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New Jersey
Fortunato v. New Jersey Life Ins., 254 N.J. Super. 420 (App. Div. 1991). The
Appellate Division held that the Chancery Division should not have denied the
Commissioner's request for an order directing him to rehabilitate New Jersey
Life Insurance Company. The Chancery judge had refused to grant the request
for rehabilitation because there were issues of fact concerning the existence of
insolvency, including the issue of whether a reinsurance agreement had been
repudiated. The reinsurance issue was scheduled for arbitration at a later date.
While the Uniform Insurers Liquidation Act [N.J.S.A. 17B:32‐2, before
amendment by P.L.1992, c. 65] gives the Superior Court original jurisdiction
over the Commissioner's petition, it does not require a full hearing before the
court issues orders. The Commissioner's determination that further business
by the insurer would be hazardous was a finding of fact, an informed
prediction, and was neither arbitrary nor unreasonable. Because the insurer
failed to demonstrate to the contrary, the Commissioner's determination was
sufficient to grant the rehabilitation order.
New York Application of Bohlinger, 199 Misc. 941, 106 N.Y.S.2d 953 (1951), affirmed, 280
A.D. 517, 113 N.Y.S.2d 755, affirmed 305 N.Y. 258, 112 N.E.2d 280, cert. denied,
346 U.S. 857, rehearing denied, 346 U.S. 913. Where it was determined that a
fraternal benefit society was affiliated with the Communist Party and that the
party's influence could not be eradicated by removing some or all of the
leaders of the society, the court held that the insurance commissioner was not
required to apply for an order of rehabilitation before seeking its dissolution.
The court further held that the commissioner did not have to wait for a
conviction of the society for subversive activities before proceeding to have
the society dissolved.
Application of People, by Dineen, 194 Misc. 999, 86 N.Y.S.2d 733 (1949). An
order liquidating the insurance business of a fraternal organization is
warranted where the organization is divided into three groups, where one
group with 384 members had a bank balance of $409.46, anther group with
330 members had a bank balance of $28.97, and a third group with 734
members had a bank balance of $846.88, thus maintaining insufficient
reserves.
In re International Workers, 280 A.D. 517, 114 N.Y.S.2d 755 (1952), affirmed, 305
N.Y. 258, 112 N.E.2d 280 cert. denied, 346 U.S. 857, rehearing denied, 74 346
U.S. 913. The court held that consideration must be given to the moral risk
which is a component of financial hazard when determining whether to
dissolve a fraternal benefit society and whether its continued transactions
posed a significant hazard to its policyholders, creditors or the public.
Matter of Globe and Rutgers Fire Ins. Co., 149 Misc. 18, 266 N.Y.S. 603 (1933).
The court's decision on the insurance commissioner's application for an order
of liquidation was withheld to afford a reasonable opportunity for
demonstration of the success of a plan of reorganization under an earlier order
of rehabilitation.
Matter of New York Title & Mortgage Co., 156 Misc. 186, 281 N.Y.S. 715 (1935).
Only the strongest showing to the contrary could justify the court's refusal to
follow the recommendations of the insurance commissioner for an order of
liquidation of a title and mortgage company in rehabilitation, where the
commissioner determined liquidation was necessary and desirable.