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Hertz v. Knudson, 6 F.2d 812 (8th Cir. 1925). Following the case of Lyon Bonding
& Surety Company v. Karatz, 262 U.S. 77, in which receivers appointed by a
federal court were found to be without any jurisdiction, the receivers petitioned
for the payment of their expenses and fees. The court noted that normally no
compensation would be payable but in the circumstances of the case, the
Nebraska liquidator of Lyon Bonding had reached an agreement with the
federal receivers to perform certain functions in Minnesota during the
pendency of the litigation to determine their jurisdiction. However, the court
stated that it had no jurisdiction over the dispute and that the parties must go to
the Nebraska state courts to have the compensation issue resolved.
Holley v. General American Life Ins. Co., 101 F.2d 172 (8th Cir. 1939). An
unsecured creditor and a shareholder of an insolvent insurer intervened to
challenge the sale of assets of the insolvent insurer. In rejecting the petition and
intervention, the federal court noted that the Missouri liquidation court had
exclusive jurisdiction and that the federal court could not entertain a suit for
appointment of receiver and review of the sale of assets. Further, the suit was
an obvious attempt to interfere in the disposition of the property of an
insolvent Missouri insurance company under the supervision of a Missouri state
court and on that basis alone, could not be maintained since it constituted a
collateral attack.
Melahn v. Pennock Insurance, Inc., 965 F. 2d 1497 (8th Cir. 1990). Transit
Casualty Company's receiver brought state court action against its agent,
Pennock, for an accounting and the recovery of unearned commissions on
premiums due but not collected and on premiums collected but not remitted.
Pennock removed the case to federal court based on diversity of citizenship and
filed a motion to dismiss on the grounds that the court lacked personal
jurisdiction. Melahn moved to remand the case to state court some eighty days
later on the basis of abstention under Burford v. Sun Oil, 319 U.S. 315 (1943). The
Eighth Circuit held that the district court had the authority to remand the case
to the state court based on abstention even though section 1447(c) U.S.C. does
not expressly provide for this type of remand. Moreover, the motion to remand
on these grounds need not be made within the thirty‐day time limit set forth in
section 1447(c). The district court in this case, however, did not properly
exercise its authority to remand. The factors in favor of abstention were
insufficient in weight and number to override the obligation of federal courts to
decide cases over which they have subject matter jurisdiction. Melahn failed to
prove that the exercise of federal jurisdiction would frustrate the state's
interests in the matter. Accordingly, the district court abused its discretion in
ordering remand under the circumstances.
Moss v. Kansas City Life Ins., 96 F.2d 108 (8th Cir. 1938). The policyholders of an
insolvent Missouri insurer sued the insurance commissioner and another insurer
to which the commissioner had transferred assets belonging to the insolvent
insurer. There was no final adjudication of insolvency and therefore, the
insolvent insurer was not yet legally dissolved. Nevertheless, the court held that
given the other aspects of the order, which enjoined the company from
defending actions against it and then only in the name of the Missouri
commissioner, the company is not capable of being a party in an action in
federal court.
Motlow v. Southern Holding & Securities Corp., 95 F.2d 721 (8th Cir. 1938) cert.
denied, 305 U.S. 609 (1938). The federal district court could not set aside
allegedly fraudulent transfers of an insolvent insurer involved in liquidation