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liquidation proceeding, noting that the insolvent insurer had complied with the
notice requirements of the liquidation article.
Wisconsin Mutual Ins. Co. v. Manson, 24 Wis.2d 673, 130 N.W.2d 182 (1964).
The court held that one insurer could not offset the $500 in interest due on its
surplus note to an insolvent insurer.
Assessments
U.S. Supreme
Fourth Circuit
Pink v. AAA Highway Express, Inc., 314 U.S. 201 (1941). The U.S. Supreme Court
held that an assessment validly determined according to the laws of the state
of incorporation of a mutual insurer is entitled to full faith and credit, but the
question whether a resident of another state is a member of the mutual
insurer is a question of the law of the state of residency.
Keehn v. Parrish Dray Line, 145 F.2d 646 (4th Cir. 1944). The Illinois statutory
receiver of an insolvent Illinois insurer brought suit in South Carolina to recover
assessments levied by the Illinois receivership court against all policyholders of
the insolvent mutual insurer. It was held that a valid assessment levied by the
Illinois court was conclusive and binding against all South Carolina
policyholders, but since they were not personally served with process in the
liquidation proceeding and parties to the action, they could attempt to prove
that they were not members of the company and therefore not liable to pay
the assessment.
Miller v. Barnwell Bros., Inc., 137 F.2d 257 (4th Cir. 1943). The Illinois domiciliary
receiver of an insolvent mutual insurer brought suit against North Carolina
residents to recover assessments levied by the receivership court. The
insureds argued that they were not bound by the assessment, since they had
not been a party to the proceedings. The court held that members of a mutual
insurer are subject to the valid regulatory power of the state of incorporation.
Therefore, where the assessment was valid under Illinois law, it would be
binding upon North Carolina policyholders.
Arkansas
House v. Siegle, 121 Ark. 236, 180 S.W. 747 (1915). The court held that when a
mutual fire insurance company became insolvent during the life of a policy, this
did not relieve the policyholder of liability on a premium note, though the
by‐laws of the company provided that a member might withdraw from the
company at any time (in which case the unearned portion of the premiums
would be returned), notwithstanding the statutory requirement that such
companies file a qualified indemnity bond for the payment of losses and that
by statute each policyholder is a member and liable to assessment (even
though no assessment can be made until the bond is exhausted).
Johnson V. House, 131 Ark. 113, 198 S.W. 876 (1917). The insolvency of a mutual
insurance company before the expiration of its policies is no defense to actions
on premium notes and the receiver of such company may recover from
policyholders the full amount of unpaid premium notes, at least as long as the
company has outstanding debts, because such notes constitute the principal
assets of the company.
Swing v. Arkadelphia Lumber Co., 90 Ark. 394, 119 S.W. 265 (1909). The
directors of an insolvent insurer had made monthly assessments against the
policyholders up to the time of the dissolution. Nearly six years thereafter, the
same court made an assessment against the policyholders. About eight years
thereafter, the trustee sued a policyholder for the assessment levied such
court. The court held that in order to defeat the defense of limitation, the
court‐appointed trustee must show that the assessments made by the