ONE HUNDRED AND THIRTY-SECOND SESSION.
Vol. XVI.-No. 28.-Part 5. 1909.
50th ANNUAL REPORT OF THE Superintendent of Insurance OF THE State Of New York, 1909,
PART V. Laws of 1909—Court of Appeals Decisions—Opinions of Attorney-General—Superintendent's Rulings—Examinations — Special Reports —Fees and Taxes
Otto P. Heyn, Appellant, v. New York Life Insurance Company, Respondent.
J. Quintus Cohen, as Trustee of theEstate of John T. Lee, A Bankrupt, Bespondent, v. American SuretyCompany Of New York, Appellant.
Gustav T. Lawrence, Appellant, v. TheGeneral Accident AssuranceCorporation, Limited, Of Perth,Scotland, Respondent.
In the Matter of the Assignment ofWallace G. Northam for the Benefit ofCreditors.
Emma T. Cornell, Respondent, v.The Travelers Insurance Company OfHartford, Connecticut, Appellant.
Anna E. Lahn, Respondent, v. TheAmeeioan Sueety Company Of NewYoek, Appellant, Impleaded with Another.
Lillie Lane et al., Respondents, v.The Equitable Life AssurAnce SocietyOf The United States, Defendant, and W. Moeton Gaeden, Individually and as Executor of Geoege W. Kidd,Deceased, Appellant.
Lane v. Equitable Life Assur. Society,115 App. Div. 902, affirmed,
(Argued June 12, 1908; decided September 29, 1908.)
Appeal from a judgment of theAppellate Division of the Supremo Court in the second judicial department, entered November 23, 1906, affirming a judgment in favor ofplaintiff's entered upon a decision of the court on trial at Special Term in an action to recover the proceeds of a policy of life insurance alleged to have been assigned to the plaintiffs.
Judgment affirmed, with costs; no opinion.
Concur: Cullen, Ch. J., Haight, Vann,Weenee, Willaud Baetlett, Hiscockand Chasb, JJ.
United States Title Guaranty AndIndemnity Company, Appellant,.!;.Elizabeth Gbiffin, Respondent.
The Pennsylvania Steel Company,Respondent, v. Title Guarantee AndTrust Company, Appellant, and StarHolding Company et al.,
Continental Insurance Company,Respondent, v. The New York Gas,Electric Light, Heat And Power Companyet al., Appellants.
William A. Boutwell, Appellant, v. TheGlobe And Rutgers Fire InsuranceCompany Of The City Of New York,Respondent.
Adelbert G. Sergent, Appellant, v. TheLiverpool And London And GlobeInsurance Company, Respondent.
Gebmania Life Insurance Company,Respondent, v. John G. R. Lilliendahlet al., Defendants, and Marie A.Donnegan, Appellant.
Jared F. Harrison, Respondent, v.Hartford Life Insurance Company,Respondent.
William Boswell, Appellant, v. SecurityMutual Life Insurance Company,Respondent.
Michael Gienty, Appellant, v. Knights OfColumbus,
Siegmund E. Halberstadt, Appellant, v. New York Life
Bertha D. Thompson, as Administratrix of the Estate of WilLiam II. Thompson, Deceased, Appellant, v. The Equitable Life Assurance Society OfThe United States, Respondent.
Thompson v. Equitable Life Assur. Society, 119 App. Div.
(Argued December 8, 1908; decided January 5, 1909.)
Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered April 20, 1907, affirming a judgment in favor of defendant entered upon a dismissal of the complaint by the court at a Trial Term in an action to recover upon certain policies of lifeinsurance.
Judgment affirmed, with costs; no opinion.
Concur: Cullen, Ch. J., Gray, Willard Bartlett and BTisCock, J J. Dissenting: Edward T. Bartlett and. Vann, J J. Absent: Werner, J.
Franklin B. Lord, Jr., et al., as Executors of Franklin B. Lord, Deceased, Appellants, v. The Equitable Life AssurAnce Society Of The UnitedStates, Respondent, Impleaded with Others.
Constitutional Law — Eight Of Legislature To Amend Charter Of Corporations — Life Insurance Corporations — Constitutionality AndEffect Of Statute (L. 1906, Ch. 326, § 13) Permitting Life Insurance Corporations To Amend Charter So That Policyholders, As Well As StockHolders, May Vote For Directors. The provision in the Revised Statutes that "the charter of every corporation, that shall hereafter be granted bythe legislature, shall be subject to alteration, suspension and repeal in the discretion of the legislature" (1 R. S. 600, § 8), was the result of public alarm and protest caused by the decision of the Supreme Court of the United Stated in the Dartmouth College case. This statute became thepermanent policy of the State when the Constitution of 1846 was adopted and in the revision of 1894.
It is provided by section 11 of chapter 463 of the Laws of 1853 that all companies formed under that act "shall be subject to all the provisions of the Revised Statutes in relation to corporations, so far as the same are applicable, except in regard to annual statements and other matters herein otherwise provided for." This exception does not refer to the provisions of section 20 of that act, that " every charter created by or under the laws ofthis State for the purposes aforesaid shall continue until repealed," and the Revised Statutes were not so modified as to prevent the Legislature from touching the charter of a company organized under the Laws of 1853, except by repeal.
The limitation in the act of 1853 was not intended to repeal the reserved power to alter charters. The provision for a permanent charter until repealed was to enable life insurance companies to make and perforin their peculiar contracts which differ from any others in the length of time they may last.
There is a distinction between the repeal of a charter and the repeal of a franchise. The charter of a corporation is the law which gives it existence as such; that is, its general franchise, which can be repealed at the will of the Legislature. A special franchise is the right granted by the public to use public property for a public use, but with profit, such as the right to build and operate a railroad in the streets of a city. Such a franchise, when acted upon, becomes property and cannot be repealed, unless power to do so is reserved in the grant, although it may be condemned upon making compensation. (People v. O'Brien, 111 N. Y. 1, distinguished.)
The power to amend a general law of incorporation involves power to amend charters taken out under that law. Both by the Constitution and theRevised Statutes the Legislature has the reserved power to so amend the law under which a charter has been taken out as to carry with it a corresponding amendment of the charter itself either directly or by authorizing the corporation to make the change. The right to amend a charter, however, does not include the right to take away money invested in reliance thereon or property acquired thereunder. When the Legislature has created a corporation and has given it the power to acquire property, it cannot take away the property so acquired without providing for compensation, since such property is protected by the Federal Constitution.
The right of a stockholder to vote for directors is the right to protect property from loss and make it effective in earning dividends. To absolutely deprive him of the right to vote is to deprive him of an essential attribute of his property. To so undermine that right as to essentially affect its powerof protection would, under ordinary circumstances, undermine the right to property involved in the ownership of stock.
The variations between the statute of 1S53 and section 52 of the Insurance Law (L. 1906, ch. 32G, § 13) as to the right to enfranchise policyholders are differences of detail not of substance, and were within the control of the Legislature under the reserved powers which it possesses. The object of the reservation in the charter was to permit the enfranchisement of policyholders, and that is all that the Legislature has authorized. The Legislature may, under its reserve power, amend anv ch^i^Cjitf^"^ re~ spect, not fundamental, when the object* of iRJ^ftrpSminn and pioperty acquired by it are considered. The statute" "b¥EH)Q6 authorizes no change in principle since the oldTfeEsflW^e^itteiL
social* U*uaw mutualization, but it simply allowed the object contemplated by the charter to be effected by a method varying in unessential details from that provided by the charter itself. So far as the act applies to this case it is sanctioned by the Constitution of this State and is not in conflict with the Constitution of the United States.
The contention that the Legislature did not amend the charter of defendant, by authorizing the directors to amend it, is overruled. When theLegislature authorizes a course of procedure whereby a charter may be acquired or amended, action in conformity thereto does not create the charter nor make the amendment, but both come into existence through an operation of the statute. The amendment is the act of the Legislature, the same asthe charter itself, and neither has existence except as conferred by statute.
The objection that enough of the directors, who were not directors de jure, to affect the result voted for the amendment, whereby the charter was mutualized, is not well founded. Passing by the fact that all were directors de facto, section 20 of the Stock Corporation Law (L. 1892, ch. 088, amd. L. 1906, ch. 238) provides that "policyholders of an insurance corporation shall be eligible to election as directors whether or not they be stockholders."
The Legislature authorized the directors of defendant to enfranchise policyholders with the consent of stockholders holding a majority of the stock. Stockholders and directors voted for an amendment which conferred upon policyholders the right to vote for twenty-eight out of fifty-two directors, and limited stockholders to the right to vote for but twenty-four. Held, this action deprived the stockholders of the right to vote for all the directors. While the directors had the right to limit the power of the policyholders to vote for only a part of the directors, they had no right to thus limit thepower of the stockholders. Lord v. Equitable Life Assur. Society, 126 App. Div. 937, reversed.
(Argued January 7, 1909; decided February 9, 1909.)
Appeal, by permission, from an order of the Appellate Division of the Supreme Court in the second judicial department, entered May 12, 1908, which affirmed an interlocutory judgment of Special Term sustaining a demurrer to the complaint.
The following question was certified: "Docs the complaint in this action, consisting.of the amended complaint and the supplemental complaint, set forth a cause of action against the defendant, The Equitable Life Assurance Society of the United States?"