White v. Coventry & Benson

By the Court, Balcom, J. The decision made by this court, at the Cortland general term in November, 1858, in White, receiver, v. Selover and Haskill, virtually determines this case in favor of the plaintiff ■ The Union Mutual Insurance Company was organized under the act “ to provide for the incorporation of insurance companies,” passed April 10, 1849. (Laws of 1849, p. 441.) The 10th section made it the duty of the corporators to declare, in their charter, “ the mode and manner” in which they were to exercise their corporate powers. And they declared, in the 11th section of their charter, that .the corporation might divide applications for insurance into two .or more classes, according to the degree of hazard; and that the premium notes should not in such case be assessed for any losses, except in the class to which they should belong. And I am of the opinion this provision of the charter does not conflict with any provision in the act under which it was formed. (See opinion of Paige, J., MS., in Sheldon, receiver, v. Roseboom.) (a) [310] This court has repeatedly held, in this district, that the Union Mutual Insurance Company should he .deemed to have been duly incorporated, in actions between the receiver of it [311] and those who have contracted with it as a corporation. But if there were any errors committed in its formation, they were cured by the law of 1851, which changed its name to “ The Union Insurance Company.” (Laws of 1851, p. 775.) The legislature had power to confirm its organization if it was irregularly formed. (The People v. The Manhattan Co., 9 Wend. 351. See 1 Kernan, 102; 4 id. 336.) [Chenango General Term, May 10, 1859. Mason, Balcom and Campbell, Justices.] The defendants were insured by the corporation, after its name was changed, and have not even the shadow of a right to object to the validity of its charter. They are as much estopped from setting up the invalidity of the charter, as the corporation would have been, if it had been sued by the defendants upon the policy they took of it, for a loss, by fire, of the insured property. (See 3 Sandf. 170) 17 Barb. 378; 17 Ohio Rep. 407.) The charter being valid, as between the plaintiff and the defendants, and the note of the latter having been assessed pursuant to its provisions, they were liable to pay the assessment made on it. These views dispose of the only points relied upon by the defendants' counsel. The judgment in the action should therefore be affirmed with costs. Decision accordingly. Footnotes [(a)] Paige, J. The act to provide for the incorporation of insurance companies, passed April 10th, 1849, section 3, directs the associates to-file a declaration, &c., comprising a copy'of their charter, and section 10 directs that the corporation declare; in their'charter, the mode and manner in which their corporate powers, &c. are to he exercised. The 11th section .directs that .the charter be examined by the attorney general; -and, if found by him to be in conformity with the act, that he certify the same ■ to the comptroller, &e. And the same section provides that, on filing in the' office-of the clerk of the county, &c., certified copies of "such certificate, and -of the certificate of the [310] comptroller or examiner therein mentioned, &c., the company shall he authorized to commence business and issue policies. Section 12 authorizes the directors to make such by-laws as are not inconsistent with the constitution and laws of the state, as may be deemed necessary for the government of . their officers and the conducting of the affairs of the company. The charter (§ 13) of the company in this case declares that the company may divide applications for insurance into two or more classes, and that the premium notes received upon such applications should not, in such case, be assessed for the payment of any losses, except in the class to which they belonged. The company, in its by-laws, divided their risks into two classes or departments, &c. I am inclined to believe that the provisions of the general insurance act above cited, authorized the Columbian Insurance Company to divide its risks or applications for insurance into two classes. This division, in my judgment, does not infringe the provisions of the act in relation to the amount of capital, or impair the security provided by the act against the evil of an insufficient fund, or of unreasonable contributions by the assured. This division of the risks into two classes cannot be regarded as a division of the company (as stated by Mr. Justice Marvin) into two organizations. If the capital to be applied in the payment of losses is divided, so are the risks. If the capital, in consequence of the division, is less for each department, the risks aré also proportionately less. It is therefore clear that the assured cannot be injured by the division of the risks. The 10th section of the act, which directs the company to declare, in its charter, the mode and’manner in which its corporate powers are to be exercised, authorizes the company, at its election," to provide in its charter for a division of the risks, and the assessment of the premium notes for losses only which arise in the class to which they belong. Such a provision in the charter, clearly relates to the mode and manner in which the corporate powers of the company are to be exercised. The 11th section of the act, in substance, declares that the filing of the certificate of the attorney general, that the charter is in conformity to the act, together with the certificate of the comptroller, &c., as to the capital, shall authorize the company to commence business and issue policies. Such certificate of the attorney general would seem to be conclusive as to the legal right of the Columbian Insurance Company to divide its risks into two classes; for the act declares that the filing of such certificate, &c., shall be the authority of the company to commence business, &c., that is, to commence business in the mode and manner declared in its charter, which is, in the first place, by the division of the risks into two classes. For the above reasons, I think that the decision in Thomas v. Achilles, (16 Barb. 491,) is erroneous.