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SAFEGUARD MUTUAL INSURANCE COMPANY v. COMMONWEALTH (02/18/72)

decided: February 18, 1972.

SAFEGUARD MUTUAL INSURANCE COMPANY
v.
COMMONWEALTH



Original Jurisdiction.

COUNSEL

Malcolm H. Waldron, Jr., for plaintiff.

Charles D. Cowley, Assistant Attorney General, with him Robert A. Miller, Assistant Attorney General, Gerald Gornish, Deputy Attorney General, and J. Shane Creamer, Attorney General, for defendants.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer and Rogers. Opinion by Judge Rogers. Concurring Opinion by Judge Crumlish, Jr.

Author: Rogers

[4 Pa. Commw. 477 Page 478]

The defendant, the Commonwealth of Pennsylvania, has filed preliminary objections to Safeguard Mutual Insurance Company's complaint claiming damages in the amount of $12,719,968.

The objections consist of motions "to dismiss" and to strike, based upon the form and content of the complaint, and a demurrer interposing the Commonwealth's

[4 Pa. Commw. 477 Page 479]

    immunity. As we sustain the demurrer, we discuss only that objection.

The complaint alleges that the plaintiff, a mutual fire insurance company, was, after examination, suspended from doing business in Pennsylvania by the State's Insurance Commissioner, that the Commissioner thereafter with the approval of the Attorney General applied to the Court of Common Pleas of Dauphin County for an order of dissolution and liquidation, and that there ensued litigation lasting three years and culminating in a refusal of the relief sought by the Commonwealth. The actions of the Commissioner and the Insurance Department in suspending the plaintiff and seeking its liquidation are characterized as malicious, arbitrary, capricious, whimsical, unlawful and unconstitutional.

The complaint asserts that these activities of the Commonwealth by its Insurance Commissioner and Insurance Department render it liable in trespass for negligence and in assumpsit upon a theory either of "quasicontract" or of "condemnation."

The State's actions complained of were taken pursuant to Section 502 of The Insurance Department Act, Act of May 17, 1921, P.L. 789, as amended, 40 P.S. ยง 202, which pertinently reads as follows: "Whenever any domestic insurance company . . . (e) is found, after an examination, to be in such condition that its further transaction of business will be hazardous to its policyholders, or to its creditors, or to the public; . . . the Insurance Commissioner, after examination, shall suspend the entire business of any such domestic insurance company. . . . Upon suspension of any such organization by the Insurance Commissioner . . . he ...


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