Case ID: misc_92/html/0434-01.html
Source: Caselaw Access Project
Author: {"author": "G-uy, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Joseph J. Schumacher, Respondent, v. American Union Fire Insurance Company, of Philadelphia, Penn., Defendant, Charles Johnson, as Insurance Commissioner of the Commonwealth of Pennsylvania, Appellant.
    (Supreme Court, Appellate Term, First Department,
    December, 1915.)
    Corporations — liquidation of — service of summons after dissolution — attachment — Code Civ. Pro., § 638.
    Where the summons in an action against a Pennsylvania corporation was not served until after it was dissolved and its corporate existence ended and liquidation of the corporation ordered to be made under the direction of the commissioner of insurance of Pennsylvania according to the laws thereof, and it is claimed that the summons was served on the New York state superintendent of insurance and on the former agents of the corporation in New York state, an order denying a motion of the commissioner of insurance of Pennsylvania to vacate the judgment entered in favor of plaintiff and a warrant of attachment levied on certain funds alleged to be due said corporation from another and to set aside the service of the summons will be reversed and the motion granted.
    The corporation having been dissolved at the time of the attempted service no service of the summons was made, the attachment became inoperative under section 638 of the Code of Civil Procedure, and the judgment finally entered was void.
    Appeal from order of the City Court of the city of New York denying motion to vacate judgment and warrant of attachment and to set aside the service of the summons herein.
    J ames E. Finegan, for appellant.
    Yan Iderstine, Duncan & Barker (Wendell P. Barker, of counsel), for respondent.
   G-uy, J.

In this action to recover upon assigned claims for return premiums on unmatured fire insurance policies issued by the defendant, a foreign corporation organized under the laws of the commonwealth of Pennsylvania, Charles Johnson, commissioner of insurance of Pennsylvania, appeared specially in the court below and moved for an order declaring the service of the summons to be null and void, and for the vacating of the attachment granted and the judgment entered therein. The motion was denied, and he appeals to this court.

On March 26, 1913, in proceedings taken by the said Pennsylvania commissioner in that state the defendant company was dissolved, its ■ corporate existence ended and the liquidation of the corporation was ordered to be made under the direction of the commissioner according to the laws of Pennsylvania. The dissolution became effective March twenty-seventh, on the entry of a copy of the order of dissolution in the office of the clerk of the county of Philadelphia. This action was begun March 25, 1913, and on the following day a warrant of attachment was levied on moneys alleged to be due on return premiums from the Warsaw Fire Insurance Company to the defendant corporation. The Warsaw Company reinsured the defendant’s risks, and upon the dissolution of the defendant the policies of reinsurance were cancelled by operation of law, leaving a sum in excess of $250,000 applicable to the obligations of the dissolved corporation. The summons was served March twenty-ninth upon the New York superintendent of insurance and also on Berry, Tremaine & Co., Inc., who were the managing agents of the defendant corporation prior to its dissolution. On April 7, 1913, judgment by default for the sum of $1,419.54 was entered in favor of plaintiff against the defendant, and on April eighth execution was duly issued but no money collected on the judgment.

In a proceeding commenced by the New York state superintendent of insurance, that officer on April 12, 1913, with the consent of the appellant was directed by the Supreme Court to take possession of the property, conserve the assets and liquidate the business of the insurance company in the state of New York, and title to all of the property, contracts and rights of action of the said corporation was pursuant to section 63 of the.Insurance Law vested in said superintendent, who was authorized and directed to exercise all the rights and duties with respect to the corporation as were formerly exercised by and imposed upon ancillary receivers of foreign corporations. The main ground of the decision of the learned justice at special term was that the said order of the Supreme Court preeluded the appellant from raising any question as to any matters affecting the validity of claims of New York creditors.

The Court of Appeals (Martyne v. American Union Fire Ins. Co. of Philadelphia, 216 N. Y. 183) has affirmed an order of the Appellate Division, second department, affirming an order granting a motion hy the insurance commissioner of Pennsylvania to set aside the service of the summons, warrant of attachment and the levy thereof in that action, which was commenced after the dissolution of the defendant, and has decided that notwithstanding the order of the Supreme Court of April 12, 1913, made in pursuance of section 63 of the Insurance Law, vesting title to the property of the defendant in the New York state superintendent of insurance, the Pennsylvania commissioner of insurance had a standing to make the motion at special term; and that the debt due from the "Warsaw Company on.return premiums on policies taken out by the defendant in that company is not subject to attachment in New York in an action against the defendant, a foreign corporation.

The only apparent distinction between the Martyne case and the one at bar is that there the action was brought after the dissolution of the corporation, while here the action was begun and the attachment levied before the dissolution. In this case the summons was not served, however, until March twenty-ninth, two days after the dissolution became effective, when it is claimed to have been served on the New York state superintendent of insurance and on the former agents of the corporation in this state. But the company having been dissolved at the time of the attempted service no service of the summons was made, the attachment became inoperative (Code, § 638), and the judgment finally entered was void. Martyne v. American Union Fire Ins. Co. of Philadelphia, supra.

Bijur and Page, JJ., concur.

The order appealed from should be reversed and the motion granted with ten dollars costs and disbursements.