BERNARD v. FIRESIDE COMMERCIAL LIFE INS.
633 So.2d 177 (1993)
Sherman BERNARD, Commissioner of Insurance for the State of Louisiana
v.
FIRESIDE COMMERCIAL LIFE INSURANCE COMPANY.
No. 92 CA 0237.
Court of Appeal of Louisiana, First Circuit.
November 24, 1993.
Writ Denied March 11, 1994.
Carey R. Holliday, Baton Rouge, for plaintiff-appellant Second Com'r of Ins., State of LA.
Philip K. Jones, Jr., New Orleans, for defendant-appellee F.D.I.C. as Receiver for Key Sav. and Loan Ass'n.
Bert K. Robinson, Baton Rouge, for defendant in rule-appellant First Magnolia Life Ins. Co.
Before CARTER, LeBLANC and PITCHER, JJ.
LeBLANC, Judge.
This matter arises from two claims asserted by the Federal Deposit Insurance Corporation (FDIC) in an intervention filed in the rehabilitation proceedings of Fireside Commercial Life Insurance Company (Fireside), a domestic life insurance company. First, FDIC claimed ownership of certain funds Fireside transferred to Magnolia Life Insurance Company (Magnolia) prior to the initiation of rehabilitation proceedings by the Louisiana Commissioner of Insurance (Commissioner). The trial court rejected this contention.
FDIC's second claim involved a certain transaction involving the transfer of $1,141,300.00 in assets from Fireside to Magnolia. FDIC argued this transfer was invalid and, therefore, the assets should be returned by Magnolia to Fireside's estate for the benefit of its creditors, including FDIC. The trial court ultimately rendered judgment on this claim ordering Magnolia to pay FDIC $268,803.35, the amount Fireside was indebted to FDIC.
Magnolia and the Commissioner have appealed this judgment, and FDIC answered the appeals. For the reasons below, we reverse the portion of the trial court judgment ordering Magnolia to pay FDIC $268,803.35.
FACTUAL BACKGROUND1. On December 31, 1985, Magnolia loaned $1,010,000.00 to Fireside Holding Company. There was trial testimony that John Bennet Waters, CEO of both Fireside and Fireside Holding Company, represented that the purpose of the loan was to infuse money into Fireside to prevent it from being listed as impaired by the Commissioner.
2. Fireside and Magnolia subsequently entered into negotiations concerning an agreement whereby Magnolia would reinsure all of Fireside policies.
1. With the exception of certain policies previously reinsured by another insurance company.
2. The Commissioner asserts that the trial court instructed its counsel not to participate in these proceedings because there was no need to incur additional costs to the State since this matter was essentially one between FDIC and Magnolia. However, FDIC contends that the Commissioner, through his counsel, requested that he be allowed to limit his participation in these proceedings and, that the trial court never prohibited the Commissioner's participation therein. Although the trial court commented on this issue at the June 7, 1991 hearing on FDIC's motion for new trial, its comments did not clearly resolve this conflict. However, in view of our conclusion that the judgment of the trial court is reversible on other grounds, we pretermit consideration of this issue.
3. La.R.S. 22:745 was amended and reenacted by Acts 1991, No. 1031 as La.R.S. 22:825. All references in this opinion to R.S. 22:745 B are to that provision as it existed prior to its redesignation (without substantive change) by Act 1031. At the time in question, R.S. 22:745 B provided that:
Any transfer of, or lien upon, any property of any insurer made or created within four months prior to the filing of a petition for an order to show cause under this Part, which gives to any creditor or policyholder or enables him to obtain a greater percentage of his debt than any other creditor or policyholder in the same class, which is accepted by a creditor or policyholder having reasonable cause to believe that such a preference will occur, shall be voidable. Where the preference consists in a transfer, such period of four months shall not expire until four months after the date of the recording or registering of the transfer if by law such recording or registering is required.
4. FDIC has asserted throughout these proceedings that its claim is not based on La.R.S. 22:745, which it maintains is not applicable herein.
5. FDIC also seeks to have the trial court judgment modified to provide that Magnolia should pay the awarded funds to the Commissioner, rather than directly to FDIC, and that the Commissioner should then pay FDIC $268,803.35.
6. The amended reinsurance agreement of January 2, 1987 states that this transfer of assets was also in satisfaction of the twenty percent servicing fee Fireside owed to Magnolia for the collection of the premiums due on Fireside's policies from September through December, 1986.
7. In fact, it appears that a hearing was not held on the reinsurance plan prior to the trial court signing the order. Through a resolution of its board of directors, Fireside waived notice and appearance at any hearing held on the submitted plan.
8. In the amended final judgment it rendered on July 22, 1991, the trial court "rescinded" the July 9, 1987 rehabilitation order to the extent that it was inconsistent with that judgment.
9. The Louisiana Insurance Code (Title 22) was amended and reenacted in its entirety by Acts 1991, No. 1031. Under this revision, the provisions dealing with the rehabilitation of domestic insurers were redesignated as La.R.S. 22:811 et seq. Section 3 of Act 1031 provided that the act was to become effective January 1, 1993. Since Act 1031 became effective after the dates pertinent herein, all references in this opinion to Title 22 are to the cited provisions as they existed prior to the revision effected by Act 1031. In any event, we note that the Act 1031 revision did not effect any substantive changes in the cited provisions, insofar as they are pertinent herein.
10. La.C.C. art. 2044 provides, in pertinent part, that: "If an obligor causes or increases his insolvency by failing to exercise a right, the obligee may exercise it himself, unless the right is strictly personal to the obligor."
FDIC asserts that this article applies to this case because Key was a creditor of Fireside, which "caused or increased its insolvency by transferring assets in the amount of $1,141,300 to Magnolia which the District Court found was greater than that required under the Reinsurance Plan to protect the policyholders."
11. The promissory note executed by Calkey, Inc. on January 4, 1983, provided for an interest rate of twelve (12%) percent per annum, while the participation certificate issued to Key by Fireside on November 3, 1983, provided that Key's "Yield rate per annum, net" would be "Citibank Prime + 2%".
12. Although the trial court later amended the judgment rendered in accordance with these reasons, it did so on an entirely different ground, while expressly stating that the remainder of the reasons rendered on April 10, 1991 were correct (with the further exception of its finding that the Fireside Holding transaction was contra bonos mores).
13. Considering our disposition of this matter, we pretermit all other issues raised by the parties.