In Banc. Suit by A.H. Averill, as Insurance Commissioner of the State of Oregon, against Rufus C. Holman, as State Treasurer of the State of Oregon, for determination of claims against funds deposited by the Federal Surety Company, a foreign corporation, with the State Treasurer on the insolvency of the surety company, wherein B. Underdahl filed his claim and E.W. Clark, Insurance Commissioner for the State of Iowa, as receiver and liquidator of the Federal Surety Company, and James L. Conley, as ancillary receiver of the Federal Surety Company for Oregon, intervened. From decree disallowing his claim, B. Underdahl appeals, and, on appeal, Sherman J. Frank and the Standard Oil Company of California, claimants, the receiver and liquidator of the Federal Surety Company and its ancillary receiver for the state of Oregon, object to allowance of such claim.
AFFIRMED. REHEARING DENIED. The Federal Surety Company, a foreign corporation organized in the state of Iowa, was in October, 1929, licensed by the state of Oregon to write in this state all lines of insurance permitted by its charter, except surety and fidelity bonds. It *Page 127 immediately engaged in casualty insurance business in Oregon. Thereafter, on April 1, 1930, it was licensed to issue surety and fidelity bonds in this state, and in order to engage in that line of business deposited with the state treasurer $25,000 in Liberty bonds.
In the early part of 1931, because of its impaired financial condition, it ceased to do business in Oregon, and in September of that year a receiver and liquidator was appointed for the company in its home state. An ancillary receiver in Oregon was appointed by the circuit court of the state of Oregon for Multnomah county.
Pursuant to § 46-139, Oregon Code 1930, as amended by chapter 43, Oregon Laws, Second Special Session, 1933, A.H. Averill, as insurance commissioner of the state of Oregon, in September, 1934, filed suit in Marion county against Rufus C. Holman, state treasurer, as defendant. The complaint alleges that the Federal Surety Company was authorized to transact business as a surety company on April 1, 1930, and that said company deposited with the state treasurer bonds "upon the condition that said bonds should be held in trust for all holders of the obligations of said Federal Surety Company, to remain with said state treasurer in trust to answer any default of said company as surety upon any such obligation established by final judgment upon which execution might lawfully be issued against said company". This pleading further alleges the insolvency of that corporation, the appointment of a receiver in its home state and the appointment of an ancillary receiver in Oregon, and avers that there are numerous claims against said deposit. The prayer of the complaint is that an order be made fixing the time, place and manner of filing claims against said deposit and that upon the final hearing the court determine what claims, if any, are entitled to be paid out of the *Page 128 funds realized from securities deposited by the Federal Surety Company with the state treasurer.
An order was thereupon made by the court pursuant to the prayer of the complaint, providing for the publication of notice to present claims and requiring that all such claims be in writing duly verified by the respective claimants and that they contain a "clear and definite statement of such facts as will enable the insurance commissioner to determine the amount of same and whether they are payable out of said deposit".
Pursuant to the notice so published, B. Underdahl filed his claim with the insurance commissioner, in which claim he stated that he had purchased from the Liberty Insurance Company of Dayton, Ohio, a public liability policy protecting him against direct loss and expense growing out of or resulting from claims against him for damages arising out of the occurrence of any accident during the one year covered by such policy, for which he might be legally liable by reason of the ownership, maintenance or use of a certain designated automobile; that during said period an accident occurred due to the operation of said automobile; that later a judgment was entered against him, which together with the cost of defending said suit totaled $6,458.91; and that he had been forced to pay the amount of said judgment and expenses. The claim then contains this further statement:
"That about the time of the trial of said cause the Liberty Insurance Company of Dayton, Ohio, went into the hands of a receivership and all the insurance carried in said company was reinsured by the Federal Surety Company of Davenport, Iowa; that said Federal Surety Company of Davenport, Iowa, has likewise gone into the hands of the receiver and that there is now on deposit with the state treasurer of the state of Oregon, and subject to your disposition, a large sum of money *Page 129 which had been deposited with you and the state treasurer by the Federal Surety Company; that I hereby file this claim with you against said money on deposit with the state treasurer and hereby state that all the said moneys above set forth have been expended by me in the defense of said case and in payment of said judgment."
After the institution of this suit E.W. Clark, insurance commissioner for the state of Iowa, as receiver and liquidator of Federal Surety Company, and James L. Conley, as ancillary receiver of Federal Surety Company for Oregon, were granted leave to intervene and become parties to the proceeding, whereupon they filed a joint answer, the allegations of which are not material here except in so far as they oppose the allowance of the claim of B. Underdahl.
Upon the expiration of the time for filing claims with him, the insurance commissioner made and filed with the court his report, in which he recommended that certain claims be allowed and others denied. Among those which he recommended to be disallowed was that of B. Underdahl, which, the commissioner set forth, was one for the amount paid by that claimant as shown in his statement. The commissioner further remarked:
"The basis of the claim is a policy of casualty insurance issued to claimant by Liberty Insurance Company of Dayton, Ohio, the accident occurring on September 10, 1930. It is alleged that about the time of the trial of the said cause the Liberty Insurance Company of Dayton, Ohio, went into the hands of a receivership and all of the insurance carried by said company was reinsured by the Federal Surety Company of Davenport, Iowa. This claim is not proved to the satisfaction of plaintiff herein, for the reason that it does not arise under a surety bond issued by Federal Surety Company." *Page 130
No evidence appears to have been introduced in the circuit court in support of, or in any way concerning, the claim of B. Underdahl, and the final order of the court disallowing that claim is in the following language:
"It is hereby further ordered, adjudged and decreed that the following claims are not entitled to be paid out of said deposit of securities of Federal Surety Company now held by Rufus C. Holman, state treasurer, pursuant to § 46-139, Oregon Code 1930, and that each and all of said claims and any part thereof are barred from payment out of the proceeds of said deposits: * * *
Exhibit 15. B. Underdahl ______________ $6,458.91."
At the second special session of the legislature in 1933, § 46-139, supra, was amended by chapter 43 of the laws of that session so as to provide the procedure to be followed in disposing of money or securities on deposit with the insurance commissioner or state treasurer, belonging to insurance companies which have become insolvent. This amendment, as far as material here, is as follows:
"Whenever any such company which has deposited money, securities, or a surety bond or bonds with the commissioner or state treasurer shall have become insolvent, the commissioner shall file a bill in the circuit court of the state of Oregon for the county of Marion for the benefit of the state of Oregon, and of all claimants having valid claims against such deposits. The state treasurer shall be a party to the suit and such deposits shall be distributed by said court in settlement of claims originating in Oregon for the payment of which such deposits were made. Such deposits shall be apportioned and paid ratably by the commissioner to all claimants whose claims against such company have been proved to the satisfaction of the commissioner and have been approved by said court. Said claims shall be in such form as the said court shall require, *Page 131 and notice of the time, place and manner of the filing thereof shall be given by the commissioner by publication in a newspaper printed and published in the most populous county in the state."
As to all insolvencies occurring six months or more prior to the taking effect of that act notice is required to be published at least once every two months for a period of six months, and for all insolvencies occurring less than six months prior to the taking effect of the act notice is to be published in like manner for one year.
The procedure outlined by the foregoing statute was followed in this instance. It will, however, be noted that the legislature did not attempt to prescribe each step which was to be taken by the claimant, the commissioner and the court. In the case at bar, after the time in which to file claims had expired the commissioner made his recommendations to the court, as above stated, and the court on January 15, 1935, made an order approving certain claims and disallowing others. There were three claims disallowed, totaling a sum in excess of $19,000 and including the claim of Mr. Underdahl. In denying these claims the order of the court stated:
"It is hereby further ordered that the following claims are disapproved on account of insufficient evidence that they are payable out of the said deposit."
This last-mentioned order of the court provided that "all claimants or other interested persons shall, on or before the sixteenth day of February, 1935, make, verify and file with the clerk of this court such objections as they may have to this order, specifying the particulars of such objections". It further stated that all right to file objections should terminate on February 16 and claims thereafter should be barred, and that *Page 132 upon the expiration of the time allowed notice would be given to all persons filing objections and to all those to whose claims objections had been filed, "of the time and place when such objections would be heard and finally passed upon by the court". The order also provided that all claimants whose claims were disapproved by said order might make and file with the clerk, within the time for filing objections to the order, written application to the court for hearing upon said claims and an opportunity to submit further evidence in support of such claims.
The insurance commissioner served a copy of the order upon all persons who had filed claims with him, and on February 16, 1935, Underdahl filed objections to the order of January 15, therein stating that his demand should be allowed because a proper claim had been filed with the insurance commissioner and it was "a valid and proper claim against the surety deposit of the Federal Surety Company". Included with his objections was also an application to the court "for a hearing on said claim and opportunity to submit further evidence in support of the same".
The interveners on February 16 filed their answer hereinbefore mentioned, in which they stated their objections to the three claims disallowed, and acquiesced in the order of the court denying said claims.
On April 6, 1935, the court made an order fixing May 15 of that year as the time for hearing any objections to the claim which had on January 15 been allowed or denied, and requiring all those who had any such objections to appear at that time and "there present any argument or evidence that they may have in support of or in opposition to such objections, or in support of or in opposition to such claims". Notice of the date fixed for such hearing was, by order of the court, required *Page 133 to be given by the clerk of that court to all "claimants, objectors and applicants respectively and to said receiver and liquidator of Federal Surety Company, both by mail and publication in the Morning Oregonian", which notice was duly given and proof thereof filed.
The decree of the court from which this appeal was taken by Underdahl is dated November 19, 1935, and recites among other things that the court has "heard and considered the evidence presented in support of or in opposition to said objections", yet, as hereinabove stated, no evidence appears in the record before us, and if any evidence was introduced in the circuit court the record does not disclose what it comprised.
Sherman J. Frank and the Standard Oil Company of California, whose claims were allowed, the receiver and liquidator of the Federal Surety Company and its ancillary receiver for the state of Oregon are all here objecting to the allowance of the Underdahl claim, and all assert that there is no evidence in the record to support the statements made in the claim filed by Underdahl with the insurance commissioner. Neither the state treasurer nor the insurance commissioner has made any appearance in this court.
The first question which presents itself is whether or not the claim of the appellant, Underdahl, has been established. The law outlining the procedure in a case of this nature provides that the claim must be proved to the satisfaction of the insurance commissioner and approved by the court. Neither of these requirements has been met by the appellant. The report of the commissioner to the court does not admit the statements contained in appellant's claim. This report, after reciting certain matters which might be considered as facts established to the satisfaction of the commissioner, *Page 134 proceeds to state that certain matters are "alleged" in this claim, clearly indicating that those allegations have not been proved by the claimant to the satisfaction of the commissioner.
Inasmuch as the court entered the preliminary order of January 15, 1935, denying this claim on the ground of insufficiency of evidence and granting to the claimant the privilege of applying for the right to introduce evidence in support of the claim, it is apparent that the court did not assume as established facts the statements made in the claim filed by Underdahl, and that denial of this claim was not based, as appellant asserts, solely on the ground that the demand did not arise directly out of a surety bond issued by Federal Surety Company. It would appear also that the appellant must so have understood the order of the court, for in his objections to the disallowance of his claim he asked permission to introduce further evidence.
Just what occurred May 15 or thereafter, at the hearing on the objections to the order of January 15, is not disclosed by the record and we can not assume that, as now insisted by the appellant, the facts stated in his claim were admitted by all litigants concerned, and considered by the circuit court as so admitted, and that the only question which was presented to that court was whether or not, upon the showing made in his statement, the appellant was entitled to a pro rata share of the deposit of securities made by the Federal Surety Company with the state treasurer.
The procedure adopted by the circuit court in the instant case is analogous with that prevailing in probate matters. The function performed by the insurance commissioner in passing in the first instance upon the claim submitted is similar to that of an administrator. When a claim is disapproved by the administrator, it *Page 135 then becomes the duty of the claimant, if he desires to pursue his demand further, to have a hearing before the court on his claim, and at that time establish it by competent evidence. And so, in the case before us, when the commissioner recommended against the allowance of the Underdahl claim and the court entered an order disallowing it on the ground of insufficient evidence, it became incumbent upon Underdahl to prove his claim in much the same manner as would a claimant before a court in probate proceedings.
It was never intended by the amendment of the statute in 1933, above quoted in part, that a verified statement of claim, standing alone, would, upon rejection by the commissioner or attack by other claimants, be sufficient proof of the validity of the demand. It therefore follows, since the appellant's claim was disallowed by the circuit court and is not supported by any evidence before us, that the decree of the circuit court must be affirmed, and it is so ordered.
CAMPBELL, C.J., not participating.