Carpenter v. National Surety Co.

NOURSE, P. J.

On June 1, 1934, the National Surety Company, a New York corporation, was decreed insolvent by the New York Supreme Court, and the New York superintendent of insurance was appointed liquidator thereof. At that time the company was doing business in California. On July 20, 1934, in a proceeding commenced by the California Insurance Commissioner under Act 3739 (Deering’s Gen. Laws), the company was decreed insolvent by the San Francisco superior court, and said commissioner was appointed as liquidator to wind up its affairs in this state. The two liquidators entered into a working agreement, approved by the respective courts having jurisdiction of their activities, which agreement included provisions for the handling of claims filed against the estate of the insolvent company. Los Angeles Athletic Club and Title Insurance Company duly filed with the California liquidator the claim which is the subject of this action. The California liquidator transmitted it to the New York liquidator by whom it was disallowed. Through the California liquidator the claimants were given notice of the disallowance. Under the

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working agreement between the two liquidators, a determination of the claim in the California proceeding is to be deemed valid in the New York liquidation proceeding. Upon the hearing in the court below, the ruling of the liquidator was disapproved, and judgment was entered allowing the claim, from which judgment the liquidator now prosecutes this appeal.

The facts giving rise to the claim are as follows: The Los Angeles Athletic Club and Title Insurance Company-owned certain unimproved real property at Grand Avenue and Eighteenth Street, Los Angeles. On November 1, 1924, they leased said property to one Danziger and wife, for 25 years at an annual rental of $25,000, which lease the Danzigers assigned to Olympic Auditorium, Inc. The lease required the lessee to construct on the leased premises an auditorium building of a reasonable value of not less than $175,000, and the lessee agreed to have the building completed and clear of mechanics’ liens, or liability therefor, on or before August 1, 1925. The lease further provided that prior to construction of the building, the lessee should furnish to the lessors a bond in the principal sum of '$100,000, conditioned that the building should be free and clear of liens or claims when completed. Pursuant to this last-mentioned provision, on January 20, 1925, Danziger and National Surety Company, as principals, executed the bond on which the claim, the subject of this action, is made. The building was thereafter constructed. The landowners fully complied with statutory provisions as to posting notice of nonresponsibility. Within due time after completion of the building, certain firms and persons who had not been compensated for work performed and materials furnished, filed mechanics’ liens totaling $86,488.38, and subsequently commenced an action to foreclose said liens. Thereafter the lessee defaulted in the payment of rent, and the lessors recovered possession of the premises and forfeiture of the lease.