Averill v. Holman ( 1936 )

Petition for rehearing denied December 8, 1936 ON PETITION FOR REHEARING (62 P.2d 939) The appellant, B. Underdahl, has filed a petition for rehearing, a petition or motion for diminution of the record and a motion to modify our former opinion to provide that the cause be remanded with opportunity to appellant to present evidence in support of his claim.

In the motion for diminution of the record the appellant urges upon us that the proceedings on the final hearing in the circuit court were such as to lead him to believe that the only question there involved was whether claims arising out of casualty insurance written by the insolvent insurance company were payable out of the deposit made by that company with the state treasurer as a condition of doing surety insurance business in this state. Because of such understanding on the part of appellant the transcript of proceedings on the final hearing in the circuit court was not made a part of the record on appeal to this court. A purported transcript of the proceedings had at that hearing is made a part of the motion for diminution of the record. The petition for a modification of our former opinion requests that if this court on a reconsideration of the matter should determine, from the record here or on the record as claimed by the motion for a diminution of the record, that the appellant had failed to establish his claim by sufficient proof, the cause be remanded, with an opportunity to appellant to introduce testimony in support of his claim.

The only ground on which the appellant asks a rehearing is that he is entitled to have his claim paid from the residue of the deposit with the state treasurer after the payment of claims against the insolvent insurance company based upon surety bonds written by that company. Assuming that the appellant is correct in his contention that he was under a misapprehension as to the position which would be taken by the respondents in this court with reference to the nature of the questions involved, and that for such reason he had neglected to present a full transcript of the proceedings before the trial court, nevertheless it would, in our opinion, be futile either to grant the motion for diminution of the record or to modify our former opinion. It may be conceded, in considering the petition and motions here involved, that the appellant established his claim against Federal Surety Company arising out of casualty insurance either originally written or reinsured by that company. Such a liability on the part of Federal Surety Company, however, is not payable out of its deposit with the state treasurer. That deposit, as was held in Earle v. Holman, 154 Or. 578 (61 P.2d 1242), decided by this court November 5, 1936, is limited to surety insurance business.

It is true that in that case the claims growing out of surety insurance business filed against the deposit and allowed by the court greatly exceeded the amount of the deposit, while in the case at bar it would appear that there would be enough of the deposit remaining after paying the claimants on surety bonds to pay the appellant's claim. In support of his contention that he is entitled to share in such residue, the appellant cites and relies upon the following cases: State ex rel. Union IndemnityCo. v. Knott, 105 Fla. 569 (143 So. 221); Kelly v. Knott,120 Fla. 580 (163 So. 64); Snedigar v. New Jersey Fidelity PlateGlass Insurance Co., 120 Fla. 596 (163 So. 71), and SouthernPacific Co. v. Lion Bonding Surety Co., — Tex. Civ. App. — (294 S.W. 599).

The case of State ex rel. Travelers' Indemnity Co. v. Knott,114 Fla. 820 (153 So. 304, 155 So. 115), fully explains the case of State ex rel. Union Indemnity Co. v. Knott, supra, and holds that the opinion in that instance "was written with the facts in that case in view" and that the law then in effect in Florida required a motor transportation company, before receiving a certificate to do business, to give bonds to indemnify passengers and the public receiving personal injuries through any act of negligence on the part of the transportation company. Neither the facts nor the statutes of Florida involved in the two decisions of that jurisdiction just referred to have any application to the question now before us. The case of Southern Pacific Co. v. Lion Bonding SuretyCo., supra, was explained in the opinion of this court in Earlev. Holman, supra, and nothing further need be said here concerning the decision in that case.

Both the appellant and the respondents seem to consider the case of Kelly v. Knott, supra, as deciding that claims growing out of surety bonds were given priority in payment out of the securities deposited by the insurance company as a condition to doing business in the state of Florida. What the Florida court appears really to have decided in that instance is, when interpreted in the light of the opinion in Snedigar v. NewJersey Fidelity Plate Glass Insurance Co., supra, that said securities were deposited as a trust fund for the "payment of all `claims' against the defaulting or insolvent surety company, whether such claims arise out of surety bonds or surety contracts or not"; and that the primary, but not the sole, purpose of the deposit of securities with the state treasurer is for the "payment of claims, if any, that may have accrued against the deposited securities by reason of breaches of surety bonds or contracts of suretyship".

We are unable, in construing the language of the Florida statute, to reconcile the conclusions expressed in those two cases to the effect that the securities were deposited as a trust fund for the security of all claimants against the depositing company with the view that claims of common creditors are subordinated to the payment of claims that may have accrued against the deposited securities by reason of breaches of surety bonds or contracts of suretyship. The decision of the Florida court in Kelly v. Knott, supra, that the securities were deposited and held as a trust fund for local Florida creditors was reversed by the supreme court of the United States in United States v. Knott, 298 U.S. 544 (56 S. Ct. 902, 80 L. Ed. 1321, 104 A.L.R. 741), where it was held that the claim of the United States to the fund was prior to that of any of the Florida creditors.

We adhere to our decision in Earle v. Holman, supra, to the effect that the deposit was made for the benefit of holders of surety insurance contracts and is not available, in this proceeding, for the satisfaction of other classes of claims against the insolvent insurance company. The petitions and motion herein are therefore denied.

CAMPBELL, C.J., not participating.