Boyd v. Wright

148 Ga. 216 | Ga. | 1918

Hill, J.

Under the pleadings and record in this case, the question to be determined is whether the “death claimants” are entitled to priority of payment out of the assets in the hands of the insurance commissioner, as against living, or continuing, policyholders in the stock company—The Empire Life Insurance Company. The decree rendered by the trial judge adjudicated that death claims arising under the mutual and the stock company stood upon the same basis; and no exception was taken to this ruling. It was also held that as between the death claimants and the living policyholders, under both companies, the death claimants are entitled to priority of payment. And this is the question to be considered and decided. Intervenors alleged and insisted that the company had breached its contracts by failing and refusing to. perform its obligations in accordance with the terms of the policies, and prayed that they might recover damages for a breach of the contracts. The case as made does not call for a decision as to the correct measure of damages on the breach of the contract by the failure of the insurance company. But the question is on the clear-cut issue made by the record, whether the death claimants are entitled to priority of payment over the living policyholders, as to the funds in the hands of the comptroller-general, who is also ex-officio insurance commissioner of the State. Under the facts of this case, it seems to us that each class of claimants stands upon the same basis. We see- no good reason why a death claimant is entitled to priority over the living policyholders, whose policies have an accrual or cash-surrender value of a certain amount. Upon what basis of law, justice, or equity is the one class entitled to priority over the other?.

It was insisted by one intervenor that she was entitled to priority in payment out of the assets of the mutual company which were acquired by the stock company under the contract of May 2, 1912, and that the assets were impressed with a trust in the hands of the stock company and should be applied to the claims against the mutual company before any of the assets were to be applied to claims against the stock company. The court found, “that the whole amount of unpaid death claims of all classes, not including contested death claims, is about $133,804.83. That all of the claims were based upon policies issued by the mutual company, except claims aggregating about $14,301.54. Health claims unpaid amount to about $400.00; . ■ . that the holders of claims on account of deaths insured against by the mutual company should be paid from the assets of the mutual company prior to the claims of other policyholdera on any account whatsoever; and the court further finds that a sum of money has been paid from the assets of the stock company in satisfaction of death claims based upon policies issued by the mutual company in excess of the amount of the claims now outstanding, and based upon policies issued by the stock company, and for the purpose of equalizing the outlay made by the stock company on account of the liability of the mutual company, as hereinbefore detailed.” The court then “ordered, that death claims upon policies issued by the mutual company and by the stock company be paid out ■ of assets in the hands of said insurance commissioner, whether the same were owned by either the mutual company or the stock company, in priority to and over other claims of policyholders on any account whatsoever; and that •such claims, when based upon policies issued by the mutual company, or upon policies issued by the stock company, shall have no priority one over the other, but the said policies shall be paid upon a basis of equality. Payments shall be so made until said policies shall have been paid in full, or until the assets of said estate shall have been exhausted.”

In the case of a mutual fire-insurance ' company (Taylor v. Ins. Co., 46 Minn. 198, 48 N. W. 772), it was held that “all the outstanding policies at the date of the sequestration of its assets must be deemed to stand on the same footing, and the policyholders are entitled only to the surrender value of the same.” The holder of an unmatured life policy is a creditor of the insurance company issuing the policy,- and is entitled to share with the other creditors in the assets of the corporation. Any question as to the value of unmatured policies, and how such values may be ascertained, is not involved in the present suit. When a life-insurance company is adjudged insolvent, the claims accruing to its policyholders are in the nature of damages for a breach of contract, which occurs at the date of dissolution of the company; and the damages which may be recovered are the value of the claims at that date. See Fuller v. Wright, 147 Ga. 70 (92 S. E. 873); Commonwealth v. American Life Ins. Co., 162 Pa. 586 (29 Atl. 660, 42 Am. St. R. 844). The general rule for the distribution of the assets has been thus stated: “In distributing the assets of an insolvent life-insurance company the general rule is that all creditors stand on an equal footing; and this rule applies between policyholders of all classes, matured and unmatured, though there are cases giving priority to matured policies in mutual companies. Auditors appointed to distribute the assets of an insolvent life-insurance company can not separate mutual policies from ordinary policies in the distribution, if the company has never preserved a separate fund for the payment of mutual policies.” 14 Ruling Case Law, 855 (21); 22 Cyc. 1408 (h); Commonwealth v. Am. Life Ins. Co., 170 Pa. 170 (32 Atl. 405); Shloss v. Metropolitan Surety Co., 149 Iowa, 382 (128 N. W. 384). And see note to Boston & Albany Railroad Co. v. Mercantile Trust &c. Co., 38 L. R. A. 97, 103 (82 Md. 535, 34 Atl. 778). And we think the above states the general rule correctly. There is nothing in the present case to take it out of the general rule. We think, therefore, that the court erred in giving priority to the “death claims” over the claims of holders of life policies in the stock company.

Judgment reversed.

All the Justices concur.