The opinion of the court was delivered by: GODDARD
The Ace Grain Company, Inc., a judgment creditor of the Rhode Island Insurance Company moves for an order requiring Doeskin Products, Inc., the third party, to turn over to the attorney for the judgment creditor, the principal and interest of certain of the third party's debentures now registered in the name of the judgment debtor.
The receiver of the judgment debtor, Rhode Island Insurance Company (hereinafter referred to as the Insurance Company or insurer), appearing specially in connection with this application, requests that he be permitted to intervene to protect the assets of the receivership estate, and for an order
1- Dismissing these supplementary proceedings;
2- Enjoining and restraining all actions or proceedings in the nature of an attachment, garnishment, or execution;
3- Vacating the third party subpoena served upon Doeskin Products, Inc., and all stays heretofore granted.
The interest on the debentures is payable semi-annually in the amount of $ 15,600 on January first and July first. The next interest date is July 1, 1952.
On July 20, 1950, the Rhode Island Superior Court appointed Thomas J. Meehan, Director of Business Regulation of the State of Rhode Island, the equivalent of New York's Superintendent of Insurance, receiver of the Insurance Company. Under the statute governing his appointment, the Director of Business Regulation acquires title to all the company's assets as of the date of the order directing him to take possession
The Ace Grain Company, Inc., carrying insurance with the Insurance Company, claimed a loss covered under the policy, and in June, 1950, prior to the appointment of the receiver, brought suit against the company in New York, and ultimately judgment was entered by default against the Insurance Company on December 24, 1951, for $ 30,630.03. From this judgment the Insurance Company has appealed to the Court of Appeals.
The Insurance Company owns $ 780,000 face value Doeskin debentures, and the Ace Grain Company, Inc. seeks to have the Insurance Company transfer and deliver to the Ace Grain Company so many of the debentures as will, in the open market, provide a sum sufficient to satisfy Ace Grain Company's judgment of $ 30,630.03 with interest from December 25, 1951.
The receiver, claiming title to the debentures, resists the demands now made by the Ace Grain Company and asks that these entire proceedings be terminated on the ground that the Ace Grain Company is attempting to obtain an unlawful preference in violation of Section 523 of the New York Insurance Law, McK. Consol. Laws, c. 28.
The Uniform Insurers Liquidation Act was adopted by both New York and Rhode Island effective July 1, 1940. In New York it became a part of the Insurance Law and was numbered Sections 517 to 524. In Rhode Island it became Chapter 853 of the Laws of 1940. The Uniform Insurers Liquidation Act was the result of a long standing policy to prevent attempts of local creditors to seize the assets within the state of a foreign insurer for whom a receiver had been appointed in a foreign state to the end that all creditors of the insurer would secure equal treatment and that no creditor would be allowed to obtain an advantage over other creditors similarly situated.
The pertinent parts of the New York statute are as follows:
'Sec. 517. Uniform insurers liquidation act; title; definitions * * *
'2. 'Delinquency proceeding' means any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, ...