Hyatt v. McMahon

25 Barb. 457, 1857 N.Y. App. Div. LEXIS 149

• Court: New York Supreme Court
• Decided: September 22, 1857
• Status: Published

Opinion

Rosekrans, J.

The 14th section of the act of 1849, to provide for the incorporation of insurance companies, (Laws of 1849, p. 447,) although unskillfully and inartificially drawn, will, nevertheless, in my judgment, authorize a pre-existing mutual insurance company to change its name and extend its charter, by complying with the provisions of the statute. It provides for such extension by altering or amending the charter so as to accord with the.provisions of the act, and filing a copy of the charter so altered or amended in the office of the secretary of state, with the consent and declaration mentioned in the 14th section, and thereupon such proceedings shall be bad as are required by the 11th section of the act. The 11th section requires the examination of the charter by the attorney general, and he is to certify it to the comptroller, who is to examine personally, or by persons to be appointed, as to the capital, premiums or engagements for insurance, and on filing the proper certificate in the office of the secretary of state, he is to furnish the corporation with a certified copy of the charter and other papers filed, and upon filing these papers in the office of the clerk of the county where the company is to be located, the corporation may commence business. This charter is, by the 10th section of the act, to declare, amongst other things, the mode and manner in which the corporate powers under the act are to be

exercised. Although this language may have been intended primarily to require a statement whether the company proposed to transact business as a° joint stock or as a mutual insurance company, it is not necessarily restricted to that subject. The language is general, and includes all other matters relating to “ the mode and manner of transacting business,” as well as the character of the proposed company. The name of the corporation must necessarily be contained in the charter: and I can see no objection to giving to the words their full meaning, and thus allowing a change of name. In the case of The Queen v. The Registrar of joint stock companies, (10 Adol. & Ellis, N. S. 839, 59 Eng. Com. Law Rep.,) under an English statute of a similar nature, the court refused a mandamus to compel the registrar to receive and file a return of a joint stock company, changing its name; but the decision was put partly upon the language of the statute, which declared that a joint stock company, incorporated under the statute, “ should continue so incorporated until it should be dissolved,” and partly upon the ground that a change of name would bring into confusion the title to shares and the liabilities on contracts, and the right to assets. The statute of 1848, under consideration, contains no such language as that in the English statute; nor are there any shares in mutual insurance companies to be affected by the change of name. The rule in the case cited, might be adopted when the comptroller, attorney general or secretary of state should refuse to proceed, under a proposed charter containing a change of ñame of a pre-existing corporation ; but to adopt it after such change has been allowed, would not only produce confusion but destruction of titles, liabilities and rights: and after such change the apprehended confusion may be obviated entirely by proper averments and proofs. It is insisted that the complaint is defective in not stating a performance of the several acts required by the statute, in order to effect a re-organization of the company. The plaintiff claims title to the note in suit by virtue of his appointment as receiver of the Rensselaer Insurance Company, the note being payable to the Rensselaer County Mutual Insurance Company. And it is necessary that he should, by proper averments, show that the note is a part of the assets of the company of which he has been appointed receiver. If, after the making of the note, the name of the corporation had been changed by a special act of the legislature, it would have been sufficient for the plaintiff to aver that such act was passed, and that he was appointed receiver of the corporation by its new name, setting out the proceedings taken for that purpose. And if my construction of the 14th section of the act for incorporating insurance companies, as to the power to change the name of a pre-existing company, is correct, I do not perceive why, by the same rule, the general averment contained in the complaint as to the re-organization and alteration and amendment of the charter of the Rensselaer County Mutual Insurance Company, including change of name, is not sufficient. The statute is a public statute, and the court will take notice of its provisions. The averment as to re-organization is of a fact, and not of a conclusion of law. In alleging a fact, it is not necessary to state such circumstances as merely tend to prove the fact. The due allegation of the fact, without detailing a variety of minute circumstances which constitute the evidence of it, will be sufficient. (1 Chit. PI. 225. Wooden v. Strew, 10 How. Pr. R. 48. 50.) The averment complained of answers the purpose of pleading—of informing the opposite party and the court of the facts intended to be relied upon to sustain the action, and includes all the particulars mentioned in the 14th section of the statute, necessary to be complied with to constitute the reorganization of the company and the amendment of'its charter; and the defendant can raise an issue, by his answer, as to a compliance with any or all of these particulars. There are adjudged cases which I think justify this general manner of pleading. In Herkimer County Bank v. Furman, (17 Barb. 116,) it was averred that the Astorogan manufacturing company was a corporation, formed under the general law providing for the incorporation of such companies, and that on a certain day it was dissolved. The dissolution, by the terms of the act, was required to be by resolution of the board of directors. (17 Barb. 120, note.) The complaint was demurred to, upon the ground that it did not show that the company was duly incorporated, and that the manner of dissolution was not forth; and the demurrer was overruled. In the case of The People ex rel. Crane v. Ryder, (2 Kern. 443,) the complaint alleged that an election was duly and legally held, pursuant to the statute, and that the relator was duly and legally elected county judge, and on demurrer it was held that this was a statement of facts, and not of conclusions of law. In Brouwer, receiver, v. Appleby, (1 Sand. 168,) the court intimate that the rule of pleading- and evidence, as to incorporation, is applicable in an action by a receiver of a corporation. See also Hill v. Reed, (16 Barb. 280, 284,) where, in an action by an assignee, averments as general as those in the complaint in this case, upon demurrer urging the same objections as those urged in the case under consideration, are held sufficient. But if the averment in the complaint which has been considered is treated as surplusage, I think the complaint states facts sufficient to constitute a cause of action, so far as regards the transfer of the title to the note in suit. It is averred that the Rensselaer County Mutual Insurance Company was a corporation duly organized ; that the defendant made the note promising to pay that company, and thereby became a member of the company ; that the corporation transacted business under that name from the date of its incorporation until October 23d, 1851, at which time it changed its corporate name to that of the Rensselaer Insurance Company, under which name it continued to transact business until February 13,1855. It then states the recovery of the judgment by Shaughnessy against the said Rensselaer Insurance Company, and the appointment of the plaintiff as receiver of said corporation, and the delivering of its assets, including this note, to the plaintiff, as such receiver. It is evident from the language of the complaint, that the pleader intended to state that there was but one corporation transacting business under these two different names. Whether the name of the corporation was legally changed or not I deem a matter of no moment, in this action. Neither the corporation nor any member of it, nor any person dealing with it .under the new name, could take advantage of the misnomer. (Ang. & Ames on Corp. §§ 99,100 and notes, 645,648 and notes. African Society v. Varick, 13 John. 38. 12 Barb. 674, 5.) Chancellor Kent says, (2 Kent's Com. 341, 8th ed.) “ The general rule to be collected from the cases is, that a variation from the precise name of the corporation, when the true name can be collected from the instrument or is shown by proper averments, will not invalidate a grant by or to a corporation or a contract with it; and the modern decisions show an increased liberality on this subject. For a corporation to attempt to set aside its own grant by reason of a misnomer in its own name, was severely censured, and in a great measure repressed, as early as the time of Lord Coke.” If a corporation cannot avail itself of such misnomer, neither could a member of the corporation. (10 Adol. & Ellis, 843, supra. 8 East, 492.)

Another objection to the complaint is, that the receiver has no power to make an assessment upon the premium notes belonging to the corporation ; that by the terms of the contract, it can only be made by the directors of the company; that the act of 1852, (Laws of 1852, p. 67,) purporting to authorize receivers of mutual insurance companies to make assessments, is unconstitutional and void as to notes given before the passage of that act, (as was the ca.se with the note in •'uit.) The conclusive answer to the objection of unconstitutionality of the act is, the power reserved to the legislature, by the charter of this company and the general act under which it was re-organized, to alter or repeal the charter. The obligation of the contract wí s that the maker of the note should pay his proportion .of losses and expenses of the company, in proportion to the amount of his premiun note. (Laws of 1836, p. 275, §§ 43, 44.) The note was made payable at any time when the directors should deem the same requisite for the payment of losses and incidental expenses. (Ch. 43, § 6.) And when notices of losses were received or judgment obtained against the company, for losses, the charter provided (id. 45, § 10) that the directors should Settle and determine the sums to be paid by the several members of the corporation as their respective proportions of such losses. It has been said that the assessment is not a judicial but a ministerial act, and may as well be performed by a receiver as by the directors. (14 Barb. 373.) But whether this be so or not, the legislature, when they granted this charter, reserved the right to alter it, and the corporation and its members accepted the charter and assumed their obligations under, and subject to, this reserved right. In 1832 the legislature exercised this right, by declaring that when the assets of such corporation passed into the hands of a receiver he should make the assessment, instead of the directors. This was a legitimate exercise of the reserved power, and a necessary exercise of it to secure the rights of the creditors of an insolvent corporation. If not necessary, it was convenient at least, and was reserved. Even if it increased the liability of the members, as it does not, it would be valid. (10 Barb. 260.) The extent to which this reserved power may be exercised has not been distinctly adjudged. It need not be claimed to be without limit, or that it may be capriciously or wantonly exercised, but it may safely be affirmed that it may be exercised in all cases, and to any extent, to carry out the original purposes of-the incorporation, and to secure the due administration of justice in regard to the rights of the creditors of the corporation and the proper disposition of its assets. (Northern R. R. Co. v. Miller, 10 Barb. 282. Schenectady and Saratoga Plank Road Co. v. Thatcher, 1 Kern. 102, 114, 115. White v. Syracuse and Utica R. R. Co. 14 Barb. 560, 561. Troy and Rutland R. R. Co. v. Kerr, 17 Barb. 603, remarks of Hand, J.) Assessments by receivers have been sanctioned by the courts. (Bangs v. Gray, 15 Barb. 264; S. C. 2 Kern. 477. Hyde, receiver, v. Lynde, 4 Comst. 387. Devendorf v. Beardsley, 23 Barb. 656, 666.)

[Washington Special Term, September 22, 1857.

Judgment upon demurrer in favor of the plaintiff, with leave to the defendant to answer on payment of $35 costs.

Rosehrans, Justice.]