State ex rel. Safeguard Ins. Co. v. Vorys

• Decision Date: 08 June 1960
• Docket Number: No. 35859,35859
• Citation: State ex rel. Safeguard Ins. Co. v. Vorys, 167 N.E.2d 910, 171 Ohio St. 109 (Ohio 1960)
• Parties: , 12 O.O.2d 132 STATE ex rel. SAFEGUARD INS. CO. v. VORYS, Supt. of Insurance.
• Court: Ohio Supreme Court

Page 109

171 Ohio St. 109

167 N.E.2d 910, 12 O.O.2d 132

STATE ex rel. SAFEGUARD INS. CO. v.VORYS, Supt. of Insurance.

No. 35859.

Supreme Court of Ohio.

June 8, 1960.

Syllabus by the Court

1.In considering the question as to what effect an Ohio court should give to an agreement providing for merger of two or more corporations of other states, the presumption obtains, in the absence of pleading and proof to the contrary, that the law of Ohio is the same as the applicable law of such other states.Paragraph one of the syllabus of Mendelson v. Mendelson, 123 Ohio St. 11, 173 N.E. 615, approved and followed.

2.Under Ohio law, such a merger agreement may provide for and be effective in transferring to the corporation resulting from a merger thereunder all property of each of the merging corporations, and in making all obligations and liabilities of each of the morging corporations obligations and liabilities of such resulting corporation and in extinguishing their existence as obligations or liabilities of any merging corporation other than such resulting corporation.

3.Where a corporation makes a deposit of securities with the Ohio Superintendent of Insurance as required by Section 3929.01(B)(5), Revised Code, and thereafter such corporation merges with other corporations under a merger agreement that is effective in transferring to a resulting corporation all the property of each of the merging corporations and in making the obligations and liabilities of each of the merging corporations obligations and liabilities of such resulting corporation and in extinguishing them as obligations or liabilities of any of the merging corporations other than the resulting corporation, the securities so deposited become the property of such resulting corporation subject to any claims or liens against them in favor of those to whom the depositing corporation was obligated or liable prior to the merger and to whom the resulting corporation was thereafter obligated or liable.

4.Where the resulting corporation of such a merger files with the Ohio Superintendent of Insurance a certificate of the superintendent of insurance of its state of incorporation that such resulting corporation has made a deposit with him for the benefit and security of all its policyholders of $100,000 or more in securities in which such resulting corporation may invest its assets by the laws of the state of its incorporation and where the Ohio Superintendent of Insurance is satisfied by such certificate that such deposit has been made and where it does not appear that the resulting corporation is or may be insolvent, the Ohio Superintendent of Insurance has, under Section 3929.07, Revised Code, a duty to deliver on request to such resulting corporation a deposit made with him pursuant to Section 3929.01(B)(5), Revised Code, by a corporation which merger with the resulting corporation in such merger.State ex rel. Continental Casualty Co. v. Safford, 117 Ohio St. 412, 160 N.E. 239, approved and followed.State ex rel. Van Schaick v. Bowen, 131 Ohio. St. 310, 2 N.E.2d 824, distinguished and limited.

In Mandamus.

This is an original action in mandamus instituted in this court to require respondent, the Superintendent of Insurance (herein referred to as respondent superintendent), to release and surrender to relator $50,000 in securities deposited with the respondent superintendent by the London & Lancashire Indemnity Company of America (herein referred to as the indemnity company) in 1916 and $3,000 in securities deposited by that company with the respondent superintendent in 1951.

By his amended answer, the respondent superintendent admits certain allegations of relator's petition, including allegations that relator is a Connecticut corporation authorized to do business in Ohio, that relator is the resulting corporation of a merger of the indemnity company and another insurance company with relator in 1957, that relator thereby acquired all the assets and assumed all the liabilities and obligations of the indemnity company, that relator has filed with the respondent superintendent a certificate showing that relator has a deposit with the superintendent of insurance of the state of Connecticut in the sum of $415,000, that the indemnity company had made the foregoing deposits with the respondent superintendent "for the benefit and security of all its policy holders' * * * in order to comply with the requirements of' what is now Section 3929.01(B)(5), Revised Code, ¹ that the indemnity company has caused to be published a notice of discontinuance of its business in order to comply with Section 3905.25, Revised Code, and filed affidavits to the effect that its debts and liabilities have been extinguished, that relator applied to the respondent superintendent for the withdrawal of the foregoing deposits made by the indemnity company, and that the respondent superintendent refuses to permit such withdrawal, but the respondent superintendent denies that the liabilities and obligations of the idemnity company, which the foregoing deposits of securities by the indemnity company were made to secure, have in fact been paid or extinguished and denies that the assumption of such liabilities and obligations by relator as an incident of said merger is sufficient to pay or extinguish those liabilities and obligations.

The cause is now before this court on relator's demurrer to the amended answer.See170 Ohio St. 343, 164 N.E.2d 743, for report of the decision on relator's demurrer to the original answer.

Hamilton & Kramer, Columbus, for relator.

Mark McElroy, Atty. Gen., and Gerald J. Celebrezze, Cleveland, for respondent.

TAFT, Judge.

Although statutory provisions for deposits such as the $53,000 in deposits made by the indemnity company with respondent superintendent are common, there are few helpful precedents with respect to the problem as to when and how companies making such deposits or their successors may get them back.See 23 American Jurisprudence 309, Section 331, 50 American Jurisprudence, 1110, Section 316, 29 American Jurisprudence 473, Section 57, and annotation 116 A.L.R. 965.

In the petition, relator alleges that the merger of the indemnity company and the other insurance company with relator was made pursuant to a merger agreement which is made a part of the petition.In its amended answer, respondent'admits that relator is the resulting corporation of' that merger 'as alleged,' and therefore in effect admits the alleged terms of that merger agreement.

That agreement reads, so far as pertinent:

'* * * The resulting corporation * * * of Connecticut * * * shall be a continuation of the corporate existence of * * * [relator]; and the separtate corporate existence of * * * indemnity company and the * * * insurance company * * * shall cease to exist except as herein specifically provided.

'* * * Upon this * * * merger becoming effective all the property * * * and all the debts due the constituent corporations * * * shall be * * * vested in the resulting corporation * * *; and all rights of creditors and policyholders and liens upon the property of any of said constituent corporations shall be preserved unimpaired and the constituent corporations shall continue in existence so far as may be necessary to preserve the same; and all debts and liabilities and duties of any of such constituent corporations shall thenceforth be attached to the resulting corporation, and may be enforced against it to the same extent as if incurred or contracted by it.No action or proceeding pending at the time of the merger * * *, to which any * * * of the * * * constituent corporations may be a party, shall be abated or discontinued * * * but the same may be prosecuted * * * as if the merger had not taken place, or the resulting corporation may be substituted in place of the constituent corporation as a party * * *.'

It is obvious that, if full effect can be given to the foregoing agreement, then, when the merger became effective, all the property of the indemnity company passed to relator subject to any rights and liens against it (the continued existence of the indemnity company was obviously not necessary to preserve any rights or liens against the $53,000 deposit involved in the instant case), all liabilities of the indemnity company became liabilities of relator as if incurred by relator, and, since the indemnity company ceased to exist as a separate legal entity, those liabilities (which were not the subjent of pending actions or proceedings) necessarily ceased to be liabilities of any legal entity other than the relator as the resulting corporation of the merger.

What if any effect can be given to the foregoing merger agreement will necessarily be dependent upon the law of the state of relator (Connecticut) and perhaps also upon the law of the state of the indemnity company and of the other insurance company (New York).

However, our problem, in determining what effect can be given to that merger agreement, is considerably simplified by the fact that it has not even been suggested, either in the pleadings or by argument, that we should take judicial notice or even consider the law of any other state.SeeSections 2317.08,2317.09,2317.44and2317.45, Revised Code.It follows that, 'in the absence of pleading and proof to the contrary, the presumption obtains that the law' of Ohio 'is the same as the law' of any other state whose law might be pertinent to a consideration of what effect can be given to the merger agreement.Mendelson v. Mendelson, 123 Ohio St. 11, 173 N.E. 615.

Where there is a merger such as provided for by the merger agreement in the instant case, Section 1701.78 to 1701.83, Revised Code, ² quite clearly contemplate the...