11 A.2d 887 | Pa. | 1940
When this case was here before,
"(1) In the liquidation of a reciprocal insurance exchange, policy claims having been allowed in the total sum of $291,455.55, is it proper to assess subscribers for their maximum aggregate liability, totaling $2,843,233.27?"
"(3) Does the subscriber's liability include, in addition to the claims allowed on policy losses, a proportionate share of the cost of computing liabilities, administration expenses, collection costs, and other obligations incurred by the statutory liquidator?"
All parties agree that liquidation was required and that the statute2 imposes the duty of liquidation on the Insurance Commissioner. He must convert the assets into cash. The principal assets of this insolvent were, as we said before, "the subscribers' obligations resulting from the Act of April 9, 1929, to pay a sum, in the words of the Act, 'equal to not less than one additional annual premium or deposit charged.' " The policies, on which *409 claims were allowed, were issued between April 9, 1929, the date of the amendment, and May 18, 1933.
The court below ordered an assessment in the full amount of an annual premium. The appellants now complain that it is inequitable at this time to assess nearly ten times the amount of the liabilities. It would be inequitable if the whole assessment could be collected, but the learned court below recognized that many subscribers may not have assets from which their assessments can be collected. The court said: "In fixing the amount of the assessment we must take into consideration the fact that, due to insolvency, bankruptcy, death, etc., the assessment cannot be collected from every subscriber; and it is therefore essential that the amount of the assessment be large enough to permit allowance to be made for such contingencies;Buckley v. Columbia Ins. Co.,
It is the general rule in levying assessments in liquidation proceedings that, unless fixed by statute, the rate to be levied at any given time is discretionary and will be sustained on appeal unless abuse of discretion is shown; in addition to the cases cited in the extract from the opinion of the court below, see Wood v. Standard Mutual Live-Stock Ins. Co.,
Appellants' second question, as stated by them, is: "(2) Is the contingent liability of subscribers in an insolvent reciprocal insurance exchange several only and not joint, so that each is liable only for that proportion of his premiums which the total of claims allowed for losses occurring during the term of his policy bears to the total of premiums earned for that period, irrespective of whether assessments against other subscribers are collectible?" Or, to state it in another form: in the event of insolvency of the exchange, must the subscriber pay his full assessment, if that amount is necessary to raise a fund sufficient to pay all liabilities, or is the statutory obligation satisfied by allowing him to pay only in the proportion that total liabilities bear to the sum of the assessments whether collectible or not?
This insurance business could be conducted as required by the legislation3 on the subject and not otherwise. The Act, as amended April 9, 1929, P. L. 464,
The appellants refer to the William Penn Motor Indemnity Exchange cases,
We all agree that the statute, the power of attorney and the policy contract issuable pursuant to them required each subscriber, in the contingency4 of insolvency, to pay, if needed to satisfy liabilities, an amount equal to one additional annual premium, and that the subscribers may not discharge that obligation by paying a proportionate amount of it as suggested by the appellants in the statement of the second question.5
The remaining question is as follows: "(4) Does the subscriber's liability include contingent liability to claimants who are also subscribers, chargeable with the defalcations of the common attorney in fact?"
The stipulation states that "Out of 539 claims 231 subscribers claim a total of $57,157.55 and 308 non-subscribers claim a total of $214,298.00. Of the pending claims amounting to approximately $20,000, 5 are by non-subscribers and 8 by subscribers."
None of the 231 subscribers seems to have been represented in this court except as the insurance commissioner represents all creditors. It does not appear that the alleged defalcations were the sole cause of the insolvency; depreciation in value of securities and losses much above the average doubtless contributed. In what has been printed, we find nothing to justify the application of the rule that the principal must suffer his agent's default. In a general sense, of course, all the subscribers suffered by the failure of the enterprise; we do not understand the word "chargeable", in the question, *415 to mean that a subscriber participated in a defalcation, but that the word was used in the sense of constructively chargeable; if a subscriber actually participated his claim will require different treatment. As has been said, the statute imposed obligations which each subscriber must be held to have assumed; one of them was to pay at the rate specified for the purpose of raising the fund necessary to liquidate the business. The subscribers are therefore assessable for the benefit of all creditors, whether subscribers or not.
Non-subscribing claimants contend that in distribution they should be preferred to subscribing claimants. This point of course can only become important if the fund raised is not sufficient to pay both classes. As the subscribing claimants have not been heard on the point we think the decision of it must be left until it is raised, if at all, when distribution is made.
The order appealed from is affirmed, costs to be paid by appellants.