Neblett v. Pac. Mut. Life Ins. Co. of Cal.

GIBSON, C. J. This appeal presents another phase of the protracted litigation which has followed the seizure of the business and assets of the Pacific Mutual Life Insurance Company of California by the insurance commissioner for purposes of rehabilitation or liquidation. Since that time the legality of the seizure, the lawfulness of the plan of rehabilitation through organization of a new company, the propriety of an order providing for liquidation of the old company, and the validity of a voting trust agreement under which the stock of the new company was transferred from the commissioner to five voting trustees, have been upheld in a sequence of decisions on appeal. (Carpenter v. Pacific Mutual Life Ins. [397]Co., 10 Cal.2d 307 [74 P.2d 761], affirmed in Neblett v. Carpenter, 305 U.S. 297 [59 S.Ct. 170, 83 L.Ed. 182]; Id., 13 Cal. 2d 306 [89 P.2d 637]; Id., 14 Cal.2d 704, 711 [96 P.2d 796]; Caminetti v. Pacific Mutual Life Ins. Co., this day filed, ante, pp. 344 [139 P.2d 908] and 386 [139 P.2d 930].) All prior attacks were made in the statutory proceeding. The present appeal, however, arises out of a contemporaneous, independent action in equity in which certain policyholders and stockholders of the old company seek to annul all orders and steps taken in that proceeding. After an extended trial, judgment went against plaintiffs and they noticed an appeal. The separate appeal of the commissioner from that portion of the judgment sustaining the validity of the voting trust is controlled and determined by our decision in Caminetti v. Pacific Mutual Life Ins. Co., ante, p. 344 [139 P.2d 908]. That decision is also determinative of all questions raised by plaintiffs with respect to validity of the voting trust.

Plaintiffs’ principal contention is that all orders in the statutory proceeding should be set aside for fraud. It is well settled that a final judgment may not be attacked in equity upon this ground unless the alleged fraud is extrinsic or collateral, such as where “an unsuccessful party to an action has been kept in ignorance thereof ... or has been prevented from fully participating therein. ’’ (Westphal v. Westphal, 20 Cal.2d 393, 397 [126 P.2d 105]; see, also, Olivera V. Grace, 19 Cal.2d 570 [122 P.2d 564, 140 A.L.R 1328]; Hammell v. Britton, 19 Cal.2d 72 [119 P.2d 333]; Horton v. Horton, 18 Cal.2d 579 [116 P.2d 605].) In an effort to bring the present action within this rule plaintiffs urge that certain of the defendants conspired to deprive them of their rights in the assets of the old company by falsely declaring it insolvent and instituting the statutory proceeding wherein court approval was obtained of the commissioner’s acts and the rehabilitation plan, and that the stockholders and policyholders were prevented from showing in the statutory proceeding the facts as to the conspiracy and lack of insolvency of the old company.