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adjudication of the priority of the claims to be paid out of the funds turned
over to the Illinois receiver.
Missouri
Bensinger v. Pacific States Life Ins. Co., 25 F. Supp. 295 (E.D. Mo. 1938). A
Colorado life insurance company was placed in liquidation in Colorado with
ancillary receivers appointed in Missouri and Illinois, with an Indiana claimant
as assignee of an Illinois claimant filing a claim in the Missouri ancillary
proceeding for the attachment of certain land in Missouri. In rejecting this
effort to attach Missouri assets, the court noted that liquidation of an insolvent
insurance company is designed to be prompt, fair and equitable so that the
closing of the estate is for the benefit of all creditors. This would appear to be
even more appropriate when the creditor is from Indiana attempting to take
preference over creditors residing in Missouri.
McDonald v. Pacific States Life Ins. Co., 344 Mo. 1, 124 S.W.2d 1157 (1939). The
holder of a judgment on a life insurance policy issued by an insolvent Colorado
insurance company, attached certain Missouri real estate belonging to the
insolvent insurer. Missouri had also appointed an ancillary receiver for the
insolvency. The holder of the judgment also filed a claim in the Colorado
liquidation proceeding, which had been allowed but not yet paid. In restating
the statutory powers of the domiciliary liquidator to the assets of the insolvent
insurer, the Missouri court rejected the claimant's argument that the claimant
was not bound by the statutory provisions of the state of Colorado and further
noted that the assets of the insolvent insurer should be treated as one unit for
the benefit of all creditors without regard to the location of the assets or the
residence of the creditor. Thus, the claims of the Missouri creditors should not
be given preference to those from other states by the Missouri ancillary
receiver. Further, the Missouri priority of distribution statute would not be
applicable to a Colorado insolvency.
New York
Seidman & Seidman v. Gee, No. 88 Civ. 3382, 1989 U.S. Dist. Lexis 7503 (S.D.
N.Y. 1989). Gee was appointed liquidator of Universal Casualty and Surety
Company, Ltd., a defunct Cayman Islands insurer. Gee entered into three
standstill agreements in 1986 and 1987 with Universal's U.S. auditors, Seidman
& Seidman, in which Gee agreed to give Seidman notice before commencing
suit in return for Seidman's agreement to waive any statute of limitations
defense. In March, 1988, Seidman was served with process in a Florida state
court action which Gee had commenced in July, 1987. In May, 1988, Seidman
brought an action against Gee in District Court in the Southern District of New
York alleging fraud and breach of the standstill agreements. Gee moved to
dismiss for lack of personal and subject matter jurisdiction and on grounds that
Seidman's claims were asserted as counterclaims in the Florida state court
action. The Court found subject matter jurisdiction existed based on diversity,
and found sufficient business transactions in New York to warrant personal
jurisdiction. The Court also did not find circumstances justifying priority for the
Florida state court action. Gee's motion to dismiss was therefore denied.
Ohio Covington v. Indiana Dep’t of Natural Res., 2002 Ohio 2874 (Ohio Ct. App. 2002).
Prior to becoming insolvent, the insurance company issued performance bonds
to Indiana surface mining companies. The mining companies failed to perform
the mine reclamation required by Indiana Law. The Indiana Department of
Natural Resources then, pursuant to Indiana Law, required the mining
companies to forfeit their performance bonds if the Department determined
the surface mining operator failed to properly reclaim the land. The
Department then attempted to obtain funds from the Ohio Superintendent
based upon the mining companies’ performance bonds purchased from the
insurance company. The Department argued that it should be given a Class 2
classification under Ohio Revised Code § 3903.42. The Court, noting that the
statute in question is unambiguous and therefore should be given its plain