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SECTION 7219. Appointment of receivers of 7238. Valuation of policies in windguch companies.

ing up. 7220. Circumstances under which apo 7239. Rule adopted by statute in pointed.

England, 7221. Appointment at the suit of 7240. Manner of making the assessjudgment creditors.

ment. 7222. Appointment at the suit of 7241. Equalizing those who have paid policy-holders.

premiums in cash. 7223. Impeaching the decree appoint- 7242. Particularity in making the asing the receiver.

sessment. 7224. Receiver cannot reinsure risks. 7243. Requisites of notice of the 7225. Cannot waive stipulations in

assessment. policies.

7244. Notes payable absolutely where 7226. Payment of losses accruing dur

no assessment is necessary. ing the receivership.

7245. Arrangements among the mem7227. Receiver's right of action on a

bers limiting their liability. guaranty where one life in- 7246. Actions to enforce assessments surance company absorbs an

upon premium notes. other and reinsures its risks. 7247. What the receiver must aver 7228. Administration of the securities

deposited with the superin- 7248. Recovery of interest on such tendent of insurance.

premium notes. 7229. Proceedings where receiver dis- 7249. Receiver takes premium notes allows a claim.

subject to equities. 7230. Compromising claims.

7250. Illustrations of this principle. 7231. Premium notes in the hands of 7251. Right of set-off in actions on receiver.

premium notes. 7232. Further of premium notes. 7252. Right of set-off under statutes 7233. Assessing the premium notes.

of New York. 7234. Necessity of assessment. 7253. Defenses to such actions. 7235. Circumstances under which such 7254. Priorities in distribution.

assessments may be made. 7255. Receiver may exercise an option 7236. Effect of assessments by a for

possessed by the company. mer receiver.

7256. Distribution not made to credit7237. Extent and proportion of the

ors of creditors. assessment.

and prove.

8 7219. Appointment of Receivers of Such Companies.Corporations organized for conducting the business of insurance in all its branches, have become the subject of elaborate statutory regulation (it may be assumed) in all the States of the American Union; and the circumstances under which receivers may be appointed to wind up such corporations in the event of their insolvency, or in the event of their assets shrinking to such a limit as to render it unsafe to the public for them to continue their business, are generally the subjects of statutory definition and regulation. An attempt to collect and classify these statutes would be beyond the plan of the present work, and they are noticed only where they incidentally become the subject of judicial exposition. Statutes like that of New York, providing for arresting the business of an insurance company and appointing a receiver when the further prosecution of its business will be injurious to the public interests, are not repugnant to the provisions of State and Federal constitutions prohibiting the deprivation of a person of property without due process of law.: Under some of

I As to receivers of fire insurance a hearing before a court, subject to a companies in New York, see 2 Rev. right of final appeal to the Court of Stat. N.Y. (7th ed.), pp. 1482–1485. As Appeals. See People v. Atlantic Mut. to receivers of marine insurance com- Life Ins. Co., 74 N. Y. 177. It is also panies in the same State, see Ibid., pointed out in the case just cited that pp. 1467-1471. A receiver of the the decision of the Supreme Court at assets of an insolvent insurance com- Special Term, restraining a life insurpany, appointed under New York ance company from the further proseLaws of 1853, chapter 463, section 17, cution of its business, and appointing is governed, in respect of the duties a receiver upon an application of the of his office, by the provisions of the Attorney-General under the statute, Revised Statutes relating to corpora- is not final; but that it is for the tions, and by the practice of courts of General Term, and afterwards for the equity. People v. Security Life Ins. Court of Appeals, to scrutinize all Co., 78 N. Y. 114; 8. C. 34 Am. Rep. proceedings in every case, and to de522.

termine whether a cause existed for 2 New York Laws 1869, ch. 90, $ 7. the interfer ace, and whether there

: Attorney-General v. North Amer- was sufficient reason for continuing ica Life Ins. Co., 82 N. Y. 172, 183. It it; and that the controlling question is pointed out in the opinion that the for decision in such case is, Are the proceedings are not arbitrary; that assets of the corporation sufficient to there is, first, the judgment of the Su- justify the belief that it may continue perintendent of Insurance, and then the business of life insurance with

these statutes, a receiver may be appointed on the application of the State Commissioner of Insurance, or State Superintendent of Insurance, by whatever name called, on his finding that the assets of an insurance company have fallen below a prescribed statutory limit. Unless the governing statute enacts or implies the contrary, a receiver of an insurance company may be appointed on an application of one of its stockholders, as in the case of other corporations.

§ 7220. Circumstances under Which Appointed. The mere fact that the assets of an insurance company have fallen

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safety to the public? In Wisconsin, and against corporations (2 Rev. Stat. jurisdiction of an action by a creditor N. Y., 463, $ 39, et seq.), an applicaor a stockholder to wind up the busi- tion may be made by a stockholder, ness of an insolvent mutual insurance without the intervention of the Attorcompany, and, as incidental thereto, ney-General, to restrain an insolvent to grant an injunction restraining insurance company from exercising the continuance of its business and its corporate rights and franchises, the disposing of its property, and to and for the appointment of a receiver. appoint a receiver, is conferred by Osgood v. Maguire, 61 N. Y. 524. The Wisconsin Revised Statutes, sections court say that “the practice and de3218, 3219, which apply to mutual as cisions are in accordance with this well as other insurance companies. view of the law: Mann v. Pentz, 2 Re Oshkosh Mut. Fire Ins. Co., 77 Sandf. Ch. (N. Y.) 257; Re Franklin Wis. 366; 8. c. 9 L. R. A. 273; 46 Bank, 1 Paige (N. Y.), 85; Hill v. N. W. Rep. 441.

Nautilus Ins. Co., 4 Sandf. Ch. (N. Y.) 1 Thus, by the Connecticut Statute 577, 580; Verplank v. Mercantile Ins. 1875, page 12, the Insurance Commis- Co., 1 Edw. Ch. (N. Y.) 46; 8. c. 2 sioner, on finding that the assets of

Paige (N. Y.), 438.” Effect of a statute any life insurance company of that avoiding transfers after petition for State are less than three-fourths of

receiver: Sands v. Hill, 55 N. Y. 18. its liabilities, is to apply to the Su- Status of checks given to settle losses perior Court for the appointment of prior to appointment of receiver: Mera receiver and the annulling of its rill v. Anderson, 10 Hun (N. Y.), 604. charter. It is no answer to a petition Reduction of contracts of life insurfor this purpose that the respond- ance in place of winding up, under ents had, by legislative permission, English statute, - see Stat. 33 & 34 transferred all their assets to another Vict., ch. 61, $ 22. This statute incompany, which had assumed all cludes mutual life insurance comtheir liabilities, so long as the holders panies: Re Great Britain Mut. Life of their policies had not assented to Ins. Soc., 16 Ch. Div. 246; Lind. the arrangement. Stedman v. Amer- Comp. Law (5th ed.), p. 635; Re ican Mut. Life Ins. Co., 45 Conn, 377. Great Britain Mut. Life Ins. Soc., 19

* Ante, $ 6878. Thus, under the Ch. Div. 39; 8. C. affirmed, 20 Ch. provisions of the Revised Statutes of Div. 352. New York relating to proceedings by

below the statutory limit, so that it is prohibited from continuing its business, does not, under all statutory systems, demand the appointment of a receiver; but, in the absence of special circumstances requiring such an appointment, the directors may wind up the affairs of the company, reinsure its risks, and go out of business; and it may go out of business with. out the interference of a court of equity by such an appointment. The governing principle applicable to such cases is, that the mere fact of insolvency does not require the appointment of a receiver, unless it appears that prejudice will ensue to parties in interest from allowing the affairs of the corporation to remain in the hands of its directors, to be wound up by them. Some of the statutes confer upon the court superintending the administration, through its receiver, power to direct the receiver to continue the business. Under such a statute, the court will not make such a direction, where it is apparent that very few of the policy-holders will, in fact, pay any future premiums. When an application is made by the Attorney-General, under the New York statute for the appointment of a receiver to wind up a life insurance company, the question for decision is said to be, whether the assets of the corporation are sufficient to justify the belief that it may continue the business of life insurance with safety to the public; and where it appeared, from the evidence ad. duced upon such an application, that the assets of the company

1 Streit v. Citizens' Fire Ins. Co., insurance company pursuant to the 29 N. J. Eq. 22.

provisions of New York Laws, 1869, * See Rawnsley v. Trenton Mut. chapter 902, relate only to those speci&c. Ins. Co., 9 N. J. Eq. 347. So, as fied in section 8, of the act, and terto a railroad company, see Union minate with his report, unless such Trust Co. v. St. Louis &c. R, Co., 4 duties are continued by the court; ani) Dill. (U. S.) 114. Under some statu- the compensation which is to be paid tory schemes, actuaries are also ap- must be fixed by the court, and is not pointed, presumably for the purpose under the control of the receiver, of investigating, on mathematical Superintendent of Insurance, or actlines, the affairs of the company, and uary. Re North American Life Ins. ascertaining how much it will take to Co., 55 How. Pr. (N. Y.) 465. restore it to a safe basis, and whether s New York Stat. 1869, p. 902. or not it can go on. The duties of an • People r. Atlantic Mut. Life Ins. actuary appointed by a receiver of an Co., 15 Hun (N. Y.), 84.

were less than the amount of the values of the outstanding policies by about one-tenth of that amount; that the capital was entirely sunk; that the assets were of a kind not readily convertible or available; that a portion of the assets had been kept as a cash deposit with a private banker who was an officer of the company, without any agreement as to interest, and without security against losses; that the trustees were not in the practice of holding regular meetings, or of supervising the affairs of the company; that dividends were paid without a regular meeting or vote of the board of trustees, when there had been losses and depreciation in the value of the assets, and when it was impossible to know whether or not the capital had been impaired; - it was held that there was sufficient cause for interference, and that an order granting a receiver, and enjoining the company from the further prosecution of its business, would not be reversed; but that a clause in the order dissolving the corporation itself, was improper.'

$ 7221. Appointment at the Suit of Judgment Creditors. Receivers of insolvent insurance companies may be appointed at the suit of judgment creditors, unless the statutory system by which such companies are governed, enacts or implies some other mode of winding them up and of satisfying the demands of their creditors and policy-holders. In New York, an insol. vent mutual insurance company could be wound up by means of a receiver, appointed at the suit of a judgment creditor, under the provisions of the Revised Statutes authorizing the property of insolvent corporations so to be sequestrated. But it was held necessary to pursue the provisions of the statute strictly; and therefore, before the court could lawfully order sequestration and appoint a receiver, it must have a petition before it from a judgment creditor, or his legal representatives, setting forth the due recovery of a judgment in a court of law or of a decree in equity, with the due return of an execution issued thereon, unsatisfied in whole or in part. This was essential to confer upon the court the slightest power

· People v. Atlantic Mut. Life Ins. Co., 74 N. Y. 177.

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