Proceeding in the matter of the receivership of the International Re-Insurance Corporation. On motions by the receivers to disallow the claim and amended claim of the liquidator of Keystone Indemnity Exchange and to strike the amended claim. The Court of Chancery, Wolcott, Chancellor, held that claims were barred.
Motion to dismiss amended claim granted.
Where contract of re-insurance between insurance company and insurance exchange provided that definite claim for loss should be made on insurance company by subscribers of exchange within two years after expiration of agreement, and claims of subscribers against insurance company were not filed within the two year period following termination of agreement, claims were barred.
[32 Del.Ch. 30] Motions of the receivers to disallow the claim and amended claim of the Liquidator of Keystone Indemnity Exchange and to strike the amended claim. The motions were argued before Howard Duane, Esquire, Special Master, who filed his report to which both the receivers and the claimant excepted. The matter has come on to be determined upon the exceptions to the Special Master's final report.
C. Edward Duffy, of Wilmington, for the Claimant.
Arthur G. Logan, of Logan, Marvel & Boggs, of Wilmington, for the Receivers.
Motion to Strike the Amended Claim
The original claim of the Insurance Commissioner of Pennsylvania as Liquidator of Keystone Indemnity Exchange (hereinafter called ‘ the Exchange’ ) was filed on December 30, 1941. The receivers filed an exception to the original claim which came on for hearing before the Special Master. It then appeared that a number of substantial legal questions were raised by the exception and to facilitate their clarification the Special Master ordered the claimant to file an amended claim in the form of a complaint. Accordingly, the Liquidator filed an amended claim and the receivers [32 Del.Ch. 31] moved to strike the amended claim on the ground that it was a substantial departure from the original claim of such nature as to be in fact an entirely new claim and thus subject to the provisions of the orders of this court of November 27, 1946 and December 1, 1948 prohibiting the filing of new claims without the consent of the claimant that the claim shall not participate in the partial distributions provided for in said orders.
The original claim had attached to it a document, upon which presumably it was based, called ‘ Treaty of Re-Insurance No. 820’ . This document was executed by International Re-Insurance Corporation but was never executed on behalf of the Exchange. The amended claim has attached to it an instrument called ‘ Memorandum of Agreement-Keystone Indemnity Exchange and International Re-Insurance Corporation-Assessment Bond’ . This agreement was executed by both parties on August 15, 1930.
It appears that the Treaty of Re-Insurance No. 820, an imperfect document on its face, was attached to the original claim in error. When the amended claim was ordered to be filed, the error was discovered and rectified by annexing the proper agreement upon which the claim was based. The Special Master was of the opinion that this was a proper subject of amendment. I agree with him. The motion to strike the amended claim is denied.
Motion to Disallow the Claim
In order to make clear the basis for the motion, it will be necessary to state in brief the facts upon which the claim is predicated. The Exchange was an unincorporated group of subscribers engaged among themselves in the reciprocal or inter-insurance business. It was organized in Pennsylvania in 1919 and continued in the reciprocal insurance business until June 8, 1933 when it was dissolved by the Court of Common Pleas of Dauphin County, Pennsylvania, after a finding of insolvency. The Insurance Commissioner of [32 Del.Ch. 32] Pennsylvania was ordered to take possession of its property and to liquidate its business.
Reciprocal or inter-insurance is a system of insurance under which several individuals may underwrite each other's risks against various hazards through an attorney-in-fact common to all, under an agreement that each underwriter acts separately and severally and not jointly with any other. All the subscribers are insured ...