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where commissioner had not authorized the appeal, the Attorney General
would not be permitted to intervene. The legislature intended the insurance
commissioner to exercise sole judgment as to the conduct of the delinquency
proceedings, and when acting as receiver, his primary obligations are to the
policyholders, the court, and the creditors of the insolvent insurance company.
The Home Ins. Co. v. Montgomery County Comm'n, 902 So. 2d 677 (Ala. 2004).
Rehabilitator, liquidator or receiver may bring civil action against debtor for
breach of contract and bad‐faith failure to pay a claim, has the power to settle
the claim, and the right to seek enforcement of the settlement. See 902 So. 2d
at 678. However, Alabama has adopted the UILA, which requires the receiver to
seek enforcement of its settlement with in reciprocal state. 902 So. 2d at 679.
Arizona Arizona Corporation Commission v. California Ins. Co., 28 Ariz. 128, 236 P. 460
(1925). The Arizona Supreme Court held that the insurance commissioner, as
receiver, could not object to the validity of the notes and mortgage of assets
as ultra vires, because the company's indebtedness was already greater than
permitted by its charter. The court stated that the state corporation
commission simply stepped into the shoes of the insolvent insurer, and had no
better or different right or title to the property than the corporation had.
Thus, the commissioner had no greater right to interpose an objection to the
validity of the notes and mortgage than would the company itself. The court
was also persuaded by the fact that the members of the commission were fully
advised as to all details of the transaction and consented thereto.
In re Diamond Benefits Life Ins. Co., 907 P.2d 63 (Ariz. 1995). The court held
that the Special Deputy Receiver of an insolvent insurer was not subject to
the statute of limitations, pursuant to an Arizona law that exempts the state
and political subdivisions from statutes of limitations. Thus, an action for
conversion brought by the Special Deputy Receiver could go forward even
though it exceeded the two year statute of limitations period. The court
found that the state, not the insolvent insurer, was the real party in interest
in the conversion proceeding because the state would be liable to pay
policyholders out of the Insurance Guaranty Fund in the event the insurer
was unable to satisfy claims against it.
Pioneer Annuity Life Ins. Co. v. Rich, 880 P.2d 682 (Ariz. Ct. App. 1994).
Receiver of an insolvent insurance company brought an action against a
shareholder pursuant to the Arizona constitution which makes shareholders
of banking or insurance corporations liable for corporate debts to the extent
of the par value of their stock, in addition to the amount invested in the
shares. (Such a provision is often referred to as a "double liability provision"
because the shareholders may lose twice the amount of their original
investment.) The court held that the receiver stands not only in the shoes of
the corporation, but also in the shoes of bona fide creditors of the
corporation. Accordingly, the receiver could enforce the constitutional
rights of creditors on their behalf by pursuing a cause of action against the
insurer's sole shareholder.
California
Copenhagen Reinsurance Co. Ltd. v. Superior Court, No. B099422 (Cal. Ct.
App. Sept. 10, 1996), reported in Mealey's Litig. Rep.‐Reinsurance, Vol. 7,
No.10 at G1 (Sept. 25, 1996). Court complied with a writ of mandate issued
by the California Court of Appeals and entered an order adopting the
statement of decision of a panel of referees granting judgment for members
of the Mission‐affiliated Pacific Reinsurance Management Corporation pool
on various issues.