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evocation of the agent's license, the return of any commissions earned on the
placement of policies on AIBA's behalf and damages.
Plaintiffs constitute approximately 2,600 licensed agents who had received the
demand letter. Under Pennsylvania law, agents are personally liable for such
unlicensed insurance sales which are considered "unlawful" regardless of
whether they are received inadvertently. The court dismissed the action and
allowed the issuance of the letter because it entitled agents to due process
prior to license revocation and retrieval by the Commissioner.
Tennessee McReynolds v. Cherokee Ins. Co., 815 S.W.2d 201 (Tenn. Ct. App. 1990).
Insolvent insurer's estate brought an action against agencies to recover unpaid
premiums. The lower court permitted the agencies to set‐off the insurer's
profit sharing obligations against the agencies' debts for unpaid premiums. In
affirming the lower court's decision, the court of appeals held the following:
(1) that where insurance agencies had a right to their share of the profits on
insurance, even though the amount of such profits were not to be ascertained
until the end of the calendar year, the agencies were entitled to set‐off their
share of profits from the amount of premiums owed to the insolvent insurer;
(2) that the insurance agencies' obligations to insurer to collect and remit
premiums, and insurer's obligation to agencies for share or profit, were mutual
and thus could be offset; and (3) that the insurance agencies' delay in paying
premiums to insolvent insurer in order to assure payment of insurer's profit
sharing obligation did not preclude agencies from offsetting amount owed by
insurer against agencies' debt to insurer regarding unpaid premiums.
State ex rel. Williams v. Cosmopolitan Ins. Co., 217 Tenn. 8, 394 S.W.2d 643
(1965). The Tennessee Supreme Court found that some rights and liabilities
can be fixed at a date earlier than the decree ordering liquidation, which, in this
case, was the date of adjudication of insolvency by an Illinois court and an
order of rehabilitation. In this case, a general agent in Tennessee filed a claim
in Tennessee against an insolvent insurer for the agent's costs in obtaining
substitute coverage for the insurer's policyholders upon the agent's learning
that the company's authority to do business in Tennessee had been revoked.
The lower court denied the claim because the order of liquidation cancelled all
policies, and the expenses were incurred prior to that time.
Texas Bard v. Charles R. Myers Ins. Agency, 839 S.W.2d 791 (Tex. 1992), reversing 811
S.W.2d 251 (Tex. App.‐‐San Antonio 1991). Receiver of insolvent Vermont
insurer sued insurance agents pursuant to correspondent's agreement for
payment of earned premiums. Defendants filed compulsory counterclaims,
which resulted in a jury award for defendants on the counterclaim. Receiver
claimed the Vermont liquidation order, which included injunctions against
maintaining counterclaims or other actions against the receiver in any court
other than the Vermont liquidation court, should have been enforced in the
Texas court under principles of full faith and credit and/or comity. Reversing a
contrary appellate court judgment, the Texas Supreme Court agreed. The
court found the liquidation order sufficiently final to be entitled to full faith and
credit. The fact that the receivership court retained jurisdiction to discharge
the receiver and enter further orders with respect to assets of the estate did
not mandate a finding that the liquidation order was an interlocutory judgment
which was therefore not entitled to full faith and credit.
Further, the fact that a receiver is entitled to prosecute claims of the insolvent
estate in foreign jurisdictions does not also require the receiver to be subjected
to prosecution of claims against him in that foreign jurisdiction. The Texas
compulsory counterclaim statute did not require a contrary result; the
counterclaim requirement is a procedural rule which fosters judicial economy
by foreclosing piecemeal litigation. The order of the liquidation court which