Safeway Trails, Inc., et al., Appellants, v. the Stuyvesant Insurance Company, Appellees, 316 F.2d 234 (4th Cir. 1963)

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U.S. Court of Appeals for the Fourth Circuit - 316 F.2d 234 (4th Cir. 1963)

Argued April 2, 1963
Decided April 4, 1963

Richard L. Wharton, Greensboro, N. C., and Richard R. Paradise, Washington, D. C. (Charles B. McInnis, Washington, D. C., L. A. Odom, Spartanburg, S. C., and Roberts & McInnis, Washington, D. C., on brief), for appellants.

Bynum M. Hunter and David M. Clark, Greensboro, N. C. (Smith, Moore, Smith, Schell & Hunter, Greensboro, N. C., on brief), for appellees Stuyvesant, Unity, U. S. Liability, Global, Preferred and Nationwide, defendant reinsurers.

Before SOBELOFF, Chief Judge, HAYNSWORTH, Circuit Judge, and HARRY E. WATKINS, District Judge.


Plaintiffs are each insured under public liability policies issued by defendant, Equity General Insurance Company. The latter company was unable to carry all of such insurance and entered into quota reinsurance agreements with the other defendant insurance companies. These plaintiffs have sustained losses under their policies with Equity General. The reinsurance agreements between Equity General and defendant insurance companies provide that in the event of insolvency of Equity General and the appointment of a receiver that any amount due under such reinsurance agreements shall be paid to such receiver of Equity General.

When Equity General, a Florida corporation, became insolvent, a receiver was appointed on September 23, 1960, by a state court in Florida having jurisdiction. That court entered an order directing the receiver to marshall all of the assets of Equity General and authorizing the liquidation of the company. Defendant reinsurers submitted to the jurisdiction of that court and were ordered to pay to the receiver the several sums of money from time to time found to be due by them under the terms of the reinsurance agreements. That court also directed that all persons having claims against Equity General present their claims to the receiver not later than December 15, 1961.

Instead of proving their claims in the receivership proceeding in the Florida court, and asserting their alleged claims to the funds to be paid to the receiver under such reinsurance agreements, plaintiffs brought this Declaratory Judgment action on October 6, 1961, seeking to have the reinsurance proceeds paid directly to plaintiffs rather than through the receiver. From an order of the District Court, 211 F. Supp. 227, dismissing such action, plaintiffs have appealed.

We believe that the District Court correctly held that plaintiffs must prove their claims against Equity General and to the funds which are paid into Court by defendants in the Florida Receivership proceeding. We assume that they will be permitted to file their claims and be given a hearing in that forum. Should plaintiffs not be permitted to file their claims or to have a hearing thereon in the Florida court, they may apply to this court for further hearing. In the meantime, this action will be retained on the docket of this court.

SOBELOFF, Chief Judge, HAYNSWORTH, Circuit Judge, and HARRY E. WATKINS, District Judge, concur.