The brief of the appellants states their case in this way: "The receiver in this case is acting in a dual capacity; he is for general purposes liquidating the affairs of this insolvent corporation; he is for a special purpose, namely, the benefit of the policyholders, administering a trust fund which has been committed to his care by the provisions of the statute." In this connection it is also urged by the appellants, that "as a going concern the policyholders had an interest in all the assets of the corporation and a special lien upon the trust fund; the general creditors had no interest whatsoever in the trust fund, but did have an interest in general assets." Assuming this to *Page 143 be true, we cannot, under the facts found, appreciate the force of the appellants' contention set forth in their brief, to wit: that the special fund is for the sole benefit of the policyholders, and that no part of this fund can be used for the benefit of the general creditors or transferred to the general assets of the company. As the statement of a principle this may be correct, but as applied to the present case the conclusion drawn therefrom is quite a different matter. If the Indemnity Company were a going concern, solvent, with funds sufficient to meet the expense of liquidation and pay its creditors, the contention of the appellants might be tenable; but it is apparent from the record now before us that this company is hopelessly insolvent, and that its general creditors will receive but little, if anything, for their respective claims.
It is a well-settled principle in the disposition of trust estates, that a trust fund shall bear the necessary expenses of its administration, and that one who conducts a litigation in the right of another for the benefit of such a fund shall be protected in the distribution of it for the expenses incurred by him in the faithful performance of his duty. International Imp. Fund v.Greenough, 105 U.S. 527. It is stated in Perry on Trusts, that "trustees have an inherent equitable right to be reimbursed [for] all expenses which they reasonably and properly incur in the execution of the trust, and it is immaterial that there are no provisions for such expenses in the instrument of trust. If a person undertakes an office for another in relation to property, he has a natural right to be reimbursed [for] all the money necessarily expended in the performance of the duty." 2 Perry on Trusts (6th Ed.) § 910; Lewin on Trusts (12th Ed.) p. 787.
Section 4264 of our General Statutes, relating to deposits with the State Treasurer, provides that "the *Page 144 legal title to such securities shall be transferred to him in trust for the policyholders of such insurance company, and he shall hold such securities in trust for said policyholders; but such company may collect and receive the interest and dividends thereon, and withdraw said securities on depositing with the said treasurer other securities of like character and value." Section 4268 provides that such securities may be delivered to a receiver duly qualified, who shall administer the trust fund invested in such securities for the benefit of the policyholders of such company under the orders of the court to which such receiver is accountable. It is unquestionably true that as such receiver he was under an obligation to protect this fund from all unjust claims. We know from the record of the present case, and from records in other cases formerly before this court, of the magnitude and nature of many of the services rendered and the expenditures made by the receiver in protecting this fund in California, Arizona, and other sections of this country. Now it appears that the receiver's services and expenditures resulted in a reduction of these claims about one half million dollars, and that the prospective dividends of the policyholders were more than doubled thereby. This was brought about at the expense of the general assets of the company, and we can see no good reason why the policyholders should not now contribute their fair proportion of these expenses. A claim for reimbursement may be maintained as a right, in the present case, to an equitable contribution by the parties interested in the assets of this insolvent company. This should be made in proportion to their respective interests. It does not appear that such a contribution is unwarranted by our General Statutes relating to this subject. This right to a reimbursement does not rest upon contract, but is based upon equitable principles. *Page 145
Some embarrassment has been created owing to the fact that "no accurate bookkeeping allotment of expense . . . has been made or was practicable." But the rights of the parties should not be forfeited on this account. There was evidence from which these amounts could be approximately ascertained, and it became necessary for the trial court to determine, with as much accuracy as the information obtained from the evidence would permit, what portion of the trust funds should be impressed with these expenditures of the receiver. The mode adopted by the court below was sanctioned in the case of Attorney-General v. NorthAmerican Life Ins. Co., 89 N.Y. 94, 106, where it is said: "Of course it is difficult, if not impossible, to reach absolute justice in the proper apportionment of expenses to the two funds, but the mode adopted of a pro rata distribution seems to us just and the best attainable." See also Matter of Equitable Reserve FundLife Asso., 131 N.Y. 354, 381, 30 N.E. 114.
But few apportionments are capable of mathematical certainty. Many of them depend upon comparative values. The mode of apportionment adopted by the court in this case, although not certain, is as near certainty and as equitable as possible. We have reached this conclusion, not only from the method employed by the trial court, but from other comparisons and percentages that we have obtained by a careful scrutiny of the undisputed facts now before us. The method followed in this case and approved by us seems to have been the one taken by Judge Chester of the Supreme Court of New York in the case of The People v. Metropolitan Surety Co., not officially reported.
There is no error.
In this opinion the other judges concurred.