclusive of the contingent liability of its members on premium notes given, amounted to $6,736.84. In order that the fire losses and expenses of the receivership might be paid, the receiver, by order of court, levied and collected from all the assessable members an annual premium on the premium notes held by the company. From such source the receiver realized $14,589.02, collected from 440 members. Five hundred of the policy holders had previously prepaid their premiums for a year beyond November 17, 1910, aggregating $11,723.22. In levying such assessments, the receiver took account of such prepaid premiums and adjusted them by making proper credits on the involved assessments, leaving, however, a balance of prepaid premiums not restored to certain policy holders.

Appellees in advancing the $20,000 did not contract for, or expect to receive, and they have not received any profit therefor, other than as enjoyed proportionately by every oth- Drawing on the fund arising from the aser member of the company. All said sum was sets that came into his hands and the sum expended by the company for the benefit realized from such assessment, the receiver of all the members and policy holders. The has paid all the liabilities of the company, remaining sum of $2,500, which has not been except the cost of the receivership, the costs returned to appellees (by being paid to the and expenses incident to the prosecution of bank or otherwise), has been paid to the this suit, and claims based on such unearned bank by Coate, Furnas, and Byers, who ex-premiums not restored. He has in his hands ecuted the renewal note therefor as above set an unexpended balance of $4,916. The reout. Such sum has not been repaid to them, ceiver has not repaid to the assessed memand on January 17, 1911, they filed with the bers any part of the sums collected from receiver a waiver of any right to such re- them respectively through such assessment, payment. and the balance remaining in his hands is The court includes in the finding certain not sufficient to that end. No part of the statements of the assets and liabilities of sum aggregating $18,717.73, including interthe company on December 31, 1907, July 31, est, paid by the company on said note, and

the renewals thereof, executed by appellees when the financial condition of the comto the bank, has been repaid to the company pany would permit, keeping in view its obor to the receiver.

ligation to its policy holders; that the statOn the facts so found, the court stated ute had received a practical interpretation five conclusions of law to the effect that the to that effect in the organization and licenlaw is with the appellees, and that appellant sing of other companies. Application havis not entitled to recover; that certain mem-ing been made to the Attorney General of bers and policy holders are estopped from the state, he in a written opinion substantialmaintaining the action, and that certainly concurred in the opinion of the auditor members are so estopped by reason of their knowledge and acquiescence in the facts attending the advancing and use of said sum of $20,000, and its repayment in part, and that as a consequence, the receiver is not entitled to maintain the action for their benefit, and, not being entitled to recover for all the members and policy holders, he cannot recover for the benefit of any of them; that appellees are entitled to recover costs. If the conclusions to the effect that by reason of the principle of estoppel operating against certain members and policy holders the receiver is not entitled to maintain this action are correctly stated on the finding, it follows that the general conclusions that the law is with appellees and that they are entitled to recover costs are correctly stated also. We proceed to consider the conclusions. The promoters of the Indiana State Fire Insurance Company in considering its organization were confronted by a statute providing in substance that such a company might be authorized to issue policies of insurance against loss by fire, etc., "when application for insurance in which there shall be taken not less than a hundred thousand dollars, in bona fide premium notes and $20,000 in cash by any such company, and of which it shall be at the time possessed." Section 4651, Burns 1908 and 1914.

of state. Of course the opinion of the auditor of state interpreting a statute with the enforcement of which he is charged, or the opinion of the Attorney General in construing such a statute, is not binding on the courts, but the fact of such opinions is entitled to weight in determining the bona fides of action based thereon. Appellees thereupon in the utmost good faith executed their note by which they procured $20,000 and obligated themselves to pay the note when due. They delivered the sum to the company. The company accepted it with full knowledge of its source, and under an arrangement by which it was to be repaid when the finances of the company would safely permit. The company received the full benefit of the money, placing it in a fund subsequently drawn on to pay fire losses, expenses, dividends to its members, etc. Appellees in advancing the money were actuated by no improper or selfish motive; they neither contracted for nor expected to receive any advantage or benefit peculiar to themselves; they did not receive any such advantage or benefit. Risking the loss of the sum advanced, as subsequently they did lose a substantial part of it, they were actuated solely by a purpose and desire to advance the interests of the company. They made no effort to conceal the fact that they had advanced the money, and that conditionally it was to be repaid to them, but on the contrary took steps by which every applicant for insurance and every member of the company on becoming such should be fully informed of the facts, and as a general rule such applicants and members were so informed.

[1, 2] Appellant contends, and appellees apparently concede, that such statute contemplated that the $20,000 mentioned should be paid on application for insurance. In our judgment appellant correctly interprets the statute in this respect. The promoters and incorporators of the Indiana State Fire Insurance Company, among From time to time the company in harwhom were included appellees, did not so mony with the original understanding disproceed. Being uncertain as to the meaning charged its conditional obligation in part by of the statute in the respect under considera- paying money to the bank for application on tion and as to whether the advancing of the the note and its renewals, until $17,500 of sum by the incorporators or a number of the principal and $1,217.73 of the interest, or them would satisfy its terms, they applied to a total of $18,717.73, had been paid. Facts the state official charged with the duty of are found to the effect that when each of the supervising insurance companies and their payments was made, the financial condition organization for information. By him they of the company was apparently such as to were advised in substance that the statute justify an honest belief that it could be safely did not require that the sum mentioned done. This action is predicated on the fact should be paid on applications for insurance; of such payments. The receiver sues to rethat the essential element was the good- cover back the amount paid, with interest. faith acquisition and possession of the sum, It appears from the finding that the policy and its availability for the legitimate pur- holders and members of the insurance corposes of the company; that the statute would poration are financially interested in this be satisfied if the incorporators or any of litigation, if at all, in their capacity as credthem advanced the money under an arrange-itors based on the fact of the assessments

clusions of law, it is apparent that the decision in favor of appellees was based on estoppel operating against certain policy holders and members who claim to be creditors, by reason of assessments paid and advanced. It is appellant's contention, however, that the cause of action on which the receiver sued was that of the corporation, rather than that of the individual policy holders, and hence that estoppel operating against certain of the latter did not defeat the action. Respecting the title of a receiver, and the basis of his right to bring and maintain actions, we quote the following from Marion Trust Co. v. Blish, 170 Ind. 686, 84 N. E. 814, 85 N. E. 344, 18 L. R. A. (N. S.) 347;

agreement to the extent of repaying $17,500 and interest. From the beginning of the transaction to the end, appellees were not guilty of fraud, bad faith, or neglect. This action is brought to recover the sum paid. The mere statement of the facts is apparently convincing that had no receiver been appointed the corporation could not have maintained the action, and consequently that the receiver, if suing in its right, cannot maintain it. There are other arguments and facts, however, that must be considered.

[3] Thus it is urged that the entire transaction by which the corporation received money and in part returned it was illegal and ultra vires. The transaction by which the money was advanced to the company considered by itself was in effect a loan. It was a loan of money to the company to be used by it for legitimate purposes. It was so used. It was expended in the payment of fire losses, expenses, and dividends declared in favor of members. In the absence of a prohibitory provision in its charter or in its enabling and governing act, it is neither illegal nor ultra vires for a corporation to borrow money to carry out the purposes for which it was organized. Wright v. Hughes, 119 Ind. 324, 21 N. E. 907, 12 Am. St. Rep. 412.

"There can be no doubt of the proposition that it is the general rule that in the ordinary receivership which is extended over the affairs of an insolvent corporation, the receiver can only sue in the right of the corporation, and that he is subject to all of the equities which would have been available against it. This rule is subject to the exception that the receiver so far represents the general creditors that he may avoid transactions in fraud or their rights. 'Since the appointment of a receiver in limine does not affect any questions of right involved in the ac tion, and does not change any contract relations or rights of action existing between parties, it follows as a general rule that in ordinary actions brought by a receiver in his official capacity, to recover upon an obligation or demand due to the person or estate which has passed under the receiver's control, the defendant may avail [4] Under the facts here, however, the adhimself of any matter of defense which he might vancing of money cannot be considered as an have urged had the action been brought by the original party instead of by his receiver.' High, independent transaction. It cannot be disReceivers (3d Ed.) § 245. In a subsequent sec-associated from the statutory requirement retion of the same work the author says: While specting the acquisition and possession of the receiver of an insolvent corporation is thus treated as the representative of both creditors and shareholders, so far as any beneficial interest is concerned, yet, for the purpose of determining the nature and extent of his title, he is regarded as representing only the corporate body itself, and not its creditors or shareholders, being vested by law with the estate of the corporation, and deriving his own title under and through it. For purposes of litigation, therefore, he takes only the rights of the corporation, such as could be asserted in its own name, and upon that basis only can he litigate for the benefit of either shareholders or creditors, except when acts have been done in fraud of the rights of the latter, but which are valid as against the corporation itself, in which case he holds adversely to the corporation.' High, Receivers (3d Ed.) § 315."

Considering the cause of action as the corporation's, and that appellant acquired from it his right to bring and maintain the action, we are confronted with the following situation: Appellees, actuated solely by a purpose to further the interests of the company, and with no hope or expectation of benefit to themselves, except such as they would enjoy in common with all the mem-bers, in perfect good faith advanced the money involved. The corporation at the time of receiving it, and in consideration of its advancement, through its board of directors, acting by unanimous vote, agreed to repay it when and as the financial condition of the -company permitted. The corporation used the money for its own purposes, and kept its

$20,000 in cash as a condition to the right to issue policies. The statute then in force (section 4651, Burns 1908) contemplated that that sum be advanced on applications for insurance, and that it be held and used for the proper purposes of the company. The advancing of a like sum by appellees was intended as a compliance with the statutory requirement. It was based on a misinterpretation of the statute. Appellees, however, as found by the court, proceeded in good faith. If, under such circumstances, the receipt of the money by the corporation with the conditional agreement to repay it and its subsequent repayment in part should be deemed to be ultra vires, for the reason that such a method of acquiring money, or an agreement to repay it, or its actual repayment, howeve" acquired, was not within the purview of the statute, then the case presents itself as follows: The action is not brought to annul the arrangement made between appellees and the corporation, or to enjoin the taking of steps to carry it out. The contract has been executed on each side. No one interested raised any voice of protest prior to or at the time it was carried out, or when any steps were taken to perform it. Appellees advanced the money. The corporation received and used it for legitimate purposes. It made exactly the same use of the sum advanced by appellees that it would have made of a like sum

But when such a transaction is not prohibited by law

"the broad doctrine that the officers of a corpo-
ration cannot in their own names contract with
it is unreasonable.
tually deny the corporations the credit upon
Such a holding would vir-
which their business may be transacted. If the
right of the stockholders and officers of a corpo-
ration to advance money to it to carry on its
such purpose is denied, it would result in de-
affairs, or to indorse for it to obtain money for
priving the corporation of its most ready and
frequent source of credit. If directors can lend
money to the corporation, or indorse for it, un-
der the laws of this state, they should certain-
ly have the right to collect their debt or be se-
cured therein as is accorded by law to other
creditors." Levering v. Bimel, 146 Ind. 545, 45

paid on applications for insurance as contem-
plated by the statute. In the actual case the
corporation created a liability to repay, con-
ditioned on its reasonable financial ability to
do so.
Had the statute been followed, the
company, by receiving the money on insur-
ance applications, the policies thereafter be
ing issued, would have created a liability
conditioned on fire losses occurring. To the
extent that the sum advanced by appellees is
involved in this action the company repaid it.
"The rule is now too thoroughly established
open to question, that where a
contract has been executed and fully performed
on the part of the corporation, or of the parties
with whom it contracted, neither will be permit-
ted to insist that the contract was not within N. E. 775.
the power of the corporation." Wright v.
Hughes, supra, and cases.

to be

"Where a corporation receives the money or property of another under an agreement or duty to account therefor, it may be compelled to perform such duty, though the transaction was ultra vires." 7 R. C. L. 677.

See, also, Bristol Milling Co. v. Probasco, 64 Ind. 406; Twin Lick Oil Co. v. Marbury, 91 U. S. 587, 23 L. Ed. 328; 2 Thompson, Corporations (2d Ed.) § 1247.

The transaction here has been submitted to the careful scrutiny of the trial court. Certain language used in Beloit v. Heine-The finding makes a very strong case that apman, 128 Wis. 401, 107 N. W. 334, quoted with approval in Rankin v. Emigh, 218 U. S. 27, 30 Sup. Ct. 672, 54 L. Ed. 915, is worthy of consideration here, viz.:

"No authority has been cited, and we think none can be, to deny the power of a banking corporation, or any other corporation, to disgorge property of another which it had got into its possession by any means whatever under a duty to disgorge. It may have had no legal power to take the steps by which the money of these plaintiffs' assignors came to its hands; but having taken such steps and obtained their money, no such absurdity exists as a legal obstacle to its surrendering it. It would be a reproach to the law to hold any such doctrine of inequity.'

pellees' conduct was characterized by openness and entire good faith. They sought no advantage. They anticipated no gain to themselves. Having an eye single to the company's good, as they understood it, they ran the hazard of loss, subsequently suffered. We do not believe that the receiver by virtue of his title acquired from the corporation can maintain this action.

[6] We have yet to consider the case in its relation to the members and policy holders of the corporation who by reason of advance payments on their policies and by the payment of assessments on the call of the receiver may be deemed to be creditors of the company. In fact there are no unpaid credi

On the subject of the relation of the doctrine of ultra vires to executed contracts, see also the following: State Board, etc., v. Citi-tors except such members and policy holders. zens' St. R. Co., 47 Ind. 407, 17 Am. Rep. 702; Louisville, etc., Co. v. Flanagan, 113 Ind. 488, 14 N. E. 370, 3 Am. St. Rep. 674; Emigh v. Earling, 134 Wis. 565, 115 N. W. 128, 27 L. R. A. (N. S.) 243; Manchester, etc., Co. v. Concord, etc., Co., 66 N. H. 100, 20 Atl. 383, 9 L. R. A. 689, 49 Am. St. Rep. 582; Central, etc., Co. v. Pullman, etc., Co., 35 L. Ed. 55, Note; In re Mutual, etc., Co., 70 Am. St. Rep. Note, 167.

[5] We do not overlook the fact that when the transactions involved here were had appellees were members of the board of directors of the insurance company. It is universally held that transactions between a corporation and its managing officers or directors, wherein money is advanced to the former by the latter, will be carefully examined by the courts to determine whether such transactions were fair and just, and whether there has been any fraud or overreaching on the part of such officers or directors. Such transactions when not duly authorized are usually regarded as voidable at the election of the corporation. Bossert v. Geis, 57 Ind. App. 384, 107 N. E. 95, and cases; Green v. Felton, 42 Ind. App. 675, 84 N. E.

"When a court has taken possession of the property of an insolvent corporation for administration, and appointed a receiver, the property of the corporation is a trust fund for the payment of its debts. Such receiver represents the creditors as well as the stockholders and holds the property for the benefit of both. He is the trustee for both, and, as trustee for the creditors, can maintain and defend actions which the corporation could not." Franklin Nat. Bank v. Whitehead, 149 Ind. 560, 49 N. E. 592, 39 L. R. A. 725, 63 Am. St. Rep. 302. The receiver in his capacity as representative of the general creditors may avoid transactions had by the corporation in fraud of their rights. Marion Trust Co. v. Blish, supra. As to claims based on transactions had by a corporation, and which are binding on it, but which are fraudulently prejudicial to the general creditors, the receiver as a representative of the latter holds adversely to the former. High, Receivers (3d Ed.) § 315.

The second, third, and fourth conclusions of law deal with the case in its relation to members and policy holders as creditors with claims originating as aforesaid. If, under