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In re New State Life Ins. Co., 23 P.2d 376, 164 Okla. 208 (1933). Where all parties
agreed that one insurer did not have the power to enter into the contract with
the insolvent insurer, and therefore the contract was ultra vires, the court held
that where money has been advanced under an ultra vires contract, the party
receiving the money has an obligation to return the money as implied by law.
Pennsylvania Crozer‐Chester Medical Ctr. v. Gerald J. Sullivan & Assocs., Inc., No. 86‐4890,
1989 U.S. Dist. LEXIS 13577 (E.D. Pa. Nov. 14, 1989). Insured and its
comprehensive liability insurance carrier and liquidator of insolvent directors,
officers and trustees insurance carrier filed cross‐motions for summary
judgment to recover interpleaded settlement funds paid to the court by
underwriter of directors, officers and trustees coverage. The court determined
that New York law controlled the dispute and that the relationship between the
insolvent directors, officers and trustees insurance carrier and the underwriter
was one of reinsurance. The court then pointed out that "[i]t is well established
by both statute and case law that the proceeds of reinsurance policies are paid
to the liquidation estate following the insolvency of a ceding company."
Accordingly, since the insured and its comprehensive liability insurance carrier
offered no proof that the settlement agreement was a novation intended to
supersede the original reinsurance arrangement, the court concluded the
liquidator was entitled to the interpleaded settlement proceeds. The court
granted the liquidator's motion for summary judgment.
Hunt v. Auferheide, 330 Pa. 362, 199 A. 345 (1938). The statutory liquidator can
sue directors of an insolvent casualty company for diversion of assets. In such a
suit, the liquidator could recover only the value of the diverted assets.
Neel v. Kistler, 21 Leh. L.J. 156 (1944). The liability of subscribers to an insurance
exchange is an asset of the exchange. Therefore, the insurance commissioner,
as liquidator, can maintain suit against the subscribers.
Tennessee
Bostick v. Maxey, 37 Tenn. (5 Sneed) 173 (1857). When the trustee of insolvent
mutual company sought to recover amount of premium note from policyholder,
it was held that, where the liabilities of the company had been discharged,
policyholder was not liable to pay balance of the note.
Ewing v. Coffman, 80 Tenn. 79 (1883). The owner of life a policy took out a loan
against a policy secured a by mortgage. All assets of the insurer were then
transferred to a second company. The insured assented to a new contract with
the second company. The second company thereafter became insolvent, and a
receiver was appointed in Tennessee. The receiver sued to collect the loan debt
and foreclose the mortgage. The insured asserted a right to set‐off premiums
paid to both companies against the debt. The court held, that all rights against
the first company were surrendered when the new contract was assented to,
and that no right of set‐off existed, among other reasons, because the insurer's
insolvency did not void the policy.
Gleason v. Prudential Fire Ins. Co., 127 Tenn. 8, 151 S.W. 1030 (1912).
Policyholders' premium notes become assets of the company for distribution to
its creditors.
Utah
In re Rehabilitation of American Investors Assurance Co., 521 P.2d 560 (Utah
1974). For purposes of the statute permitting the insurance commissioner to
take possession of the property of a financially troubled insurance company
under rehabilitation proceeding and to transfer the property and business of
the company to a new corporation, good will is a part of the property that
may be transferred. Consequently, the court, in affirming the
commissioner’s rehabilitation plan, may directly transfer the name of the
former company to the new corporation.