Majority
p. 23WHRITNER v. UNIVERSAL LIFE INSURANCE COMPANY. N. Y. Supreme Court, Second Department; Special Term, October, 1877.
Headnote
Fbivolous Answeb.—Injunction in Pboceedings to wind up an Insubance Company.—Defenses.In an action on an insurance policy, the company answered that it could not pay the money due, because it was under injunction at suit of the attorney general, in proceedings to wind it up for insolvency, whereby it was restrained from exercising any of its corporate powers, or paying any moneys except salaries of em ployees—Held, insufficient as against the plaintiff; since he had not been enjoined. Defendant could not take advantage of proceedings instituted against it by others to hinder plaintiff from perfecting his rights.[1]
The statute does not authorize the court to stay proceedings by creditors, pending an application to wind up the affairs of the company.
Motion for judgment on a frivolous answer.
Plaintiff commenced an action against defendant, a corporation duly created under the laws of the State of New York, to recover the sum of $1,000 the amount due from defendant upon a policy of insurance. The answer alleged that defendant’s corporate functions
p. 24
had been suspended, and for a further, separate and distinct defense set forth as follows :
“Defendant further answers that it is a corporation duly organized under the laws of the State of New York and authorized by law to make insurance upon the lives of persons. That on or about August 22, 1877, the attorney general of the State- of New York, duly commissioned and sworn, made a certain petition unto this court and stated in said petition that this defendant was insolvent and unable to pay its debts and upon information and belief that the assets of the said defendant were insufficient to reinsure its outstanding risks and the said petition prayed that this defendant might be restrained as hereinafter stated.
“ That thereupon, and on or about August 23, 1877, the Honorable J. S. Laud on, one of the justices of this court, granted a certain injunction, which was duly served upon this defendant, whereby this defendant was ordered restrained and enjoined from exercising any of the corporate rights, privileges, and franchises of such company except receiving and paying moneys as thereinafter allowed, and from paying out, or in any way transferring or delivering to any person any of the effects, money or property of such company except salaries of employees and officers then due, and from collecting or receiving any debts or demands except interest, .agents, balances, and premiums, until the court should otherwise order, and that such order was at the time of the commencement of this action and still is in force.”
Plaintiff moved for judgment on the answer as frivolous.
Winfield, Leeds & Morse, for plaintiff.
Alexander & Green, for defendant.
To its own agreement the defendant avers that the people have instituted proceedings
p. 25
to place it in the hands of a receiver. To this it may be replied:
1. That the proceeding against it is a special one, in which the court acts under the statute. No provision in the statute enables the court to stay proceedings by other creditors pending the application.
2. It would certainly be remarkable if proceedings by others to wind up the company, could interfere with the plaintiff’s rights.
3. Neither the people nor a creditor has enjoined the plaintiff, and certainly the defendant is in no position to set up proceedings against it by others.
Plaintiff is entitled to judgment. Motion granted with $10 costs.
This judgment was affirmed by the general term of the second department, December, 1877.