In re Cas. Co. of America

• Decision Date: 23 February 1927
• Citation: 155 N.E. 735,244 N.Y. 443
• Parties: In re CASUALTY CO. OF AMERICA. In re RUBIN.
• Court: New York Court of Appeals Court of Appeals

244 N.Y. 443

155 N.E. 735

In re CASUALTY CO. OF AMERICA. In re RUBIN.

Court of Appeals of New York.

Feb. 23, 1927.

In the matter of the application of the People of the State of New York by Jesse S. Phillips, as Superintendent of Insurance, for an order to take possession of the property and liquidate the business of the Casualty Company of America. Maxwell Rubin was employed as attorney by the said Superintendent to conduct certain litigation in connection with said liquidation. From an order of the Appellate Division (217 App. Div. 681, 216 N. Y. S. 256), modifying an order of the Special Term which determined the compensation to be paid the claimant, Maxwell Rubin, by the Superintendent of Insurance, the claimant appeals.

Order of the Appellate Division reversed, and that of the Special Term affirmed.

Appeal from Supreme Court, Appellate Division, First Department.

E. Crosby Kindleberger and Hamilton Rogers, both of New York City, for appellant.

Wm. J. Cahill and Clarence C. Fowler, both of New York City, for superintendent of in surance, respondent.

CARDOZO, C. J.

An order of the Supreme Court directed the superintendent of insurance to liquidate the business of the Casualty Company of America, a domestic corporation. Maxwell Rubin, a member of the bar, was retained by the liquidator to take charge of an important lawsuit. Nothing was said at the time of the employment about the amount to be paid. The services began in March, 1923, and continued till the end of December, 1924. In the meantime, the superintendent in office at the time of the retainer had been superseded by another, whose term of office began after the chief services were over. Mr. Rubin put in a bill for $8,500, a balance arrived at after valuing the services at $10,000 and crediting $1,500 paid upon account. The superintendent rejected the bill as excessive. He fixed the value of the services at $3,500, and the balance then due at $2,000. The claimant, dissatisfied, petitioned the Supreme Court to determine what was due. The court held, after a preliminary reference, that the services were worth $8,000 (which left the balance due $6,500), but remitted the matter to the liquidator to value the services again in the light of the court's opinion. The liquidator, unmoved, reaffirmed his valuation. Upon a second motion, the court again disapproved the action of the liquidator, again fixed the value at $8,000, and ordered payment accordingly. There followed an appeal to the Appellate Division. The order was there modified by re-establishing the superintendent's valuation. The court did not hold that the award was adequate. The holding was that there was no power to increase it. This was thought to follow from provisions of the statute. Ins. Law, § 63, subd. 6; Consol. Laws, c. 28. As between liquidator and claimant, the former, in the view of the Appellate Division, had been made the final judge of the value of the services. The court might cut down. It had no power to enlarge.

The liquidation of insurance companies in this state is governed by a statute adopted, in its main features, in 1909. The system of liquidation by receivers specially appointed had proved to be dilatory and wasteful. The Legislature substituted administration by a department of the government. Upon the application of the superintendent of insurance, an order may be made by the Supreme Court for the liquidation of the business. The work is to be done by the superintendent and his deputies, but under the supervision of the court, and subject to its direction.

‘Such liquidation shall be made by and under the direction of such superintendent, and his successors in office, who may deal with the property and business of such corporation in their own names as superintendents, or in the name of the corporation, as the court may direct’ L. 1909, c. 300, § 63, subd. 3, as amended (Consol. Laws, c. 28, § 63, subd. 3).

Where the business to be liquidated is that of a foreign corporation the rights and duties of the superintendent are those of an ancillary receiver. Section 63, subd. 5; Matter of People (City Eq. Fire Ins. Co.) 238 N. Y. 147, 144 N. E. 484. There may be rules and regulations with a view to orderly administration, but these, too, are to be ‘subject to the approval of the court.’ Section 63, subd. 7. Assistants may be employed, and other expenses incurred, but again ‘the approval of the court’ is to be a check upon waste. Section 63, subd. 6.

‘For the purposes of this section, the superintendent shall have power to appoint, under his hand and official seal, one or more special deputy superintendents of insurance, as his agent or agents, and to employ such counsel, clerks and assistants as may by him be deemed necessary, and give each of such persons such powers to assist him as he may consider wise. The compensation of such special deputy superintendents, counsel, clerks and assistants, and all expenses of taking possession of and conducting the business of liquidating any such corporation shall be fixed by the superintendent, subject to the approval of the court, and shall, on certificate of the superintendent, be paid out of the funds or assets of such corporation.’

We do not read this subdivision as clothing the superintendent with the authority of an arbitrator. If he is an arbitrator to fix the value of the services of counsel or assistants, he may fix with like finality the value of supplies such as stationery and coal, or even the rental to be paid for the occupation of an office. His authority, whatever it is, extends to ‘all expenses of taking possession of and * * * liquidating’ the business. We cannot bring ourselves to believe that those who deal with a liquidator as employees or as vendors or as landlords of a building are to be held, upon the basis of this curt and indefinite enactment, to have made him as against themselves a judge in his own cause. The enactment, as we view it, was framed to meet the needs of a different situation. The liquidator may find it convenient in the administration of the business to hire deputies or clerks or counsel at an agreed rate of compensation, or to attain a like result, when agreement has been omitted...