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equires all claims against the receiver to be brought in Vermont (or to be
heard in Texas by a Special Master appointed by the liquidator) also operated
to further judicial economy by ensuring that all claims against the insolvent
estate are prosecuted in one forum, enabling the receivership court to ensure
that all claimants are treated uniformly. The claims were ordered dismissed
without prejudice to prosecute them in Vermont.
Wheeler v. Clark, 306 S.W. 2d 158 (Tex. Civ. App. 1957) writ ref. In an action by
the receiver of an insurance company to recover unearned commissions due
from an agent, the agent cross‐claimed for amounts owed by the insurer. The
agent had repaid the policyholders unearned premiums due them or secured
new policies in a different company. The agent then took assignments from
those policyholders for claims they had against the receiver. If the agent were
permitted to offset the sums owed to the agent for unearned commissions
against the claims assigned to the agent, the agent would become a preferred
creditor of the estate. The court found that the agent acted voluntarily in
refunding monies to the policyholders. It also found that the agent was not
entitled to an offset for unearned commissions and that amount was due to
the receiver.
Virginia
Johnson v. Button, 120 Va. 339, 91 S.E. 151 (1917). The court held that the
insolvency of the company automatically cancelled the outstanding policies
and thus return premiums would be calculated upon the pro‐rata basis, and
that because this cancellation was without any fault on the part of the agents,
the agents had no obligation to return any part of the commissions received on
the policies cancelled. The receiver of the insolvent company asserted that as
the policies had not been cancelled by the company, but had rather been
replaced by agents for their clients, the short‐rate premium schedule should
apply, and also that the amount due the agents should be offset by the
commissions the agents had earned on the premiums.
Wisconsin In the Matter of Liquidation of All‐Star Insurance Corporation, 112 Wis. 2d 329,
332 N.W.2d 828 (1983). In insurance liquidation proceedings, liquidator stands
in the shoes of the insolvent company and the liquidation order terminates the
company's existence. The liquidator was entitled to receive unearned
premiums from agent pursuant to agency agreement, because agent had
proper notice of liquidation proceedings and was not entitled to set‐off against
the unpaid premiums pursuant to agreement.
Claims for Unearned Premiums
Fifth Circuit
Sixth Circuit
Barnhardt Marine Ins., Inc. v. New England International Surety of America,
Inc., 961 F.2d 529 (5th Cir. 1992). Insurance broker brought action as subrogee
against insolvent insurer and its president and chairman of the board to
recover unearned premiums paid after insolvency. Citing the McCarran‐
Ferguson Act, 15 U.S.C. § 1011, the court affirmed an administrative stay
pending resolution of all proceedings in the state liquidation court on the
grounds of Burford abstention. Burford v. Sun Oil, 319 U.S. 315, 63 S. Ct. 1098
(1943). The action against the president and chairman of the board individually
for mismanagement and undercapitalization was also properly stayed,
because the derivative claim involved the same assets which the Commissioner
was required to collect and distribute in the liquidation proceeding. Pursuit of
those claims in federal court would "usurp" Louisiana's control over the
liquidation proceeding, permit plaintiff to obtain an unfair advantage over
other claimants, and "encroach" into the Commissioner's exclusive power as
liquidator.
McDonough Caperton Shepherd Group, Inc. v. Academy of Medicine, Cleveland,
888 F.2d 1392 (6th Cir. 1989). Interpleader claimants sought review of the