Opinion ID: 2047375
Heading Depth: 2
Heading Rank: 1

Heading: Director's Rights

Text: [A rehabilitator] derives his authority from statute, and cannot act in contravention of or beyond the statute   . (19A J. Appleman & J. Appleman, Insurance Law & Practice § 10682, at 121 (rev. 1982).) Article XIII of the Insurance Code (Code) details the Director's authority to act as rehabilitator of an insolvent insurance company: The Director    shall be vested by operation of law with the title to all property, contracts and rights of action of the company as of the date of the order directing rehabilitation   . (Emphasis added.) (Ill.Rev.Stat.1987, ch. 73, par. 803.) Section 192 of the Code authorizes the Director to: deal with the property and business of the company in his name    or in the name of the company. (Emphasis added.) Ill.Rev.Stat.1987, ch. 73, par. 804(2). It is thus clear that the Code grants the Director only those rights the insolvent company had as of the date of the order directing rehabilitation. The Code does not provide the Director with the right to assert claims of the insolvent corporation's creditors. Moreover, this court has previously noted: We understand the rule to be, that where a receiver is appointed for the purpose of taking charge of the property and assets of a corporation, he is, for the purpose of determining the nature and extent of his title, regarded as representing only the corporate body itself, and not its creditors or shareholders   [.] [F]or purposes of litigation, he takes only the rights of the corporation such as could be asserted in its own name, and that upon that basis only, can he litigate for the benefit of either shareholders or creditors. (Emphasis added.) ( Republic Life Insurance Co. v. Swigert (1890), 135 Ill. 150, 167, 25 N.E. 680.) This court further recognized in Republic Life Insurance that while a receiver may be thought of as a trustee for creditors and stockholders, `this only proves that they are the beneficiaries of the fund in his hands, without indicating the sources of his title or the extent of his powers.' ( Republic Life Insurance, 135 Ill. at 168, 25 N.E. 680, quoting Curtis v. Leavitt (1857), 15 N.Y. 9, 44.) Thus, the Director as rehabilitator of an insolvent insurance company has only those rights the company had as of the date of rehabilitation, and, while the creditors are the beneficiaries of his actions, the Director is not authorized to assert creditors' claims on behalf of the creditors.