Court Opinion

ID: 3587508
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:37:03.992709+00
Date Added: 2024-06-11T07:41:55.403226
License: Public Domain

The Southern Surety Company of New York, organized and existing under the laws of the State of New York, was placed in liquidation by an order of the Supreme Court dated March 22, 1932, and the Superintendent of Insurance thereupon, pursuant to directions contained in such order, took possession of its assets and thereafter proceeded in the matter of its liquidation. The claimant, the Goodyear Tire  Rubber Co., Inc., and *Page 65 
its affiliates, the adjudication of whose claims is to follow the decision in this case, are residents of the State of Ohio. At the time of the entry of the order of liquidation, $50,000 of its assets, consisting of securities valued in that amount, was on deposit with the Superintendent of Insurance of the State of Ohio as a condition precedent to its doing business in that State as required by section 9510 of the Ohio General Code.
In an action brought by the Attorney-General of the State of Ohio in behalf of its Superintendent of Insurance against the Southern Surety Company of New York and another under the provisions of sections 641-643 of the General Code of Ohio, the claimant, being an Ohio resident policyholder, was paid 12.675% of the amount of its claim, whereupon it filed a claim with the New York liquidator for the difference of the face of its claim less the amount paid to it out of the deposit aforesaid with the Superintendent of Insurance of the State of Ohio. The New York liquidator recommended the allowance of the claim upon condition that no dividend be paid thereon unless and until all allowed policyholder claimants should have received dividends in an amount equal to 12.675% of their claims. Objections were filed to the recommendation of the liquidator in that respect and the claimant asserted that regardless of the dividend which it received upon its claim out of the deposit with the Superintendent of Insurance of the State of Ohio it was entitled in New York out of the general assets of the insolvent to a dividend equivalent in amount to that paid to other policyholder claimants. The objections were dismissed and the recommendation of the Superintendent of Insurance of the State of New York adopted and an order was made by Special Term accordingly. The Appellate Division reversed and sustained the objections and the New York liquidator has appealed to this court. The statutory deposit within the State of Ohio was made to enable the surety company to do business within that State. Construing the statutes of that State, the Ohio courts have held that the deposit will be there retained until all claims of *Page 66 
Ohio policyholders against the company shall first have been paid or extinguished (State ex rel. Van Schaick v. Bowen, 131 Ohio St. 310), that the deposit was a trust fund for the protection of Ohio policyholders only, and that, as to such fund, Ohio policyholders were secured creditors (State ex rel. Turner v.Union Casualty Ins. Co., 8 Ohio App. 285).
It is conceded that the interpretation of the Ohio statute by the Ohio court is binding on the New York courts, but it is claimed by the liquidator that the Ohio statute and its construction are irrelevant to the distribution of assets of the insurance company located within the State of New York. With that assertion I am entirely in accord. It is stipulated that the New York liquidator was not a party to the suit of State ex rel. VanSchaick v. Bowen (supra), and that he did not appear therein. He, therefore, cannot be bound by the decision in that case (Reynolds v. Stockton, 140 U.S. 254). The courts of this State would recognize the decisions of another State, if at all, only on the basis of comity (Huntington v. Attrill,146 U.S. 657, 669), and comity does not require us to give effect to the laws of Ohio where the effect thereof would be prejudicial to our own citizens or others who may have access to our courts to assert their claims (Willitts v. Waite, 25 N.Y. 577, 585,586; Matter of Waite, 99 N.Y. 433, 448).
The pertinent Ohio law is not similar to ours, and to sustain the contention of the claimant would be to create a preference in its behalf. The assets subject to the order of distribution here have always been under the supervision and control of the Superintendent of Insurance of the State of New York and of our courts and within the jurisdiction of our courts. A statutory deposit is required by the laws of our State. Out of such deposit, the Superintendent of Insurance has distributed a dividend to policyholder claimants of 3.2%. Out of the general assets of the insolvent the Superintendent has paid a dividend of 7.3% to all non-policyholder claimants and to policyholder claimants throughout the country who have not received a dividend *Page 67 
equal in amount to that paid by the New York liquidator. The surety company is insolvent. Its assets are insufficient to pay the claims of its creditors in full. Under section 71 of the Insurance Law of this State (Cons. Laws, ch. 28) the securities deposited with the Superintendent of Insurance were held by him in trust for the benefit and protection of and as security for all policyholders of the corporation wherever located. "The ordinary rule of distribution of the assets of an insolvent is equality amongst creditors of the same class" (Matter of People
[Norske Lloyd Ins. Co.], 242 N.Y. 148, 164). There is nothing in the statutes of our State to the contrary. Claimant has proved in the liquidation here as a general creditor. It is not a secured claimant within the sense of subdivision 5 of section 425 of the Insurance Law. The claimant has no property of the surety company in its possession nor does it have any mortgage or lien upon any property in the hands of the Superintendent of Insurance of the State of New York nor any specific lien or claim upon the fund in his hands for distribution. Our courts will not give it a preference simply because the laws and decisions of the State of Ohio have authorized a distribution to it upon its claim out of a special deposit made in that State to enable the surety company to do business there. Claimant has waived any interest in the statutory deposit of the surety company held by the Superintendent of Insurance of the State of New York.
The order of the Appellate Division should be reversed and the order of the Special Term reinstated and confirmed, with costs in this court and in the Appellate Division.
LEHMAN, HUBBS and LOUGHRAN, JJ., concur with FINCH, J.; RIPPEY, J., dissents in opinion in which CRANE, Ch. J., concurs; O'BRIEN, J., taking no part.
Order affirmed. (See 282 N.Y. 678.) *Page 68