Galloway v. State ex rel. Payne
| Decision Date | 16 May 1979 |
| Citation | 371 So.2d 48 |
| Parties | Thomas M. GALLOWAY v. STATE of Alabama ex rel. Charles H. PAYNE, Commissioner of Insurance. Civ. 1790. |
| Court | Alabama Court of Civil Appeals |
Mark J. Everest of Collins, Galloway & Smith, Mobile, for appellant.
William A. McCrary and Bill Bradley of Henslee & Bradley, Gadsden, for appellee.
This is an appeal from a judgment ordering the claim of Thomas M. Galloway (hereinafter Galloway) against Trustee Life Insurance Company to be treated as the claim of a "general creditor" without preference or priority. The trial court rendered this judgment after hearing oral testimony.
Galloway received a judgment in the amount of $4,000 plus costs against Trustee Life Insurance Company in Mobile Circuit Court on December 12, 1974. Judgment was based upon a promissory note. This judgment was filed and recorded on February 21, 1975. On January 2, 1975 the State of Alabama commenced delinquency proceedings against Trustee Life Insurance Company by filing a petition for an injunction and appointment of receiver. On February 22, 1975 the injunction was granted and Charles H. Payne, Commissioner of Insurance, was appointed receiver of all property, assets, and estate of Trustee Life Insurance Company. Galloway filed a claim against Trustee Life Insurance Company in the amount of his judgment on September 23, 1976.
On November 28, 1978 the receiver filed a petition asking that Galloway's claim along with others be received and allowed as a claim of a general creditor without any priority or preference under Code of Alabama 1975, § 27-32-37. This section provides:
Upon the issuance of a proper court order placing a domestic insurer in receivership or placing a foreign insurer in ancillary receivership for rehabilitation or liquidation, pursuant to this chapter or other insurance laws of Alabama, all beneficiaries of and all persons holding or owning a contract of insurance with such insurer shall be a preferred creditor of said insurer to the extent of the equity, cash value or other benefit then accrued, arising under the terms of such contract. With the exception of costs of administration of said receiverships, Recorded tax liens and judgments obtained prior to initiation of delinquency proceedings, and secured creditors' claims, no claim of a creditor shall be preferred over that of a policyholder of the insurer in receivership. Policyholders are hereby removed from the class of general creditors and all laws and court decisions in conflict herewith shall have no further application. (Emphasis added.)
Galloway objected to the petition, saying his claim was entitled to priority under § 27-32-37, such section "not requiring the recording of a judgment prior to Receivership Proceedings."
The sole issue for review is whether a judgment obtained prior to initiation of delinquency proceedings and filed and recorded after the initiation of the proceedings is entitled to preference over the policyholders of the insurer in receivership under Code of Alabama 1975, § 27-32-37.
We do not review this case with any presumption in favor of the trial court, for we are concerned with construing Code of Alabama 1975, § 27-32-37, which is a question of law. Donnelly v. Doak, Ala., 346 So.2d 414 (1977); 2A Ala.Dig. Appeal & Error 931(2).
The primary construction problem involved in § 27-32-37 is whether the word "recorded" modifies judgments, as well as tax liens. We find that it does.
We note that Code of Alabama 1975, § 27-32-2 sets forth the purpose of the chapter containing § 27-32-37 and the construction thereof.
The purpose of this chapter is to promote effectiveness, economy and uniformity in the rehabilitation, reorganization, conservation and liquidation of insurers doing business in this state. It is intended that this chapter shall be liberally construed to the end so far as possible that the Assets of such insurers shall be effectively conserved . . . . (Emphasis added.)
It has been said in Myers v. Protective Life Insurance Co., Ala., 342 So.2d 772 (1977) that Acts of Alabama 1975, Act No. 1040, which is the Act from which § 27-32-37 is derived "promulgate(s) the public policy of this State of...
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