The opinion of the court was delivered by: VANARTSDALEN
VANARTSDALEN, District Judge.
Defendant, United Bonding Insurance Co. (hereafter called United), by its statutory liquidator who was appointed by the Indiana State Court, contends that the Full Faith and Credit Clause of the United States Constitution (Article IV, § 1) requires a stay of the proceedings before this court.
Plaintiff filed this action against Noe Construction Corporation seeking payment for materials supplied to Noe in Pennsylvania on a project insured by the Federal Housing Administration. United was the surety on the required materialmen's bond, and as such was joined as a co-defendant in this action on the bond. Plaintiff alleges diversity of citizenship and a "federal question" as a basis for jurisdiction. Whether or not this action may be based on a "federal question", the bond expressly providing for concurrent state and federal jurisdiction, need not be decided since there is clear diversity of citizenship of all parties to this action.
Prior to this action being filed, United, an Indiana corporation, had been declared insolvent, and the Indiana State Court appointed the Department of Insurance of Indiana as the statutorily prescribed liquidator. The Statutes of Indiana, Ind. Stat. § 39-3410 (1965) (Burn's), IC 1971, 27-1-4-10, and Pennsylvania, Pa. Stat. tit. 40, § 202 (Supp. 1971), both provide that where a statutory liquidator is appointed for an insolvent insurance company in that state, the liquidator becomes vested with title to all of the insolvent's property, and all claims against the insolvent must be presented to the liquidator, and determined according to special statutory administrative procedures both as to validity and priority, if any, of distribution.
United contends that because Pennsylvania and Indiana have similar statutes, the Full Faith and Credit Clause of the United States Constitution requires this Court, sitting in Pennsylvania, to accord the Indiana liquidator the same relief as would be accorded a Pennsylvania liquidator were the insolvent a Pennsylvania corporation. The effect of United's contention is that the claim against the insolvent would have to be presented to the liquidator in Indiana and determined by the Indiana procedure.
In Arroyo v. Chesapeake Insurance Company, 209 Pa. Super. 174, 224 A. 2d 101 (1966), an attachment issued in Pennsylvania against the property of an insolvent Maryland insurance company for whom a statutory liquidator had been appointed by the Maryland courts was dissolved. The court held that since Pennsylvania law would expressly prohibit such an attachment against property of a Pennsylvania insolvent insurance company for whom a statutory liquidator had been appointed in Pennsylvania, Full Faith and Credit required the same relief be afforded to the foreign statutory receiver. The Court pointed out that:
Arroyo relied substantially on Clark v. Williard, 294 U.S. 211, 55 S. Ct. 356, 79 L. Ed. 865 (1935), even though the final result in Clark was opposite that of Arroyo. In Clark, the Supreme Court held that a Montana resident could successfully issue an execution in Montana against property of an insolvent Iowa corporation. Justice Cardozo speaking for the Court stated:
"Iowa may say that one who is a liquidator with title, appointed by her statutes, shall be so recognized in Montana with whatever rights and privileges accompany such recognition according to Montana law. For failure to give adherence to that principle, we reversed and remanded when the case was last before us. [ Clark v. Williard, 292 U.S. 112, 54 S. Ct. 615, 78 L. Ed. 1160 (1934)]. Iowa may not say, however, that a liquidator with title who goes into Montana may set at naught Montana law as to the distribution of Montana assets, and carry over into another state the rule of distribution prescribed by the statutes of the domicile." Id. at 215, 55 S. Ct. at 358.
The application of Clark to the instant case merely requires that Pennsylvania recognize the status of the Indiana liquidator of United, and apply Pennsylvania law to that status. Pennsylvania law could provide that in the event a foreign liquidator comes into Pennsylvania, proceedings will be stayed against the insolvent and claimants must present their claims to the liquidator in Indiana and in accordance with Indiana law. The Pennsylvania statute does not so provide. In addition there is no policy reason to support the creation of such a provision. The present action will in no way affect priority of claims or given any preference to plaintiff. The action is merely to determine the validity of the claim. Therefore, Arroyo, involving attachments, is not apposite to the facts of this case and does not lend support to United's contention.
The nature of the action brought here militates against the granting of a stay in the absence of a state mandate. This is an action against two defendants, alleged to be jointly obligated on a performance bond for a construction project in Pennsylvania. The bond expressly provides that
"3. No suit or action shall be commenced hereunder ...