Court Opinion

ID: 5507586
Source: CourtListenerOpinion
Date Created: 2022-01-10 03:20:32.338365+00
Date Added: 2024-06-11T08:34:05.181565
License: Public Domain

O’BRIEN, J.
On November 5, 1883, the American Steam-Boiler Insurance Company deposited, pursuant to section 6, c. 463, of the Laws of 1853, $100,000 in bonds with the superintendent of insurance. The company subsequently having ceased to do business, an action was commenced by the people for the purpose of dissolving the corporation for nonuser, winding it up, and distributing its assets. In such proceeding the receiver was appointed, and duly qualified. The interest on the bonds so deposited became due on the 1st of May, 1894, and was collected by the superintendent of insurance; and to obtain such interest the receiver applied to this court for an order directing the superintendent to pay it over to him, which motion was denied upon the ground that there was no power in the court to grant the application.
Although it was stated upon the argument that there was no question as to the company’s solvency, the fact being that it was not only able to pay all its debts, but would, in addition, pay a large dividend to the stockholders, this does not appear in the petition, and cannot, therefore, be considered. As the law stood prior to 189:2, there was no authority in this court to interfere with a fund such as this, deposited under chapter 463 of the Laws of 1853 as amended; it having been directly held in the case of Ruggles v. Chapman, 59 N. Y. 163, that the courts have no power to compel the superintendent to transfer the trust imposed upon him by said act. The judge writing the opinion in that case, in speaking of the difficulties in the way of harmonizing the two independent schemes of dealing with an insolvent insurance company, with part of its assets in the hands of the superintendent of insurance and part in the hands of the receiver, says:
“We venture to add that it is better that the legislative power should be invoked to resolve the difficulty, and to provide for the protection of the rights of the parties interested in such cases by general laws, than that the courts should attempt to build a system out of the discordant and scanty material of positive enactments now to be found in the statutes.”
To justify a transfer of the principal or interest in the hands of the superintendent of insurance, express legislative authority must *157be shown. In the opinion of the court below, reference was made to the act of 1884, c. 285, which provides that the court, upon the application of the attorney general, should direct a transfer to the receiver of such corporation of the securities or fund deposited with the insurance department; and for the reason that the application was not so -made, but was opposed by the attorney general, and as none of the provisions of that act was applicable to sustain the motion made, he therefore denied it. We do not think that the law of 1884 has any bearing upon the question here. As shown by its title, the act itself is one to provide for the transfer of securities and property by bankrupt corporations to their receivers, and for the transfer by the superintendent of insurance to receivers of insolvent life insurance and annuity companies the funds and securities deposited with such superintendent by such companies for the security of policy holders. By its first section it makes provision for all cases where receivers are appointed for any corporation, excepting only an insurance company; and by the second section it confines itself to the receivers of insolvent life insurance and annuity companies. The defendant here is an-insurance company; but it is neither a life nor an annuity company, and, being a casualty insurance company, the laws of 1884 are inapplicable. Impelled, no doubt, by the force of the suggestions contained in the opinion from which we have quoted (Ruggles v. Chapman, 59 N. Y. 165), and the sentiment existing in favor of having the laws relating to these different companies consolidated and harmonized, the legislature, in 1892, recognizing the various forms of insurance, classified them, making special provisions for each class, and repealing laws— among others, that of 1858—inconsistent with the new provisions. In addition to general regulations applicable to all insurance companies, the provisions for the different kinds relating to “life, health, and casualty insurance corporations,” within which category this defendant would come, are embraced between sections 70 and 92, inclusive, of the act. Chapter 690, Laws 1892. Among the general provisions we find that section 14 provides that, “so long as the corporation depositing the securities shall continue solvent and comply with the laws of the state, it shall be permitted by the superintendent to collect the interest or dividends on such deposit”; and by section 76, which has special application to a corporation such as the defendant company, it is provided that when such a corporation is deemed insolvent, and a receiver thereof appointed, the latter, upon giving his bond, “shall take possession of all (such) assets and credits, including the securities deposited in the insurance department.” It will thus be seen that in either contingency (of the solvency or insolvency of the company) the interest should go to the receiver,—in the case of solvency, by the express language of section 14, and, in the case of insolvency, by the fair construction to be given to section 76, which requires that the shares deposited in the insurance department could be taken possession of by the receiver. It does not weaken the receiver’s position that he did not ask for the bonds themselves. If there is express authority for his right to the securities, this confers power upon the court, in a proper *158case, to direct the payment of the interest realized upon bonds to the receiver. In other words, the greater power that is given to the court, of directing the transmission of the securities themselves, necessarily includes the lesser, or ordering the transfer of interest realized from such securities. The superintendent was not required by any statute to collect the interest, because this would place in Ms hands an amount in excess of the deposit required by law; and, having this money, no reason was suggested why he should not pay it over to the receiver. We think, therefore, that the court has the power, in a proper case, to grant the application. The learned judge below, upon the ground that the court had no power, refused to and did not pass upon the merits of the application. The petition here is rather meager, in failing to state the exact financial condition of the company; and to the end that this may be remedied, and all the facts bearing upon the question presented, a new application should be made, and an opportunity afforded the attorney general to furnish reasons, if any, why the application should not be granted. The order accordingly should be reversed, with leave to renew, without costs to either party.