Hicks v. Poe - 269 U.S. 118 (1925)
U.S. Supreme Court
Hicks v. Poe, 269 U.S. 118 (1925)
Hicks v. Poe
Argued October 12, 13, 1925
Decided November 16, 1925
269 U.S. 118
1. A reinsurance company made a participation contract with a company engaged in the business of surety, fidelity, and burglary insurance whereby the former assumed one-third of the liability on risks written by the latter during a period of five years, and upon annual accountings was to receive one-third of any profits, or pay one-third of any losses, leaving, however, the management of the business to the other without restriction. The second company being unsuccessful, its receivers, after the five-year period, in winding up its business cancelled its outstanding risks by returning unearned premiums to policyholders. Held that this was not a breach of the contract, and did not relieve the reinsurer of its liability to pay the insured company one-third of the losses occurring after the five-year period on business written within it. P. 269 U. S. 119.
2. The rule that the liability of a reinsurer is not affected by the insolvency of the reinsured company, or the inability of the latter to fulfill its own contracts with the original insured, is applicable to a participation contract differing from customary reinsurance in that the reinsurer, instead of receiving premiums and paying its share of the losses, is to participate in profits and losses. P. 269 U. S. 121.
293 F. 766 affirmed.
Appeal from a decree of the circuit court of appeals which affirmed a decree of the district court (276 F. 949; 293 id. 764) in favor of the receivers of a Maryland insurance company in a suit brought by them under the Trading with the Enemy Act to reach impounded funds belonging to a foreign insurance company, and for an accounting, etc.