In Re the Liquidation of National Surety Co.

27 N.E.2d 505, 283 N.Y. 68, 1940 N.Y. LEXIS 914
CourtNew York Court of Appeals
DecidedMay 28, 1940
StatusPublished
Cited by20 cases

This text of 27 N.E.2d 505 (In Re the Liquidation of National Surety Co.) is published on Counsel Stack Legal Research, covering New York Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re the Liquidation of National Surety Co., 27 N.E.2d 505, 283 N.Y. 68, 1940 N.Y. LEXIS 914 (N.Y. 1940).

Opinion

Finch, J.

A creditor, residing in the State of Mississippi, has filed in this State in a liquidation proceeding involving assets of National Surety Company a sworn proof of claim in support of a debt arising in Mississippi. The only support for the proof of claim is a judgment entered by default in the State of Mississippi reciting proof of service in the State of Mississippi upon the Superintendent of Insurance of that State as the alleged representative of the National Surety Company previously dissolved in the State of New York.

On September 14, 1932, National Surety Company executed a bond in the sum of $6,000 for an administrator of the goods, chattels, etc., of a decedent in favor of the State of Mississippi, conditioned that the administrator should faithfully discharge his duties as administrator. The administrator received the sum of $5,847, the proceeds of a war risk insurance policy covering the life of decedent as a soldier of the United States in the World war.

On June 1, 1934, the Superintendent of Insurance of the State of New York was directed by order of the Supreme Court to take possession forthwith of the property and liquidate the business and property of the National Surety Company. This order fixed April 1, 1935, as the last day for the filing of claims, finally dissolved the company, and provided for the vesting of title in the Superintendent as liquidator of all of the property, contracts and choses in action of the company, and permanently enjoined all suits and proceedings against the company.

On April 5, 1934, the administrator was removed and an administratrix de bonis non substituted, and on February 18, 1935, a proof of claim was filed with the liquidator of the National Surety Company in this State in the sum of $1,847, with interest, wherein was recited the removal of the administrator, the appointment of the administratrix, and that $4,000 of said $5,847 had been distributed but that the administrator had been directed to pay over to *73 the administratrix the remaining sum of $1,847, which he had failed to do. On September 11, 1935, this administratrix was removed and another administrator appointed. On October 3, 1935, the claimant filed with the liquidator an amended proof of claim alleging that the distribution of the $4,000 was made to one not the widow, and that Minnie-. Cooper was the lawful surviving widow of decedent and! entitled to the entire estate, and the claim as amended was’ then made for the entire amount of the original estate as received by the administrator.

On March 12, 1936, an action was commenced in the State of -Mississippi by Minnie Cooper and others, as plaintiffs, against the National Surety Company, alleging due service of summons obtained by service on the Superintendent of Insurance of the State of Mississippi, and thereafter a final decree on default was taken, which decree also recited the appointment of the original administrator, his alleged wasting of the estate, adjudged that Minnie Cooper was the sole distributee of the estate, and that she was entitled to recover from the National Surety Company the amount of the original estate, with interest, namely, the sum of $6,709.52, for which sum the claimant was forthwith directed to file a claim with the Superintendent of Insurance of the State of New York, as liquidator of the National Surety Company. The liquidator recommended the disallowance of the amended claim, to which claimant filed objections. The issues thus raised were referred to a referee to hear and report. No evidence was offered by claimant on the hearing before the referee in substantiation of the amended claim, except the production of the judgment taken on default in the State of Mississippi through service upon the Superintendent of Insurance of the State of Mississippi as representing the National Surety Company theretofore dissolved in the State of New York. It is conceded that prior to the issuance of the administrator's bond involved herein National Surety Company had complied with the laws of Mississippi governing the administration of foreign insurance companies which, among other *74 things, appointed the Superintendent of Insurance of the State of Mississippi agent for the service of process as required by the Mississippi statutes, including a term of three years beyond dissolution, and that National Surety Company had been duly licensed to engage in business in the State of Mississippi..

The Special Term confirmed the disallowance of the claim by the referee and the Appellate Division unanimously affirmed.

Several objections are presented to the allowance of the claim. Of these only the first question need be considered, namely, is the final decree entered in an action instituted in the State of Mississippi against the National Surety Company, after its dissolution in the State of New York, binding on the liquidator in the State of New York and valid against assets in his possession in this State?

At common law all actions, either pending or thereafter instituted, abate upon the final dissolution of a corporation and judgments subsequently entered against the dissolved company are null and void. Also all persons who had contracted or done business with the dissolved corporation are charged with knowledge of the statutes governing the termination of its corporate existence upon dissolution, and of the statutes governing its liquidation, and are bound thereby. (People v. Globe Mut. Life Ins. Co., 91 N. Y. 174, 179; Jemison v. Citizens Sav. Bank, 122 N. Y. 135, 140.) This is likewise true as to persons outside of the State of the incorporation of the dissolved company. (Relfe v. Rundle, 103 U. S. 222, 225; Canada Southern Ry. Co. v. Gebhard, 109 U. S. 527, 537; Martyne v. American Union Fire Ins. Co., 216 N. Y. 183, 193.)

Under the above circumstances, since the statutes of New York governing the dissolution of delinquent insurers provide that an order may be obtained directing the immediate cessation of the corporate existence, the corporate life of National Surety Company ceased for all purposes everywhere upon the obtaining of such an order by the Superintendent of Insurance and the common-law rule became *75 applicable that upon dissolution of the corporation all actions pending or thereafter instituted abate and judgments thereafter entered are null and void. (Pendleton v. Russell, 144 U. S. 640, 645; First National Bank v. Colby, 88 U. S. 609, 615; Rodgers v. Adriatic Fire Ins. Co., 148 N. Y. 34, 38.)

Claimant contends, however, that, because the State of New York has provided in its General Corporation Law (Cons. Laws, ch.

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Bluebook (online)
27 N.E.2d 505, 283 N.Y. 68, 1940 N.Y. LEXIS 914, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-liquidation-of-national-surety-co-ny-1940.