Martyne v. American Union Fire Ins. Co. of Philadelphia

• Decision Date: 16 November 1915
• Citation: 216 N.Y. 183,110 N.E. 502
• Parties: MARTYNE v. AMERICAN UNION FIRE INS. CO. OF PHILADELPHIA.
• Court: New York Court of Appeals Court of Appeals

216 N.Y. 183

110 N.E. 502

MARTYNE

v.AMERICAN UNION FIRE INS. CO. OF PHILADELPHIA.

Court of Appeals of New York.

Nov. 16, 1915.

Action by Charles W. Martyne against the American Union Fire Insurance Company of Philadelphia and Charles Johnson, Insurance Commissioner of Pennsylvania. From a judgment of the Appellate Division (168 App.Div. 380, 153 N.Y.Supp. 438) affirming an order, made on motion of the commissioner vacating a service of summons, warrant of attachment, and levy thereunder, plaintiff, by permission, appeals on certified questions. First question certified not answered, second, third, and fifth questions answered in the affirmative, and the fourth question answered in the negative, and order affirmed.

The Appellate Division in the order granting leave to appeal to this court has certified that in its opinion the following questions of law ought to be reviewed by the Court of Appeals, viz:

“1. Did a right of action to recover return premiums accrue to policy holders of the American Union Fire Insurance Company by reason of its insolvency and the proceedings against it in the Court of Common Pleas, Dauphin county, Pennsylvania, and if so, when?

“2. Did the dissolution of the American Union Fire Insurance Company on the 27th day of March, 1913, by reason of the entry that day of a certified copy of the order of March 26, 1913, made by the court of common pleas of Dauphin county, Pennsylvania, make it impossible thereafter for New York creditors of the American Union Fire Insurance Company in the court of the state of New York for the purpose of pursuing their remedies by attachment against property of said American Union Fire Insurance Company found within the jurisdiction of the state of New York?

“3. In view of the order made and entered in the Supreme Court, county of New York, April 12, 1913, has Charles Johnson, commissioner of insurance of the state of Pennsylvania, any standing to make the motion granted by the order appealed from?

“4. Is the debt due from the Warsaw Fire Insurance Company to the American Union Fire Insurance Company property subject to attachment in New York state in an action of contract against the American Union Fire Insurance Company as a foreign corporation?

“5. Should the court have granted the motion herein to have the service of the summons and the order of publication and the warrant of attachment herein declared null and void and vacated?”

The American Union Fire Insurance Company was duly incorporated in the commonwealth of Pennsylvania May 5, 1910, and soon thereafter commenced the business of issuing fire insurance policies. It was duly authorized to transact the business of insurance in this state. In 1911 it entered into a reinsurance agreement with the Warsaw Fire Insurance Company, a foreign insurance corporation. On March 10, 1913, pursuant to the laws of Pennsylvania the Attorney General of that state on the application of the insurance commissioner, in which application he alleged that the American Union Fire Insurance Company was insolvent, and that its further transaction of business would be hazardous to its policy holders, to its creditors, and to the public, obtained an order from the Court of Common Pleas of Dauphin county, Pennsylvania, a court of original, general jurisdiction, requiring said company to show cause why the courts should not order the liquidation of the business of said company and the dissolution of said corporation. The order to show cause enjoined and restrained the American Union Fire Insurance Company, its officers, agents, and employés, pending the further order of the court from transacting any of the business of said company or disposing of any of its property. The order was returnable in said court on the 22d day of March, 1913, and was duly served on said corporation March 13, 1913. The insurance company filed an answer submitting itself to the order of the court. An order was duly made in the proceeding March 26, 1913, from which we quote:

“And it further appearing to the court, after a full hearing from the testimony taken at said hearing, that the said American Union Fire Insurance Company is insolvent, and that its further transaction of business would be hazardous to its policy holders, its creditors, and the public, it is hereby ordered, adjudged, and decreed that the said American Union Fire Insurance Company, a corporation chartered and existing under the laws of the commonwealth, having its principal office in the city of Philadelphia, be and the same is hereby dissolved and its corporate existence ended, and the liquidation of the business of said corporation is hereby ordered; said liquidation to be made by and under the direction of the insurance commissioner of the commonwealth and in accordance with the provisions of the act of June 1, 1911 (P.L.599), and it is further ordered that said dissolution of said corporation shall take effect upon the entry of a certified copy of this order in the office of the prothonotary of the county of Philadelphia.”

A certified copy of such order was entered in the office of the prothonotary of the county of Philadelphia March 27, 1913, at 10:05 a.m.

Prior to the dissolution of the American Union Fire Insurance Company there was due and owing from it to the Warsaw Fire Insurance Company for premiums upon the business reinsured by said Warsaw Company a balance of upwards of $60,000.

As a result of the dissolution of the American Union Fire Insurance Company all the policies of fire insurance issued by said company which were theretofore in effect were canceled by operation of law, and under and pursuant to said agreement with said Warsaw Company a large sum of money became due from said Warsaw Company to the commissioner of insurance of Pennsylvania for return premiums upon policies reinsured by the Warsaw Company, making the Warsaw Company the debtor of the American Union Fire Insurance Company in a substantial amount.

Subsequent to March 27 the plaintiff in this action obtained from a large number of persons holding insurance policies written by said American Union Fire Insurance Company an assignment of their several claims for return premiums on the policies so canceled by the American Union Fire Insurance Company's dissolution. The total amount of the claims so assigned to the plaintiff in this action is $2,782.24.

This action was commenced, and on April 5, 1913, a warrant of attachment was obtained in the action and a levy was made thereunder on the indebtedness due from the Warsaw Company to said commissioner of insurance. On April 12, 1913, the New York superintendent of insurance was on his application appointed liquidator of the American Union Company under section 63 of the Insurance Law of this state.

On November 7, 1914, the commissioner of insurance of Pennsylvania appeared specially in this action to have the service of the summons, attachment and levy, and all other proceedings in this action set aside and declared null and void. The motion was granted at the Special Term, and on appeal therefrom to the Appellate Division the order was unanimously affirmed. It is from such order of affirmance that the appeal is taken to this court.

Appeal from Supreme Court, Appellate Division, Second Department.

Edward Sanford, of New York City, for appellant.

James E. Finegan, of New York City, for respondent.

CHASE.

This action is brought against a corporation that has ceased to exist as such. The defendant corporation was dissolved by a court of competent jurisdiction in the state where it was incorporated and pursuant to the statutes of the state in which it obtained its corporate life.

Justice Story, in Mumma v. Potomac Co., 8 Pet. 281, 286 (8 L.Ed. 945), said:

“There is no pretense to say that a scire facias can be maintained, and a judgment had thereon, against a dead corporation, any more than against a dead man.” People v. American Loan & Trust Co., 172 N.Y. 371, 377, 65 N.E. 200;Bonaffe v. Fowler,7 Paige, 576, 578.

The plaintiff does not deny that the corporation has been dissolved. He admits that as the corporation has been dissolved a judgment in personam cannot be obtained against it, but he insists that he is entitled to maintain the action quasi in rem, for the purpose and only for the purpose as a diligent creditor of securing to himself, to the extent of his claim, the assets of the defunct corporation which he asserts have their status in this state.

[1] It could not be successfully claimed that a New York creditor could maintain an action against the dissolved corporation for the purpose of obtaining a judgment in personam, in view of the many decisions in this state which hold that such an action cannot be maintained after dissolution. People v. Knickerbocker Life Ins. Co., 106 N.Y. 619, 13 N.E. 447;Sturges v. Vanderbilt, 73 N.Y. 384;Matter of Stewart, 39 Misc.Rep. 275, 79 N.Y.Supp. 525;Rodgers v. Adriatic F. Ins. Co., 148 N.Y. 34, 42 N.E. 515.

[2][3] The American Union Fire Insurance Company was organized in Pennsylvania, and during the times mentioned in the record in this case there was in existence in Pennsylvania a statute, approved June 1, 1911, which authorized the insurance commissioner of Pennsylvania, upon the happening of certain things or the existence of certain conditions therein specified, to apply to the court of common pleas of Dauphin county or the court of any county in which the principal office of such corporation is located for the liquidation of the business of the corporation, and that statute expressly provides that:

“The order of liquidation shall, unless otherwise directed by the court provide that the dissolution of the corporation shall take effect upon the entry of such order in the office of the clerk of the county wherein such corporation had its principal office for the transaction of business.”

It also expressly provides that the liquidation shall be made by and under the direction of the insurance...