Case ID: ny-sup-ct_22/html/0084-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Learned, P. J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of the PEOPLE OF THE STATE OF NEW YORK, by AUGUSTUS SCHOONMAKER, Jr., Attorney-General, v. THE ATLANTIC MUTUAL LIFE INSURANCE COMPANY.
    
      Chap. 902 of 1869 — when the court will not direct a receiver to continue the business of the company.
    
    The authority conferred upon the court by section 7 of chapter 902,of 1869, to direct the receiver of an insurance company, upon certain facts being established, to continue the business considered and such direction refused under the circumstances of this case.
    Appeal from an order made at the Special Term, upon the filing of the report by the actuary appointed by the Receiver of the Atlantic Mutual Life Insurance Company, directing the receiver to take the necessary steps to convert the assets of the company into cash, and distribute the same as provided by law.
    The appellants insisted that the court should have directed the receiver to continue the business, as is authorized by section 7 of' chapter 902 of 1869.
    
      The Attorney-General, for the people.
    
      William Barnes, for the Atlantic Mutual Life Insurance Company.
    
      S. W. JRosendalet for the Superintendent of the Insurance Department.
   Learned, P. J.:

Under section 7, chapter 902, Laws of 1869, it hás been, upon ' proper application, decided by this court that the assets and funds of this company are not sufficient to justify the further continuance of the business. This decision of the Special Term has been affirmed by the General Term and by the Court of Appeals. That question, at léast, then, múst be deemed tó bé settled.

There are sóiñe provisions in the following sections of that act which seem to indicate, that in one case the receiver, iii the closing up of the affairs of the company, is to continue to receive the future premiums on policies which had been issued at the time of his appointment; and that, in respect tó these policies, he is tó continue the business, at least uiitil there be an accumulation of funds sufficient to meet ail the oligations of the company, and to pay its stock. (Sections 8, 9, 10.)

I do not propose to examine this somewhat peculiar scheme for having this court, through its officer, carry oh life insurance business. It is certainly undesirable that this court, or its officer, should be thus engaged, especially when we consider that in every such case it must have been already decided that the assets and funds were not sufficient tó justify the further continuance of thé business. At least, it should appear, from the facts before us and from the statute, that it is our imperative duty tó have the. receiver carry on business before we undertake it.

The statute says, that if it shall be found, by the actuary’s report, that the securities in the department, and the assets and credits, including the future premiums that will accrue on the outstanding' policies, and other obligations of the company, are sufficient to pay all the policies, annuities, and other obligations as they mature, and the legal costs and expenses of the business ; and if the actuary’s report be confirmed by the court, then the receiver is to notify the policyholders, etc.

It will be seen that the actuary’s report is not conclusive, but that the court must confirm the report before its officer is to attempt to continue the business. And it appears to me that this question is not one of mere mathematical calculation. A great deal has been said in the argument about net valuation and gross valuation. It has been urged that the statute requires the actuary to make ' his report on the basis of one valuation, while he has actually made it on the basis of the other. I think there are other matters to be considered. Since August 1, 1877, or about that time, this company has been in a receiver’s hands. For several months prior thereto, the proceedings had been pending. A deposit oí some $118,000, made in the Hope Banking Company, was secured ' by collateral, worth about $30,000, and that is all the deposit is worth according to the actuary’s report. The whole capital stock is only $110,000.

Now, without referring in detail to the facts, which have appeared in regard to the company, it is apparent that its credit is gone. An opportunity had been afforded by the Special Term, before the appointment of a receiver, for the stockholders to make good the deficiency. They failed to do so. And the question now must be not merely whether if the future premiums should be aid, they and the existing assets would be sufficient to |iay the 2iolicies, but there must be another question decided, before we authorize any jiroceedhigs towards carrying on the business through a receiver. That question is whether, under the circumstances, there will jirobably be any considerable amount of future premiums 2>aid. It is useless to attenqit to carry on this business if the circumstances are such that few, if any, jiolicyholders will 2irobably, in fact, pay any future 2>remiums. I am satisfied from all the circumstances, that an attenqit to notify the 2iolicyholders and require them to pay their pi'emiums, would now be a failure. And not only would it be a failure, but it would result in injustice to them. Few would wish to 2>ay premiums to the receiver of a discredited corporation. And to forfeit their 2iolicies for non-payment would, afford an 02i2iortunity for great speculation and wrong. It would be like that 2iractice of some of these insurance comqianies which has acquired the slang name of freezing out the Iiolicyholders.

For these reasons, I think that the order should be affirmed.

Present — Learned, P. J., Boardman and Tappan, JJ.

Order affirmed, without costs.