Lucas v. Pittsburgh Life & Trust Co.

Sims, J.,

after making the foregoing statement, delivered the following opinion of the court:

The questions presented by the assignment of error will be disposed of in their order as stated below.

1. Is the decree under review erroneous in its holding that the plaintiff is not entitled upon the facts appearing in the record before us to any relief in this suit against the Metropolitan Life Insurance Company?

The question must be answered in the negative.

The Metropolitan Life Insurance Company defended upon two grounds only,—

*269 1st. That proof of the alleged death of the assured has not been furnished.

2nd. That the contract alleged in the bill shows on its face that it does not embody any actual assumption by this defendant of the obligation of the policy of insurance sued on.

We are of opinion that the 1st ground is not well taken. In view of the letter of this defendant, in reply to the letter of the beneficiary informing such defendant of the death of the assured, in which reply nothing was said requiring proof of such death, but the position was taken that this defendant was not liable upon another ground, wholly independent of such proof, we think that such defendant waived all objection to the insufficiency of the proof of the death. West Rockingham, etc., Ins. Co. v. Sheets & Co., 26 Gratt. (67 Va.) 854. See also Snyder v. Supreme, etc., Circle, 122 Tenn. 248 , 122 S. W. 981 , 45 L. R. A. (N. S.) 209, upon the principle involved, where, as in the instant case, the record is silent as to the elements which, if present, would apply the waiver on the ground of estoppel, because of the misleading of the plaintiff to her prejudice.

We are, however, of opinion that, upon the facts so far as they appear in the record before us, the 2nd ground is well taken. We think that it appears on the face of the contract of the Metropolitan Life Insurance Company with the Pittsburgh Life and Trust Company, set up in the bill, that the former company did not thereby assume the obligation of the policy of insurance sued on, but only agreed to do so in the event that the assured became privy to such contract by himself assenting thereto and agreeing and contracting with such corporation as stipulated in such contract. This, so far as appears from the record before us, the assured never did. Therefore, so far as the record before us discloses, *270 the Metropolitan Life Insurance Company has never assumed the obligation of said policy of insurance.

The petition, indeed, claims that the Pittsburgh Life and Trust'Company made deposit with the Treasurer of Virginia of $50,000.00 of securities under section 4211 of the Code, on which the plaintiff, along with other Virginia policyholders, had a lien under section 4214 of the Code; and that the Metropolitan Life Insurance Company has withdrawn all of such securities from the hands of the State Treasurer under the provisions of section 4217 of the Code. This does not appear from the allegations of the bill or otherwise from the record before us, so that we cannot adjudicate upon the effect that such facts might have upon the case. We may say, however, that unless the circumstances were so exceptional as to take the case out of the general rule applicable in such ease, the deposit mentioned could not have been legally withdrawn by the Metropolitan Life Insurance Company under the provisions of section 4217 of the Code unless it had been made to appear in that proceeding that the obligation of said policy had been in fact assumed by such company, and not merely agreed to be assumed upon certain conditions not contained in the policy. Actual assumption of the policy obligation is the burden that section 4217 of the Code requires to be taken upon itself by the corporation withdrawing such deposit; and, notwithstanding that the contract in evidence does not contain appropriate language to evidence such an assumption, the actual assumption will, in general, be presumed, when such a deposit has been withdrawn under such statute. Am. Bonding Co. v. Am. Surety Co., 127 Va. 209, 221 , 103 S. E. 599 .

On the other hand, if the deposit mentioned was made and has not been withdrawn, the plaintiff, not *271 withstanding the failure to prove in this suit the actual assumption aforesaid, has a lien on the deposit under section 4214 of the Code, along with other Virginia policyholders affected, and is entitled to enforce the same by suit in the Circuit Court of the city of Richmond.

2. Did the decree under review err in setting aside the judgment against the Pittsburgh Life and Trust Company entered upon the bill taken for confessed as to it, when it was subsequently' made to appear that such corporation, by decree of the Pennsylvania court having jurisdiction so to do, had been decreed to be insolvent and had been dissolved as of May 1, 1917, prior to the institution of this suit and prior to the death of the assured?

The question must be answered in the negative.

The insolvency and dissolution of an insurance company “ipso facto cancels its outstanding policies.” Johnson v. Button, 120 Va. 339, 343 , 91 S. E. 151 ; 22 Cyc. 1404; Carr v. Hamilton, 129 U. S. 252 , 9 Sup. Ct. 295, 32 L. Ed. 671 ; Com. v. American Life Ins. Co., 162 Pa. 586 , 29 Atl. 660 , 42 Am. St. Rep. 844 ; People v. Security Life Ins. Co., 78 N. Y. 114 , 34 Am. Rep. 522 .

In 22 Cyc., supra (p. 1404), this is said: “The insolvency of an insurance company constitutes a breach of contract on its part, and on dissolution of the company claims of policyholders are debts due in praesenti.”

In Com. v. American Life Ins. Co., supra ( 162 Pa. 586 , 29 Atl. 660 , 42 Am. St. Rep. 844 ), this is said: “A life insurance company when adjudged insolvent and dissolved, has broken its engagement with its policyholders and becomes liable to them in damages for such breach. The measure of damages is the net value of the policies, without regard to the health of the holder, calculated as of the date of the dissolution of the com *272 pany, according to the tables of mortality used in the business of life insurance, less outstanding premium notes, if any.”

■ The decree under review is in entire accord with our holding upon the question under consideration, and with the authorities we have above cited.

It is urged in argument for the plaintiff that the aforesaid contract between the receiver and the Metropolitan Life Insurance Company prevented the Pittsburgh Life and Trust Company from being wound up as insolvent, so that, it is contended, the principles announced in the authorities just cited do not apply to the instant case. But an examination of the aforesaid contract, especially of the second paragraph thereof quoted in the statement preceding this opinion, discloses that the contract does not prevent the Pittsburgh Life and Trust Company from being wound up as insolvent, quoad policyholders by whom the agreement of the Metropolitan Life Insurance Company to assume the obligation has not been accepted as provided for in the contract. On the contrary, such winding up of the affairs of the former corporation quoad such policyholders is distinctly provided for. And, as we have above held, the plaintiff falls within this class of policyholders.

As appears from the decree under review, the court below has not decided whether it can properly enter any decree against the Pittsburgh Life and Trust Company, hence that question is not before us for adjudication.

For the reasons above stated the decree under review will be affirmed, with the modification, however, that the bill shall not stand dismissed and shall not be dismissed as against the Metropolitan Life Insurance Company prior to further hearing, if the plaintiff should desire to and shall, within a reasonable time, amend the bill by allegation to the effect that such corporation *273 •withdrew the deposit with the State Treasurer above referred to upon the showing in that proceeding that the corporation had assumed the contingent liabilities mentioned in section 4217 of the Code, but if such amendment is not made within a reasonable time the court below shall order the bill to be dismissed as against such corporation; and we will further provide in our decree that, even if the plaintiff shall not elect to so amend the bill, nothing in the decree under review nor in the decree we shall enter shall be construed to bar the plaintiff from proceeding by suit in the Circuit Court for the city of Richmond to enforce any rights he may have, if any, under section 4214 of the Code, if such deposit or any portion thereof still remains in the hands of the State Treasurer.

Decree under review modified and affirmed.