In the Matter of F. O. Baroff Company, Inc., Debtor. American Bank & Trust Company v. Edward S. Davis, Trustee

HAYS, Circuit Judge:

On this appeal is presented the novel but narrow question whether under the New York law of insurance, the estate of a bankrupt insured which has sustained loss otherwise within the scope of its policy of indemnity has a right to the proceeds of the policy which is superior to the right of a third person with an unsatisfied claim against the insured within the scope of the insurance agreement. We hold that New York Insurance Law § 167(1) requires that the relative rights of the insured and such a third person to the policy’s proceeds depend on their relative contribution…