First Russian Ins. Co. v. Beha

• Citation: 148 N.E. 722,240 N.Y. 601
• Parties: FIRST RUSSIAN INS. CO., Established in 1827, and Paul E. Rasor, Respondents, v. James A. BEHA, as Superintendent of Insurance of the State of New York, Appellant.
• Decision Date: 07 April 1925
• Court: New York Court of Appeals

240 N.Y. 601

148 N.E. 722

FIRST RUSSIAN INS. CO., Established in 1827, and Paul E. Rasor, Respondents,

v.James A. BEHA, as Superintendent of Insurance of the State of New York, Appellant.

Court of Appeals of New York.

April 7, 1925.

Appeal by defendant from a judgment of the Appellate Division, Third Department (-- App. Div. --, 207 N. Y. S. 837), modifying, and, as modified, affirming a judgment of Trial Term in favor of plaintiff.

Appeal from a judgment of the Appellate Division of the Supreme Court in the Third Judicial Department, entered January 15, 1925, modifying, and affirming as modified, a judgment in favor of plaintiff entered upon a decision of the court at a Trial Term without a jury. The action was brought to obtain the payment and delivery, subject to suitable provision assuring the payment of any indebtedness of the plaintiff company, of $223,000 par value New York City stock belonging to the plaintiff company which had been deposited with the superintendent of insurance, pursuant to the provisions of the Insurance Law, for the protection of the policy holders of the company in the United States; the plaintiff company at the time of the commencement of the action having discontinued the transaction of business in the United States and having paid all its obligations to United States policyholders and creditors, with the exception of certain claims in dispute. The question was whether defendant could properly and legally surrender the property in question to the present board of directors of the plaintiff company.

Albert Ottinger, Atty. Gen. (J. Du Pratt White, of New York City, Edward G. Griffin, of Albany, and Joseph C. H. Flynn, of Brooklyn, of counsel), for appellant.

Frederick B. Campbell and Paul C. Whipp, both of New York City, for respondents.

PER CURIAM.

The considerations which lead to a reversal in the case of Russian Reinsurance Co. v. Bankers' Trust Company, decided herewith (240 N. Y. 149, 147 N. E. 703); are not presented by the record in this case. The continued existence of the corporation and the authority of the directors are conclusively established by the findings which have been unanimously affirmed. The defendant holds the property and is sued as an officer of the state, and there is no danger of recovery against him in another jurisdiction.

POUND, J. (dissenting).

I dissent. The findings must be read in the light of undisputed facts of history of which the court takes judicial notice. Obviously, the plaintiff corporation is not in a normal condition. It no longer exists de facto in Russia. We have held that the decrees of the Soviet government have not so destroyed the de jure existence of the Russian insurance companies that they are immune from suit in this state. But, unquestionably, the Soviet government has accomplished a result, unlawful in the eyes of our government though it may be. It has, at least, sequestrated the property of the corporation in the sense that it has seized it for the use of the state. Cent. Dict. We say that this was not a legal act, because the United States does not recognize the Soviet government. It was, however, an act done under color of governmental authority, and it has the effect of preventing the further operation of the corporation in Russia and of preventing creditors, policy holders, and stockholders from asserting their claims against it in Russia or in any country which recognizes the validity of the Soviet decrees.

The Insurance Law (Consol. Laws, c. 28), § 63, subd. 4, provides that, when a foreign corporation authorized to do business ‘and having assets in this state has been placed in the hands of a receiver or had its property sequestrated in its domiciliary state or country or in any other state or country, the superintendent may, the Attorney-General representing him, apply to the Supreme Court or any justice thereof in the judicial district in which such corporation has its principal office for the transaction of business in this state, for an order directing such corporation to show cause why the superintendent should not take possession of its property and conserve its assets for the benefit of its creditors, and for such other relief as the nature of the case and the interests of its policy holders, creditors, stockholders or the public may require. * * *’

Without recognizing the Soviet decrees, we must recognize the resulting facts. It is as if the Soviet government had decreed the death of A., and A. had been executed. If he had...