Download PDF - Goodmans

Texas
Buckner v. Lloyd's Ins. Co. of American et al., 99 S.W.2d 331 (Tex. Civ. App.
1936). One claimant filed three claims with the New York liquidator of an
insolvent insurer. The claims were referred to the Texas ancillary receiver who
approved one claim and rejected the other two. Prior to the insolvency, the
company was formed by the merger of three separate corporations. The
surviving corporation assumed the liabilities and obligations of all three
companies. The claims were based on three surety bonds issued serially as
surety for various aspects of the same cause of action. The court determined
that allowing the claimant to combine all of three claims would provide a larger
ratable share of the assets in comparison with other creditors.
Durish v. Channelview Bank, 809 S.W.2d 273 (Tex. App.‐‐Austin 1991). Prior to
insolvency, insurer issued surety bond in favor of defendant bank, which made
demand under the bond to no avail. Thereafter, the insurer was placed in
receivership, and the ancillary Texas receiver found the insolvent insurer had
insufficient assets to satisfy its Texas obligations. The receiver then rejected
the bank's claim for reimbursement under the Texas Property and Casualty
Insurance Guaranty Association Act, finding it was not a "covered claim" under
the Act. The Act had been amended to delete coverage for surety bonds after
a certain date, and the court held that no surety bond coverage was provided
under the Act for any insurer which was declared to be "impaired" after that
date. Because this insurer was declared impaired after that date, the bank's
claim was not a "covered claim," and judgment was entered for the receiver.
Great American Ins. Co. v. Langdeau, 379 S.W.2d 62 (Tex. 1964), reversed, 369
S.W.2d 944 (Tex. Civ. App. 1963). In a suit against a surety company by a
receiver of an insolvent insurer to recover on a fidelity bond issued to cover the
insurer's the secretary‐treasurer as the officer responsible for handling the
insurer's funds, the court noted that the fidelity bond provided protection for
acts of fraud and dishonesty and other specified crimes, not for "faithful
performance of duties" as was required by statute for some other types of
insurers. Under this type of bond, mere negligence, carelessness or
incompetence is insufficient to constitute fraud. The court found that the
evidence of the officer's conduct did not establish participation in the
wrongdoing or knowledge of the wrongdoing and, thus, the
secretary‐treasurer did not commit any acts of misconduct insured against.
Wisconsin
Duel v. National Surety Corp., 64 F. Supp. 961 (E.D. Wis. 1945). The liquidator of
an insolvent insurer sued the issuer of a $10,000 fidelity bond insuring the
insolvent insurer's employees. The primary incident involved the conversion by
an employee/general agent/director/secretary of approximately $20,000 in net
premiums written by the insolvent insurer. In rejecting the various grounds
raised for denial of the claim by the surety company, the court noted that the
bond was originally required by the commissioner of insurance during a prior
liquidation process which was dismissed following a contribution of surplus
and the furnishing of the bond in question. Thus, the surety company was
aware of the circumstances for the original issuance of the bond and that the
general agent among others was to be covered under the fidelity bond.
In the Matter of the Liquidation of Wisconsin Surety Corp., 112 Wis. 2d 396, 332
N.W.2d (1983). A surety bond was found to not be a truly contingent claim as
defined under the Wisconsin Liquidation Act, but a technically contingent claim
that could be allowed as excused late filing.
Claims of Guaranty Funds
Eighth Circuit
Liberty State Bank v. Minnesota Life and Health Insurance Guaranty Assoc.,
149 F.3d 832 (8 th Cir. 1998). Liberty State Bank invested in municipal bonds