17:20-3. Delivery of securities on dissolution, liquidation, reorganization or merger; action to obtain delivery; claims of policyholders

17:20-3. Whenever any insurance company of this State shall voluntarily dissolve, or a receiver or trustee thereof shall be appointed by the Superior Court in any action brought in such court to effect the liquidation or reorganization of such company; or if, pursuant to the provisions of any statute of this State, any statutory officer shall take possession of the business and affairs of such company; or if such company shall have heretofore or shall hereafter become legally merged into or consolidated with another such company, the commissioner shall thereupon deliver to such receiver or trustee, or to the directors or trustees on dissolution, or to such statutory officer, or to the company resulting from such merger or consolidation, the securities deposited with him.

Before the commissioner shall make such delivery, such receiver or trustee, or such directors or trustees on dissolution, or such statutory officer, or such company resulting from such merger or consolidation, shall institute an action in the Superior Court to obtain delivery by the commissioner of such securities to the plaintiff. The court may proceed in the action in a summary manner or otherwise, and process therein may be served upon all persons, other than the commissioner by publishing the same or a notice thereof once in a newspaper published in the county where the company has its principal office. The court may enter judgment directing the commissioner to deliver such securities to the plaintiff. Upon such delivery, the commissioner shall be relieved of all further responsibility or obligation in regard to the securities so deposited, except when such securities are delivered by such commissioner as commissioner to himself in his capacity as the officer designated by statute to take possession of the business and affairs of any such company. Such deposited securities shall not be delivered to the directors or trustees on dissolution until all proceedings in such voluntary dissolution shall have first been approved by the commissioner.

Nothing herein contained shall be construed as in anywise affecting the rights, in such securities, of the policyholders of such company for whose benefit and security such deposit was made, as provided in R.S.17:20-2. Such securities or the proceeds thereof, shall be administered, upon such delivery, as a trust fund for the benefit of such policyholders, and shall not be mingled with other assets of such company, until distribution thereof is made as hereinafter provided.

The Superior Court, in any action brought therein for the delivery of such securities as herein provided, shall have jurisdiction to limit the time within which policyholders shall present and make proof of their respective claims against such company, and may bar all such policyholders from any claim in such securities for failing so to do within the time limited. The court may also prescribe what notice, by publication or otherwise, shall be given to such policyholders of such limitation of time. Nothing contained in subtitle 3 of Title 17 of the Revised Statutes (R.S.17:17-1 et seq.) shall be construed as conferring upon the Superior Court general jurisdiction over the business and affairs of such company by reason only of any application made to it pursuant to the provisions of this section. Such claims shall be presented to such receiver or trustee, or to such directors or trustees in dissolution, or to such statutory officer, or to such company resulting from such merger or consolidation, in writing and under oath and shall be passed upon by the same, subject to a summary review by the court as may be prescribed by order of the court. Upon the expiration of the time limited for filing claims, and upon the determination as herein provided, of claims disallowed, such securities or the proceeds thereof shall be distributed pro rata to such policyholders on account of such claims, and the balance thereof shall thereupon be discharged from any trust for the benefit of such policyholders. If the proceeds of such distribution are insufficient to pay such claims in full, nothing herein contained shall be construed as preventing such policyholders from asserting any lawful claim against other assets of such company for the amount of such deficiency.

Amended 1953,c.17,s.109; 1989,c.264,s.3; repealed in part (see N.J.S.17B:36-3b).