American Ben. Life Ins. Co. v. Ussery

• Decision Date: 20 July 1979
• Citation: 373 So.2d 824
• Parties: AMERICAN BENEFIT LIFE INSURANCE COMPANY, and Alabama Corporation, et al. v. R. Frank USSERY, Receiver of Old National Insurance Company, an Alabama Corporation, et al. 77-543, 77-564 and 77-565.
• Court: Alabama Supreme Court

Page 824

373 So.2d 824

AMERICAN BENEFIT LIFE INSURANCE COMPANY, and Alabama Corporation, et al. v. R. Frank USSERY, Receiver of Old National Insurance Company, an Alabama Corporation, et al.

77-543, 77-564 and 77-565.

Supreme Court of Alabama.

July 20, 1979.

Robert M. Alton, Jr., Montgomery, for appellant and cross-appellee, American Ben. Life Ins. Co.

Edward L. Hardin, Jr., Sp. Asst. Atty. Gen., for William J. Baxley, individually and as Atty. Gen. for the State of Alabama, appellee and cross-appellant;

James M. Tingle, Birmingham, for Charles Payne as Receiver of Old Nat. Ins. Co., appellee.

Edward S. Allen, Birmingham, for appellee, Herbert Crook, as Ancillary Receiver of Old Nat. Ins. Co.

C. Larimore Whitaker and Joseph B. Mays, Birmingham, for appellee, Hill Country Life Ins. Co.

EMBRY, Justice.

In this case three notices of appeal have been filed. The first notice of appeal was filed by counsel for American Benefit Life Insurance Company, an Alabama Corporation, which owns all of the capital stock of Old National Insurance Company of Alabama, an Alabama Corporation in receivership. This notice of appeal was properly filed because American Benefit Life Insurance Company is a proper party to this action. The second notice of appeal was filed in the name of William J. Baxley, as Attorney General of the State of Alabama, by Edward Hardin, appointed Special Assistant Attorney General by the Attorney General. This notice was abortive because the Attorney General of the State of Alabama is not a proper party to this action, as we will discuss later. The third notice of appeal was filed by the Special Assistant Attorney General, purportedly on behalf of the State of Alabama ex rel. R. Frank Ussery, Superintendent of Insurance. This notice of appeal also was abortive because R. Frank Ussery was the court-appointed receiver of Old National Insurance Company of Alabama and had authorized neither Hardin nor the Attorney General to represent him, but in fact, had counsel of his own choice. As a result, there is only one proper appeal in this case, that of American Benefit Life.

Appellees in this case are: (1) R. Frank Ussery, the receiver appointed by the Circuit Court of Jefferson County (Bessemer Division) for Old National of Alabama; (2) Herbert Crook, the ancillary receiver of Old National appointed by a Texas District Court, and (3) Hill Country Life Insurance Company, a Texas Corporation, which was allowed to intervene and whose proposed plan of reinsurance of policies of Old National of Alabama the trial court adopted.

The appeal is from a final decree of the Circuit Court of Jefferson County (Bessemer Division) rendered on 19 December 1977, which: (1) established the assets and liabilities of Old National of Alabama; (2) approved a proposed agreement of reinsurance between the receiver and Hill Country Life Insurance Company; (3) rejected a plan of reinsurance proposed by American Benefit Life Insurance Company, and (4) determined that Old National of Alabama was liable for a block of reserve liabilities formerly held by Old National Insurance Company of Texas. We affirm the decree of the trial court.

In 1970 Old National of Alabama had become insolvent and was placed in receivership by the Circuit Court of Jefferson County (Bessemer Division) and in ancillary receivership by a Texas District Court. The major part of the liabilities of Old National of Alabama consisted of reserve liabilities on policies of insurance. In a series of actions taken between 1970 and 1977, the receiver of Old National of Alabama reduced the liabilities of the company by forcing other insurance companies to take back policies of reinsurance fraudulently transferred to Old National of Alabama. The final phase of the receivership commenced on 18 August 1977 when the ancillary receiver filed a report with the circuit court seeking approval of a plan of reinsurance by Hill Country Life of the remaining policies of Old National of Alabama. At that point appellant, American Benefit, objected to Hill Country's plan. ¹

The circuit court set a hearing for the following purposes: (1) to determine all the timely filed but undetermined claims against Old National of Alabama; (2) to determine all the assets and liabilities of the company; and (3) to determine which of the proposed plans of reinsurance to approve. After hearing the evidence Ore tenus, the court entered a decree containing the following findings: (1) both Empire Life Insurance Company's claim for $3,185 and the State Department of Revenue's claim for $4,400.25 were valid; (2) all other remaining claims, including American Benefit's claim for $2,935,000, were not proved and therefore denied; (3) the value of the assets of Old National of Alabama was $1,907,472; (4) the amount of liabilities of Old National of Alabama was $2,723,000 and such liabilities included a block of reserve liabilities valued at $1,400,000 which had been added to Old National of Alabama from Old National Insurance Company of Texas; ² (5) Hill Country Life's plan of reinsurance would be the approved and accepted plan of reinsurance; and (6) the Attorney General of Alabama was not authorized to interfere with the administration of the receivership of Old National of Alabama and could not take a position contrary to that of the receiver while purporting to represent the receiver.

American Benefit and the Attorney General moved for a new trial. The Attorney General also moved that the trial judge, Gardner F. Goodwyn, Jr., recuse himself, that the final decree be altered or amended, and that he be allowed to intervene. All these motions were denied and both American Benefit and the Attorney General filed notices of appeal as previously noted.

The receiver and the ancillary receiver filed motions in this court to dismiss the Attorney General's appeal on grounds that such appeal was untimely filed; the Attorney General was not a party to the action and therefore not entitled to appeal. American Benefit made a motion in this court to supplement the record or alternatively to extend its reply brief with alleged evidence from a Texas proceeding.

At the outset we consider the abortive attempt by American Benefit to place evidence before us not in the record below. The general rule is that an appellate court will not consider matters outside the record. Scroggins v. Alabama Gas Corp., 275 Ala. 650, 158 So.2d 90 (1963). American Benefit does not seek to correct the record as permitted by ARAP Rule 10(f), but rather attempts to introduce new evidence not submitted at trial. That evidence being improperly submitted American Benefit's motion to supplement the record is hereby denied; the proffered evidence is stricken and will not be considered.

The issues for review on this appeal are: (1) whether the Attorney General can be legitimately involved in this case either as a party or as counsel for the Alabama receiver; (2) whether the National Bankers block of reinsurance is a proper liability of Old National of Alabama; and (3) whether the trial court erred by adopting the Hill Country plan of reinsurance and rejecting the proposed American Benefit plan.

I

On 31 October 1977, the circuit court issued a pretrial order at which time the receiver and the Attorney General each thought they were seeking the same relief. As the litigation proceeded a dispute arose between the office of the Attorney General and the receiver concerning Old National of Alabama's liability regarding the National Bankers block. The receiver did not deny the liability of Old National of Alabama but only sought the trial court's determination of whether or not that liability existed. To the contrary, the Attorney General insisted Old National of Alabama was not liable for the National Bankers block. Shortly thereafter, the Attorney General appointed a Special Assistant Attorney General, who filed a motion alleging the Attorney General controlled the decisions of the receiver and the opinions of the receiver were entitled to no weight. Whereupon, the trial court amended the pretrial order to reflect the receiver's position and to preclude the Attorney General from taking a position contrary to the receiver in the receiver's name. That amendment also provided that, on appropriate petition, the trial court would allow the Attorney General to intervene as a party litigant and take any position he wished respecting the issues in the case. The Attorney General declined to petition to intervene.

The Attorney General and American Benefit contend the trial court was in error when it ruled the Attorney General could not control the decisions of the receiver. The Attorney General and American Benefit rely on Code 1975, § 27-32-3(d) and § 36-15-21 in support of their contention. Section 27-32-3(d) provides in pertinent part:

" * * * No person other than the commissioner and the attorney general representing him shall appear in the courts of this state requesting the appointment of a receiver or otherwise commence such delinquency proceedings to take over, liquidate, rehabilitate, reorganize or conserve an insurer, and no court shall entertain a petition for the commencement of such proceedings unless the same has been filed in the name of the state on the relation of the commissioner."

Section 36-15-21 states in pertinent part:

"All litigation concerning the interest of the state, or any department thereof, shall be under the direction and control of the Attorney General * * * ."

Neither of these Code sections supports the contention that the Attorney General may control the court-appointed receiver of an insolvent insurance company.

Code 1975, § 27-32-3(d) deals with the situation where the Commissioner of Insurance is trying to force an insurance company into receivership or some other delinquency proceeding. In this case Old National of Alabama was already in receivership and the trial court had appointed the Commissioner of...