Robinson v. Mutual Reserve Life Ins. Co.

Citation175 F. 624
PartiesROBINSON v. MUTUAL RESERVE LIFE INS. CO. SCOVILL v. SAME.
Decision Date28 December 1909
CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York

William Beverly Winslow, for complainants.

James Byrne, for receivers.

Nash &amp Jones, Sullivan & Cromwell, Thomas L. Feitner, Robert Van Iderstine, Sewell T. Tyng, Miles M. Dawson, John E. Ruston John T. McGovern, John M. Scoble, Gilbert E. Roe, C. A Mountjoy, and Page, Crawford & Tuska, for exceptants.

WARD Circuit Judge.

The special master has greatly aided the court by his lucid statement of a most complicated situation in his reports dated July 1 and December 14, 1909, and all the counsel are entitled to praise for the fair way in which they have co-operated to arrive as expeditiously as possible at the actual facts. In this way much time and expense have been saved for the benefit of persons who have fared very badly at the hands of the Association and of the Company. As I have concluded to sustain the master's findings of fact and conclusions of law, I will state as briefly as possible my views generally, and so dispose of the exceptions which apply to both reports without referring to them particularly.

After April 17, 1902, when the Association reorganized as a Company under the insurance law (chapter 722, Laws N.Y. 1901), it conducted the business of insurance in two different ways viz.: Maintaining the policies theretofore issued on the assessment plan, and thereafter issuing policies solely on the level premium plan. It remained, however, the same company, was still a mutual company, and all its policy holders, whether on the assessment or level premium plan, were members, notwithstanding that they paid their premiums on different plans. The officers elected were the agents of all the members equally, and the holders of level premium policies were as much affected by and responsible for their acts as were the holders of assessment policies. Inasmuch as the vested contract rights of the assessment policy holders were not to be changed by the reorganization (Polk v. Mutual Reserve Fund Life Association, 207 U.S. 310, 28 Sup.Ct. 65, 52 L.Ed. 222), I think the proper way to have conducted business after April 17, 1902, would have been to have kept the accounts of the assessment and level premium policy holders separate. If this had been done, the situation would now be comparatively simple. But it was not done by the officers, who were the agents of both classes. The problem, therefore, is to ascertain to what extent the accounts of each class can be disentangled.

I will consider first the relations of the two classes of policy holders inter se, and afterwards their relation to the general creditors. The master has traced into the possession of the receivers February 15, 1908, certain assets which were a part of the reserve fund April 17, 1902. The agreement with the Central Trust Company as to the fund provided that upon dissolution of the corporation--

'it shall be divided amongst the members of the Association proportionately to the gross amount of assessments paid by said members respectively to said Association or shall be distributed in such other equitable manner as the courts shall direct. ' Robinson v. Mutual Reserve Life Insurance Co. (C.C.) 162 F. 798.

The specific distribution provided for among the members evidently contemplated the winding up of the Association in a state of solvency. Such a distribution would have been between the parties valid, but not, I think, as against creditors. Inasmuch as the Company is insolvent, the fund must be distributed equitably, on the other alternative, viz., as the courts shall direct. I have no doubt that the date at which all claims should be ascertained is February 15, 1908, when the receivers were appointed. The Company was not then dissolved, but by its admission of insolvency and the appointment of receivers it was substantially dissolved, and claims should be fixed as of that date. It would be quite unreasonable to fix them as of April 19, 1907, the date the suit was begun, in analogy to an action by the Attorney General, under section 1785, Code Civ. Proc. N.Y., instituted for dissolution after a quasi judicial examination by a public official (section 80, Insurance Law (Consol. Laws, c. 28)), and followed by an injunction against doing business under section 1787, and the appointment of receivers under section 1789. People v. Commercial Alliance Life Ins. Co., 154 N.Y. 95, 47 N.E. 968. In an action for sequestration under section 1784, when the business continues, the time for fixing claims would doubtless be the adjudication of insolvency.

Coming now, to the rights of the two classes of members inter se, I agree with the master that the claimants for deaths occurring before February 15, 1908, in both classes became creditors, and that death claimants under assessment policies should be first paid out of the reserve fund, because it was created by their assessments, was pledged to pay their death claims, for a long course of years had been so applied, and is now specifically identified. On the other hand, the net reserve paid by the level premium policy holders cannot be specifically traced into the free assets on hand. Death claimants under those policies, together with claimants under assessment policies (except 15-year policies, whose payment was restricted to the death and reserve funds and assessments), as to any balance not paid out of the reserve fund should be paid out of the free assets. People v. Life & Reserve Association, 150 N.Y. 94, 45 N.E. 8. Claims on disability policies maturing before February 15, 1908, when properly ascertained, are to be treated in exactly the same manner as death claims. This disposes of the living policy holders, whose claims did not mature before the appointment of receivers, because apparently nothing will be...

To continue reading

Request your trial
6 cases
  • O'Malley v. Continental Life Ins. Co.
    • United States
    • Missouri Supreme Court
    • 19 Noviembre 1938
    ... ... Car & S. Co., 103 A. 471; Muellhaupt v. Strowbridge ... Estate Co., 14 P.2d 282; Robinson v. Mut. Reserve ... Life Ins. Co., 175 F. 624, 182 F. 850; Louque v ... Hercules Oil Co., 127 ... Co. v. Hall, 330 Mo. 1107, 52 ... S.W.2d 174; State ex rel. St. Louis Mutual Life Ins. Co ... v. Mulloy, 330 Mo. 951, 52 S.W.2d 469; Relfe v ... Rundle, 103 U.S. 222, 26 ... ...
  • Robinson v. Mutual Reserve Life Ins. Co.
    • United States
    • U.S. District Court — Southern District of New York
    • 7 Noviembre 1910
  • S.E.C. v. Capital Counsellors, Inc., 404
    • United States
    • U.S. Court of Appeals — Second Circuit
    • 3 Marzo 1975
    ...in opposing the appointment of a receiver. They call our attention to a number of older cases, including Robinson v. Mutual Reserve Life Ins. Co., 175 F. 624 (C.C.S.D.N.Y.1909), 182 F. 850 (C.C.S.D.N.Y.1910), aff'd 189 F. 347 (2 Cir. 1911); Barnes v. Newcomb, 89 N.Y. 108 (1882); and People ......
  • Sweet v. All Package Grocery Stores Co.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • 12 Diciembre 1919
    ...of the proceedings for collection, as was the case in the Columbian Ins. Co. Receivership (N.Y.), 3 Abb.Dec. 239.' In Robinson v. Mutual Reserve Co. (C.C.) 175 F. 624, affirmed 189 F. 347, 111 C.C.A. 79, we held that the was not entitled to any preference over general creditors on its claim......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT