The Security Life Insurance and Annuity Company was incorporated as a stock company for the transaction of the business of life insurance and dealing in annuities, under the Laws of 1853. (2 R. S.
*99[5th ed.], 767.) It commenced its business in the year 1861, and issued a life insurance policy to the petitioner, Rebecca L. Miller, for the sum of $6,000, on the life of her husband, James L. Miller. He died on the 26th day of November, 1876, while the policy was in full force. On the 7th of December, 1876, she presented to the company notice and proof of his death, as that was required to be done by the terms of the policy. The company was at that time insolvent, and on the fourteenth of that month the Hon. William H. Wickham was appointed its receiver. The petitioner applied to the court for an order directing the payment of the amount of the loss out of the assets of the company in his hands. It was shown that they amounted to about the sum of $250,000, and that the net value of different classes of policies in force, unpaid endowment claims, and certain small items, amounted to the aggregate sum of $3,8J2,600. For the reason that these different claims were considered to be entitled to participate in the distribution of the assets, the application made for the payment out of them of this particular loss was denied. That has been objected to as erroneous, chiefly for the reason that the holders of policies were entitled to participate in, and be benefited by, the earnings of the company. But that did not have the effect of rendering them members of the company in any such sense as to subject them to direct or indirect liability for its losses. Its only result was to diminish the premiums actually payable upon their policies, and to graduate their amount according to the prosperity and pecuniary success of the company. The persons holding them were still entitled to the full benefit of their policies according to their terms, and had the unqualified right to resort to the company for their indemnity. The plan was adopted for the purpose of returning what should be received, by way of premiums, beyond what could be required to pay the expenses and meet the obligations of the corporation, and in no event did it amount to any thing but a mere abatement, by way of returning the excess of payments, secured by the collection of the premiums.
The act under which the company was incorporated provided that it should be subject to all the provisions of the Revised Statutes in relation to corporations, so far as the same were applicable, except that requiring annual statements and other matters specially provided for. (2 R. S. [5th ed.], 770, § 73.) And by one of the provisions so *100applied to it, open and subsisting engagements or contracts, in the nature of insurances or contingent undertakings of any kind, are to be regarded as obligations existing against the corporation, and with the consent of the parties holding them, they can be canceled and discharged by the receiver refunding so much of the premium paid as shall be in the same proportion to the time which shall remain of the risk assumed as the whole premium will bear to the whole term of the risk. (3 R. S. [5th ed.], 771, § 86.) To that extent the other policyholders, under this provision, became creditors of the corporation, at the time when the receiver was appointed; and it defined the principle adopted for the adjustment of their demands, and the cancellation of their contracts of insurance. And under it they can legally make their respective claims to the receiver for payment. The only source from which payment can be made by him, is that of the assets of the insolvent corporation, and persons whose claims for losses had matured when he was appointed, have not, in terms, been given any priority over the other class of demands.
The appointment of the receiver was made under the provisions of the statute prescribing the proceedings which should be taken in equity for the settlement of the affairs of insolvent corporations. (3 R. S. [5th ed.], 761.) They were rendered applicable to this corporation by the section of the act already referred to under which it was created, and by one of them it was declared that “ a just and fair distribution of the property of such corporation and of the proceeds thereof ” should be “ made among its fair and honest creditors, in the order and in the proportions prescribed by this title in the case of a voluntary dissolution of a corporation.” (Id., 766, § 57.) And that by the provisions referred to, after giving a preference to debts entitled to it which should be owing to the United States, and judgments, so far as they might be liens, on the corporate property, declared that all other creditors should be paid “ in proportion to their respective demands, without giving any preference to debts due on specialties.” (Id., 771, § 90, sub. 3.) This very clearly placed all demands against the corporation on the foundation of equality, except such as were entitled to be preferred in payment under the laws of the United States, or were liens by virtue of judgments recovered upon the property of the corporation, and it was so construed and applied in the cases of Lowene v. American Fwe Ins. Co. (6 Paige, *101482) and De Peyster v. Same (id., 486). The policy of the statute, as it was the prevailing principle in ecprity, was to apply the doctrine of equality, as far as that could be practically done, to the adjustment of all the obligations of the insolvent corporation, and it accordingly, in terms, was made expressive of that intention. For that reason, the claim held by the applicant was not entitled to be paid out of the assets in the receiver’s hands, in preference to those of the policyholders for their proportionate return of premiums. The utmost that can be secured for it, will be to place it, as the statute seems to have required, on the same footing of equitable equality. That and all other bona fide claims, not entitled to preference because of the exceptions declared, will participate proportionately in the proceeds of the assets held by the receiver. Beyond that it cannot be extended, and for that reason the application made was properly denied. The order appealed from should be affirmed, with ten dollars costs, besides disbursements.
Davis, P. J., and Brady, J., concurred.Order affirmed, with ten dollars costs, besides disbursements.