Commonwealth ex rel. Chidsey v. Keystone Mutual Casualty Company
| Decision Date | 22 November 1950 |
| Citation | 366 Pa. 149,76 A.2d 867 |
| Parties | COMMONWEALTH ex rel. CHIDSEY, Attorney General, v. KEYSTONE MUT. CAS. CO. Appeal of MARGIOTTI, Attorney General. Appeal of LESLIE, Insurance Commissioner. Appeal of HAINES et al. |
| Court | Pennsylvania Supreme Court |
Argued October 3, 1950
Appeals, Nos. 20, 21 and 22, May T., 1951, from decree of Court of Common Pleas of Dauphin County, 1947, Commonwealth Docket, No. 129, in re Commonwealth of Pennsylvania ex rel T. McKeen Chidsey, Attorney General et al., v. Keystone Mutual Casualty Company. Decree reversed.
Proceeding upon petition of policyholders' protective committee to intervene in liquidation proceeding by Insurance Commissioner.
Petition refused, opinion by NEELY, J. Attorney General, Insurance Commissioner, and policyholders' committee, respectively appealed.
The decree is reversed and the record is remitted to the court below to enter an appropriate decree in accordance with this opinion. All costs to be paid out of the fund.
Ralph B. Umsted, Deputy Attorney General, with him Charles J. Margiotti, Attorney General, in propria persona, and Artemas C. Leslie, Insurance Commissioner, in propria persona, for appellants.
Elder W. Marshall, with him Reed, Smith, Shaw & McClay Charles Denby, Walter M. Newman, Walker & Newman and Sherman T. Rock, for policyholders' committee, appellants.
Maurice Stern, in propria persona, with him Josef Jaffe and Mayer, Magaziner & Brunswick, for Maurice Stern, amicus curiae.
David A. Saltzburg, Sebastian C. Pugliese and Albert D. Brandon, with them Morris W. Kolander and Kolander & Saltzburg, for E. Brooke Matlack, amicus curiae.
Before DREW, C.J., STERN, STEARNE, JONES and LADNER, JJ.
There are three appeals from the refusal of the Court of Common Pleas of Dauphin County to permit the intervention of a policyholders' committee in a dissolution and liquidation proceeding relating to the Keystone Mutual Casualty Company, a Pennsylvania corporation. Appellants are the Commonwealth's Attorney General, its Insurance Commissioner and the Committee. The Statutory Liquidator interposes no objection to the intervention but reserves his right to question the validity of any plan of rehabilitation. The Ancillary Receiver for the State of Maryland intervened as a party defendant in opposition to any plan of rehabilitation.
The reasons which motivated the Court to deny the intervention may be thus summarized: (a) a decree of dissolution was entered by the Court; (b) that after corporate dissolution there can be no reestablishment of the corporate entity; (c) that there is no authority for the proposed plan to turn over the assets to officers and directors of the dissolved company; (d) that an intervenor takes the litigation "as he finds it" and this petition is in effect "an attack upon the proceedings" and is in the nature of a bill for review. Perhaps the foundation of the Court's objection is, as stated in its opinion, "Were we to allow this petition, we would be required to hear evidence and pass upon the validity of our decree [of dissolution]...."
On June 26, 1947, upon suggestion filed by then Attorney General, and with the consent of the company,
On June 2, 1948 a policyholders' protective committee was granted leave to intervene. In its petition it was averred that the Committee believed that the company was not insolvent; that its assets far exceeded the liabilities and expressed the belief that reinstatement and rehabilitation of the company was "feasible". This Committee consisted of six members representing policyholders, and whose chairman was Duverney Matlack and was thereafter referred to as the Matlack Committee. On February 21, 1950 the court granted permission to this Committee to withdraw as intervening party "... with leave to make further appearance at a later date for the purpose of requesting an appropriate allowance for expenses and counsel fee of said Committee...." On March 10, 1950 the present application to intervene was made by five authorized individuals, as a Policyholders' Protective Committee, which was denied as indicated. This appeal followed.
Policyholders of a mutual insurance company are interested parties. Such a company is a cooperative enterprise wherein the policyholders, as members, are both insurer and insured. Upon insolvency of the company the policyholders, as members, are liable for their proportionate share of indebtedness: 44 C.J.S. Insurance, sec. 104, p. 644, et seq. In a dissolution there can be no doubt but that such individuals are interested parties. Under the Rule of Civil Procedure 2327 such persons are permitted to intervene because the proceeding may impose liability upon them. As stated in the commentary to the rule, the right to intervene is not a grant of an absolute right "without regard to the approval of the court." Cf. Frey's Estate, 237 Pa. 269, 85 A. 147; Northampton Trust Company, Trustee, v. Northampton Traction Co. et al., 270 Pa. 199, 112 A. 871; Bily, Execx., v. Allegheny County Board of Property Assessment, Appeals and Review, 353 Pa. 49, 44 A.2d 250. Rule 2328 requires a petition to intervene "setting forth the ground on which intervention is sought ." Rule 2329 provides that the application may be refused by the court: (1) if not in subordination to and in recognition of the propriety of the action; (2) the interest of petitioner is already adequately represented; (3) undue delay in making application.
In compliance with these rules the petition, dated March 10, 1950, recited the above facts; that because of the withdrawal by leave of court of the prior Policyholders' Protective Committee on February 21, 1950 the policyholders no longer had representation in the proceeding; that the corporation was in fact solvent, and not insolvent as was represented to the court. In an amended petition a detailed plan of proposed rehabilitation was set forth.
We have then petitioners who possess the status of intervenors and pleadings which comply with the applicable rules of civil procedure. These petitioners are not officious intermeddlers in litigation in which they have no interest. It does not necessarily follow that if intervention is permitted, the court is required to grant permission to rehabilitate. If the corporation is insolvent, and its charter forfeited, it may be beyond the power of the court to permit a rehabilitation or reorganization.
The objection which appears to be the most formidable is whether under Procedural Ruel No. 2329(1) this application "is not in subordination to and in recognition of the propriety of the action." The general rule is that an intervenor must take the suit "as he finds it": Northhampton Trust Company, Trustee, v. Northampton Traction Co. et al., 270 Pa. 199, 205, 112 A. 871. Cf. Franklin National Bank et al. v. Kennerly Coal & Coke Co., 300 Pa. 479, 483, 150 A. 902.
It is noted that in both petitions to intervene (June 2, 1948 Matlack Committee and the present one Haines Committee) the averment is made that the corporation is solvent. Futhermore the decree of insolvency and dissolution was based entirely upon a consent decree. The court was not required to find facts on which to base its decree, because of such consent of the officers of the corporation, who thereupon resigned. We agree with the learned court below that an intervenor should not be allowed to become a party to the suit merely to review what the court has done and to require demonstration of the legality and propriety of its action. But arguendo, if an intervenor sought to establish that a group of insurance companies had contributed a fund to pay all debts and costs of an insolvent insurance company, ought...
To continue reading
Request your trial