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Rheinberger v. Security Life Ins. Co. of America, 4 F. Supp. 824 (N.D. Ill. 1933),
appeal dismissed, 72 F.2d 147 (1933). After a receiver was appointed for an
insolvent insurer, and approval of the receivership court was obtained for a
contract with another insurer, policyholders were prevented from intervening
for the purpose of attacking the court's approval of receivership. Further,
although it is the duty of the court to inquire into allegations by plaintiff that
amendments to the reinsurance contract were secured by or constitute fraud
or deceit upon the court, the court found no basis for such allegations.
Indiana State ex rel. Mid‐West Ins. Co. v. Superior Court of Marion County, 231 Ind. 94,
106 N.E.2d 924 (1952). In rejecting a petition by a claimant against an insured of
an insolvent insurer, the court noted that claimant was not a judgment creditor
of the insolvent insurer, and further, only the Indiana Insurance Department is
permitted to seek the appointment of a receiver for an insolvent insurance
company. The Department intervened in the proceeding alleging that the
insurer was insolvent and seeking the appointment of a rehabilitator.
However, the court rejected the Department's petition because it had been
incorrectly filed in the wrong court and the wrong proceeding since
intervention was not the appropriate mechanism for securing the appointment
of a rehabilitator.
Michigan
Attorney General ex rel. Commissioner of Insurance v. Lapeer Farmers Mutual
Fire Ins. Ass'n., 300 Mich. 320, 1 N.W.2d 557 (1942). The trial court did not
abuse its discretion in denying the petition of objecting members and creditors
to intervene in a receivership proceeding against an insolvent insurer, brought
by Attorney General on the relation of the insurance commissioner, for the
purpose of opposing the final accounting of a former receiver and for
directions to successor receiver thereon, where it did not appear that any
useful purpose would be served by permitting the intervention and it appeared
the petition to intervene was but one of many dilatory steps being taken to
delay the proceeding. It was error in failing to give members formal notice of
particular proceedings in receivership, since where members had opportunity
to contest and did contest the various stages of the proceeding, no prejudice
could be shown.
Gauss, State Commissioner of Insurance v. Central West Casualty Company,
266 Mich. 159, 253 N.W. 252 (1934). The Supreme Court of Michigan, reversing
the trial court, permitted the creditors of an insolvent insurance company to
intervene in a suit by the commissioner of insurance to take possession of the
property and assets of the company and conduct its business until the further
order of the court. The court held, however, that such intervention must be in
subordination to the commissioner's petition and order thereon.
Trosper v. Ingham Circuit Judge, 293 Mich. 438, 292 N.W. 360 (1940). The court
held that the circuit judge did not abuse his discretion by refusing a
policyholder's leave to intervene in the liquidation proceedings of the insolvent
insurance company. The policyholder is only one of several thousand
policyholders and the common interest of all policyholders is best represented
by the commissioner of insurance who was appointed receiver of the
company. The policyholder, not having an independent right of action, and not
being a party by right of entry, was properly denied leave to intervene.
Whitehorn v. Ingham Circuit Judge, 281 Mich. 10, 274 N.W. 691 (1937). The
plaintiff, a policyholder of the insolvent insurance company, was not permitted
to intervene in a state court proceeding as no useful purpose would be served.