Kelsey v. Cogswell

NEWMAN, District'Judge. The only question in this case is as to the'relative priority of what are called “fire losses” and losses for “unearned premiums.” I think the master found correctly that the $10,000 deposited in the state treasury was so deposited mainly and primarily for the security of policy holders who sustained losses by fire, and such losses should be paid in preference .to claims for unearned premiums. The only difficulty about this, and the opposing view which raises doubt, is whether, now that the company has become insolvent and this $10,000 is brought into a court of equity for distribution, it should not be distributed pro rata to both classes of claimants, as being all simple-contract creditors, without judgment or other lien. This contention has been ably presented; but, as I have stated, I think the master was correct' in taking the former view. This finding seems to me to be in consonance with the statutes of the state in reference to this deposit. The machinery provided for making this fund available is all for'the benefit of those who have fire losses, which indicates that this was the main purpose in the mind of the legislature for which this fund should be available. It is a loss by fire which is “insured against.” Code Ga. § 2036. The argument that the provision which requires the insurance company to settle all claims on policies, whether losses have occurred or not, before it will be allowed to withdraw the bonds from the treasury (Code Ga. § 2041), has weight, but is not sufficient, in my judgment, to overcome the evident intent in the act of the legislature that this deposit should be held primarily for the protection of policy holders against fire losses. The report of the master will be confirmed. A decree may be taken in accordance with this conclusion. The decree should also [607] require the delivery to the receiver of the bonds deposited with the state treasurer, such bonds to be sold, and the proceeds to be deposited by the receiver in a national bank in Atlanta, and to be paid out by the receiver in accordance with the priorities stated in the master’s report.