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directors that had contributed the moneys upon the opinion of the Executive
Committee of the Board of Directors when it was safe to do so, and when such
arrangement had been approved by the Indiana Attorney General and the
state auditor in charge of the insurance department, it was concluded that
despite a misinterpretation of the organizations statute by all concerned, the
directors had proceeded in good faith with no selfish or improper motive, and
therefore, the receiver could not pursue the directors on the ground that the
transaction was ultra vires. Further, where the policyholders were estopped
from recovering the payments by their previous knowledge of the transaction,
the receiver could not attempt to recover on their behalf.
Iowa
Hoyt v. Hampe, 214 N.W. 718, 206 Iowa 206 (1928), rehearing denied, 220 N.W.
45, 206 Iowa 206. The court held that the insurance company was required to
maintain a reserve for unearned premiums in addition to paying losses on
policies in force. The court also held that policyholders were creditors and,
from the dates of their policies had the right to require fulfillment of obligation
the company owed them. Therefore, the appropriation of company funds by
defendants was constructively fraudulent as to creditors, including
policyholders.
Louisiana Green v. Champion Insurance Company, 577 So.2d 249 (La. App. 1st Cir. 1991),
writ den'd, 580 So.2d 668 (La. 1991). Champion Insurance Company was
declared insolvent and the Insurance Commissioner was appointed liquidator.
Faced with criminal charges relating to Champion, the Commissioner moved to
recuse himself as liquidator, and a liquidator ad hoc was appointed. The
liquidator ad hoc sued twelve individual defendants, all officers and
stockholders of Champion or its various affiliates, and nine corporate
defendants related to Champion, including holding companies, a premium
finance company and managing general agent corporations. The trial court
found that all of the corporate defendants had been operated as a "single
business enterprise," and issued an order declaring that the assets of the
defendant corporations were assets of Champion to be distributed in the
liquidation proceeding. He further issued an injunction restraining the
defendants from using or otherwise disposing of those assets without a prior
hearing.
In response to a challenge that the appointment of the ad hoc liquidator was
an unconstitutional exercise of powers reserved to the executive branch, the
appellate court held that the Louisiana statutory scheme merely expresses a
non‐mandatory preference for the appointment of the Commissioner of
Insurance as liquidator, and the trial judge had authority to appoint a liquidator
ad hoc of his own choosing. The court affirmed the finding that the corporate
defendants had been operated as a "single business enterprise" and
delineated the factors to be considered in reaching such a determination. The
court concluded that once the judicial determination was made that the
entities were in fact a "single business enterprise," the liquidator was vested
with the defendants' assets by operation of law, and no further actions, such
as writs of seizure, were necessary to bring those assets into the liquidation
proceeding. The court rejected the claim that the liquidator was thereby
regulating non‐insurer corporations, finding the order was simply in
furtherance of the liquidator's duty to marshal the assets that are properly
included in the liquidation. The court squarely held that the insurance code
which authorizes the issuance of an injunction restraining, inter alia, "all other
persons from transacting any insurance business or disposing of its property,"
is intentionally broad to ensure that the jurisdiction of the liquidation court
extends to persons or entities such as defendants, who may have access,