Penn General Casualty Co v. Commonwealth of Pennsylvania Schnader 11 8212 14, 1935, No. 431

CourtUnited States Supreme Court
Writing for the CourtSTONE
Citation79 L.Ed. 850,55 S.Ct. 386,294 U.S. 189
Decision Date04 February 1935
Docket NumberNo. 431
PartiesPENN GENERAL CASUALTY CO. v. COMMONWEALTH OF PENNSYLVANIA ex rel. SCHNADER, Atty. Gen. Argued Jan. 11—14, 1935

294 U.S. 189
55 S.Ct. 386
79 L.Ed. 850
PENN GENERAL CASUALTY CO.

v.

COMMONWEALTH OF PENNSYLVANIA ex rel. SCHNADER, Atty. Gen.

No. 431.
Argued Jan. 11—14, 1935.
Decided Feb. 4, 1935.

Page 190

Messrs. Joseph W. Henderson and Thomas F. Mount, both of Philadelphia, Pa., for petitioner.

Mr. Wm. A. Schnader, of Philadelphia, Pa., for respondent.

Mr. Justice STONE delivered the opinion of the Court.

This case comes here on certiorari, 293 U.S. 547, 55 S.Ct. 126, 79 L.Ed. —-, directed to the Supreme Court of Pennsylvania, to resolve questions of public importance growing out of the conflicting claims of the federal District Court and of the insurance commis-

Page 191

sioner of the commonwealth of Pennsylvania, to jurisdiction over the liquidation of the business and affairs of appellant, an insolvent Pennsylvania insurance corporation.

The case was heard in the state Supreme Court upon an agreed statement of facts, deemed 'necessary to a determination of the question involved in the appeal,' which was filed in the state trial court. It purports to outline the substance of proceedings had in that court and in the federal District Court. The question is stated to be whether the state court, 'in view of the prior pendency of the suit * * * in the Federal court, had jurisdiction to enter the decree from which this appeal is taken.' The records of the pleadings and proceedings in those courts are not included in the record and are not before us.

Appellant was organized under the Insurance Company Law of May 17, 1921, P.L. 682. On September 14, 1933, appellant's officers and directors appeared at a hearing before the insurance commissioner at which the president of the company was ordered to return to it assets which he had improperly withdrawn from the company, with consequent serious impairment of its financial condition. On October 14, 1933, a further hearing was held before the Attorney General of the state, at which it appeared that the company was in an unsafe and unsound condition.

On November 17, 1933, a shareholder of the insurance company filed his bill of complaint against the company in the District Court for Eastern Pennsylvania. At this time negotiations, conducted by the commissioner with the stockholders of the company, for its rehabilitation were pending. The complaint alleged that the stockholder was a resident of West Virginia; that the requisite jurisdictional amount was involved; that officers of the company had misappropriated and wasted its assets; that

Page 192

the company was involvent and in a financially unsafe and unsound condition. The bill prayed the appointment of receivers, the liquidation of its property and business, and the usual injunction. Upon the filing of the bill, subpoena was issued and was served on the corporation on November 22, 1933.

On December 8, 1933, while the suit in the District Court was pending, the Attorney General of the state, acting pursuant to section 502, art. 5, of the Insurance Department Act of May 17, 1921, P.L. 789 (40 PS Pa. § 202), filed a suggestion with the court of common pleas of Dauphin county, alleging that the company was in a financially unsound condition; that the conduct of its business would be detrimental and hazardous to its policy-holders, creditors, and the public; that certain officers of the company had made illegal investments of the funds of the company and had appropriated to their own use other assets of the company. He prayed for an order that the defendant show cause why the business of the company should not be closed, its charter vacated, and its assets taken into possession of the insurance commissioner for liquidation under his direction, and for an injunction. On the same day the court of common pleas granted the order to show cause and enjoined the company from transacting any business and from disposing of its property until further order of the court. The order to show cause was served upon the company on December 11, 1933.

On December 14, 1933, the company filed an answer in the suit pending before the federal District Court, substantially admitting the alleged withdrawal of assets and illegal investment, and denying the other allegations of the complaint, and alleging the pendency of the proceedings in the court of common pleas.

On the same day the court of common pleas entered a further order restraining the company and its officers or agents from transacting any business and from dis-

Page 193

posing of its property and restraining all persons other than the insurance commissioner and his agents from taking possession of it. On the following day the federal District Court entered an order which recited the pendency of the proceedings in the court of common pleas and restrained the company and its officers or agents from permitting any one to receive or take possession of its property and enjoining all persons from interfering with it in any way. On that day both the last-mentioned restraining order of the court of common pleas and that of the federal District Court were served on the company.

After further proceedings, the court of common pleas entered its final decree, March 14, 1934, that the company be dissolved, and directing the acting insurance commissioner to take possession of and to liquidate the business and property of the casualty company in accordance with the provisions of the state Insurance Department Act. No final hearing has been held and no receiver has been appointed in the suit pending in the District Court, but, because of the restraining order of that court, the company has refused to comply with the demand of the commissioner for the surrender of its property in conformity with the decree of the state court.

On appeal from the court of common pleas, the state Supreme Court treated the case as one involving only a conflict of jurisdiction between the state court and the federal court. It viewed the comprehensive statutory scheme of the commonwealth for liquidating insurance companies by the insurance commissioner as binding on the company and its shareholder. It therefore thought that there could be no controversy between them which would be a proper subject of suit in the federal courts and that this was sufficient to preclude the exercise of jurisdiction of the federal court. It accordingly affirmed the decree. 316 Pa. 1, 173 A. 637.

Page 194

The state court and the federal court have thus reached an impasse; each asserts the right to exercise its jurisdiction with respect to substantially the same subject-matter, the liquidation of the business, and assets of the insolvent corporation; each asserts its authority to enjoin...

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371 practice notes
  • Tucker v. Specialized Loan Servicing, LLC, Case No. PWG–14–813.
    • United States
    • U.S. District Court — District of Maryland
    • February 3, 2015
    ...v. Bank of N.Y. & Trust Co., 296 U.S. 463, 477, 56 S.Ct. 343, 80 L.Ed. 331 (1936) ; Penn Gen. Cas. Co. v. Pennsylvania ex rel. Schnader, 294 U.S. 189, 55 S.Ct. 386, 79 L.Ed. 850 (1935) ; Palmer v. Texas, 212 U.S. 118, 129, 29 S.Ct. 230, 53 L.Ed. 435 (1909) ; Farmers' Loan & Trust Co. v. Lak......
  • Flam v. Flam, CASE NO. 1:12-CV-1052 AWI DLB
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • March 3, 2016
    ...exclusive jurisdiction does not apply to concurrent cases involving in personam jurisdiction. Penn General Casualty Co. v. Pennsylvania, 294 U.S. 189, 195 (1935); see also State Eng'r, 339 F.3d at 811. "When a court exercises in personam authority, it addresses a claim for liability, such a......
  • Rath Packing Co. v. Becker, Nos. 73--2481
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • October 29, 1975
    ...of the state courts is without merit. Suits for injunctions are in personam, not in rem, Penn General Casualty Co. v. Pennsylvania, 294 U.S. 189, 195, 55 S.Ct. 386, 79 L.Ed. 850 (1935), and state and federal courts having concurrent jurisdiction are 'free to proceed in (their) own way * * *......
  • Munich American Reinsurance Co. v. Crawford, No. 97-10302
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • June 2, 1998
    ...exercises that jurisdiction to the exclusion of the other. See Penn Gen. Cas. Co. v. Commonwealth of Pennsylvania ex rel. Schnader, 294 U.S. 189, 195, 55 S.Ct. 386, 389, 79 L.Ed. 850 To the extent Munich and NAC, like the petitioner in Bennett, claim a vested property interest in identifiab......
  • Request a trial to view additional results
372 cases
  • Tucker v. Specialized Loan Servicing, LLC, Case No. PWG–14–813.
    • United States
    • U.S. District Court — District of Maryland
    • February 3, 2015
    ...v. Bank of N.Y. & Trust Co., 296 U.S. 463, 477, 56 S.Ct. 343, 80 L.Ed. 331 (1936) ; Penn Gen. Cas. Co. v. Pennsylvania ex rel. Schnader, 294 U.S. 189, 55 S.Ct. 386, 79 L.Ed. 850 (1935) ; Palmer v. Texas, 212 U.S. 118, 129, 29 S.Ct. 230, 53 L.Ed. 435 (1909) ; Farmers' Loan & Trust Co. v. Lak......
  • Flam v. Flam, CASE NO. 1:12-CV-1052 AWI DLB
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • March 3, 2016
    ...exclusive jurisdiction does not apply to concurrent cases involving in personam jurisdiction. Penn General Casualty Co. v. Pennsylvania, 294 U.S. 189, 195 (1935); see also State Eng'r, 339 F.3d at 811. "When a court exercises in personam authority, it addresses a claim for liability, such a......
  • Rath Packing Co. v. Becker, Nos. 73--2481
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • October 29, 1975
    ...of the state courts is without merit. Suits for injunctions are in personam, not in rem, Penn General Casualty Co. v. Pennsylvania, 294 U.S. 189, 195, 55 S.Ct. 386, 79 L.Ed. 850 (1935), and state and federal courts having concurrent jurisdiction are 'free to proceed in (their) own way * * *......
  • Munich American Reinsurance Co. v. Crawford, No. 97-10302
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • June 2, 1998
    ...exercises that jurisdiction to the exclusion of the other. See Penn Gen. Cas. Co. v. Commonwealth of Pennsylvania ex rel. Schnader, 294 U.S. 189, 195, 55 S.Ct. 386, 389, 79 L.Ed. 850 To the extent Munich and NAC, like the petitioner in Bennett, claim a vested property interest in identifiab......
  • Request a trial to view additional results

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