HILLMAN et al. v. NEW YORK STATE STEEL CO.

HILLMAN et al. v. NEW YORK STATE STEEL CO. (District Court, W. D. New York. October 27, 1913.) Corporations (§ 560)—Administration of Estate—Compromise of Judgment. Receivers for an insolvent corporation appointed in a creditors’ suit instructed not to compromise and settle a judgment recovered against the corporation by an employé, where the question whether the receivers could recover the amount paid in such settlement from an insurance company on an indemnity policy, or only the amount the judgment creditor would receive on a distribution of assets, was doubtful under the state decisions. ' [Ed. Note.—For other cases, see Corporations, Cent. Dig. §§ 2253-2260, 2262; Dec. Dig. § 560.] In Equity. Suit by John H. Hillman, Jr., Ernest Hillman, and Arthur ,B. Sheets against the New York State Steel Company. Gn application by receivers for instructions as to compromise of judgment recovered by Francesco Bruno. Love & Keating, of Buffalo, N. Y. (George P. Keating, of Buffalo, N. Y., of counsel), for receivers. William H. Gorman, of Buffalo, N. Y., for judgment creditor. MacGregor & Stone, of Buffalo, N. Y. (Daniel J. Kenefick, of Buffalo, N. Y., of counsel), for Insurance Company. For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes [MAJORITY — HAZEL, District Judge.] HAZEL, District Judge. The question of the legal liability of the Standard Accident Insurance Company for the full amount of $5,000, at which, according to the petition, the judgment recovered against the defendant can be compromised, is involved in such doubt as to the right of the receivers to recover the full amount paid by them that I am constrained to advise that such offer of compromise or settlement be not accepted. Payment of the judgment on the basis of the proposed settlement would no doubt involve the receivers in a protracted and expensive litigation with the insurance company, and as I believe the policy to be distinctly one of indemnity—one that does not in terms compel the insurance company to pay the judgment when the liability is established, but only to reimburse the assured for the loss sustained—I am disinclined to authorize a settlement, especially in view of the construction which the Appellate Division of the Supreme Court of this state has given to insurance policies of this description. See Saratoga Trap Rock Co. v. Standard Accident Insurance Co., 143 App. Div. 852, 128 N. Y. Supp. 822, Beyer v. International Aluminum Co., 115 App. Div. 853, 101 N. Y. Supp. 83, Burke v. London Guarantee Accident Co., 47 Misc. Rep. 171, 93 N. Y. Supp. 652, and Munro v. Maryland Casualty Co., 48 Misc. Rep. 184, 96 N. Y. Supp. 705; which cases in principle disagree with the case of Sanders v. Insurance Co., 72 N. H. 485, 57 Atl. 655, 101 Am. St. Rep. 688, and in addition the case of Travelers’ Insurance Co. v. Moses, 63 N. J. Eq. 260, 49 Atl. 720, 92 Am. St. Rep. 663, which substantially warrants holding that the claim of fhe receivers against the insurance company can only be for the proportionate share that will be paid out of the assets of the defendant corporation to the judgment creditor on final distribution. I recognize that in that case the judgment debtor was in bankruptcy and the judgment creditor had filed proof of claim in bankruptcy, yet as here the affairs of the corporation are sought to be wound up in equity, the action having been brought for the protection of the creditors of the coi'poration, there is such analogy between the two cases that the principle of the Moses Case is thought applicable. An appropriate order may be entered.