Moren v. O.V.F. & M. Ins. Co.'s Receiver

• Decision Date: 22 May 1928
• Citation: 224 Ky. 643
• Parties: Moren v. Ohio Valley Fire & Marine Insurance Company's Receiver.
• Court: United States State Supreme Court — District of Kentucky

224 Ky. 643

Moren v. Ohio Valley Fire & Marine Insurance Company's Receiver.

Court of Appeals of Kentucky.

Decided May 22, 1928.

1. Insurance. — The generally recognized rule is that a decree of dissolution of an insurance company, as a decree pursuant to Ky. Stats., sec. 753, or an adjudication of insolvency coupled with the appointment of a receiver, cancels or terminates outstanding insurance policies by operation of law.

2. Insurance. — When a decree of dissolution has been entered or an adjudication of insolvency has been made coupled with the appointment of a receiver, subsequent losses under insurance policies

which were canceled or terminated by such decree or adjudication, by operation of law, are not liabilities which may be enforced against the receiver.

3. Insurance. — As to premiums unpaid at the time of insolvency or dissolution of an insurance company, policy holders are liable to the receiver for so much thereof as has been earned, but they are not liable for the unearned residue; that is, premiums for the unexpired term of insurance.

4. Insurance. — On dissolution or adjudication of insolvency of an insurance company, holders of policies on which premiums have been paid for a term extending beyond the insolvency or dissolution of the company have valid claims for unearned premiums, and this is so, even though there is no provision in the policy for refunding premiums paid.

5. Receivers. — As soon as a receiver is appointed and qualified, he comes under the sole direction of the court and his contracts are the engagements of the court.

6. Receivers. — Receiver's duty to incur expenses, even without court's direction, where essential to preserve the property, does not include the right to create debts for other purposes.

7. Receivers. — A person entering into a contract with a receiver is bound to take notice of his disability to contract and makes a contract with him at his peril.

8. Insurance. — Agent for insolvent insurance company held not entitled to preference for moneys expended by him in refunding unearned premiums, even if contract for preference was entered into between receiver of the company and agent; receiver not being authorized by the court to so contract.

9. Insurance. — Where one, who had been the agent of an insurance company which had gone into receivership, took up for a new company, at the receiver's request, the policies of the company in receivership, he was entitled to claim, as against receiver, moneys expended in refunding unearned premiums without deducting commissions paid on new policies.

10. Insurance. — One paying policy holders of company in receivership their unearned premiums and taking assignment of their rights against receiver stood in policy holders' place and was entitled to payment by receiver.

Appeal from Franklin Circuit Court.

CARROLL & CARROLL for appellant.

W.C. MARSHALL for appellee.

OPINION OF THE COURT BY COMMISSIONER HOBSON.

Affirming.

T.G. Moren owned and conducted for many years an insurance agency at his home in London, Ky. The Home Insurance Company that had been issuing policies on country property withdrew from this territory and Moren got for the Ohio Valley Insurance Company the insurance which had been previously given to the Home Insurance Company. The Home policies were taken up and in lieu thereof policies of the Ohio Valley Company were issued. The commissions on this business were divided equally between the two agencies. After this and while the policies were still in force the Ohio Vally Insurance Company became insolvent and was placed in a receiver's hands. Moren sent in his licenses and also turned in his commission. After this, at the request of the receiver, Moren took up the policies in Laurel and Clay counties, about 400 in number, by refunding to the holders the amount of the unearned premium, either in cash or reinsurance, and issued to them policies in another company. The policies in the Ohio Valley were assigned to him. The amount of the unearned premium on these policies totaled $3,450.44. Moren filed, in the action brought by the receiver for the settlement of the affairs of the insurance company, a preferred claim for this amount, on the ground that he had secured the policies at the receiver's request and upon...