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Schenek v. Citizens Casualty Co., 66 Misc.2d 811, 322 N.Y.S.2d 483 (1971). The
court found that evidence submitted by the insurance commissioner
supported the petition to terminate rehabilitation proceedings and liquidate
the insurance company and established that every effort had been made to
rehabilitate the company. The court also found that the insurer had failed to
improve its impaired capital status or infuse any capital whatsoever and
therefore it would have been futile to continue the rehabilitation or continue
the company's operations which would have been hazardous to policyholders,
stockholders and the public.
Stewart v. Citizens Casualty Company of New York, 61 Misc.2d 809, 306
N.Y.S.2d 973 (1969), reversed on other grounds, 34 A.D.2d 525, 308 N.Y.S.2d
513, affirmed, 27 N.Y.2d 685, 314 N.Y.S.2d 7, 262 N.E.2d 215, cert. denied, 401
U.S. 910. The insurance commissioner must prove allegations supporting a
petition for an order of rehabilitation and there is no presumption made that
the condition of insolvency is continuing once the commissioner proceeds for
the order to rehabilitate.
Stewart v. Citizens Casualty Co. of New York, 23 N.Y.2d 407, 297 N.Y.S.2d 115,
244 N.E.2d 690 (1968), remanded, 61 Misc.2d 809, 306 N.Y.S.2d 973. The court
concluded that a violation of the insurance code must be proved before the
insurance commissioner could intervene and rehabilitate the insurer. Where
the insurer failed to establish that it was solvent the commissioner had the
authority to rehabilitate the company absent proof to the contrary.
Pennsylvania Commissioner ex rel. Maxwell v. Safeguard Mutual Ins. Co., 91 Dauph. 305
(1969), rehearing, 92 Dauph. 307 (1970). Pennsylvania law strongly implies that
a petition to order dissolution of an insurance company may only be supported
by a showing of "hazardous condition." In a proceeding to dissolve an
insurance company, the proofs of the insurance commissioner must be clear,
direct, and convincing and only those inferences that are unmistakable and
inevitable will be allowed. Where evidence established that an insurance
company was not willfully violating the insurance laws and that the company's
further transaction of business would not be hazardous to its policyholders,
the commissioner's petition to liquidate was denied and the company's
petition to vacate his suspension order was allowed. The commissioner of
insurance is not authorized by statute to suspend a mutual insurance company
on the ground that its claims practices are not in the best interests of
policyholders and claimants. Moreover, a showing that an insurance company
is engaged in an unlawful operation by virtue of a technical violation of the law,
without more, is not a sufficient basis for a court to order dissolution and
liquidation of the company.
Commonwealth Insurance Department v. Safeguard Mutual Ins. Co., 18 Pa.
Cmwlth. 195, 336 A.2d 674 (1975), modified on other grounds, 478 Pa. 592, 387
A.2d 647 (1978). In seeking an order requiring the insurance company to show
cause why its business should not be closed, the department of insurance has
the burden of proving the insurer to be insolvent and/or in a hazardous
condition. If the department meets that burden, the insurer must show a
subsequent change in condition which revived the company's financial health.
Sheppard v. Old Heritage Mutual Ins. Co., 492 Pa. 581, 425 A.2d 304, (1980).
The court in a liquidation proceeding is not required to take judicial notice of
the insurance company's annual financial statement for the following calendar
year. Where an insurance company was found insolvent because its admitted
assets were not greater than its liabilities, it could not rehabilitate itself, as an