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insolvency. The court found for plaintiff and required defendant to make his
claim for reimbursement of unearned premium in the liquidation proceeding.
A claim that the plaintiff broker was negligent in placing the insurance with an
insolvent carrier was rejected for lack of evidence.
Massachusetts
Missouri
Comm. of Ins. v. Jankowski Ins. Agency, LLC, 61 Mass. App. Ct. 305 (App. Ct.
2004). Where the broker refused to return unearned commissions to the estate
of the insolvent insurer, the court held that unearned commissions are assets of
the insurer’s estate and must be returned to the liquidator.
Paisley v. Lucas, 346 Mo. 827, 143 S.W.2d 262 (1940). In an action to recover
commissions and bonuses alleged to be due under a general agency contract
from an insolvent insurance company, the court held that the agent was not
entitled to commissions on policies written in "open territory" and that the
agent did not have a perpetual employment contract since the contract was
for an indefinite period and was thus, terminable at will by either party.
New York Harnett v. National Motorcycle Plan, Inc., 59 A.D.2d 870, 399 N.Y.S.2d 242
(1977). An agent named as a defendant in an action brought by the liquidator
cannot set off a claim for damages for alleged breaches of contract by the
insolvent insurer against the agent's obligations to the insurer. The agent's
claim had not matured at the time of insolvency. The concept of "mutuality"
depends on whether the debts to be offset are due to, and from, the same
persons in the same capacity.
Oklahoma Cockrell v. Grimes, 740 P.2d 746 (Okla. App. 1987). The insurance
commissioner, as receiver of an insolvent carrier, was sued by an agent to
secure payment of commissions on renewal premiums for policies issued by
the insolvent carrier. In ordering payment of the commissions, the Court of
Appeals of Oklahoma opined that the language of the agent's contract with
the carrier provided the agent with a vested right to the commission portion of
the premium collected by the receiver. The court noted that, "protection of
the policyholders of an insolvent insurer may not be done at the expense of
the vested property rights of another private citizen." 740 P.2d at 749.
Rouch v. National Old Line Ins. Co., 453 F. Supp. 247 (W.D. Okla. 1978). In an
action by a former general agent of an insurance company to impose a
constructive trust on monies held by another company as renewal premiums
pursuant to a contract whereby the receiver for the first company had
assigned the policies to the second company under an agreement that the
latter would assume no liability for payment of any agents' commissions or
service fees, and in which Texas law was applicable and it appeared that the
agent had not filed a claim against the receiver and waited over six years
before bringing this action, there existed material issues, including latches,
precluding summary judgment for agent.
Oregon
Pennsylvania
Ainsworth v. Cincotta, 79 Or. App. 574, 721 P.2d 455 (1986). The Oregon Court
of Appeals held that a domiciliary receiver of an insolvent insurer was entitled
to recover unearned commission on cancelled policies from those agents who,
by entering into a managing general agent's agreement, had agreed to
conduct business in accordance with industry customs and standards.
Brainard v. Foster, Civil Action No. 91‐5308‐5318, 1992 U.S. Dist. LEXIS 3196 (E.D.
Pa. 1992). The Pennsylvania District Court's Memorandum and Order dismissed
without prejudice a suit brought by agents of an unlicensed insurance
company, American Independent Business Alliance Group ("AIBA"), in
liquidation to enjoin the Commonwealth's Insurance Commissioner and the
Department of Insurance from issuing a letter to other agents that threatened