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authorizing the Liquidator to properly present contingent claims to the Court on
behalf of future claimants.
Lane v. Bogert, 116 N.J. Eq. 454, 174 A. 217 (1934). The court held that if an
insurance company becomes insolvent, the receiver or trustees have authority
to sue such officers and directors for dereliction of their duties.
Lincoln Bus Co. v. Jersey Mutual Casualty Ins. Co., 112 N.J. Eq. 523, 10 N.J. Misc.
1114, 162 A. 915 (1932). Where the banking commissioner, having taken over
the affairs of an insolvent insurance company, defended suits against the
company without authorization to do so, the commissioner was not
chargeable with the expenses of the unauthorized suits. As a public official,
the commissioner was acting with due care and made an honest mistake in the
performance of these duties.
Matter of Integrity Insurance Co., 240 N.J. Super. 480 (App. Div. 1990). The
action involved a suit to recover damages from third parties such as the
insurer's accountant, auditor, directors and officers based on negligence,
fraud, breach of fiduciary duties and violations of statutes, such as antiracketeering
and consumer fraud statutes.
The court held that the liquidator could prosecute claims "on behalf of"
creditors, policyholders, and other beneficiaries of Integrity if the objective of
the suit was to increase the estate's assets to which the creditors,
policyholders and public may look for satisfaction of their debt. However, the
liquidator could not maintain a suit in a representative capacity to assert
personal claims which really belonged to individual creditors or policyholders.
As to the misrepresentation claim, the "doctrine of constructive notice"
asserted by defendants did not apply and thus if Integrity's officers and
directors were part of the fraudulent scheme to misrepresent the
corporation's financial condition, the estate was not charged with the
knowledge of the directors and officers.
Yellow Cab Ins. v. Bankers' Indemnity Ins. Co., 110 N.J.L. 546, 166 A. 186 (1933).
Where the insurance commissioner required the directors of an insurance
company undergoing voluntary dissolution to post a bond indemnifying the
commissioner and other interested persons against loss for improper payment
of dividends and the surrender of securities, such requirement was held as a
valid exercise of authority.
New York
Bohlinger v. Mayville Realty Co., 135 N.Y.S.2d 865 (1954), affirmed, 285 A.D.
1045, 141 N.Y.S.2d 509, appeal denied, 286 A.D. 832, 143 N.Y.S.2d 627. The
liquidator of an insurance company was entitled to enforce a contract between
the company and an agent.
Callon Petroleum Co. v. Superintendent of Ins., 863 N.Y.S.2d 92 (N.Y. App. Div.
2008). Although the court generally defers to the rehabilitator’s business
judgment, the rehabilitator of an insolvent surety acted arbitrarily and
capriciously by failing to negotiate, compromise, pay, or otherwise resolve an
obligation that the court previously determined was valid. The court ordered
the rehabilitator to take affirmative action with respect to the claim.
Consolidated Edison Co. of N.Y. v. Insurance Dept. of the State of N.Y., 140
Misc.2d 969, 532 N.Y.S.2d 186 (N.Y. Sup. Ct. 1988). In an Article 78 proceeding,
the court held that the Superintendent of Insurance, acting in his capacity as