People v. Commercial Alliance Life Ins. Co.

• Decision Date: 12 October 1897
• Citation: 154 N.Y. 95,47 N.E. 968
• Parties: PEOPLE v. COMMERCIAL ALLIANCE LIFE INS. CO. MILLER v. GILBERT.
• Court: New York Court of Appeals Court of Appeals

154 N.Y. 95

47 N.E. 968

PEOPLE

v.COMMERCIAL ALLIANCE LIFE INS. CO.

MILLER

v.GILBERT.

Court of Appeals of New York.

Oct. 12, 1897.

Appeal from supreme court, appellate division, First department.

Claim of R. Stuart Miller, as guardian, against William T. Gilbert, receiver of the Commercial Alliance Life Insurance Company. From a judgment of the appellate division (45 N. Y. Supp. 223) affirming an order overruling exceptions and confirming the report of the referee, claimant appeals. Affirmed.

Edgar J. Nathan, for appellant.

Henry D. Hotchkiss, for respondent.

HAIGHT, J.

This action was brought by the attorney general on behalf of the people to have the defendant, the Commercial Alliance Life Insurance Company, adjudged insolvent, the corporation dissolved, and its assets distributed. That action was commenced on the 13th day of October, 1894, and on that day notice was given of an application for the appointment of a receiver, and, in the meantime, a temporary injunction was issued, staying all proceedings on the part of the company, and restraining the paying out or transferring of any of its property or the disposing of its assets. October 30th a temporary receiver was appointed, and on January 10, 1895, final judgment was entered, dissolving the corporation and appointing a permanent receiver. The company had previously issued to Thomas Miller two policies of insurance in the sum of $5,000 each, known as the yearly renewable term policies, on which the premiums were payable bimonthly. One policy was issued to Marian M. Miller and the other to Ellen Miller, the daughters of Thomas Miller. He died January 15, 1895, five days after the final judgment dissolving the corporation. The premium had been paid up to the 1st day of December, 1894, the last payment having been made October 1, 1894. The claimant, as guardian for these daughters, insists that the value of the policies should be based on the fact of the death of Miller. The referee refused to compute the claim upon this basis, holding that no rights of creditors could be changed or enlarged after the commencement of the action by the attorney general to dissolve the corporation, and that the claimant's status as a creditor was fixed as of that date, and he reported accordingly. The report was confirmed at special term and affirmed in the appellate division. In allowing the appeal to this court, the following has been certified for our determination: ‘Whether the claims filed by R. Stuart Miller, guardian, etc., under the two policies issued to Thomas Miller for $5,000 should be allowed by the receiver of the Commercial Alliance Life Insurance Company at their value, to be ascertained and determined by considering the fact of the death of said Thomas Miller, which occurred on January 15, 1895, after the dissolution of said corporation, but before proofs of claim were duly filed; or whether the amount of said claims must be fixed and determined on and as of said 13th day of October, 1894, when proceedings for the dissolution of said corporation were initiated, and without regard to the subsequent death of the assured.’

We think this question is fully answered in the case of In re Equitable Reserve Fund Life Ass'n of the State of New York, 131 N. Y. 354, 30 N. E. 114, and in that of People v. Life & Reserve Ass'n of Buffalo, 150 N. Y. 94, 45 N. E. 8. It is true that in these cases the constitution and by-laws of mutual benefit associations were under consideration by the court, but we are unable to see why the conclusion reached in those cases does not apply with equal force to that now under consideration. The attorney general, acting under the authority conferred upon him by the statute, brought the action to have the charter of the defendant annulled. On the same day he procured a temporary injunction restraining the company practically from doing business until a receiver could be appointed, and within a few days thereafter procured the appointment of a receiver. It was the arm of the law taking hold of a corporation, for the purpose of stopping its business and distributing its assets. Judgment was subsequently entered for the relief demanded, establishing the charge that the corporation was insolvent at the time the action was commenced. menced. The judgment relates back to the commencement of the action, and became effective as of that time, and thereafter the company could not require the payment of premiums, or insist upon forfeitures. It is the day on which the court practically takes possession of the assets of the company for the purpose of distribution among its creditors, and consequently is the day on which the rights of creditors should be ascertained, and the value of their claims determined. We are aware that this rule must, of necessity, result in some hardship. The health of policy holders may, in some instances, become impaired, and to such an...