64 Ohio St. (n.s.) 419

The State of Ohio ex rel. v. Matthews, Superintendent of Insurance.

Securities deposited by insurance company with Superintendent of Insurance — In trust to protect policy holders — Can only be recovered by assignee of company, when — Duty of insurance superintendent in distributing such deposit.

1. Where securities have been deposited with the Superintendent of Insurance, by an insurance company, to be held by such superintendent in trust for the benefit and protection of, and as security for, the policy holders of such company, the assignee of such company, under our insolvent laws, cannot recover such securities from such superintendent without first showing that such company is no longer liable to any of its policy holders.

2. It is the official duty of such superintendent, in the event that such company becomes insolvent, to act, vand perform his trust, by distributing the funds so deposited with him, pro rata among the several policy holders, and when their just claims shall all be satisfied, to pay the balance, if any, to the company, or its assignee or other successor.

(Decided April 16, 1901.)

Petition in Mandamus.

The Cincinnati Life Association doing a life insurance business on the assessment plan, deposited securities to the amount of $5,000.00, with the superintendent of insurance of this state under section 3631 — 25, Bates’ Bevised Statutes.

The association having become insolvent, made a general assignment of its assets for the benefit of all its creditors, and thereupon the assignee applied to the court of insolvency of Hamilton county for an order requiring the superintendent of insurance to turn over the $5,000.00 of securities to such assignee, to be by him distributed among the policy holders pro rata according to the amount due to each one. *420there being no other kind of indebtedness. The court granted the order as prayed for by the assignee, but the superintendent of insurance was no't made a party, and he refused to obey the order, and refused to turn over the securities upon demand of the assignee. Thereupon the assignee caused a petition in mandamus in due form to be filed by the state upon his relation, to compel the superintendent of insurance to turn over the said securities to the assignee. The superintendent of insurance demurred to the petition, on the ground that it does not state facts sufficient to constitute a cause of action against him.

Robertson & Buchioalter, for plaintiff.

J. M. Sheets, attorney general, and J. E. Todd, assistant attorney general, and S. TT. Bennett, for defendant.

Burket, J.

The statute under which the securities were deposited with the superintendent of insurance provides: “The securities deposited with the insurance department pursuant to this section shall be held by the superintendent in trust for the benefit and protection of and as security for the policy holders of such corporation, their legal representatives and beneficiaries.”

There is no provision in this statute for turning the securities over to an assignee or receiver in case of insolvency. On the contrary the securities are required to be held by the superintendent in trust for the benefit and protection of, and as security for, the policy holders. This evidently means that the policy holders are to be protected and secured by the superintendent himself, and not through an assignee or receiver. The duty of the superintendent to secure and protect the *421policy holders in their rights is, by this statute, made a part of his official duties, and he must discharge that duty himself, and cannot shift it upon an assignee or receiver. The appointment of an assignee or receiver by a court cannot have the effect to relieve the superintendent of insurance of a part of his official duties. He is a trustee of the securities for the policy holders, and as such trustee obtained possession of the fund, and holds the same in his official trust capacity, and the appointment of an assignee— another trustee — cannot authorize such later appointee to compel the earlier trustee to surrender such trust fund. The trust adheres to the office of the superintendent of insurance, and its proper administration is a part of the official duties of the office, made so by the general assembly, and a court cannot change those duties, and relieve the superintendent of duties which the general assembly has imposed upon him. The following cases are more or less in point: Ruggles v. Chapman, 59 N.Y., 163, and 64 N.Y., 557; Cooke v. Warner, 56 Conn., 234; Beach on Insurance, Sec. 82; Joyce on Insurance, Sec. 3593.

The assignee stands in the shoes of the company, the assignor, and has the powers only of the assignor as to the collection of outstanding funds. And it is perfectly clear that the assignor, the insurance company, could not recover the securities in question from the superintendent of insurance without first showing that all its policies had been taken up, and that it-was no longer liable to any policy holder. So with the assignee, he must first show that the company is no longer liable to any policy holder before he can recover the securities from the superintendent of insurance.' As was said by the court in Falkenbach v. Patterson, 43 Ohio St., 359, on page 369: “The *422superintendent of insurance should act and perform his trust, * * * and when the trust is fully performed the remainder of the deposit, if any, should be properly disposed ofthat is, it should then, and not till then, be paid over to the assignee.

We think it clear that the assignee is not entitled to the securities held by the superintendent of insurance, upon the facts disclosed in the petition, and the demurrer to the petition will therefore be sustained and the writ refused.

'Writ refused.

Min,shall, C. J., Williams, Burket, Spear, Davis and Shauck, JJ., concurred.

State v. Matthews
64 Ohio St. (n.s.) 419

Case Details

Name
State v. Matthews
Decision Date
Apr 16, 1901
Citations

64 Ohio St. (n.s.) 419

Jurisdiction
Ohio

References

Referencing

Nothing yet... Still searching!

Referenced By

Nothing yet... Still searching!