Case Name: In the Matter of the Liquidation of Lawyers Mortgage Company. William E. Russell et al., as Reorganization Managers of Lawyers Mortgage Company, Appellants; Louis R. Pink, Superintendent of Insurance of the State of New York, as Liquidator, Respondent
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1944-07-19
Citations: 293 N.Y. 159
Docket Number: 
Parties: In the Matter of the Liquidation of Lawyers Mortgage Company. William E. Russell et al., as Reorganization Managers of Lawyers Mortgage Company, Appellants; Louis R. Pink, Superintendent of Insurance of the State of New York, as Liquidator, Respondent.
Judges: 
Reporter: New York Reports
Volume: 293
Pages: 159–170

Head Matter:
In the Matter of the Liquidation of Lawyers Mortgage Company. William E. Russell et al., as Reorganization Managers of Lawyers Mortgage Company, Appellants; Louis R. Pink, Superintendent of Insurance of the State of New York, as Liquidator, Respondent.
Argued February 29, 1944;
decided July 19, 1944.
Scott McLanahcm and Kersey B. Egginton for appellants.
I. The Superintendent, as liquidator, is bound to consider fairly and in good faith, and to submit to the court for its consideration, any reasonable offer made by the reorganization managers for the purchase of assets on behalf of the assenting creditors. No question of discretion of the Superintendent, or of the court, is here involved. (Vermeule v. City of Corning, 186 App. Div. 206, 230 N. Y. 585; Matter of the Bank of United States, 290 N. Y. 279; Matter of National Surety Company, 248 App. Div. 111, 272 N. Y. 613.) II. The court has ample power to grant the relief sought by the reorganization managers. (Matter of Casualty Co. of Am. [Rubin Claim], 244 N. Y. 443; Motlow v. Southern Holding & Securities Corporation, 95 F. 2d 721; National Bondholders Corp. v. Joyce, 276 N. Y. 92; Matter of Lawyers Mortgage Co., 169 Misc. 802, 256 App. Div. 974.) III. The grounds upon which the Superintendent rests his position are wholly inadequate and untenable.
Edward F. Keenan, Joseph Lapidus and Thomas D. Austin for respondent.
. I. The denial of the application at Special Term and the affirmance by the Appellate Division constituted an, exercise of discretion which should not be reviewed by the Court of Appeals. (Matter of Bank of United States, 290 N. Y. 279.) II. The appellants conceded that there is nothing in the plan which requires the Superintendent to sell or transfer the remaining assets now in his hands to the reorganization managers. (Matter of Lawyers Mortgage Co., 169 Misc. 802, 256 App. Div. 974.) III. The Superintendent of Insurance cannot be compelled to accept an offer involving the creation of a realization corporation, which he does not approve, upon any theory that he is estopped to oppose the creation of such a corporation. IV. No valid reason exists for a transfer of the remaining assets now in the hands of the Superintendent to the reorganization managers or to a realization corporation. (Matter of Casualty Co. of Am. [Rubin Claim], 244 N. Y. 443; Matter of Knickerbocker Life Ins. Co., 199 App. Div. 503, 233 N. Y. 604; Matter of Second Russian Ins. Co., 219 App. Div. 46, 244 N. Y. 606.) V. The courts below did not err in refusing to direct the Superintendent to apply for an order which would require him to transfer the assets in his hands to the reorganization managers. (Insurance Law, § 539; Matter of Union Bank of Brooklyn, 176 App. Div. 477; Matter of National Surety Co., 248 App. Div. 111, 272 N. Y. 613; Matter of Lawyers Title & Guaranty Co., 254 App. Div. 491.)
Dominick R. Santomenna and Alfred Douglas Olena for Carrie L. Parsons and another, as executors of George W. Pranbard, deceased, amici curies, in support of respondent’s position.
I. The court cannot direct the Superintendent to apply to the court for an order authorizing the sale of the assets to the appellants, unless the Superintendent acted unreasonably. (Matter of National Surety Company, 248 App. Div. 111, 272 N. Y. 613.) II. The Superintendent has exercised wise discretion in rejecting appellants’ offer. III. The rejection of the offer is not contrary to any expressed intention of the creditors.

Opinion:
Loughran, J.
In this proceeding under former article XI (now XVI) of the Insurance Law for the liquidation of Lawyers Mortgage Company, the court approved a plan of reorganization which was adopted by the Superintendent of Insurance as liquidator. Pursuant thereto, the liquid assets were transferred to an " Operating Company " and four " Organization Managers " were appointed with authority to purchase the nonliquid assets for disposal through a " Realization Corporation."
On July 23, 1942, the managers made a written offer to buy the nonliquid assets for $4,909,000 and thereupon requested the Superintendent to apply to the court for approval thereof. When he refused, they moved for an order directing him to petition the court for sanction of the sale contemplated by their offer. By our leave, they have appealed to us from an affirmance of the denial of that motion.
In liquidating a delinquent insurer, the Superintendent of Insurance acts as a statutory.receiver,— not as a receiver for the court. (Matter of People [Tit. & Mtge. Guar. Co.] 264 N. Y. 69.) Section 539 of the Insurance Law says that as liquidator the Superintendent may sell or otherwise dispose of the property of a delinquent insurer " subject to the approval of the court " (so, former § 421). The meaning of this is that the court may veto such action of the liquidator but cannot compel it. (Matter of Casualty Co. of Am. [Rubin Claim], 244 N. Y. 443, 449.) When it was the idea that assets in the keeping of a liquidator were to be disposed of only on an order of the court, the Legislature has had no difficulty in plainly saying so. (Matter of Bank of the United States, 290 N. Y. 279, 284.) We do not find in the cited statute any warrant for the notion that the Superintendent was bound to act upon the offer in question.
Nor is any warrant therefor contained in the plan of reorganization. The provision for transfer of the liquid assets to the " Operating Company " required that the Superintendent should " apply to the court for an order " to that end. Such a direction is missing from the provision for disposition of the nonliquid assets. In that connection, the plan says that " the Reorganization Managers shall request the Superintendent of Insurance to apply for an order authorizing the sale at a price and on terms satisfactory to him and approved by the court." Thus the parties to the plan appear to have deliberately excluded the duty which the managers would now have us put upon the Superintendent.
Though his refusal to consider their offer is not for us to question, his reasons therefor should be noticed. He said: " Since the date of reorganization in 1937, all claims against the company have been determined and a 15% liquidating dividend has been paid to creditors of the company. We are continuing to liquidate the assets as expeditiously as possible and there is no point in now transferring this work to a new corporation." The managers express distrust respecting the good faith of such an attitude but their concern in that regard does not make any question of law.
The order should be affirmed, with costs.