223 A.D. 378 | N.Y. App. Div. | 1928
The policy of the State of New York expressed in statutes and decisions is to avoid expensive receiverships for the distribution of the assets of insurance companies, a method which experience has proved wasteful when compared with liquidation through the Department of Insurance. (Reed v. Squire Co., Inc., 217 App. Div. 494; Matter of Casualty Co. of America [Rubin Claim], 244 N. Y. 443; Matter of Knickerbocker Life Insurance Co., 209 App. Div. 524.) So far, therefore, as the orders appoint receivers they are unauthorized and must be reversed.
The purposes of the statute are embodied in a report of the New York State Senate Committee of 1883, which contains the following:
*382 “ The enormous expenses incurred in the administration of the fund — these expenses being of two kinds, legal expenses, so called, which include fees to counsel, referees, receivers and court fees; other expenses consisting of office rent, clerk hire, traveling expenses, payments to experts, bookkeepers and accountants, maintenance and repairs of real property, and payment of taxes on the same. Large items of miscellaneous expenditure not included in the foregoing expenses. * * *
“ To remedy these various evils under the laws as they exist, and as they are administered today, is the province of the wise legislator. The Committee respectfully suggests that in lieu of the numerous receivers variously appointed to administer the trusts of insolvent corporations that a department of the State government should be established for the discharge of the duties in the capital of the State and under rules established and principles laid down for the administration of the various trusts now scattered in the hands of receivers, and the various trusts that are likely hereafter to arise from the insolvency of corporations.” (See N. Y. Sen. Doc. 1883, vol. 2, No. 38, pp. 8, 9.)
With the reversal of the part of the orders referred to, the direction that all future applications as to matters embraced in the receiverships are to be made to the justice who signed the orders also fails.
The provisions allowing the referees a roving commission to act as commissioners to take testimony without the State of New York, upon the consent of the attorney for the Superintendent of Insurance and of the attorney for any claimant, should be eliminated and the question left to the court to decide in each instance. It seems to us that the advisability of incurring expense to obtain depositions and of paying same out of the funds of the companies being liquidated, should be determined in each instance by the court after an examination of the facts upon which the application is based. Such course will serve as a proper protection of the funds.
The deposited assets, as well as the “ free ” assets which have come into the hands of the Superintendent of Insurance, should first be applied to the payment of local claims and, possibly, of local creditors. Thereafter, in the ordinary case, the “ surplus ” is turned over to the liquidating officer or agent in the home jurisdiction of the foreign company. This, however, is not an ordinary case. It appears that the Russian Soviet government has confiscated the assets of the foreign parent companies and extinguished claims existing within the jurisdiction of the government against the parent organizations. Ordinarily the New York
In the cases before us, however, it may be that the “ surplus ” would not be distributed in Russia among the creditors and stockitolders. Their rights and everything of such character have been, it seems, confiscated.
Turning in this situation to the statutes and the decisions interpretative of them, we find that equity and justice are the ends to be served. If they cannot be served by the Superintendent of Insurance acting with the usual powers and duties of an ancillary receiver, there must be adopted a plan adequate to meet the necessities of the case.
That the Superintendent of Insurance contemplated submitting a plan appears from the briefs filed here on his behalf. It is stated that he was deterred by the disposition of the matter at Special Term. Under the circumstances, we believe that to this extent he may renew his application at Special Term and to the justice at the time presiding, for further consideration and disposition. It is the duty of the Superintendent of Insurance to conserve the assets of the companies; but his disposition of the claims and other matters is subject to the direction and approval of the court.
He is a public trustee of the funds involved; and it is the duty of the court to supervise his acts and conduct in the premises. (Matter of Casualty Co. of America [Rubin Claim], 244 N. Y. 443.) We accordingly are of the opinion that, regardless of whether the appeals taken are technically sufficient to raise all questions embraced in the confirmation of the report of the Superintendent of Insurance by the orders involved, all disputed questions as to claims, expenses, allowances and other matters should be heard before the referees appointed.
This applies also to questions as to the classification of claims, complaint being made that the Insurance Department has erroneously given to certain claims or claimants the standing ordinarily held by creditors in the parent jurisdiction. It is asserted that the department has failed to give proper effect to the peculiar circumstances arising as a result of the actions of the Soviets.
The assertion that a jury trial is a matter of right in questions arising as to the disposition of claims, allowances and the like, is obviously and basically without merit.
Other questions which are raised as to the disposition of funds
We agree that the funds are not to be held “ indefinitely,” if justice is best served by a more speedy distribution. It may be most equitable to pay all the claims made rather than to hold the funds for a so-called government which would prevent any such “ surplus ” coming into the hands of those rightfully entitled thereto.
The orders should, therefore, be modified as indicated above. In addition, the provisions for receiverships should be ehminated. All disputed questions as to the amount and standing of claims, allowances and the like, are to be heard before the referees. In other respects the matters should be remitted to Special Term, to be disposed of in connection with the adoption of an adequate plan for a just and final disposition.
Dowling, Finch, McAvoy and O’Malley, JJ., concur.
In each case: Order modified as indicated in opinion. Settle order on notice.
