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Bohlinger v. Ward & Co.

Decided: March 24, 1955.

ALFRED J. BOHLINGER, SUPERINTENDENT OF INSURANCE OF THE STATE OF NEW YORK, ETC., PLAINTIFF-APPELLANT, AND CROSS-RESPONDENT,
v.
WARD & COMPANY, A NEW JERSEY CORPORATION, DEFENDANT-RESPONDENT AND CROSS-APPELLANT



Clapp, Jayne and Francis. The opinion of the court was delivered by Jayne, J.A.D.

Jayne

[34 NJSuper Page 585] The Preferred Accident Insurance Company of New York was organized and empowered to issue policies of casualty insurance under the Insurance Law of the State of New York. The company acquired a license to pursue its business in this State, and in furtherance of that undertaking it entered into an "Agency Agreement" on July 1, 1949 by the terms of which the defendant was authorized to receive and accept proposals for insurance on behalf of the company, to collect and give receipts for the premiums and "to retain out of premiums collected, as full compensation on business so placed with the company" the therein specified allowances.

The agreement embraced, inter alia , terms of present pertinency which we quote:

"It is a condition of this Agreement that the Agent shall refund ratably to the Company, on business heretofore or hereafter written, commissions on canceled liability and on reductions in premiums at the same rate at which such commissions were originally retained.

(2) For the convenience of the Agent the Company will send monthly to the Agent a record of the business of the month placed by the Agent with the Company, the premiums on which if collected by the Agent, shall be paid to the Company promptly thereafter.

(5) The Company reserves the right to cancel any policy or other contract of insurance or suretyship by direct notice to the insured or obligee."

On April 20, 1951 the Superintendent of Insurance of the State of New York instituted a proceeding against the company in the Supreme Court, New York County, pursuant to Article XVI of the New York Insurance Law to terminate the company's existence and to appoint the superintendent as its statutory liquidator. An order to show cause containing the conventional restraints was issued, a hearing held, and a formal order granting the relief prayed for in the superintendent's petition was filed on April 30, 1951.

On March 7, 1952 the present action was instituted by the liquidator in the Chancery Division of this court to oblige the defendant to account to him for premiums and all other sums of money remaining due and unpaid to the insolvent company.

The basic issues were succinctly stated in the pretrial order, and it is expeditious to quote them:

"(a) What are the rights and interest of the plaintiff and the defendant under the written agreement annexed to the complaint and marked Exhibit A?

(b) Was there another agreement between the parties made subsequent to July 1st, 1949 and if so, what were its terms and conditions?

(c) Should there be an accounting between the parties?

(d) Is defendant entitled to set off against premiums collected by it a sum of money representing (a) the amount of premiums collected by it and allegedly repaid to assureds by reason of the cancellation and reduction of policies, (b) the amount of premiums collected by the defendant and allegedly paid by it to other insurance

companies to obtain insurance policies in replacement of cancelled policies, (c) the amount of premiums allegedly paid by the defendant for and on behalf of assureds on policies thereafter cancelled, and (d) commissions allegedly payable to the defendant on premiums collected by it."

It was disclosed at the trial that the amount of premiums collected by the defendant and in its hands at the time of the order of liquidation on April 30, 1951, after deducting its share of commissions, was $6,112.97. The Chancery Division resolved that the defendant by way of offset was entitled to a net credit of $4,054.60 and judgment was accordingly entered in favor of ...


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