The American Steam Boiler Insurance Company is a casualty company organized under the provisions of chapter 463 of the Laws of 1853. Pursuant to the provisions of that act it had deposited with the superintendent of insurance the sum of $100,000 in trust for the benefit of its policyholders. In November, 1893, a judgment was entered in this action dissolving the franchises of the company, forfeiting its corporate privileges and appointing Henry S. Ward as receiver. After the dissolution of the corporation the superintendent of insurance collected $3,000 interest that matured upon the deposits made with him for the benefit of the policyholders. The receiver then demanded of the superintendent the transfer of such interest to him, which was refused, and thereupon an application was made to the court for an order compelling such transfer. This motion was denied at the Special Term, but the order was reversed in the General Term with leave to renew the motion. (People v. Am. S.B. Ins. Co., 81 Hun, 498" court="N.Y. Sup. Ct." date_filed="1894-11-16" href="https://app.midpage.ai/document/people-v-american-steam-boiler-insurance-5507586?utm_source=webapp" opinion_id="5507586">81 Hun, 498.) Upon such renewal the motion was granted, and the same has been affirmed in the General Term.
The right of the receiver to a transfer to him of the fund or security deposited with the superintendent of insurance depends upon the construction to be given to the provisions of chapter 690 of the Laws of 1892. Under the statute of 1853 it has been held that the superintendent holds the securities deposited by virtue of a statutory trust created for the benefit and protection of the policyholders, and that the receiver when appointed is not entitled to have the fund turned over to him until the rights of the policyholders have
been settled. (Ruggles v. Chapman, Supt., etc., 59 N.Y. 163" court="NY" date_filed="1874-12-01" href="https://app.midpage.ai/document/ruggles-v--chapman-3620748?utm_source=webapp" opinion_id="3620748">59 N.Y. 163;People ex rel. Ruggles, Receiver, etc., v. Chapman,
64 id. 557; In the Matter of the Atty.-Genl. v. The N. Am. L. Ins.Co., 92 id. 654; In the Matter of the Guardian Mut. L. Ins.Co., 13 Hun, 115; affd., 74 N.Y. 617" court="NY" date_filed="1878-10-01" href="https://app.midpage.ai/document/matter-of-guardian-mutual-life-insurance-company-3577033?utm_source=webapp" opinion_id="3577033">74 N.Y. 617.) By chapter 902 of the Laws of 1869 certain life insurance companies were authorized to make special deposits with the insurance department, in addition to the amount of deposits required by law, for the purpose of protecting the holders of registered policy and annuity bonds issued under the provisions of the act. In sections 7 and 8 of that act provisions were made for the conversion of the deposit into money by the superintendent and treasurer in case of insolvency, or in case it should be found that the issuing of additional policy and annuity bonds was injurious to the public interest, and pay the same over to the receiver to be distributed under the directions of the court, first, to the payment of the registered policy and annuity bondholders of the company, and then apply the surplus, if any, with the other assets to the payment of its just debts. Under this act it has been held that as to such companies the receiver was entitled to the deposit. (In the Matter of the Application of the Atty.-Genl. v. The N.Am. L. Ins. Co., 80 N.Y. 152" court="NY" date_filed="1880-02-24" href="https://app.midpage.ai/document/matter-of-atty-genl-v--north-am-l-ins-co-3588117?utm_source=webapp" opinion_id="3588117">80 N.Y. 152; Same v. Same, 82 id. 172;Same v. Same, 85 id. 485; Smyth v. Munroe,
84 id. 354-361.) The American Steam Boiler Insurance Company is not incorporated under the provisions of the latter act, has made no special deposit for the benefit of the holders of registered policy and annuity bonds and has issued no such policies or bonds. It consequently is not subject to the provisions of that act. Such was the law as it existed up to the time of the revision of 1892. Have the rights of the superintendent been changed in this regard? By section 70 of the act power is given to thirteen or more persons to become a corporation for the purpose of making various kinds of insurance, enumerating them, in which life and casualty are each particularly specified. The next section pertains to the organization of such companies, and the next to the withdrawal of securities upon
relinquishment of the business of the company. These sections are doubtless general, having reference to all of the various kinds of insurance authorized by the provisions of the act. Then follows section 73, which provides for special deposits with the superintendent in addition to the amount required by law for the benefit of the holders of registered policies and annuity bonds. And then sections 74 and 75, both pertaining to registered policies and annuity bonds. These sections unquestionably have reference only to that class of insurance and do not apply to companies that do not issue registered policies or annuity bonds. We then come to section 76, which provides that "If at any time the affairs of any such depositing corporation shall, in the opinion of the superintendent of insurance, appear to be in such a condition as to render the issuing of additional policies andannuity bonds by the corporation injurious to public interest, such corporation shall be deemed insolvent and the superintendent shall report the fact to the attorney-general, who shall bring such action or institute such proceedings as may be authorized by law to be taken against an insolvent insurance corporation. If in any such action or proceeding it shall appear to the satisfaction of the court that the assets and funds of the corporation are not sufficient to justify its further continuance of the business of insuring lives, granting annuities and incurring new obligations as authorized by its charter, it shall enjoin and restrain the corporation from the further transaction of its business and appoint a receiver of its assets and credits, who, upon filing his bond to the people of the state in an amount and with sureties approved by the court conditioned for the faithful performance of his duties, shall take possession of all such assets and credits, including the securities deposited in the insurance department." Here we have express statutory authority for the receiver to take possession of the deposits, but do the provisions of the section have reference to insurance companies generally, or are they limited to the companies issuing registered policies and annuity bonds? This section and the one that follows it are
a substantial reproduction of sections 7 and 8 of chapter 902 of the Laws of 1869, which, as we have seen, have reference only to companies issuing registered policies and annuity bonds. They immediately succeed sections 73, 74 and 75, which also pertain to the same class of insurance. Section 76 refers to them as "such depositing corporations," and speaks of annuity bonds; thus, as we think, referring to that particular class of insurance, and not to insurance companies generally. If we are correct in this view, it follows that the provisions of section 76 have no application to casualty insurance companies, and that consequently there has been no change in the statutes affecting the right of the superintendent to retain the funds or securities deposited with him until the rights and equities of the policyholders are fully determined and adjusted.
We see no reason why the interest must not follow the principal. By section 14 of the act the corporation, so long as it shall continue solvent and comply with the laws of the state, shall be permitted by the superintendent to collect the interests or dividends upon its deposits. This, doubtless, has reference to a solvent corporation still continuing active business. It has no application to a corporation that has ceased to exist and has been dissolved by a judgment of the court. Thereafter the superintendent holds the deposits or securities under the trust created by the statute for the benefit of the policyholders, and as such is entitled to collect the interest thereafter accruing and treat it as a part and parcel of the trust in his hands.
This motion does not conform to the provisions of section 72 of the act, and consequently it need not be here considered.
The orders of the General and Special Terms should be reversed and the motion denied, but without costs to either party.
All concur.
Orders reversed.