Judgment Against Insured Is Conclusive Proof of Amount of Claim Against Dissolved Insurer- Commonwealth ex rel. Woodside v. Seaboard Mut. Cas. Co.

Plaintiffs, injured in an automobile accident, brought suits against an insured taxicab company. Before the case came to trial, the insurance commissioner found the insurer insolvent. In a separate proceeding he obtained a court order dissolving the insurer, enjoining the prosecution of any legal action against the insurer’s assets, and providing for the filing of proof of claims with the insurance commissioner. The insurer’s attorney, who had entered an appearance on behalf of the taxicab company, withdrew, and in an undefended action the plaintiffs recovered judgments against the cab company totalling nineteen thousand dollars. Unable to obtain execution on these judgments and enjoined from proceeding by writ of attachment against the insurer, plaintiffs filed claims for the nineteen thousand dollars with the insurance commissioner. After presentation of plaintiffs’ evidence, the commissioner, acting as a liquidator, concluded that the claims were exaggerated and allowed 2,500 dollars. The Court of Common Pleas affirmed, holding that the judgments were not binding on the liquidator. On appeal to the Supreme Court of Pennsylvania, held, reversed, three justices dissenting. The amount of a judgment against a tortfeasor conclusively establishes the amount of the injured party’s claim against the tortfeasor’s dissolved insurer when the cause of action against the tortfeasor arises prior to the insurer’s dissolution.