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cancelled by order of the court, the holders of "all cash" policies had valid
claims against the company for unearned returned premiums.
Iowa State v. American Bonding & Cas. Co., 206 Iowa 988, 221 N.W. 585 (1928).
Funds deposited with the Iowa insurance commissioner by an insolvent insurer
under the erroneous belief that such deposit was required by statute did not
lose their trust character by virtue of such mistake. Consequently, the deposit
passed into the hands of the receiver as a trust fund, and holders of claims for
unearned premiums were entitled to have their claims established against the
trust fund.
Kentucky
Michigan
Minnesota
Moren v. Ohio Valley Fire & Marine Ins. Co.'s Receiver, 224 Ky. 643, 6 S.W.2d
1091 (1928). The court held that an agent contracted with the insolvent
insurer's receiver to refund unearned premiums and secure other policies at
agent's own risk, and found that while agent had a valid claim against the
estate for unearned premiums refunded, the agent did not have a preferred
claim due to the contract with the receiver.
Berry v. Dehnke, 302 Mich. 614, 5 N.W.2d 505 (1942). Where a mutual fire
insurance company issued farm risk policies and cash premium stock plan
policies, both of which were void because issued in violation of statute, the
holders, on the insolvency of the insurance company, were entitled to a return
of the unearned premium, under the equitable rule that where a contract is
invalid and the parties acted in good faith, they should be placed as near as
possible to status quo.
In re Minneapolis Mutual Fire Ins. Co., 49 Minn. 291, 51 N.W. 921 (1892). The
assignees of the claims of several holders of all‐cash policies in an insolvent
mutual life insurance company sought to recover unearned premiums paid.
The receiver disallowed the claims on the ground that the holders of the allcash
policies were members of the mutual insurance company and liable for all
its losses and were required to have their claims subordinated to the claims of
those not standing in such a relationship. The court held that after the capital
of a mutual insurance company reached a specified amount, the policyholders
were no longer members, but merely contract claimants with the company.
The court found that the all‐cash policies at issue were merely claimants as the
insurance company's by‐laws explicitly declared that the holders as all‐cash
policies would not be members of the company. Thus, the court allowed the
assignees to recover the unearned premiums.
State ex rel. Schaefer v. Minnesota Title Insurance and Trust Company, 104
Minn. 447, 116 N.W. 944 (1908). The court held that the policyholder of a title
insurance company adjudged insolvent is entitled to a return of the unearned
part of the premium paid less a proportionate amount which the insurance
company may retain for services rendered in examining the title prior to the
policy's issuance.
Missouri
New Jersey
Relfe v. Commercial Ins. Co., 10 Mo. App. 393 (1881). The receiver calculated
unearned premium claims on the basis of date of the filing of the petition, but
for fire loss claims, used the date of the order of liquidation. The court rejected
the receiver's calculation of unearned premium claims dates, and instead, held
it should be tied to the date of the entry of the order not the filing of the
petition.
Tuttle v. State Mutual Liability Ins. Co., 2 N.J. Misc. 973, 127 A. 682 (1925). When
a mutual insurance company is liquidated, policyholders are entitled to a return
of unearned premiums, but the receiver should not permit a set‐off of such
claims against assessments levied or to be levied by the receiver.