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COMMONWEALTH EX REL. WOODSIDE v. SEABOARD MUTUAL CASUALTY COMPANY (ET AL. (01/17/66)

decided: January 17, 1966.

COMMONWEALTH EX REL. WOODSIDE
v.
SEABOARD MUTUAL CASUALTY COMPANY (ET AL., APPELLANTS)



Appeal from decree of Court of Common Pleas of Dauphin County, No. 266 Commonwealth Docket, 1951, in case of Commonwealth ex rel. Robert E. Woodside, Attorney General, v. Seaboard Mutual Casualty Company.

COUNSEL

Seymour A. Sikov, with him William F. Manifesto, and Wirtzman, Sikov & Love, for appellants.

Cecil P. Harvey, Special Deputy Attorney General, for appellee.

Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Cohen. Concurring and Dissenting Opinion by Mr. Justice Roberts. Mr. Justice O'Brien joins in this opinion. Dissenting Opinion by Mr. Justice Musmanno.

Author: Cohen

[ 420 Pa. Page 238]

The facts in this case are clearly set forth in Commonwealth ex rel. Woodside v. Seaboard Mutual Casualty Company, 415 Pa. 72, 202 A.2d 42 (1964). It was there held that the judgments obtained in actions against the Peoples Cab Company "were proper judgments against Seaboard's insured; Seaboard as insurer was responsible for the amounts of the judgments even though payment thereof was now to proceed through the liquidation proceedings and not by writ of attachment." (Emphasis supplied).

Appellants now urge that they are entitled to be paid in full the face amount of their respective claims with interest. Nothing in our holding in 415 Pa. commands such an interpretation. That case only determined that the face amount of the claims that the claimants have against Seaboard's liquidator is the amount of the judgments secured in the actions against the Peoples Cab Company and payment of those claims were "to proceed through the liquidation proceedings". The statutory liquidator in the liquidation proceedings now has interposed as a defense -- not to the claim or to the amount of the claim but to the extent of liability of the insurer only -- the policy limitations maintained in the insurance policies issued by Seaboard to Peoples Cab. Such a defense to the payment of the face amount of the claim is proper here just as it would have been proper in an action seeking recovery by writ of attachment against the insurer.

The appellants also appeal from the refusal of the statutory liquidator to allow interest on their claims. It is not necessary to go as far as the lower court did when it denied this claim. There the court disposed of the claim by holding that funds in the hands of the

[ 420 Pa. Page 239]

    insurance commissioner are in "custodia legis" and hence debts against the dissolved company do not bear interest. However, the facts indicate no interest has been paid to any claimant because there were not sufficient funds in the hands of the liquidator to pay any interest, and if and when such funds are available interest will be paid to claimants as their rights will appear. This position was taken by the liquidator and conforms with the determination of the Superior Court in the case of Reliance Building and Loan Association Case, 141 Pa. Superior Ct. 315, 318, 14 A.2d 581, 582. (1940): "'"As a general rule, after property of an insolvent is in custodia legis interest thereafter accruing is not allowed on debts payable out of the fund realized by a sale of the property. But that is not because the claims had lost their interest-bearing quality during that period, but is a necessary and enforced rule of distribution, due to the fact that in case of receiverships the assets are generally insufficient to pay debts in full. If all claims were of equal dignity and all bore the same rate of interest, from the date of the receivership to the date of final distribution, it would be immaterial whether the dividend was calculated on the basis of the principal alone or of the principal and interest combined. . . . For that and like reasons, in case funds are not sufficient to pay claims of equal dignity, the distribution is made only on the basis of the principal of the debt. But that rule did not prevent the running of interest during the receivership; and, if, as a result of good fortune or good management, the estate proved sufficient to discharge the claims in full, interest as well as principal should be paid."'" Thus, appellants' claim for interest is not finally disposed of but will be considered when future accounts are stated.

Decree affirmed. Each party to pay own costs.

Disposit ...


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