Page v. Marcel

• Decision Date: 31 January 1950
• Docket Number: No. 3188,3188
• Parties: PAGE v. MARCEL.
• Court: Court of Appeal of Louisiana — District of US

Page 363

44 So.2d 363

PAGE v. MARCEL.

No. 3188.

Court of Appeal of Louisiana, First Circuit.

Jan. 31, 1950.

Pettigrew & Duval, Houma, for appellant.

A. Deutsche O'Neal, Houma, for appellee.

ELLIS, Judge.

This is a suit by the plaintiff Joseph H. Page, doing business in the name of the Page Insurance Agency, in which he alleged that he operates a general insurance agency in the city of Houma, Louisiana, and that he sold and delivered to the defendant various and sundry insurance policies which are fully described in the petition. Plaintiff further alleged, and it is admitted by the defendant, that he sold defendant a total of seven policies, five of which were taken with the Keystone Mutual Casualty Company and the other two were cancelled and credit given for the unearned premiums. He alleged that the total amount of the premiums was the sum of $1442.29 of which amount the defendant had paid $332.15, leaving a balance due on the account of $1054.14.

Defendant filed an exception of no cause or right of action and the plaintiff amended the petition in which he alleged that at the special instance and request of the defendant he allowed the defendant credit 'but that defendant knew that petitioner would have to and did pay the various insurance companies for the policies purchased by defendant and that petitioner did actually pay for all of said policies.'

The defendant answered and admitted the purchase of the policies described in the original petition but further alleged that the five policies of insurance with the Keystone Casualty Company were cancelled and rendered useless on June 26, 1947 by virtue of the fact that this company, domiciled in Pittsburgh, Pennsylvania, was dissolved on that date by an order and decree of the Court of Common Pleas of Dauphin County, Pennsylvania, and that the Insurance Commissioner of the Commonwealth of Pennsylvania was directed to take possession of the property of the company and to liquidate its business and affairs. Defendant further in its answer set forth that the plaintiff was not entitled to claim the full premium for the said policies but must credit the defendant with the return premiums due on the date the policies became ineffective and cancelled due to the failure of the company as of June 26, 1947. The District Court rendered judgment in favor of the plaintiff as prayed for and from this judgment the defendant has now appealed. The exception of no cause or right of action is not being urged on appeal as the supplemental petition cured the deficiency in the original petition.

The evidence discloses that the defendant owned a fleet of taxi cabs and the plaintiff solicited his public liability insurance business and, as the defendant was unable to pay the premiums, it resulted in the plaintiff paying the full premiums for one year with defendant's consent. The defendant agreed to repay plaintiff in quarterly installments and did pay on the indebtedness $332.15 which the manager of the plaintiff company stated was the first installment and the only one paid by the defendant. The plaintiff has proven by documentary evidence as well as the testimony of the manager of the business that it paid the premiums as alleged.

Counsel for plaintiff, in his brief, stated that there is no proof made that the Keystone Mutual Casualty Company was dissolved and no proof is made that the Keystone Mutual Casualty Company could not and is not able to meet its due obligations. He himself introduced a notice from the Special Deputy Insurance Commissioner of the Commonwealth of Pennsylvania to the Page Insurance Agency dated August 18, 1947, and on the letterhead it states: 'Liquidation Division, Insurance Department, Commonwealth of Pennsylvania, 327 Fifth Avenue, Pittsburgh, Pennsylvania. In the Liquidation of the Dissolved Keystone Mutual Casualty Company,' notifying the plaintiff of the appointment of an ancillary receiver for this insurance company and in which it states that the company is dissolved. Also introduced by the plaintiff is a letter to the Page Insurance Agency from the receiver appointed in Louisiana. This letter is dated August 1st, 1947 in which it states that the insurance company in question 'was dissolved by an order and decree of the Court of Common Pleas of Dauphin County. Pennsylvania, as of June 26, 1947.' Counsel for plaintiff was, therefore, in error.

The effect of the decree of dissolution of the Keystone Mutual Casualty Company on June 26, 1947, coupled with the appointment of a receiver was the cancellation or termination of all outstanding policies by operation of law. 44 C.J.S., Insurance, § 129, page 698.

In American Jurisprudence, Vol. 29, page 100, Section 71, the effect of such a decree is stated as follows:

'While there are some contrary decisions, the general rule appears to be well established that on the adjudication of insolvency of an insuance company or upon the entry of a decree of dissolution upon a ground other than insolvency, the outstanding policies of the company are automatically cancelled * * *.'

In Louisiana, the general rule is recognized. In Michel, Secretary of State, v. Southern Ins. Co., (Tyler Canning & Pickling Co., Intervenor) In re Whitney Central Trust & Savings Bank, 128 La. 562, 56 So. 1010, Ann.Cas.1912C, 810 the Court said:

'The sole question presented is whether the injunction against the company from further proceeding with its business and the appointment of a receiver to settle its affairs operated a cancellation of all of its outstanding policies at the date of the decree.'

* * *

* * *

'The proposition that a bankrupt insurance corporation may go on earning premiums and incurring losses does not commend itself to our judgment, either from a legal or practical standpoint, and in this jurisdiction is repelled by both the letter and spirit of Act 105 of 1898. Under that statute any company whose capital stock is impaired to the extent of 25 per cent. or whose assets are insufficient to justify its continuance in business is 'deemed insolvent,' and may be proceeded against by the Secretary of State as 'an insolvent corporation.'

'Upon application by the Secretary of State to the proper court, the judge is authorized, upon notice and hearing, to issue a decree perpetually enjoining the corporation 'from further proceeding with its business.' Such a decree necessarily brings the current business of the company to an immediate standstill, and destroys the corporate capacity to do or perform any act that would change the situation as it existed at the date of the decree.

'Act 105 of 1898 is read into all policies of insurance issued or operative in the state of Louisiana, and every policy holder is charged with notice that his policy may be canceled by operation of law in case of the insolvency of the insurance company.'

In Federico Macaroni Mfg. Co. v. Great Western Fire Ins. Co. et al., 173 La. 905, 139 So. 1, 2, 79 A.L.R. 1256, the Court recognized the general rule and stated it as follows:

'The rule is stated in 32 C.J. pp. 339, 340, §§ 102, 103, as far as is applicable here, thus:

'While there is authority to the contrary, the generally recognized rule is that a decree of dissolution or an adjudication of insolvency, coupled with the appointment of a receiver, cancels or terminates outstanding policies by operation of law, and subsequent losses under such policies are not liabilities which may be enforced against the receiver. * * * 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.'

'The rule is stated in 14 R.C.L. 853, § 20, substantially the same, viz.:

'While there are some contrary decisions, the weight of authority supports the proposition that, on the judicial adjudication of the insolvency of a stock insurance company and the appointment of a receiver, the outstanding policies of the company are ipso facto canceled, and that a claim for a loss thereafter occurring is not a provable claim against the company. The policy holders are creditors for the value of their policies at the time of the breach thus occurring, which in most cases is the pro rata return premium,' etc.

'The doctrine stated was recognized by this court in Michel, Secretary of State, v. Southern Insurance Co., 128 La. 562, 54 So. 1010 [Ann.Cas.1912C, 810] and by the courts of other states in the following cases, cited in appellant's brief, viz.: Moren v. Ohio Valley Fire & Marine Insurance Company's Receiver, by the Court of Appeals of Kentucky, 224 Ky. 643, 6 S.W.2d 1091; Doane v. Millville Mutual Marine & Fire Insurance Co., by the Court of Chancery of New Jersey, 43 N.J.Eq. 522, 11 A. 739; People v. Commercial Alliance Life Insurance Co., 154 N.Y. 95, 47 N.E. 968; In re Equitable Reserved Fund Life Association 131 N.Y. 354, 30 N.E. 114; People ex rel. Attorney General v. Life & Reserve Association, 150 N.Y. 94, 45 N.E. 8; Commonwealth ex rel. [Kirkpatrick] Attorney General v. American Life Insurance Company, by the Supreme Court of Pennsylvania, 162 Pa. 586, 29 A. 660 ; People v. Metropolitan Surety Co., 205 N.Y. 135, 98 N.E. 412, Ann.Cas.1913D, 1180; Fogg v. Supreme Lodge of United Order of Golden Lion, 159 Mass. 9, 33 N.E. 692; Burdon v. Massachusetts Safety Fund Association, 147 Mass. 360, 17 N.E. 874, 1 L.R.A. 146; Boston & A. R. Co. v. Mercantile Trust & Deposit Co., by the Court of Appeals of Maryland, 82 Md. 535, 37 A. 778; Todd v. German-American Insurance Co., 2 Ga.App. 789, 59 S.E. 94; Fuller v. Wright, Insurance Commissioner, 147 Ga. 70, 92 S.E. 873, L.R.A.1917E, 1139; Johnson v. Button, Insurance Commissioner, 120 Va. 339, 91 S.E. 151; Lucas v. Pittsburgh Life & Trust Co., by the Supreme Court of Appeals of Virginia, 137 Va. 255, 119 S.E. 109; State ex rel. Gibson v. American Bonding Co., by...