People v. Russian Reinsurance Co. of Petrograd

CourtNew York Court of Appeals
Writing for the CourtCARDOZO
Citation175 N.E. 114,255 N.Y. 415
Decision Date10 February 1931
PartiesPEOPLE, by BEHA, Superintendent of Insurance, v. RUSSIAN REINSURANCE CO. OF PETROGRAD, RUSSIA. PEOPLE, by BEHA, Superintendent of Insurance, v. FIRST RUSSIAN INS. CO.

255 N.Y. 415
175 N.E. 114

PEOPLE, by BEHA, Superintendent of Insurance,
v.
RUSSIAN REINSURANCE CO.
OF PETROGRAD, RUSSIA.
PEOPLE, by BEHA, Superintendent of Insurance,
v.
FIRST RUSSIAN INS.
CO.

Court of Appeals of New York.

Feb. 10, 1931.


In the matter of the application of the People, by James A. Beha, Superintendent of Insurance of the State of New York, against the Russian Reinsurance Company of Petrograd, Russia, and against the First Russian Insurance Company, established in 1827. From orders of the Appellate Division, First Department (229 App. Div. 637, 243 N. Y. S. 35), modifying and as modified affirming orders of the Special Term of the Supreme Court, dated September 7 and 10, 1929, directing the disposition of the surplus assets of the Russian Reinsurance Company of Petrograd, Russia, and the First Russian Insurance Company, established in 1827, such companies appeal.

Reversed and rendered.

[175 N.E. 115]


[255 N.Y. 416]Appeal from Supreme Court, Appellate Division, First Department.

Frederick B. Campbell and Paul C. Whipp, both of New York City, for appellants Russian Reinsurance Co. and First Russian Ins.
Co.

255 N.Y. 417]Walter H. Pollak, Borris M. Komar, and Ruth I. Wilson, all of New York City, for appellants creditors of the First Russian Ins. Co.
[255 N.Y. 418]James F. Donnelly, Alfred C. Bennett, John M. Downes, and Clarence C. Fowler, all of New York City, for respondent Superintendent of Insurance.

[255 N.Y. 419]John J. Bennett, Jr., Atty. Gen. (Joseph C. H. Flynn, Deputy Atty. Gen., of counsel), for the People.

[255 N.Y. 420]CARDOZO, C. J.

The appellants, Russian Reinsurance Company of Petrograd, Russia, and First Russian Insurance Company, established in 1827, are corporations organized under the laws of the Russian Empire, with agencies or branches in the state of New York.

In August, 1925, the superintendent of insurance took possession of the assets of these branches in accordance with section 63 of the Insurance Law of the state (Consol. Laws, c. 28) to conserve them for the benefit of those entitled thereto. This action was taken in view of the hazards and embarrassments growing out of the confiscatory decrees of the Russian Soviet Republic, and not because of insolvency either present or imminent.

The liquidator was protected in the unimpeded liquidation of the assets by an injunction, sweeping in its generality, whereby creditors were restrained from pursuing their legal remedies by attachment or execution against the assets so sequestered, and even, it seems, from proceeding to trial. Matter of People, by Beha (In re Second Russian Ins. Co.), 244 N. Y. 606, 155 N. E. 916.

The liquidation in now finished. The domestic creditors and policyholders have been paid. Matter of People, by Stoddard (In re Norske Lloyd Ins. Co., Ltd.), 242 N. Y. 148, 151 N. E. 159. Paid also have been the creditors, whether foreign or domestic, who acquired liens by attachment before liquidation was begun. Cf. Matter of People, by Beha (In re First Russian Ins. Co.), 253 N. Y. 365, 171 N. E. 572. The superintendent holds in his hands a surplus of nearly a million dollars for the one company and of more than a million for the other. The question is what disposition he shall make of it.

Creditors and policyholders with claims arising out of foreign business insist that the time has now come when [255 N.Y. 421]their claims should be enforceable. Either the liquidator of the domestic branch should pay them, or, if that remedy be denied, they should be relieved from the injunction which stays the remedy by suit. The insurance companies insist that they are still juristic persons, that they are represented by boards of directors resident in Paris and competent to act, and that subject to the remedies of creditors they are entitled to possession. No conflict of any moment exists between the position of the creditors on the one hand and that of the companies on the other, since the fact is not disputed that the liabilities are few and that a surplus will be left after all of them are paid.

Opposed, however, to the position of the creditors and the companies is the position of the superintendent of insurance, the statutory liquidator. He takes the ground that, in view of the hazards and uncertainties of the Russian situation, the surplus should not be paid to any one, but should be left in his hands indefinitely, until a government recognized by the United States shall function in the territory of what was once the Russian Empire. in the meantime creditors as well as companies must be told to stand aside.

The Appellate Division has upheld the contention of the superintendent, and has entered a decree accordingly. It did not solve the problem. It adjourned it sine die. By the terms of its decree the so-called plan of the superintendent of insurance ‘with reference to the distribution or disposition of the surplus' is ‘in all respects adopted.’ The surplus funds are to ‘be retained * * * until a government in Russia is recognized by the United States or until the surplus funds may be transmitted to a liquidator or legal representative of the corporation at the domicile abroad [i. e., in Russia] or in accordance with any provision of a treaty of the United

[175 N.E. 116

States.’ In the meantime the injunction is to be continued in all its rigor.

[255 N.Y. 422] We are unable to accept the view that postponement to the Greek Kalends is the fitting answer to a prayer that the court unlock the fund and formulate a plan of release and distribution.

So far as creditors are concerned, the injustice of the plan is obvious, if plan it may be called. The superintendent took possession for the benefit of domestic creditors whose claims have now been paid. Other creditors, stayed from suing while the liquidation was in progress, have asked the courts to say that their day has now arrived. The answer is ‘not yet.’ The court, they have been told, will neither pay them through a liquidator nor lift the injunction restraining other remedies, nor even restore the surplus to the possession of the debtor. Liquidation is over, and there has been a fulfillment of the trust for which possession was assumed. Even so, the creditors not within the trust are to be stayed indefinitely and perhaps forever from the pursuit of any remedy, either in equity or at law. We may doubt whether an injunction so unmeasured is consistent with constitutional immunities, and, in particular, with the privilege of access to the courts. Sliosberg v. New York Life Ins. Co., 244 N. Y. 482, 155 N. E. 749;Truax v. Corrigan, 257 U. S. 312, 334, 42 S. Ct. 124, 66 L. Ed. 254, 27 A. L. R. 375. What cannot be doubted with reason is its hardship and inequity. In the silence of the statute, a decree instructing the liquidator as to the administration of the surplus must conform to the exactions of equity and justice.

Holding, as we do, that the surplus must be made available for the payment of...

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16 practice notes
  • United States v. Pink, No. 42
    • United States
    • United States Supreme Court
    • February 2, 1942
    ...leaving a balance in his hands of more than $1,000,000. In 1931 the New York Court of Appeals (People, by Beha, v. First Russian Ins. Co., 255 N.Y. 415, 175 N.E. 114) directed respondent to dispose of that balance as follows: first, to pay claims of foreign creditors who had filed attachmen......
  • United States v. Bank of New York & Trust Co., No. 304.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • May 20, 1935
    ...declared to retain "a pallid life as the shade or little more of its former self." In Re People, by Beha (In re Russian Reinsurance Co.), 255 N. Y. 415, 425, 175 N. E. 114 (1931), the Russian corporations were declared to be "still juristic persons." In Salimoff & Co. v. Standard Oil Co., 2......
  • Moscow Fire Ins. Co. v. Bank of New York & Trust Co.
    • United States
    • New York Court of Appeals
    • April 11, 1939
    ...still had in his possession assets of great value. In Matter of People, by Beha, v. Russian Reinsurance Co. of Petrograd, Russia, 255 N.Y. 415, 175 N.E. 114 the problem of the disposition that should be made of such surplus assets was presented. Ordinarily any surplus, remaining after the d......
  • United States v. President & Directors of the Manhattan Co.
    • United States
    • New York Court of Appeals
    • January 11, 1938
    ...Corporation v. London & Lancashire Ins. Co., 255 N.Y. 120, 174 N.E. 299;People, by Beha v. Russian Reinsurance Co. of Petrograd, Russia, 255 N.Y. 415, 175 N.E. 114;Matter of People, by Beha, (First Russian Ins. Co.), 255 N.Y. 428, 175 N.E. 118;Matter of People, by Beha, (Northern Ins. Co.),......
  • Request a trial to view additional results
16 cases
  • United States v. Pink, No. 42
    • United States
    • United States Supreme Court
    • February 2, 1942
    ...leaving a balance in his hands of more than $1,000,000. In 1931 the New York Court of Appeals (People, by Beha, v. First Russian Ins. Co., 255 N.Y. 415, 175 N.E. 114) directed respondent to dispose of that balance as follows: first, to pay claims of foreign creditors who had filed attachmen......
  • United States v. Bank of New York & Trust Co., No. 304.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • May 20, 1935
    ...declared to retain "a pallid life as the shade or little more of its former self." In Re People, by Beha (In re Russian Reinsurance Co.), 255 N. Y. 415, 425, 175 N. E. 114 (1931), the Russian corporations were declared to be "still juristic persons." In Salimoff & Co. v. Standard Oil Co., 2......
  • Moscow Fire Ins. Co. v. Bank of New York & Trust Co.
    • United States
    • New York Court of Appeals
    • April 11, 1939
    ...still had in his possession assets of great value. In Matter of People, by Beha, v. Russian Reinsurance Co. of Petrograd, Russia, 255 N.Y. 415, 175 N.E. 114 the problem of the disposition that should be made of such surplus assets was presented. Ordinarily any surplus, remaining after the d......
  • United States v. President & Directors of the Manhattan Co.
    • United States
    • New York Court of Appeals
    • January 11, 1938
    ...Corporation v. London & Lancashire Ins. Co., 255 N.Y. 120, 174 N.E. 299;People, by Beha v. Russian Reinsurance Co. of Petrograd, Russia, 255 N.Y. 415, 175 N.E. 114;Matter of People, by Beha, (First Russian Ins. Co.), 255 N.Y. 428, 175 N.E. 118;Matter of People, by Beha, (Northern Ins. Co.),......
  • Request a trial to view additional results

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